Hallmark Financial (HALL) Q4 Earnings & Revenues Lag Estimates

Hallmark Financial Services’ HALL fiscal fourth-quarter 2019 operating loss of $2.01 per share was wider than the Zacks Consensus Estimate of a loss of $1.99 per share. The bottom line marked a decline from 28 cents earned in the year-ago quarter.

Total revenues improved 29.2% year over year to $124 million in the quarter under review. However, the top line missed the Zacks Consensus Estimate by 5%.

Hallmark Financial Services, Inc. Price, Consensus and EPS Surprise

Hallmark Financial Services, Inc. Price, Consensus and EPS Surprise

Hallmark Financial Services, Inc. price-consensus-eps-surprise-chart | Hallmark Financial Services, Inc. Quote

Quarterly Operational Update

Gross premiums increased 28% year over year to $214.1 million.

Net premiums written surged 35% year over year to $127.5 million driven by premium growth in each of its segments, as well as increased net retention of business.

Net combined ratio deteriorated 4510 basis points (bps) to 141.4%.

Expense ratio of 23.3% improved 240 bps year over year.

Total expenses increased 88.5% year over year to $172.2 million due to higher losses and loss adjustment costs, operating expenses and interest expense.

Segmental Update

Specialty Commercial Segment: Net premiums written rose 44.6% year over year to $93.1 million. Combined ratio deteriorated 5040 bps to 147.2%.

Standard Commercial Segment: Net premiums written were up 38.2% year over year to $15.1 million. Combined ratio deteriorated 4120 bps to 136.3%.

Personal Segment: Net premiums increased 0.7% year over year to $19.6 million. Combined ratio deteriorated 3170 bps to 114.9%.

Corporate Segment: Total revenues for this unit came in at $3.5 million against the year-ago quarter's figure of ($14.2) million. Pretax loss narrowed to $1.2 million from $18.5 million loss incurred in the year-ago quarter.

Fiscal 2019 Highlights

Operating loss was 93 cents per share against $1.01 per share earned in the year-ago period.

Total revenues improved 19.4% year over year to $458.7 million.

Net combined ratio of 108% deteriorated 1090 bps year over year.

Financial Position

As of fiscal 2019 end, cash and cash equivalents were $54.9 million, up 35.8% year over year.

Total assets increased 18.2% year over year to $1.5 billion at fiscal 2019 end.

Operating cash inflow was $27.7 million in fiscal 2019 against operating cash outflow of $32.9 million in the year-ago period.

Book value per share grew 2% year over year to $14.53 at fiscal 2019 end.

Zacks Rank

Hallmark Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Some better-ranked companies in the insurance industry are Kinsale Capital Group KNSL, Old Republic International Corporation ORI and Palomar Holdings PLMR.

Kinsale Capital provides casualty and property insurance products in the United States. Its earnings beat estimates in two of the last four quarters, the average positive surprise being 3.44%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Old Republic International engages in the insurance underwriting and related services business primarily in the United States and Canada. The company delivered positive earnings surprise in three of the last four reported quarters with the average beat being 31.72%. The stock sports a Zacks Rank #1.

Palomar Holdings provides specialty property insurance. The company surpassed estimates in two of the last four quarters, the average positive surprise being 10.93%.The stock carries a Zacks Rank #2 (Buy).

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