Hallmark Announces AM Best Rating Changes, Interim Final Arbitration Award, and Partnership with an AM Best “A” Rated Carrier
May 05 2023 - 1:55PM
AM Best announced today that it has downgraded the Long-Term Issuer
Credit Rating (Long-Term ICR) to “bb” (Fair) from “bbb-” (Good) and
the associated Long-Term Issue Ratings (Long-Term IRs) of Hallmark
Financial Services, Inc. (Hallmark) [NASDAQ: HALL]. Concurrently,
AM Best has downgraded the Financial Strength Rating (FSR) to B++
(Good) from A- (Excellent) and the Long-Term ICRs to “bbb” (Good)
from “a-” (Excellent) of the members of Hallmark Insurance Group.
In addition, AM Best has maintained the under review with negative
implications status of all Credit Ratings (ratings).
As previously disclosed in Hallmark’s public
filings, certain of Hallmark’s subsidiaries are parties to an
arbitration proceeding relating to a Loss Portfolio Transfer
Reinsurance Contract with DARAG Bermuda Ltd. and DARAG Insurance
Limited. On May 4, 2023, the arbitration panel rendered an interim
final award, subject to final determination of certain amounts
under settlement. The results of the award will result in a loss to
Hallmark that we estimate to be in a range of $25 to $35 million.
AM Best indicated that its continuing review of Hallmark’s rating
would be subject to several factors, including the final
disposition of this arbitration proceeding.
We understand that in certain situations, an
insured requires AM Best “A” rated paper, for which we have entered
a partnership with an AM Best “A” rated carrier. They operate as an
independent brand of a Fortune 500 holding company with insurance,
reinsurance, and investment operations around the world. This
carrier will allow Hallmark to underwrite our policies on their
paper to accommodate such requirements.
In addition, we have been advised by Core
Specialty, which in October 2022 acquired our Excess & Surplus
Lines Operations, that it has concluded the interim period during
which it was issuing Hallmark policies in respect of the E&S
business and will now be issuing new and renewal policies using its
“A- (positive)” insurance carrier subsidiaries and own systems.
Such policies were fully reinsured by a Core Specialty insurance
carrier subsidiary from the date of acquisition.
About Hallmark
Hallmark is a property and casualty insurance
holding company with a diversified portfolio of insurance products
written on a national platform. With six insurance subsidiaries,
Hallmark markets, underwrites and services commercial and personal
insurance in select markets. Hallmark is headquartered in Dallas,
Texas, and its common stock is listed on NASDAQ under the symbol
"HALL."
Forward-looking statements in this release are
made pursuant to the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned
that actual results may differ materially from such forward-looking
statements. Forward-looking statements involve risks and
uncertainties including, but not limited to, continued acceptance
of the Company’s products and services in the marketplace,
competitive factors, interest rate trends, general economic
conditions, the availability of financing, underwriting loss
experience and other risks detailed from time to time in the
Company’s filings with the Securities and Exchange Commission.
For further information, please contact:
Chris KenneyChief Executive Officer
817.348.1600www.hallmarkgrp.com
A photo accompanying this release is available
at https://www.globenewswire.com/NewsRoom/AttachmentNg/4fb87372-b7a9-47e0-969b-94291b3c6287
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