Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 12, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2022 | |
Entity File Number | 001-11252 | |
Entity Registrant Name | Hallmark Financial Services, Inc. | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 87-0447375 | |
Entity Address, Address Line One | 5420 Lyndon B. Johnson Freeway, Suite 1100 | |
Entity Address, City or Town | Dallas | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75240 | |
City Area Code | 817 | |
Local Phone Number | 348-1600 | |
Title of 12(b) Security | Common Stock, $0.18 par value | |
Trading Symbol | HALL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 18,190,418 | |
Entity Central Index Key | 0000819913 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Investments: | ||
Debt securities, available-for-sale, at fair value (amortized cost; $389,582 in 2022 and $288,175 in 2021) | $ 388,254 | $ 290,073 |
Equity securities (cost; $46,125 in 2022 and $42,120 in 2021) | 52,604 | 48,695 |
Total investments | 440,858 | 338,768 |
Cash and cash equivalents | 183,377 | 352,867 |
Restricted cash | 4,239 | 3,810 |
Ceded unearned premiums | 142,645 | 146,433 |
Premiums receivable | 88,420 | 90,621 |
Accounts receivable | 20,094 | 6,914 |
Receivable for securities | 1,209 | 1,326 |
Reinsurance recoverable | 545,266 | 549,964 |
Deferred policy acquisition costs | 6,847 | 6,811 |
Intangible assets, net | 693 | 819 |
Federal income tax recoverable | 14,748 | 18,217 |
Deferred federal income taxes, net | 9,412 | 8,906 |
Prepaid expenses | 5,389 | 2,389 |
Other assets | 26,666 | 25,753 |
Total assets | 1,489,863 | 1,553,598 |
Liabilities: | ||
Senior unsecured notes due 2029 (less unamortized debt issuance cost of $721 in 2022 and $746 in 2021) | 49,279 | 49,254 |
Subordinated debt securities (less unamortized debt issuance cost of $730 in 2022 and $744 in 2021) | 55,972 | 55,959 |
Reserves for unpaid losses and loss adjustment expenses | 798,338 | 816,681 |
Unearned premiums | 276,485 | 284,427 |
Reinsurance payable | 85,980 | 117,908 |
Pension liability | 59 | 174 |
Payable for securities | 2,374 | 3,280 |
Accounts payable and other liabilities | 51,540 | 50,394 |
Total liabilities | 1,320,027 | 1,378,077 |
Commitments and contingencies (Note 17) | ||
Stockholders' equity: | ||
Common stock, $.18 par value, authorized 33,333,333 shares; issued 20,872,831 shares in 2022 and 2021 | 3,757 | 3,757 |
Additional paid-in capital | 122,741 | 122,844 |
Retained earnings | 71,484 | 74,703 |
Accumulated other comprehensive loss | (3,563) | (1,035) |
Treasury stock (2,682,413 shares in 2022 and 2,700,364 in 2021), at cost | (24,583) | (24,748) |
Total stockholders' equity | 169,836 | 175,521 |
Total liabilities and stockholders' equity | $ 1,489,863 | $ 1,553,598 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Debt securities, available-for-sale, Amortized cost (in dollars) | $ 389,582 | $ 288,175 |
Equity securities, available for sale, cost (in dollars) | $ 46,125 | $ 42,120 |
Common stock, par value (in dollars per share) | $ 0.18 | $ 0.18 |
Common stock, authorized shares | 33,333,333 | 33,333,333 |
Common stock, issued shares | 20,872,831 | 20,872,831 |
Treasury stock, shares | 2,682,413 | 2,700,364 |
Senior unsecured notes due 2029 [Member] | ||
Unamortized debt issuance cost (in dollars) | $ 721 | $ 746 |
Subordinated Debt [Member] | ||
Unamortized debt issuance cost (in dollars) | $ 730 | $ 744 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Consolidated Statements of Operations [Abstract] | ||
Gross premiums written | $ 150,959 | $ 163,018 |
Ceded premiums written | (72,638) | (71,521) |
Net premiums written | 78,321 | 91,497 |
Change in unearned premiums | 4,155 | 10,355 |
Net premiums earned | 82,476 | 101,852 |
Investment income, net of expenses | 1,859 | 3,010 |
Investment gains, net | 51 | 5,779 |
Finance charges | 983 | 1,133 |
Commission and fees | 287 | 260 |
Other income | 16 | 19 |
Total revenues | 85,672 | 112,053 |
Losses and loss adjustment expenses | 64,024 | 69,479 |
Operating expenses | 24,377 | 29,972 |
Interest expense | 1,264 | 1,249 |
Amortization of intangible assets | 126 | 126 |
Total expenses | 89,791 | 100,826 |
(Loss) income before tax | (4,119) | 11,227 |
Income tax (benefit) expense | (900) | 2,256 |
Net (loss) income | $ (3,219) | $ 8,971 |
Net (loss) income per share: | ||
Basic (in dollars per share) | $ (0.18) | $ 0.49 |
Diluted (in dollars per share) | $ (0.18) | $ 0.49 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Consolidated Statements of Comprehensive (Loss) Income [Abstract] | ||
Net (loss) income | $ (3,219) | $ 8,971 |
Other comprehensive (loss) income: | ||
Change in net actuarial gain | 27 | 43 |
Tax effect on change in net actuarial gain | (6) | (9) |
Unrealized holding (losses) gains arising during the period | (3,081) | 585 |
Tax effect on unrealized holding losses (gains) arising during the period | 647 | (123) |
Reclassification adjustment for gains included in net (loss) income | (146) | (1,403) |
Tax effect on reclassification adjustment for gains included in net (loss) income | 31 | 295 |
Other comprehensive loss, net of tax | (2,528) | (612) |
Comprehensive (loss) income | $ (5,747) | $ 8,359 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Treasury Stock [Member] | Total |
Balance at Dec. 31, 2020 | $ 3,757 | $ 122,893 | $ 65,697 | $ 383 | $ (25,026) | |
Equity based compensation | 97 | |||||
Shares issued under employee benefit plans | 265 | |||||
Shares issued under employee benefit plans | (265) | |||||
Net (loss) income | 8,971 | $ 8,971 | ||||
Additional minimum pension liability, net of tax | 34 | |||||
Unrealized holding (losses) gains arising during period, net of tax | 462 | |||||
Reclassification adjustment for gains included in net (loss) income, net of tax | (1,108) | |||||
Ending balance at Mar. 31, 2021 | 3,757 | 122,725 | 74,668 | (229) | (24,761) | 176,160 |
Balance at Dec. 31, 2021 | 3,757 | 122,844 | 74,703 | (1,035) | (24,748) | 175,521 |
Equity based compensation | 62 | |||||
Shares issued under employee benefit plans | 165 | |||||
Shares issued under employee benefit plans | (165) | |||||
Net (loss) income | (3,219) | (3,219) | ||||
Additional minimum pension liability, net of tax | 21 | |||||
Unrealized holding (losses) gains arising during period, net of tax | (2,434) | |||||
Reclassification adjustment for gains included in net (loss) income, net of tax | (115) | |||||
Ending balance at Mar. 31, 2022 | $ 3,757 | $ 122,741 | $ 71,484 | $ (3,563) | $ (24,583) | $ 169,836 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (3,219) | $ 8,971 |
Adjustments to reconcile net (loss) income to cash used in operating activities: | ||
Depreciation and amortization expense | 706 | 830 |
Deferred federal income taxes (benefit) expense | (339) | 568 |
Investment (gains) losses, net | (51) | (5,779) |
Share-based payments expense (benefit) | 62 | 97 |
Change in ceded unearned premiums | 3,788 | 5,436 |
Change in premiums receivable | 2,201 | 10,533 |
Change in accounts receivable | (13,180) | 1,342 |
Change in deferred policy acquisition costs | (36) | 1,454 |
Change in reserves for losses and loss adjustment expenses | (18,343) | 22,504 |
Change in unearned premiums | (7,942) | (15,791) |
Change in reinsurance recoverable | 4,698 | (6,008) |
Change in reinsurance balances | (31,928) | 6,155 |
Change in federal income tax payable (recoverable) | 3,469 | 1,687 |
Change in all other liabilities | 1,069 | 515 |
Change in all other assets | (2,936) | (3,038) |
Net cash (used in) provided by operating activities | (61,981) | 29,476 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (631) | (64) |
Purchases of investment securities | (166,832) | (27,829) |
Maturities, sales and redemptions of investment securities | 60,383 | 177,392 |
Net cash (used in) provided by investing activities | (107,080) | 149,499 |
(Decrease) increase in cash and cash equivalents and restricted cash | (169,061) | 178,975 |
Cash and cash equivalents and restricted cash at beginning of period | 356,677 | 108,308 |
Cash and cash equivalents and restricted cash at end of period | $ 187,616 | $ 287,283 |
General
General | 3 Months Ended |
Mar. 31, 2022 | |
General [Abstract] | |
General | 1. General Hallmark Financial Services, Inc. (“Hallmark” and, together with subsidiaries, the “Company”, “we,” “us” or “our”) is an insurance holding company that, through its subsidiaries, engages in the sale of property/casualty insurance products to businesses and individuals. Our business involves marketing, distributing, underwriting and servicing our insurance products, as well as providing other insurance related services. We market, distribute, underwrite and service our property/casualty insurance products primarily through business units organized by products and distribution channels. Our business units are supported by our insurance company subsidiaries. Our Commercial Auto business unit offers primary and excess commercial vehicle insurance products and services; our E&S Casualty business unit offers primary and excess liability, excess public entity liability, E&S package and garage liability insurance products and services; our E&S Property business unit offers primary and excess commercial property insurance for both catastrophe and non-catastrophe exposures; our Professional Liability business unit offers healthcare and financial lines professional liability insurance products and services primarily for businesses, medical professionals, medical facilities and, through 2020, senior care facilities; and our Aerospace & Programs business unit offers general aviation and, until exited during 2020, satellite launch property/casualty insurance products and services, as well as certain specialty programs. Our Commercial Accounts business unit offers package and monoline property/casualty and, until exited in 2016, occupational accident insurance products. Our Specialty Personal Lines business unit offers non-standard personal automobile and renters insurance products and services. Our former Workers Compensation operating unit specialized in small and middle market workers compensation business until discontinued during 2015. Our insurance company subsidiaries supporting these business units are American Hallmark Insurance Company of Texas (“AHIC”), Hallmark Insurance Company (“HIC”), Hallmark Specialty Insurance Company (“HSIC”), Hallmark County Mutual Insurance Company (“HCM”), Hallmark National Insurance Company (“HNIC”) and Texas Builders Insurance Company (“TBIC”). These business units are segregated into three reportable industry segments for financial accounting purposes. The Specialty Commercial Segment includes our Commercial Auto business unit, E&S Casualty business unit, E&S Property business unit, Professional Liability business unit and Aerospace & Programs business unit. The Standard Commercial Segment consists of the Commercial Accounts business unit and the runoff from our former Workers Compensation operating unit. The Personal Segment consists solely of our Specialty Personal Lines business unit. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2022 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | 2. Basis of Presentation Our unaudited consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include our accounts and the accounts of our subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Certain footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K filed with the SEC. The interim financial data as of March 31, 2022 and 2021 is unaudited. However, in the opinion of management, the interim financial data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The results of operations for the three month periods ended March 31, 2022 and 2021, are not necessarily indicative of the operating results to be expected for the full year. Use of Estimates in the Preparation of the Financial Statements Our preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the date of our consolidated financial statements, as well as our reported amounts of revenues and expenses during the reporting period. Refer to “Critical Accounting Estimates and Judgments” under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021 for information on accounting policies that we consider critical in preparing our consolidated financial statements. Actual results could differ materially from those estimates. Fair Value of Financial Instruments Fair value estimates are made at a point in time based on relevant market data as well as the best information available about the financial instruments. Fair value estimates for financial instruments for which no or limited observable market data is available are based on judgments regarding current economic conditions, credit and interest rate risk. These estimates involve significant uncertainties and judgments and cannot be determined with precision. As a result, such calculated fair value estimates may not be realizable in a current sale or immediate settlement of the instrument. In addition, changes in the underlying assumptions used in the fair value measurement technique, including discount rate and estimates of future cash flows, could significantly affect these fair value estimates. Cash and Cash Equivalents Restricted Cash Senior Unsecured Notes Due 2029 Subordinated Debt Securities For accounts receivable, reinsurance balances, premiums receivable, federal income tax recoverable and other assets, the carrying amounts are held at net realizable value which approximates fair value because of the short maturity of such financial instruments. Variable Interest Entities On June 21, 2005, we formed Hallmark Statutory Trust I (“Trust I”), an unconsolidated trust subsidiary, for the sole purpose of issuing $30.0 million in trust preferred securities. Trust I used the proceeds from the sale of these securities and our initial capital contribution to purchase $30.9 million of subordinated debt securities from Hallmark. The debt securities are the sole assets of Trust I, and the payments under the debt securities are the sole revenues of Trust I. On August 23, 2007, we formed Hallmark Statutory Trust II (“Trust II”), an unconsolidated trust subsidiary, for the sole purpose of issuing $25.0 million in trust preferred securities. Trust II used the proceeds from the sale of these securities and our initial capital contribution to purchase $25.8 million of subordinated debt securities from Hallmark. The debt securities are the sole assets of Trust II, and the payments under the debt securities are the sole revenues of Trust II. We evaluate on an ongoing basis our investments in Trust I and Trust II (collectively the “Trusts”) and have determined that we do not have a variable interest in the Trusts. Therefore, the Trusts are not included in our consolidated financial statements. Income Taxes We file a consolidated federal income tax return. Deferred federal income taxes reflect the future tax consequences of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year end. Deferred taxes are recognized using the liability method, whereby tax rates are applied to cumulative temporary differences based on when and how they are expected to affect the tax return. Deferred tax assets and liabilities are adjusted for tax rate changes in effect for the year in which these temporary differences are expected to be recovered or settled. Net deferred tax assets are held at their net realizable value and an allowance is taken as needed. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. There were no uncertain tax positions at March 31, 2022. Recently Issued Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform ("ASU 2020-04"). ASU 2020-04 provides optional guidance for a limited period of time to ease potential accounting impact associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate ("LIBOR"). The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The amendments in ASU 2020-04 could be adopted as of March 12, 2020 and are effective through December 31, 2022. We do not currently have any contracts that have been changed to a new reference rate and do not expect the adoption of this guidance to have a material effect on the Company’s results of operations, financial position or liquidity. In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (Topic 326). ASU 2016-13 requires organizations to estimate credit losses on certain types of financial instruments, including receivables and available-for-sale debt securities, by introducing an approach based on expected losses. The expected loss approach will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. As a smaller reporting company, ASU 2016-13 is effective for fiscal years of the Company beginning after December 15, 2022, including interim periods within those fiscal years. ASU 2016-13 requires a modified retrospective transition method and early adoption is permitted. We are currently evaluating the impact that the adoption of this standard will have on our financial results and disclosures, but do not anticipate that any potential impact would be material. |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value [Abstract] | |
Fair Value | 3. Fair Value ASC 820 defines fair value, establishes a consistent framework for measuring fair value and requires disclosure about fair value measurements. ASC 820, among other things, requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. In addition, ASC 820 precludes the use of block discounts when measuring the fair value of instruments traded in an active market, which were previously applied to large holdings of publicly traded equity securities. We determine the fair value of our financial instruments based on the fair value hierarchy established in ASC 820. In accordance with ASC 820, we utilize the following fair value hierarchy: ● Level 1: quoted prices in active markets for identical assets; ● Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, inputs of identical assets for less active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument; and ● Level 3: inputs to the valuation methodology that are unobservable for the asset or liability. This hierarchy requires the use of observable market data when available. Under ASC 820, we determine fair value based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy described above. Fair value measurements for assets and liabilities where there exists limited or no observable market data are calculated based upon our pricing policy, the economic and competitive environment, the characteristics of the asset or liability and other factors as appropriate. These estimated fair values may not be realized upon actual sale or immediate settlement of the asset or liability. Where quoted prices are available on active exchanges for identical instruments, investment securities are classified within Level 1 of the valuation hierarchy. Level 1 investment securities include equity securities. Level 2 investment securities include corporate bonds, collateralized corporate bank loans, municipal bonds, U.S. Treasury securities, other obligations of the U.S. Government and mortgage-backed securities for which quoted prices are not available on active exchanges for identical instruments. We use third-party pricing services to determine fair values for each Level 2 investment security in all asset classes. Since quoted prices in active markets for identical assets are not available, these prices are determined using observable market information such as quotes from less active markets and/or quoted prices of securities with similar characteristics, among other things. We have reviewed the processes used by the pricing services and have determined that they result in fair values consistent with the requirements of ASC 820 for Level 2 investment securities. We have not adjusted any prices received from third-party pricing sources. There were no transfers between Level 1 and Level 2 securities. In cases where there is limited activity or less transparency around inputs to the valuation, investment securities are classified within Level 3 of the valuation hierarchy. Level 3 investments are valued based on the best available data in order to approximate fair value. This data may be internally developed and consider risk premiums that a market participant would require. Investment securities classified within Level 3 include other less liquid investment securities. The following table presents, for each of the fair value hierarchy levels, assets that are measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021 (in thousands): As of March 31, 2022 Quoted Prices in Active Markets for Identical Assets Other Observable Unobservable (Level 1) Inputs (Level 2) Inputs (Level 3) Total U.S. Treasury securities and obligations of U.S. Government $ — $ 42,483 $ — $ 42,483 Corporate bonds — 222,120 — 222,120 Corporate bank loans — 80,018 — 80,018 Municipal bonds — 41,889 — 41,889 Mortgage-backed — 1,744 — 1,744 Total debt securities — 388,254 — 388,254 Total equity securities 52,604 — — 52,604 Total investments $ 52,604 $ 388,254 $ — $ 440,858 As of December 31, 2021 Quoted Prices in Active Markets for Identical Assets Other Observable Unobservable (Level 1) Inputs (Level 2) Inputs (Level 3) Total U.S. Treasury securities and obligations of U.S. Government $ — $ 62,984 $ — $ 62,984 Corporate bonds — 105,234 347 105,581 Corporate bank loans — 81,189 — 81,189 Municipal bonds — 38,464 — 38,464 Mortgage-backed — 1,855 — 1,855 Total debt securities — 289,726 347 290,073 Total equity securities 48,695 — — 48,695 Total investments $ 48,695 $ 289,726 $ 347 $ 338,768 Due to significant unobservable inputs into the valuation model for one corporate bond as of December 31, 2021, we classified this investment as Level 3 in the fair value hierarchy. The corporate bond is a convertible senior note and its fair value was estimated by the sum of the bond value using an income approach discounting the scheduled interest and principal payments and the conversion feature utilizing a binomial lattice model. The following table summarizes the changes in fair value for all financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2022 and 2021 (in thousands): Beginning balance as of January 1, 2022 $ 347 Sales — Settlements (347) Purchases — Issuances — Total realized/unrealized losses included in net income — Net gain included in other comprehensive income — Transfers into Level 3 — Transfers out of Level 3 — Ending balance as of March 31, 2022 $ — Beginning balance as of January 1, 2021 $ 347 Sales — Settlements — Purchases — Issuances — Total realized/unrealized gains included in net loss — Net gains included in other comprehensive loss 7 Transfers into Level 3 — Transfers out of Level 3 — Ending balance as of March 31, 2021 $ 354 |
Investments
Investments | 3 Months Ended |
Mar. 31, 2022 | |
Investments [Abstract] | |
Investments | 4. Investments The amortized cost/carrying value and estimated fair value of investments in debt and equity securities by category is as follows (in thousands): Gross Gross Amortized Cost/ Unrealized Unrealized Carrying Value Gains Losses Fair Value As of March 31, 2022 U.S. Treasury securities and obligations of U.S. Government $ 43,175 $ - $ (692) $ 42,483 Corporate bonds 221,775 1,454 (1,109) 222,120 Corporate bank loans 81,024 9 (1,015) 80,018 Municipal bonds 41,862 144 (117) 41,889 Mortgage-backed 1,746 11 (13) 1,744 Total debt securities 389,582 1,618 (2,946) 388,254 Total equity securities 46,125 9,833 (3,354) 52,604 Total investments $ 435,707 $ 11,451 $ (6,300) $ 440,858 Gross Gross Amortized Cost/ Unrealized Unrealized As of December 31, 2021 Carrying Value Gains Losses Fair Value U.S. Treasury securities and obligations of U.S. Government $ 63,098 $ 56 $ (170) $ 62,984 Corporate bonds 103,515 2,115 (49) 105,581 Corporate bank loans 81,570 84 (465) 81,189 Municipal bonds 38,162 372 (70) 38,464 Mortgage-backed 1,830 29 (4) 1,855 Total debt securities 288,175 2,656 (758) 290,073 Total equity securities 42,120 9,355 (2,780) 48,695 Total investments $ 330,295 $ 12,011 $ (3,538) $ 338,768 Major categories of net investment gains (losses) on investments are summarized as follows (in thousands): Three Months Ended March 31, 2022 2021 Corporate bonds $ 12 $ 197 Corporate bank loans 5 51 Municipal bonds — (9) Equity securities 129 1,164 Gain on investments 146 1,403 Unrealized (losses) gain on equity investments (95) 4,376 Investment gains, net $ 51 $ 5,779 We realized gross gains on investments of $152 thousand and $1.5 million during the three months ended March 31, 2022 and 2021, respectively. We realized gross losses on investments of $6 thousand and $0.1 million for the three months ended March 31, 2022 and 2021, respectively. We recorded proceeds from the sale of investment securities of $0.5 million and $1.2 million during the three months ended March 31, 2022 and 2021, respectively. Realized investment gains and losses are recognized in operations on the first in-first out method. The following schedules summarize the gross unrealized losses showing the length of time that investments have been continuously in an unrealized loss position as of March 31, 2022 and December 31, 2021 (in thousands): As of March 31, 2022 12 months or less Longer than 12 months Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses U.S. Treasury securities and obligations of U.S. Government $ 42,483 $ (692) $ — $ — $ 42,483 $ (692) Corporate bonds 130,766 (1,089) 1,149 (20) 131,915 (1,109) Corporate bank loans 45,991 (480) 28,458 (535) 74,449 (1,015) Municipal bonds 9,149 (106) 838 (11) 9,987 (117) Mortgage-backed 1,669 (8) 9 (5) 1,678 (13) Total debt securities 230,058 (2,375) 30,454 (571) 260,512 (2,946) Total equity securities 14,165 (1,484) 3,922 (1,870) 18,087 (3,354) Total investments $ 244,223 $ (3,859) $ 34,376 $ (2,441) $ 278,599 $ (6,300) As of December 31, 2021 12 months or less Longer than 12 months Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses U.S. Treasury securities and obligations of U.S. Government $ 43,273 $ (170) $ — $ — $ 43,273 $ (170) Corporate bonds - - 2,245 (49) 2,245 (49) Corporate bank loans 42,256 (177) 16,763 (288) 59,019 (465) Municipal bonds 3,321 (58) 1,038 (12) 4,359 (70) Mortgage-backed - - 10 (4) 10 (4) Total debt securities 88,850 (405) 20,056 (353) 108,906 (758) Total equity securities 6,221 (710) 5,055 (2,070) 11,276 (2,780) Total investments $ 95,071 $ (1,115) $ 25,111 $ (2,423) $ 120,182 $ (3,538) We had a total of 197 debt securities with an unrealized loss, of which 164 were in an unrealized loss position for less than one year and 33 were in an unrealized loss position for a period of one year or greater, as of March 31, 2022. We held a total of 100 debt securities with an unrealized loss, of which 74 were in an unrealized loss position for less than one year and 26 were in an unrealized loss position for a period of one year or greater, as of December 31, 2021. We consider these losses as a temporary decline in value as they are on securities that we do not intend to sell and do not believe we will be required to sell prior to recovery of our amortized cost basis. The gross unrealized losses on the debt security positions at March 31, 2022 and December 31, 2021 were due predominately to market and interest rate fluctuations and we see no other indications that the decline in values of these securities is other-than-temporary. Based on evidence gathered through our normal credit evaluation process, we presently expect that all debt securities held in our investment portfolio will be paid in accordance with their contractual terms. Nonetheless, it is at least reasonably possible that the performance of certain issuers of these debt securities will be worse than currently expected resulting in future write-downs within our portfolio of debt securities. We complete a detailed analysis each quarter to assess whether any decline in the fair value of any debt security below cost is deemed other-than-temporary. All debt securities with an unrealized loss are reviewed. We recognize an impairment loss when a debt security’s value declines below cost, adjusted for accretion, amortization and previous other-than-temporary impairments and it is determined that the decline is other-than-temporary. We did not recognize any impairment loss on debt securities during the three months ended March 31, 2022 and 2021, respectively. Debt Investments: We assess whether we intend to sell, or it is more likely than not that we will be required to sell, a fixed maturity investment before recovery of its amortized cost basis less any current period credit losses. For fixed maturity investments that are considered other-than-temporarily impaired and that we do not intend to sell and will not be required to sell, we separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the investment’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between the investment’s fair value and the present value of future expected cash flows is recognized in other comprehensive income. We did not dispose of any previously impaired securities during the three months ended March 31, 2022 or 2021, respectively. Equity Investments: Equity investments that are not consolidated or accounted for under the equity method of accounting with readily determinable fair values are not required to be evaluated for other-than-temporary-impairment. Amortized Cost Fair Value (in thousands) Due in one year or less $ 98,318 $ 98,804 Due after one year through five years 222,617 221,341 Due after five years through ten years 59,833 59,300 Due after ten years 7,068 7,065 Mortgage-backed 1,746 1,744 $ 389,582 $ 388,254 |
Pledged Investments
Pledged Investments | 3 Months Ended |
Mar. 31, 2022 | |
Pledged Investments [Abstract] | |
Pledged Investments | 5. Pledged Investments We have pledged certain of our securities for the benefit of various state insurance departments and reinsurers. These securities are included with our available-for-sale debt securities because we have the ability to trade these securities. We retain the interest earned on these securities. These securities had a carrying value of $25.9 million and $30.0 million at March 31, 2022 and December 31, 2021, respectively. |
Reserves for Unpaid Losses and
Reserves for Unpaid Losses and Loss Adjustment Expenses | 3 Months Ended |
Mar. 31, 2022 | |
Reserves for Unpaid Losses and Loss Adjustment Expenses [Abstract] | |
Reserves for Unpaid Losses and Loss Adjustment Expenses | 6. Reserves for Unpaid Losses and Loss Adjustment Expenses Year to-date activity in the consolidated reserves for unpaid losses and LAE is summarized as follows (in thousands): March 31, March 31, 2022 2021 Balance at January 1 $ 816,681 $ 789,768 Less reinsurance recoverable 387,915 357,200 Net balance at January 1 428,766 432,568 Incurred related to: Current year 56,333 71,565 Prior years 7,691 (2,086) Total incurred 64,024 69,479 Paid related to: Current year 12,757 7,067 Prior years 62,213 52,360 Total paid 74,970 59,427 Net balance at March 31 417,820 442,620 Plus reinsurance recoverable 380,518 369,652 Balance at March 31 $ 798,338 $ 812,272 The year to date impact from the unfavorable (favorable) net prior years’ loss development on each reporting segment is presented below: March 31, 2022 2021 Specialty Commercial Segment $ 6,380 $ (1,899) Standard Commercial Segment (262) (1,361) Personal Segment 1,573 1,174 Total unfavorable (favorable) net prior year development $ 7,691 $ (2,086) The following describes the primary factors behind each segment’s prior accident year reserve development for the three months ended March 31, 2022 and 2021: Three months ended March 31, 2022: ● Specialty Commercial Segment. Our Commercial Auto business unit experienced net unfavorable development in the 2020 and 2019 accident years primarily in the exited contract binding commercial automobile liability line of business, partially offset by net favorable development in both the primary and excess commercial automobile lines of business in the 2021 accident year. Our E&S Property business unit experienced net unfavorable development due to the development of catastrophe-related losses in the 2021 and 2020 accident years. We experienced net unfavorable development in our E&S Casualty and Professional Liability business units. We experienced net favorable development in our and Aerospace & Programs business unit.. ● Standard Commercial Segment. Our Commercial Accounts business unit experienced net favorable development in our commercial auto liability and property lines of business in accident years 2021 and 2020, partially offset by net unfavorable development in the general liability lines of business in accident years 2019 and 2016. The run-off from our former Workers Compensation operating unit experienced net favorable development in the 2015 and prior accident years . ● Personal Segment. Net unfavorable development in our Specialty Personal Lines business unit was driven predominately by unfavorable development attributable to the 2021 and 2020 accident years due in part to rising inflationary trends, specifically loss costs, that the industry began experiencing in 2021. Three months ended March 31, 2021: ● Specialty Commercial Segment. Our Commercial Auto business unit experienced net favorable development in the 2020 and 2019 accident years both in the primary and excess commercial automobile liability lines of business, partially offset by net unfavorable development in the excess commercial automobile lines of business in the 2018, 2017 and 2016 accident years. Our E&S Casualty business unit experienced net unfavorable development primarily in our primary liability line of business in the 2018 and prior accident years, partially offset by net favorable development in the 2019 accident year. We experienced net favorable development in our E&S Property, Professional Liability and Aerospace & Programs business units . ● Standard Commercial Segment. Our Commercial Accounts business unit experienced net favorable development in our commercial property lines of business in accident year 2020, partially offset by net unfavorable development in the general liability lines of business in accident years 2020 and 2017. The run-off from our former Workers Compensation operating unit experienced net favorable development in the 2014 and prior accident years . ● Personal Segment. Net unfavorable development in our Specialty Personal Lines business unit was driven predominately by unfavorable development attributable to the 2020, 2019 and 2017 accident years . |
Share-based Payment Arrangement
Share-based Payment Arrangements | 3 Months Ended |
Mar. 31, 2022 | |
Share-Based Payment Arrangements [Abstract] | |
Share-Based Payment Arrangements | 7. Share-Based Payment Arrangements Our 2015 Long Term Incentive Plan (“2015 LTIP”) was approved by shareholders on May 29, 2015. There are 2,000,000 shares authorized for issuance under the 2015 LTIP. As of March 31, 2022, restricted stock units representing the right to receive up to 768,177 shares of our common stock were outstanding under the 2015 LTIP. There were no stock option awards granted under the 2015 LTIP as of March 31, 2022. Stock Options: There were no stock options outstanding at any point during the three months ended March 31, 2022. There were no stock options granted, exercised or forfeited during the three months ended March 31, 2022 or 2021, respectively. As of March 31, 2022, there was no unrecognized compensation cost related to non-vested stock options. Restricted Stock Units: Restricted stock units awarded under the 2015 LTIP represent the right to receive shares of common stock upon the satisfaction of vesting requirements, performance criteria and other terms and conditions. For grants issued prior to 2021, restricted stock units vest and shares of common stock become issuable on March 31 of the third calendar year following the year of grant if performance criteria have been satisfied. Restricted stock units awarded under the 2015 LTIP during 2021 cumulatively vest up to 50%, 80% and 100%, and shares of common stock become issuable, on March 31 of the third, fourth and fifth calendar years, respectively, following the year of grant if performance criteria have been satisified. The performance criteria for restricted stock units vary based on grantee. The number of shares of common stock to be received ranges from 50% to 150% of the number of restricted stock units granted based on the level of achievement of the performance criteria. Grantees of restricted stock units do not have any rights of a stockholder, and do not participate in any distributions to our common stockholders, until the award fully vests upon satisfaction of the vesting schedule, performance criteria and other conditions set forth in their award agreement. Therefore, unvested restricted stock units are not considered participating securities under ASC 260, “Earnings Per Share” (Topic 260), and are not included in the calculation of basic or diluted earnings per share. Compensation cost is measured as an amount equal to the fair value of the restricted stock units on the date of grant and is expensed over the vesting period if achievement of the performance criteria is deemed probable, with the amount of the expense recognized based on our best estimate of the ultimate achievement level. The grant date fair value of restricted stock units granted in 2018, 2019 and 2021 was $10.87, $18.10 and $4.21 per unit, respectively. We incurred compensation expense of $62 thousand and $97 thousand related to restricted stock units during the three months ended March 31, 2022 and 2021, respectively. We recorded income tax benefit of $13 thousand and $20 thousand related to restricted stock units during the three months ended March 31, 2022 and 2021, respectively. The following table details the status of our restricted stock units as of and for the three months ended March 31, 2022 and 2021. Number of Restricted Stock Units 2022 2021 Nonvested at January 1 581,689 228,827 Granted 8,313 — Vested (17,951) (28,874) Forfeited (59,933) (130,903) Nonvested at March 31 512,118 69,050 As of March 31, 2022, there was $1.9 million of unrecognized grant date compensation cost related to unvested restricted stock units assuming compensation cost accrual at target achievement level. Based on the current performance estimate, we expect to recognize $1.7 million of compensation cost related to unvested restricted stock units, of which $0.5 million is expected to be recognized during the remainder of 2022, $0.7 million in 2023, $0.4 million in 2024, $0.1 million in 2025 and $22 thousand in 2026. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2022 | |
Segment Information [Abstract] | |
Segment Information | 8. Segment Information The following is business segment information for the three months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, 2022 2021 Revenues Specialty Commercial Segment $ 51,911 $ 69,599 Standard Commercial Segment 17,128 17,688 Personal Segment 16,819 18,959 Corporate (186) 5,807 Consolidated $ 85,672 $ 112,053 Pre-tax (loss) income Specialty Commercial Segment $ 2,565 $ 11,348 Standard Commercial Segment (692) 366 Personal Segment (1,026) (1,623) Corporate (4,966) 1,136 Consolidated $ (4,119) $ 11,227 The following is additional business segment information as of the dates indicated (in thousands): March 31, December 31, Assets: 2022 2021 Specialty Commercial Segment $ 1,105,918 $ 1,163,947 Standard Commercial Segment 193,088 194,594 Personal Segment 125,340 128,165 Corporate 65,517 66,892 Consolidated $ 1,489,863 $ 1,553,598 |
Reinsurance
Reinsurance | 3 Months Ended |
Mar. 31, 2022 | |
Reinsurance [Abstract] | |
Reinsurance | 9. Reinsurance We reinsure a portion of the risk we underwrite in order to control the exposure to losses and to protect capital resources. We cede to reinsurers a portion of these risks and pay premiums based upon the risk and exposure of the policies subject to such reinsurance. Ceded reinsurance involves credit risk and is generally subject to aggregate loss limits. Although the reinsurer is liable to us to the extent of the reinsurance ceded, we are ultimately liable as the direct insurer on all risks reinsured. Reinsurance recoverables are reported after allowances for uncollectible amounts. We monitor the financial condition of reinsurers on an ongoing basis and review our reinsurance arrangements periodically. Reinsurers are selected based on their financial condition, business practices and the price of their product offerings. In order to mitigate credit risk to reinsurance companies, most of our reinsurance recoverable balance as of March 31, 2022 was with reinsurers that had an A.M. Best rating of “A-” or better. We also mitigate our credit risk for the remaining reinsurance recoverable by obtaining letters of credit. The following table shows earned premiums ceded and reinsurance loss recoveries by period (in thousands): Three Months Ended March 31, 2022 2021 Ceded earned premiums $ 76,425 $ 76,957 Reinsurance recoveries $ 66,581 $ 61,899 Loss Portfolio Transfer On July 16, 2020, AHIC, HIC, HSIC, HCM and HNIC (collectively, the “Hallmark Insurers”), entered into a Loss Portfolio Transfer Reinsurance Contract to be effective as of January 1, 2020 (the “LPT Contract”) with DARAG Bermuda Ltd. (“DARAG Bermuda”) and DARAG Insurance (Guernsey) Limited (“DARAG Guernsey” and, collectively, the “Reinsurers”). The LPT Contract was consummated on July 31, 2020. The Company recorded a $21.7 million pre-tax loss during the third quarter of 2020 attributable to the closing of the LPT Contract. Pursuant to the LPT Contract, (a) the Hallmark Insurers ceded to the Reinsurers all existing and future claims for losses occurring on or prior to December 31, 2019 on the binding primary commercial automobile liability insurance policies and the brokerage primary commercial automobile liability insurance policies issued by the Hallmark Insurers (the “Subject Business”) up to an aggregate limit of $240.0 million, with (i) the first layer of $151.2 million in reinsurance provided by DARAG Bermuda, (ii) the Hallmark Insurers retaining a loss corridor of the next $24.9 million in losses on the Subject Business, (iii) DARAG Bermuda reinsuring a second layer of $27.8 million above the first layer and the Hallmark Insurers’ loss corridor, and (iv) DARAG Guernsey reinsuring the top layer of $36.1 million in losses on the Subject Business, in each case net of third-party reinsurance and other recoveries; (b) the Hallmark Insurers will continue to manage and retain the benefit of other third-party reinsurance on the Subject Business; and (c) the Hallmark Insurers paid the Reinsurers a net reinsurance premium of $92.6 million. In connection with the closing, the parties also entered into a Services Agreement and a Trust Agreement. Pursuant to the Services Agreement, DARAG Bermuda assumed responsibility for certain administrative services, including claims handling, for the Subject Business. Pursuant to the Trust Agreement, the Reinsurers made initial cash deposits in the aggregate amount of $96.7 million into collateral trust accounts with The Bank of New York Mellon, as trustee, to be held as security for the Reinsurers’ obligations to the Hallmark Insurers under the LPT Contract. The Reinsurers and the Hallmark Insurers have agreed to submit to binding arbitration a dispute that has arisen regarding the rights and obligations of the parties under the LPT Contract. Pending resolution of the dispute, the Hallmark Insurers have agreed to fund the payment of claims under the LPT contract without prejudice to their right to seek reimbursement and other relief in the arbitration proceedings. (See Note 18.) As of March 31, 2022, our consolidated balance sheet included a $13.5 million account receivable from DARAG related to the Hallmark Insurers funding claim payments under the LPT contract pending resolution of the dispute. As of March 31, 2022, the ultimate incurred losses from the subject business were $243.6 million or $3.6 million in excess of the aggregate limit of $240.0 million. Our reinsurance recoverables of $545.3 million include $52.4 million related to the LPT Contract as of March 31, 2022. |
Subordinated Debt Securities
Subordinated Debt Securities | 3 Months Ended |
Mar. 31, 2022 | |
Subordinated Debt Securities [Abstract] | |
Subordinated Debt Securities | 10. Subordinated Debt Securities We issued trust preferred securities through Trust I and Trust II. These Delaware statutory trusts are sponsored and wholly-owned by Hallmark and each was created solely for the purpose of issuing the trust preferred securities. Each trust pays dividends on its preferred securities at the same rate each quarter as interest is paid on the junior subordinated debt securities. Under the terms of the junior subordinated debt securities, we pay interest only each quarter and the principal of each note at maturity. The subordinated debt securities of each trust are uncollateralized and do not require maintenance of minimum financial covenants. The following table summarizes the nature and terms of the junior subordinated debt and trust preferred securities: Hallmark Hallmark Statutory Statutory Trust I Trust II Issue date June 21, 2005 August 23, 2007 Principal amount of trust preferred securities $ 30,000 $ 25,000 Principal amount of junior subordinated debt securities $ 30,928 $ 25,774 Maturity date of junior subordinated debt securities June 15, 2035 September 15, 2037 Trust common stock $ 928 $ 774 Interest rate, per annum Three Month LIBOR + 3.25% Three Month LIBOR + 2.90% Current interest rate at March 31, 2022 4.08% 3.73% |
Senior Unsecured Notes
Senior Unsecured Notes | 3 Months Ended |
Mar. 31, 2022 | |
Senior Unsecured Notes [Abstract] | |
Senior Unsecured Notes | 11. Senior Unsecured Notes On August 19, 2019, Hallmark issued $50.0 million of senior unsecured notes (“Notes”) due August 15, 2029. Interest on the Notes accrues at the rate of 6.25% per annum and is payable semi-annually in arrears commencing February 15, 2020. The Notes are not obligations of or guaranteed by any of Hallmark’s subsidiaries and are not subject to any sinking fund requirements. At Hallmark’s option, the Notes are redeemable, in whole or in part, prior to the stated maturity subject to certain provisions intended to make the holders of the Notes whole on scheduled interest and principal payments. The indenture governing the Notes contains covenants which, among other things, restrict Hallmark’s ability to incur additional indebtedness, make certain payments, create liens on the stock of certain subsidiaries, dispose of certain assets, or merge or consolidate with other entities. The terms of the indenture prohibit payments or other distributions on any security of the Company that ranks junior to the Notes when the Company’s debt to capital ratio (as defined in the indenture) is greater than 35%. The Company’s debt to capital ratio was 38.3% as of March 31, 2022. |
Deferred Policy Acquisition Cos
Deferred Policy Acquisition Costs | 3 Months Ended |
Mar. 31, 2022 | |
Deferred Policy Acquisition Costs [Abstract] | |
Deferred Policy Acquisition Costs | 12. Deferred Policy Acquisition Costs The following table shows total deferred and amortized policy acquisition cost activity by period reported in operating expenses (in thousands): Three Months Ended March 31, 2022 2021 Deferred $ (24,325) $ (15,103) Amortized 24,289 16,557 Net $ (36) $ 1,454 |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings per Share [Abstract] | |
Earnings per Share | 13. Earnings per Share The following table sets forth basic and diluted weighted average shares outstanding for the periods indicated (in thousands): Three Months Ended March 31, 2022 2021 Weighted average shares - basic 18,172 18,142 Effect of dilutive securities — — Weighted average shares - assuming dilution 18,172 18,142 We had no shares of common stock potentially issuable upon exercise of employee stock options for the three months ended March 31, 2022. For the three months ended March 31, 2021, we had 14,157 shares of common stock potentially issuable upon the exercise of employee stock options which were excluded from the weighted average number of shares outstanding on a diluted basis because the effect of such options would be anti-dilutive. These instruments, to the extent not previously cancelled or exercised, expired in 2021. |
Net Periodic Pension Cost
Net Periodic Pension Cost | 3 Months Ended |
Mar. 31, 2022 | |
Net Periodic Pension Cost [Abstract] | |
Net Periodic Pension Cost | 14. Net Periodic Pension Cost The following table details the net periodic pension cost incurred by period (in thousands): Three Months Ended March 31, 2022 2021 Interest cost $ 75 $ 68 Amortization of net loss 27 43 Expected return on plan assets (191) (177) Net periodic pension cost $ (89) $ (66) Contributed amount $ — $ — |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Taxes [Abstract] | |
Income Taxes | 15. Income Taxes Our effective income tax rate for the three months ended March 31, 2022 and 2021 was 21.8% and 20.1%, respectively. The effective tax rates for the three months ended March 31, 2022 and 2021 varied from the statutory tax rates primarily due to tax exempt interest. We concluded that no valuation allowance was necessary against our deferred tax assets as of March 31, 2022 and December 31, 2021. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 3 Months Ended |
Mar. 31, 2022 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | 16. Supplemental Cash Flow Information The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheet to the total of the same such amounts shown in the statement of cash flows (in thousands): As of March 31, 2022 2021 Cash and cash equivalents $ 183,377 $ 281,849 Restricted cash 4,239 5,434 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 187,616 $ 287,283 Restricted cash represents amounts required to be set aside by a contractual agreement with a third-party insurer and amounts pledged for the benefit of various state insurance departments. The following table provides supplemental cash flow information for the three months ended March 31, 2022 and 2021: Three Months Ended March 31, 2022 2021 Interest paid $ 1,577 $ 1,576 Supplemental schedule of non-cash investing activities: Receivable for securities related to investment disposals $ 1,209 $ 1,382 Payable for securities related to investment purchases $ 2,374 $ 10,979 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 17. Commitments and Contingencies The Reinsurers and the Hallmark Insurers have agreed to submit to binding arbitration a dispute that has arisen regarding the rights and obligations of the parties under the LPT Contract. (See Note 10.) Pending resolution of the dispute, the Hallmark Insurers have agreed to fund the payment of claims under the LPT Contract without prejudice to their right to seek reimbursement and other relief in the arbitration proceedings. The arbitration panel has not yet been constituted and no pleadings have been submitted. However, based on prior negotiations, the Company expects the Reinsurers to seek rescission of the LPT Contract on the basis of alleged breach and fraudulent inducement by the Hallmark Insurers. The Company believes any such claims are without factual basis or legal merit and intends to vigorously contest the matter. The Company also intends to pursue an arbitration award enforcing the terms of the LPT Contract and reimbursing the Hallmark Insurers for all claim amounts funded by them during the pendency of the arbitration, as well as all other damages sustained by the Hallmark Insurers. The arbitration panel is currently being constituted, and no pleadings have yet been submitted. Because the dispute is at an initial stage, we are unable at this time to provide an evaluation of the likelihood of an adverse outcome. As of March 31, 2022 we were engaged in various legal proceedings in the ordinary course of business, none of which, either individually or in the aggregate, are believed likely to have a material adverse effect on our consolidated financial position or results of operations, in the opinion of management. The various legal proceedings to which we were a party are routine in nature and incidental to our business. From time to time, assessments are levied on us by the guaranty association of the states where we offer our insurance products. Such assessments are made primarily to cover the losses of policyholders of insolvent or rehabilitated insurers. Since these assessments can generally be recovered through a reduction in future premium taxes paid, we capitalize the assessments that can be recovered as they are paid and amortize the capitalized balance against our premium tax expense. We did no t pay an assessment during the first three months of 2022 or 2021. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive (Loss) Income Balances | 3 Months Ended |
Mar. 31, 2022 | |
Changes in Accumulated Other Comprehensive (Loss) Income Balances [Abstract] | |
Changes in Accumulated Other Comprehensive (Loss) Income Balances | 18. Changes in Accumulated Other Comprehensive (Loss) Income Balances The changes in accumulated other comprehensive (loss) income balances as of March 31, 2022 and 2021 were as follows (in thousands): Accumulated Other Pension Unrealized Comprehensive Liability Gains (Loss) Income (Loss) Balance at January 1, 2021 $ (3,762) $ 4,145 $ 383 Other comprehensive loss: Change in net actuarial gain 43 — 43 Tax effect on change in net actuarial gain (9) — (9) Unrealized holding losses arising during the period — 585 585 Tax effect on unrealized holdings losses arising during the period — (123) (123) Reclassification adjustment for gains included in net income — (1,403) (1,403) Tax effect on reclassification adjustment for gains included in net income — 295 295 Other comprehensive loss, net of tax 34 (646) (612) Balance at March 31, 2021 $ (3,728) $ 3,499 $ (229) Balance at January 1, 2022 $ (2,641) $ 1,606 $ (1,035) Other comprehensive income: Change in net actuarial gain 27 — 27 Tax effect on change in net actuarial gain (6) — (6) Unrealized holding gains arising during the period — (3,081) (3,081) Tax effect on unrealized holding gains arising during the period — 647 647 Reclassification adjustment for gains included in net income — (146) (146) Tax effect on reclassification adjustment for gains included in net income — 31 31 Other comprehensive loss, net of tax 21 (2,549) (2,528) Balance at March 31, 2022 $ (2,620) $ (943) $ (3,563) |
Leases
Leases | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Leases | 19. Leases Right-of-use assets are included in the other assets line item and lease liabilities are included in the other liabilities line item of the consolidated balance sheet. We determine if a contract contains a lease at inception and recognize operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments at the commencement date. Since our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Lease agreements have lease and non-lease components, which are accounted for as a single lease component. Lease expense is recognized on a straight-line basis over the lease term. The Company’s operating lease obligations predominately pertain to office leases utilized in the operation of our business. Our leases have remaining terms of one Three Months Ended Three Months Ended March 31, March 31, 2022 2021 Operating lease cost $ 673 $ 719 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 547 $ 545 Right-of-use assets obtained in exchange for new operating lease liabilities $ — $ — Other lease information as of March 31, 2022 and December 31, 2021 are as follows (in thousands): March 31, December 31, 2022 2021 Operating lease right-of-use assets $ 13,495 $ 13,211 Operating lease liabilities $ 15,455 $ 15,062 Weighted-average remaining lease term - operating leases 11.0 11.4 Weighted-average discount rate - operating leases 6.22% 6.22% We incurred $0.1 million in short-term lease payments not included in our lease liability during the three months ended March 31, 2022. Future minimum lease payments under non-cancellable leases as of March 31, 2022 and December 31, 2021 were as follows (in thousands): March 31, December 31, 2022 2021 2022 $ 1,772 $ 2,171 2023 2,224 2,023 2024 2,421 2,216 2025 2,537 2,450 2026 2,497 2,497 Thereafter 15,767 15,767 Total future minimum lease payments $ 27,218 $ 27,124 Less imputed interest $ (11,763) $ (12,062) Total operating lease liability $ 15,455 $ 15,062 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Basis of Presentation [Abstract] | |
Use of Estimates in the Preparation of the Financial Statements | Use of Estimates in the Preparation of the Financial Statements Our preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the date of our consolidated financial statements, as well as our reported amounts of revenues and expenses during the reporting period. Refer to “Critical Accounting Estimates and Judgments” under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021 for information on accounting policies that we consider critical in preparing our consolidated financial statements. Actual results could differ materially from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value estimates are made at a point in time based on relevant market data as well as the best information available about the financial instruments. Fair value estimates for financial instruments for which no or limited observable market data is available are based on judgments regarding current economic conditions, credit and interest rate risk. These estimates involve significant uncertainties and judgments and cannot be determined with precision. As a result, such calculated fair value estimates may not be realizable in a current sale or immediate settlement of the instrument. In addition, changes in the underlying assumptions used in the fair value measurement technique, including discount rate and estimates of future cash flows, could significantly affect these fair value estimates. Cash and Cash Equivalents Restricted Cash Senior Unsecured Notes Due 2029 Subordinated Debt Securities For accounts receivable, reinsurance balances, premiums receivable, federal income tax recoverable and other assets, the carrying amounts are held at net realizable value which approximates fair value because of the short maturity of such financial instruments. |
Variable Interest Entities | Variable Interest Entities On June 21, 2005, we formed Hallmark Statutory Trust I (“Trust I”), an unconsolidated trust subsidiary, for the sole purpose of issuing $30.0 million in trust preferred securities. Trust I used the proceeds from the sale of these securities and our initial capital contribution to purchase $30.9 million of subordinated debt securities from Hallmark. The debt securities are the sole assets of Trust I, and the payments under the debt securities are the sole revenues of Trust I. On August 23, 2007, we formed Hallmark Statutory Trust II (“Trust II”), an unconsolidated trust subsidiary, for the sole purpose of issuing $25.0 million in trust preferred securities. Trust II used the proceeds from the sale of these securities and our initial capital contribution to purchase $25.8 million of subordinated debt securities from Hallmark. The debt securities are the sole assets of Trust II, and the payments under the debt securities are the sole revenues of Trust II. We evaluate on an ongoing basis our investments in Trust I and Trust II (collectively the “Trusts”) and have determined that we do not have a variable interest in the Trusts. Therefore, the Trusts are not included in our consolidated financial statements. |
Income Taxes | Income Taxes We file a consolidated federal income tax return. Deferred federal income taxes reflect the future tax consequences of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year end. Deferred taxes are recognized using the liability method, whereby tax rates are applied to cumulative temporary differences based on when and how they are expected to affect the tax return. Deferred tax assets and liabilities are adjusted for tax rate changes in effect for the year in which these temporary differences are expected to be recovered or settled. Net deferred tax assets are held at their net realizable value and an allowance is taken as needed. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. There were no uncertain tax positions at March 31, 2022. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform ("ASU 2020-04"). ASU 2020-04 provides optional guidance for a limited period of time to ease potential accounting impact associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate ("LIBOR"). The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The amendments in ASU 2020-04 could be adopted as of March 12, 2020 and are effective through December 31, 2022. We do not currently have any contracts that have been changed to a new reference rate and do not expect the adoption of this guidance to have a material effect on the Company’s results of operations, financial position or liquidity. In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (Topic 326). ASU 2016-13 requires organizations to estimate credit losses on certain types of financial instruments, including receivables and available-for-sale debt securities, by introducing an approach based on expected losses. The expected loss approach will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. As a smaller reporting company, ASU 2016-13 is effective for fiscal years of the Company beginning after December 15, 2022, including interim periods within those fiscal years. ASU 2016-13 requires a modified retrospective transition method and early adoption is permitted. We are currently evaluating the impact that the adoption of this standard will have on our financial results and disclosures, but do not anticipate that any potential impact would be material. |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value [Abstract] | |
Fair Value, Assets Measured on Recurring Basis | The following table presents, for each of the fair value hierarchy levels, assets that are measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021 (in thousands): As of March 31, 2022 Quoted Prices in Active Markets for Identical Assets Other Observable Unobservable (Level 1) Inputs (Level 2) Inputs (Level 3) Total U.S. Treasury securities and obligations of U.S. Government $ — $ 42,483 $ — $ 42,483 Corporate bonds — 222,120 — 222,120 Corporate bank loans — 80,018 — 80,018 Municipal bonds — 41,889 — 41,889 Mortgage-backed — 1,744 — 1,744 Total debt securities — 388,254 — 388,254 Total equity securities 52,604 — — 52,604 Total investments $ 52,604 $ 388,254 $ — $ 440,858 As of December 31, 2021 Quoted Prices in Active Markets for Identical Assets Other Observable Unobservable (Level 1) Inputs (Level 2) Inputs (Level 3) Total U.S. Treasury securities and obligations of U.S. Government $ — $ 62,984 $ — $ 62,984 Corporate bonds — 105,234 347 105,581 Corporate bank loans — 81,189 — 81,189 Municipal bonds — 38,464 — 38,464 Mortgage-backed — 1,855 — 1,855 Total debt securities — 289,726 347 290,073 Total equity securities 48,695 — — 48,695 Total investments $ 48,695 $ 289,726 $ 347 $ 338,768 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following table summarizes the changes in fair value for all financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2022 and 2021 (in thousands): Beginning balance as of January 1, 2022 $ 347 Sales — Settlements (347) Purchases — Issuances — Total realized/unrealized losses included in net income — Net gain included in other comprehensive income — Transfers into Level 3 — Transfers out of Level 3 — Ending balance as of March 31, 2022 $ — Beginning balance as of January 1, 2021 $ 347 Sales — Settlements — Purchases — Issuances — Total realized/unrealized gains included in net loss — Net gains included in other comprehensive loss 7 Transfers into Level 3 — Transfers out of Level 3 — Ending balance as of March 31, 2021 $ 354 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Investments [Abstract] | |
Amortized Cost/Carrying Value and Estimated Fair Value of Investments in Debt and Equity Securities by Category | The amortized cost/carrying value and estimated fair value of investments in debt and equity securities by category is as follows (in thousands): Gross Gross Amortized Cost/ Unrealized Unrealized Carrying Value Gains Losses Fair Value As of March 31, 2022 U.S. Treasury securities and obligations of U.S. Government $ 43,175 $ - $ (692) $ 42,483 Corporate bonds 221,775 1,454 (1,109) 222,120 Corporate bank loans 81,024 9 (1,015) 80,018 Municipal bonds 41,862 144 (117) 41,889 Mortgage-backed 1,746 11 (13) 1,744 Total debt securities 389,582 1,618 (2,946) 388,254 Total equity securities 46,125 9,833 (3,354) 52,604 Total investments $ 435,707 $ 11,451 $ (6,300) $ 440,858 Gross Gross Amortized Cost/ Unrealized Unrealized As of December 31, 2021 Carrying Value Gains Losses Fair Value U.S. Treasury securities and obligations of U.S. Government $ 63,098 $ 56 $ (170) $ 62,984 Corporate bonds 103,515 2,115 (49) 105,581 Corporate bank loans 81,570 84 (465) 81,189 Municipal bonds 38,162 372 (70) 38,464 Mortgage-backed 1,830 29 (4) 1,855 Total debt securities 288,175 2,656 (758) 290,073 Total equity securities 42,120 9,355 (2,780) 48,695 Total investments $ 330,295 $ 12,011 $ (3,538) $ 338,768 |
Major Categories of Net Investment Gains (Losses) on Investments | Major categories of net investment gains (losses) on investments are summarized as follows (in thousands): Three Months Ended March 31, 2022 2021 Corporate bonds $ 12 $ 197 Corporate bank loans 5 51 Municipal bonds — (9) Equity securities 129 1,164 Gain on investments 146 1,403 Unrealized (losses) gain on equity investments (95) 4,376 Investment gains, net $ 51 $ 5,779 |
Summary of Gross Unrealized Loss Position | The following schedules summarize the gross unrealized losses showing the length of time that investments have been continuously in an unrealized loss position as of March 31, 2022 and December 31, 2021 (in thousands): As of March 31, 2022 12 months or less Longer than 12 months Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses U.S. Treasury securities and obligations of U.S. Government $ 42,483 $ (692) $ — $ — $ 42,483 $ (692) Corporate bonds 130,766 (1,089) 1,149 (20) 131,915 (1,109) Corporate bank loans 45,991 (480) 28,458 (535) 74,449 (1,015) Municipal bonds 9,149 (106) 838 (11) 9,987 (117) Mortgage-backed 1,669 (8) 9 (5) 1,678 (13) Total debt securities 230,058 (2,375) 30,454 (571) 260,512 (2,946) Total equity securities 14,165 (1,484) 3,922 (1,870) 18,087 (3,354) Total investments $ 244,223 $ (3,859) $ 34,376 $ (2,441) $ 278,599 $ (6,300) As of December 31, 2021 12 months or less Longer than 12 months Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses U.S. Treasury securities and obligations of U.S. Government $ 43,273 $ (170) $ — $ — $ 43,273 $ (170) Corporate bonds - - 2,245 (49) 2,245 (49) Corporate bank loans 42,256 (177) 16,763 (288) 59,019 (465) Municipal bonds 3,321 (58) 1,038 (12) 4,359 (70) Mortgage-backed - - 10 (4) 10 (4) Total debt securities 88,850 (405) 20,056 (353) 108,906 (758) Total equity securities 6,221 (710) 5,055 (2,070) 11,276 (2,780) Total investments $ 95,071 $ (1,115) $ 25,111 $ (2,423) $ 120,182 $ (3,538) |
Schedule of Amortized Cost and Estimated Fair Value of Debt Securities by Contractual Maturities | Amortized Cost Fair Value (in thousands) Due in one year or less $ 98,318 $ 98,804 Due after one year through five years 222,617 221,341 Due after five years through ten years 59,833 59,300 Due after ten years 7,068 7,065 Mortgage-backed 1,746 1,744 $ 389,582 $ 388,254 |
Reserves for Unpaid Losses an_2
Reserves for Unpaid Losses and Loss Adjustment Expenses (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Reserves for Unpaid Losses and Loss Adjustment Expenses [Abstract] | |
Summary of Activity in the Reserves for Unpaid Losses and Loss Adjustment Expense | Year to-date activity in the consolidated reserves for unpaid losses and LAE is summarized as follows (in thousands): March 31, March 31, 2022 2021 Balance at January 1 $ 816,681 $ 789,768 Less reinsurance recoverable 387,915 357,200 Net balance at January 1 428,766 432,568 Incurred related to: Current year 56,333 71,565 Prior years 7,691 (2,086) Total incurred 64,024 69,479 Paid related to: Current year 12,757 7,067 Prior years 62,213 52,360 Total paid 74,970 59,427 Net balance at March 31 417,820 442,620 Plus reinsurance recoverable 380,518 369,652 Balance at March 31 $ 798,338 $ 812,272 |
Impact of Net Prior Years Loss Development On Each Reporting Segment | The year to date impact from the unfavorable (favorable) net prior years’ loss development on each reporting segment is presented below: March 31, 2022 2021 Specialty Commercial Segment $ 6,380 $ (1,899) Standard Commercial Segment (262) (1,361) Personal Segment 1,573 1,174 Total unfavorable (favorable) net prior year development $ 7,691 $ (2,086) |
Share-Based Payment Arrangeme_2
Share-Based Payment Arrangements (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Share-Based Payment Arrangements [Abstract] | |
Summary of the Status of Restricted Stock Units | The following table details the status of our restricted stock units as of and for the three months ended March 31, 2022 and 2021. Number of Restricted Stock Units 2022 2021 Nonvested at January 1 581,689 228,827 Granted 8,313 — Vested (17,951) (28,874) Forfeited (59,933) (130,903) Nonvested at March 31 512,118 69,050 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Segment Information [Abstract] | |
Schedule of Business Segment Information | The following is business segment information for the three months ended March 31, 2022 and 2021 (in thousands): Three Months Ended March 31, 2022 2021 Revenues Specialty Commercial Segment $ 51,911 $ 69,599 Standard Commercial Segment 17,128 17,688 Personal Segment 16,819 18,959 Corporate (186) 5,807 Consolidated $ 85,672 $ 112,053 Pre-tax (loss) income Specialty Commercial Segment $ 2,565 $ 11,348 Standard Commercial Segment (692) 366 Personal Segment (1,026) (1,623) Corporate (4,966) 1,136 Consolidated $ (4,119) $ 11,227 |
Schedule of Additional Business Segment Information | The following is additional business segment information as of the dates indicated (in thousands): March 31, December 31, Assets: 2022 2021 Specialty Commercial Segment $ 1,105,918 $ 1,163,947 Standard Commercial Segment 193,088 194,594 Personal Segment 125,340 128,165 Corporate 65,517 66,892 Consolidated $ 1,489,863 $ 1,553,598 |
Reinsurance (Tables)
Reinsurance (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Reinsurance [Abstract] | |
Schedule of Reinsurance Ceded and Recoveries | The following table shows earned premiums ceded and reinsurance loss recoveries by period (in thousands): Three Months Ended March 31, 2022 2021 Ceded earned premiums $ 76,425 $ 76,957 Reinsurance recoveries $ 66,581 $ 61,899 |
Subordinated Debt Securities (T
Subordinated Debt Securities (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Subordinated Debt Securities [Abstract] | |
Summary of the nature and terms of the junior subordinated debt and trust preferred securities | The following table summarizes the nature and terms of the junior subordinated debt and trust preferred securities: Hallmark Hallmark Statutory Statutory Trust I Trust II Issue date June 21, 2005 August 23, 2007 Principal amount of trust preferred securities $ 30,000 $ 25,000 Principal amount of junior subordinated debt securities $ 30,928 $ 25,774 Maturity date of junior subordinated debt securities June 15, 2035 September 15, 2037 Trust common stock $ 928 $ 774 Interest rate, per annum Three Month LIBOR + 3.25% Three Month LIBOR + 2.90% Current interest rate at March 31, 2022 4.08% 3.73% |
Deferred Policy Acquisition C_2
Deferred Policy Acquisition Costs (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Deferred Policy Acquisition Costs [Abstract] | |
Deferred Amortized Policy Acquisition Costs | The following table shows total deferred and amortized policy acquisition cost activity by period reported in operating expenses (in thousands): Three Months Ended March 31, 2022 2021 Deferred $ (24,325) $ (15,103) Amortized 24,289 16,557 Net $ (36) $ 1,454 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings per Share [Abstract] | |
Schedule of Weighted Average Number of Shares Outstanding | The following table sets forth basic and diluted weighted average shares outstanding for the periods indicated (in thousands): Three Months Ended March 31, 2022 2021 Weighted average shares - basic 18,172 18,142 Effect of dilutive securities — — Weighted average shares - assuming dilution 18,172 18,142 |
Net Periodic Pension Cost (Tabl
Net Periodic Pension Cost (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Net Periodic Pension Cost [Abstract] | |
Schedule of Net Benefit Costs | The following table details the net periodic pension cost incurred by period (in thousands): Three Months Ended March 31, 2022 2021 Interest cost $ 75 $ 68 Amortization of net loss 27 43 Expected return on plan assets (191) (177) Net periodic pension cost $ (89) $ (66) Contributed amount $ — $ — |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Supplemental Cash Flow Information [Abstract] | |
Reconciliation of Cash, Cash Equivalents and Restricted Cash in Balance Sheet to Cash Flows | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheet to the total of the same such amounts shown in the statement of cash flows (in thousands): As of March 31, 2022 2021 Cash and cash equivalents $ 183,377 $ 281,849 Restricted cash 4,239 5,434 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 187,616 $ 287,283 |
Supplemental cash flow information | The following table provides supplemental cash flow information for the three months ended March 31, 2022 and 2021: Three Months Ended March 31, 2022 2021 Interest paid $ 1,577 $ 1,576 Supplemental schedule of non-cash investing activities: Receivable for securities related to investment disposals $ 1,209 $ 1,382 Payable for securities related to investment purchases $ 2,374 $ 10,979 |
Changes in Accumulated Other _2
Changes in Accumulated Other Comprehensive (Loss) Income Balances (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Changes in Accumulated Other Comprehensive (Loss) Income Balances [Abstract] | |
Schedule of Changes in Accumulated Other Comprehensive (Loss) Income | The changes in accumulated other comprehensive (loss) income balances as of March 31, 2022 and 2021 were as follows (in thousands): Accumulated Other Pension Unrealized Comprehensive Liability Gains (Loss) Income (Loss) Balance at January 1, 2021 $ (3,762) $ 4,145 $ 383 Other comprehensive loss: Change in net actuarial gain 43 — 43 Tax effect on change in net actuarial gain (9) — (9) Unrealized holding losses arising during the period — 585 585 Tax effect on unrealized holdings losses arising during the period — (123) (123) Reclassification adjustment for gains included in net income — (1,403) (1,403) Tax effect on reclassification adjustment for gains included in net income — 295 295 Other comprehensive loss, net of tax 34 (646) (612) Balance at March 31, 2021 $ (3,728) $ 3,499 $ (229) Balance at January 1, 2022 $ (2,641) $ 1,606 $ (1,035) Other comprehensive income: Change in net actuarial gain 27 — 27 Tax effect on change in net actuarial gain (6) — (6) Unrealized holding gains arising during the period — (3,081) (3,081) Tax effect on unrealized holding gains arising during the period — 647 647 Reclassification adjustment for gains included in net income — (146) (146) Tax effect on reclassification adjustment for gains included in net income — 31 31 Other comprehensive loss, net of tax 21 (2,549) (2,528) Balance at March 31, 2022 $ (2,620) $ (943) $ (3,563) |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Summary of components of lease expense and other lease information | Three Months Ended Three Months Ended March 31, March 31, 2022 2021 Operating lease cost $ 673 $ 719 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 547 $ 545 Right-of-use assets obtained in exchange for new operating lease liabilities $ — $ — |
Summary of balance sheet components | Other lease information as of March 31, 2022 and December 31, 2021 are as follows (in thousands): March 31, December 31, 2022 2021 Operating lease right-of-use assets $ 13,495 $ 13,211 Operating lease liabilities $ 15,455 $ 15,062 Weighted-average remaining lease term - operating leases 11.0 11.4 Weighted-average discount rate - operating leases 6.22% 6.22% |
Summary of future minimum lease payments under non-cancellable leases | Future minimum lease payments under non-cancellable leases as of March 31, 2022 and December 31, 2021 were as follows (in thousands): March 31, December 31, 2022 2021 2022 $ 1,772 $ 2,171 2023 2,224 2,023 2024 2,421 2,216 2025 2,537 2,450 2026 2,497 2,497 Thereafter 15,767 15,767 Total future minimum lease payments $ 27,218 $ 27,124 Less imputed interest $ (11,763) $ (12,062) Total operating lease liability $ 15,455 $ 15,062 |
General (Narrative) (Details)
General (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2022segment | |
General [Abstract] | |
Number of reportable segments | 3 |
Basis of Presentation (Narrativ
Basis of Presentation (Narrative) (Details) - USD ($) $ in Thousands | Aug. 23, 2007 | Jun. 21, 2005 | Mar. 31, 2022 | Dec. 31, 2021 |
Variable Interest Entity [Line Items] | ||||
Senior unsecured notes due 2029, carrying value | $ 49,279 | $ 49,254 | ||
Hallmark Statutory Trust I [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Proceeds from issuance of trust preferred securities | $ 30,000 | |||
Hallmark Statutory Trust I I [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Proceeds from issuance of trust preferred securities | $ 25,000 | |||
Senior unsecured notes due 2029 [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Senior unsecured notes due 2029, carrying value | 49,300 | |||
Senior unsecured notes due 2029, fair value | 48,300 | |||
Subordinated Debt [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Trust preferred securities, carrying value | 56,000 | |||
Trust preferred securities, fair value | $ 30,600 | |||
Subordinated Debt [Member] | Hallmark Statutory Trust I [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Payments to acquire trust preferred investments | $ 30,900 | |||
Subordinated Debt [Member] | Hallmark Statutory Trust I I [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Payments to acquire trust preferred investments | $ 25,800 |
Fair Value (Narrative) (Details
Fair Value (Narrative) (Details) | 12 Months Ended |
Dec. 31, 2021security | |
Fair Value [Abstract] | |
Available-For-Sale Securities, Number Of Debt Securities With Unobservable Inputs | 1 |
Fair Value (Fair Value of Asset
Fair Value (Fair Value of Assets Measured on a Recurring Basis) (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | $ 388,254 | $ 290,073 |
Total equity securities | 52,604 | 48,695 |
Total investments | 440,858 | 338,768 |
Equity Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total equity securities | 52,604 | 48,695 |
Collateralized Mortgage Backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 1,744 | |
Fair Value, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 388,254 | 290,073 |
Total investments | 440,858 | 338,768 |
Fair Value, Recurring [Member] | Equity Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total equity securities | 52,604 | 48,695 |
Fair Value, Recurring [Member] | U.S. Treasury securities and obligations of U.S. Government [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 42,483 | 62,984 |
Fair Value, Recurring [Member] | Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 222,120 | 105,581 |
Fair Value, Recurring [Member] | Corporate bank loans [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 80,018 | 81,189 |
Fair Value, Recurring [Member] | Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 41,889 | 38,464 |
Fair Value, Recurring [Member] | Collateralized Mortgage Backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 1,744 | 1,855 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Total investments | 52,604 | 48,695 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Equity Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total equity securities | 52,604 | 48,695 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | U.S. Treasury securities and obligations of U.S. Government [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Corporate bank loans [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Collateralized Mortgage Backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 388,254 | 289,726 |
Total investments | 388,254 | 289,726 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Equity Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total equity securities | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | U.S. Treasury securities and obligations of U.S. Government [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 42,483 | 62,984 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 222,120 | 105,234 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Corporate bank loans [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 80,018 | 81,189 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 41,889 | 38,464 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Collateralized Mortgage Backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 1,744 | 1,855 |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 347 |
Total investments | 0 | 347 |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Equity Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total equity securities | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | U.S. Treasury securities and obligations of U.S. Government [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Corporate Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 347 |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Corporate bank loans [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Municipal Bonds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Collateralized Mortgage Backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | $ 0 | $ 0 |
Fair Value (Fair Value, Assets
Fair Value (Fair Value, Assets Measured on Recurring Basis Using Significant Unobservable Inputs (Level 3)) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 347 | $ 347 |
Sales | 0 | 0 |
Settlements | 347 | 0 |
Purchases | 0 | 0 |
Issuances | 0 | 0 |
Total realized/unrealized loss (gains) included in net income (loss) | 0 | 0 |
Net gain included in other comprehensive income | 0 | 7 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Ending balance | $ 0 | $ 354 |
Investments (Narrative) (Detail
Investments (Narrative) (Details) | 3 Months Ended | ||
Mar. 31, 2022USD ($)security | Mar. 31, 2021USD ($) | Dec. 31, 2021security | |
Schedule of Available-for-sale Securities [Line Items] | |||
Gross gains on investments | $ 152,000 | $ 1,500,000 | |
Gross losses on investments | 6,000 | 100,000 | |
Proceeds from sale of investment securities | 500,000 | 1,200,000 | |
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract] | |||
Other-than-temporary impairment | 0 | 0 | |
Debt Securities, Available-for-sale, Realized Gain (Loss), Excluding Other-than-temporary Impairment | $ 0 | $ 0 | |
Debt Securities [Member] | |||
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract] | |||
Number of debt securities with unrealized loss | security | 197 | 100 | |
Number of debt securities with unrealized loss, less than 12 months | security | 164 | 74 | |
Number of debt securities with unrealized loss, greater than 12 months | security | 33 | 26 |
Investments (Amortized Cost & C
Investments (Amortized Cost & Carrying Value and Estimated Fair Value of Investments in Debt and Equity Securities by Category) (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost/ Carrying Value | $ 389,582 | $ 288,175 |
Fair Value | 388,254 | 290,073 |
Equity Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Equity securities, Amortized Cost/ Carrying Value | 46,125 | 42,120 |
Total equity securities | 52,604 | 48,695 |
Investments, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Investments, Amortized Cost/ Carrying Value | 435,707 | 330,295 |
Investments, Gross Unrealized Gains | 11,451 | 12,011 |
Investments, Gross Unrealized Losses | (6,300) | (3,538) |
Investments, Fair value | 440,858 | 338,768 |
Collateralized Mortgage Backed Securities [Member] | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost/ Carrying Value | 1,746 | |
Fair Value | 1,744 | |
Debt Securities [Member] | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost/ Carrying Value | 389,582 | 288,175 |
Gross Unrealized Gain | 1,618 | 2,656 |
Gross Unrealized Loss | (2,946) | (758) |
Fair Value | 388,254 | 290,073 |
Debt Securities [Member] | U.S. Treasury securities and obligations of U.S. Government [Member] | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost/ Carrying Value | 43,175 | 63,098 |
Gross Unrealized Gain | 0 | 56 |
Gross Unrealized Loss | (692) | (170) |
Fair Value | 42,483 | 62,984 |
Debt Securities [Member] | Corporate Bonds [Member] | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost/ Carrying Value | 221,775 | 103,515 |
Gross Unrealized Gain | 1,454 | 2,115 |
Gross Unrealized Loss | (1,109) | (49) |
Fair Value | 222,120 | 105,581 |
Debt Securities [Member] | Corporate bank loans [Member] | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost/ Carrying Value | 81,024 | 81,570 |
Gross Unrealized Gain | 9 | 84 |
Gross Unrealized Loss | (1,015) | (465) |
Fair Value | 80,018 | 81,189 |
Debt Securities [Member] | Municipal Bonds [Member] | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost/ Carrying Value | 41,862 | 38,162 |
Gross Unrealized Gain | 144 | 372 |
Gross Unrealized Loss | (117) | (70) |
Fair Value | 41,889 | 38,464 |
Debt Securities [Member] | Collateralized Mortgage Backed Securities [Member] | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost/ Carrying Value | 1,746 | 1,830 |
Gross Unrealized Gain | 11 | 29 |
Gross Unrealized Loss | (13) | (4) |
Fair Value | 1,744 | 1,855 |
Equity Securities [Member] | ||
Equity Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Equity securities, Amortized Cost/ Carrying Value | 46,125 | 42,120 |
Equity Securities, Gross Unrealized Gains | 9,833 | 9,355 |
Equity Securities, Gross Unrealized Losses | (3,354) | (2,780) |
Total equity securities | $ 52,604 | $ 48,695 |
Investments (Major Categories o
Investments (Major Categories of Net Investment Gains (Losses) on Investments) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Gain (Loss) on Securities [Line Items] | ||
Gain on investments | $ 146 | $ 1,403 |
Unrealized (losses) gain on equity investments | (95) | 4,376 |
Investment gains, net | 51 | 5,779 |
Equity Securities [Member] | ||
Gain (Loss) on Securities [Line Items] | ||
Gain on equity securities | 129 | 1,164 |
Corporate Bonds [Member] | Debt Securities [Member] | ||
Gain (Loss) on Securities [Line Items] | ||
Gain (loss) on debt securities | 12 | 197 |
Corporate bank loans [Member] | Debt Securities [Member] | ||
Gain (Loss) on Securities [Line Items] | ||
Gain (loss) on debt securities | 5 | 51 |
Municipal Bonds [Member] | Debt Securities [Member] | ||
Gain (Loss) on Securities [Line Items] | ||
Gain (loss) on debt securities | $ 0 | $ (9) |
Investments (Summary of Gross U
Investments (Summary of Gross Unrealized Gain (Loss) on Investments) (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Investments, Unrealized Loss Position, Fair Value | ||
Investments, Fair Value 12 months or less | $ 244,223 | $ 95,071 |
Investments, Fair Value Longer than 12 months | 34,376 | 25,111 |
Investments, Total Fair Value | 278,599 | 120,182 |
Investments, Unrealized Losses | ||
Investments, Unrealized Losses 12 months or less | (3,859) | (1,115) |
Investments, Unrealized Losses Longer than 12 months | (2,441) | (2,423) |
Investments, Total Unrealized Losses | (6,300) | (3,538) |
Debt Securities [Member] | ||
Debt Securities, Unrealized Loss Position, Fair Value | ||
Debt securities, Fair Value 12 months or less | 230,058 | 88,850 |
Debt securities, Fair Value Longer than 12 months | 30,454 | 20,056 |
Debt securities, Total Fair Value | 260,512 | 108,906 |
Debt securities, Unrealized Losses | ||
Debt securities, Unrealized Losses 12 months or less | (2,375) | (405) |
Debt securities, Unrealized Losses Longer than 12 months | (571) | (353) |
Debt securities, Total Unrealized Losses | 2,946 | 758 |
Debt Securities [Member] | U.S. Treasury securities and obligations of U.S. Government [Member] | ||
Debt Securities, Unrealized Loss Position, Fair Value | ||
Debt securities, Fair Value 12 months or less | 42,483 | 43,273 |
Debt securities, Fair Value Longer than 12 months | 0 | 0 |
Debt securities, Total Fair Value | 42,483 | 43,273 |
Debt securities, Unrealized Losses | ||
Debt securities, Unrealized Losses 12 months or less | (692) | (170) |
Debt securities, Unrealized Losses Longer than 12 months | 0 | 0 |
Debt securities, Total Unrealized Losses | 692 | 170 |
Debt Securities [Member] | Corporate Bonds [Member] | ||
Debt Securities, Unrealized Loss Position, Fair Value | ||
Debt securities, Fair Value 12 months or less | 130,766 | 0 |
Debt securities, Fair Value Longer than 12 months | 1,149 | 2,245 |
Debt securities, Total Fair Value | 131,915 | 2,245 |
Debt securities, Unrealized Losses | ||
Debt securities, Unrealized Losses 12 months or less | (1,089) | 0 |
Debt securities, Unrealized Losses Longer than 12 months | (20) | (49) |
Debt securities, Total Unrealized Losses | 1,109 | 49 |
Debt Securities [Member] | Corporate bank loans [Member] | ||
Debt Securities, Unrealized Loss Position, Fair Value | ||
Debt securities, Fair Value 12 months or less | 45,991 | 42,256 |
Debt securities, Fair Value Longer than 12 months | 28,458 | 16,763 |
Debt securities, Total Fair Value | 74,449 | 59,019 |
Debt securities, Unrealized Losses | ||
Debt securities, Unrealized Losses 12 months or less | (480) | (177) |
Debt securities, Unrealized Losses Longer than 12 months | (535) | (288) |
Debt securities, Total Unrealized Losses | 1,015 | 465 |
Debt Securities [Member] | Municipal Bonds [Member] | ||
Debt Securities, Unrealized Loss Position, Fair Value | ||
Debt securities, Fair Value 12 months or less | 9,149 | 3,321 |
Debt securities, Fair Value Longer than 12 months | 838 | 1,038 |
Debt securities, Total Fair Value | 9,987 | 4,359 |
Debt securities, Unrealized Losses | ||
Debt securities, Unrealized Losses 12 months or less | (106) | (58) |
Debt securities, Unrealized Losses Longer than 12 months | (11) | (12) |
Debt securities, Total Unrealized Losses | 117 | 70 |
Debt Securities [Member] | Collateralized Mortgage Backed Securities [Member] | ||
Debt Securities, Unrealized Loss Position, Fair Value | ||
Debt securities, Fair Value 12 months or less | 1,669 | 0 |
Debt securities, Fair Value Longer than 12 months | 9 | 10 |
Debt securities, Total Fair Value | 1,678 | 10 |
Debt securities, Unrealized Losses | ||
Debt securities, Unrealized Losses 12 months or less | (8) | 0 |
Debt securities, Unrealized Losses Longer than 12 months | (5) | (4) |
Debt securities, Total Unrealized Losses | 13 | 4 |
Equity Securities [Member] | ||
Equity Securities, Unrealized Loss Position, Fair Value | ||
Equity securities, Fair Value 12 months or less | 14,165 | 6,221 |
Equity securities, Fair Value Longer than 12 months | 3,922 | 5,055 |
Equity securities, Total Fair Value | 18,087 | 11,276 |
Equity Securities, Unrealized Loss | ||
Equity securities, Unrealized Losses 12 months or less | (1,484) | (710) |
Equity securities, Unrealized Losses Longer than 12 months | (1,870) | (2,070) |
Equity securities, Total Unrealized Losses | $ (3,354) | $ (2,780) |
Investments (Schedule of Amorti
Investments (Schedule of Amortized Cost and Estimated Fair Value of Debt Securities by Contractual Maturities) (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost, Due in one year or less | $ 98,318 | |
Amortized Cost, Due after one year through five years | 222,617 | |
Amortized Cost, Due after five years through ten years | 59,833 | |
Amortized Cost, Amortized Cost Due after ten years | 7,068 | |
Amortized Cost | 389,582 | $ 288,175 |
Fair Value, Due in one year or less | 98,804 | |
Fair Value, Due after one year through five years | 221,341 | |
Fair Value, Due after five years through ten years | 59,300 | |
Fair Value, Due after ten years | 7,065 | |
Fair Value | 388,254 | $ 290,073 |
Collateralized Mortgage Backed Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 1,746 | |
Fair Value | $ 1,744 |
Pledged Investments (Narrative)
Pledged Investments (Narrative) (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Pledged Investments [Abstract] | ||
Securities available-for-sale pledged, carrying value | $ 25.9 | $ 30 |
Reserves for Unpaid Losses an_3
Reserves for Unpaid Losses and Loss Adjustment Expenses (Activity in the Reserves for Unpaid Losses and Loss Adjustment Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Reserves for Unpaid Losses and Loss Adjustment Expenses [Abstract] | ||
Balance Beginning | $ 816,681 | $ 789,768 |
Less reinsurance recoverable | 387,915 | 357,200 |
Net balance ending | 428,766 | 432,568 |
Incurred related to: | ||
Current year | 56,333 | 71,565 |
Prior years | 7,691 | (2,086) |
Total incurred | 64,024 | 69,479 |
Paid related to: | ||
Current year | 12,757 | 7,067 |
Prior years | 62,213 | 52,360 |
Total paid | 74,970 | 59,427 |
Net balance at March 31 | 417,820 | 442,620 |
Plus reinsurance recoverable | 380,518 | 369,652 |
Balance at March 31 | $ 798,338 | $ 812,272 |
Reserves for Unpaid Losses an_4
Reserves for Unpaid Losses and Loss Adjustment Expenses (Causes for Prior Accident Year Reserve Development by Segment) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Total (favorable) unfavorable net prior year development | $ 7,691 | $ (2,086) |
Specialty Commercial Segment [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Total (favorable) unfavorable net prior year development | 6,380 | (1,899) |
Standard Commercial Segment [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Total (favorable) unfavorable net prior year development | (262) | (1,361) |
Personal Segment [Member] | ||
Causes of Increase (Decrease) in Liability for Unpaid Claims and Claims Adjustment Expense [Line Items] | ||
Total (favorable) unfavorable net prior year development | $ 1,573 | $ 1,174 |
Share-Based Payment Arrangeme_3
Share-Based Payment Arrangements (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2019 | Dec. 31, 2018 | |
Long Term Incentive Plan 2015 [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, number of shares authorized | 2,000,000 | ||||
Share-based compensation arrangement by share-based payment award, restricted stock options to purchase number of shares | 768,177 | ||||
Stock options, Granted | 0 | ||||
Employee Stock Option [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock Options, Outstanding | 0 | ||||
Stock options, Granted | 0 | 0 | |||
Stock Options, Exercised | 0 | 0 | |||
Stock Options, Forfeited or Expired | 0 | 0 | |||
Unrecognized compensation cost related to non-vested share-based compensation arrangements | $ 0 | ||||
Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation cost related to non-vested share-based compensation arrangements | 1,900,000 | ||||
Allocated share-based compensation expense (benefit) | 62,000 | $ 97,000 | |||
Income tax benefit (expense) of share-based payments recognized in income | 13,000 | $ 20,000 | |||
Employee Service Share-based Compensation Nonvested Awards, Total Compensation Cost Expected to Recognized | 1,700,000 | ||||
Remainder of 2022 | 500,000 | ||||
2023 | 700,000 | ||||
2024 | 400,000 | ||||
2025 | 100,000 | ||||
2026 | $ 22,000 | ||||
Restricted Stock Units (RSUs) [Member] | Minimum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of restricted stock units granted as result of meeting growth rates | 50.00% | ||||
Restricted Stock Units (RSUs) [Member] | Maximum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of restricted stock units granted as result of meeting growth rates | 150.00% | ||||
Restricted Stock Units (RSUs) [Member] | Long Term Incentive Plan 2015 [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Other than options, grant date fair value | $ 4.21 | $ 18.10 | $ 10.87 | ||
Restricted Stock Units (RSUs) [Member] | Long Term Incentive Plan 2015 [Member] | Third Anniversary [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 50.00% | ||||
Restricted Stock Units (RSUs) [Member] | Long Term Incentive Plan 2015 [Member] | Fourth Anniversary [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 80.00% | ||||
Restricted Stock Units (RSUs) [Member] | Long Term Incentive Plan 2015 [Member] | Fifth Anniversary [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 100.00% |
Share-Based Payment Arrangeme_4
Share-Based Payment Arrangements (Summary of the Status of Restricted Stock Units) (Details) - Restricted Stock Units (RSUs) [Member] - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Nonvested beginning | 581,689 | 228,827 |
Granted | 8,313 | 0 |
Vested | (17,951) | (28,874) |
Forfeited | (59,933) | (130,903) |
Nonvested ending | 512,118 | 69,050 |
Segment Information (Schedule o
Segment Information (Schedule of Business Segment Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenues [Abstract] | ||
Revenues | $ 85,672 | $ 112,053 |
Pre-tax (loss) income [Abstract] | ||
Pre-tax (loss) income | (4,119) | 11,227 |
Specialty Commercial Segment [Member] | ||
Revenues [Abstract] | ||
Revenues | 51,911 | 69,599 |
Pre-tax (loss) income [Abstract] | ||
Pre-tax (loss) income | 2,565 | 11,348 |
Standard Commercial Segment [Member] | ||
Revenues [Abstract] | ||
Revenues | 17,128 | 17,688 |
Pre-tax (loss) income [Abstract] | ||
Pre-tax (loss) income | (692) | 366 |
Personal Segment [Member] | ||
Revenues [Abstract] | ||
Revenues | 16,819 | 18,959 |
Pre-tax (loss) income [Abstract] | ||
Pre-tax (loss) income | (1,026) | (1,623) |
Corporate [Member] | ||
Revenues [Abstract] | ||
Revenues | (186) | 5,807 |
Pre-tax (loss) income [Abstract] | ||
Pre-tax (loss) income | $ (4,966) | $ 1,136 |
Segment Information (Schedule_2
Segment Information (Schedule of Additional Business Segment Information) (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Segment Reporting Information [Line Items] | ||
Assets | $ 1,489,863 | $ 1,553,598 |
Specialty Commercial Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | 1,105,918 | 1,163,947 |
Standard Commercial Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | 193,088 | 194,594 |
Personal Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | 125,340 | 128,165 |
Corporate [Member] | ||
Segment Reporting Information [Line Items] | ||
Assets | $ 65,517 | $ 66,892 |
Reinsurance (Schedule of Reinsu
Reinsurance (Schedule of Reinsurance Ceded and Recoveries) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Reinsurance [Abstract] | ||
Ceded earned premiums | $ 76,425 | $ 76,957 |
Reinsurance recoveries | $ 66,581 | $ 61,899 |
Reinsurance (Loss Portfolio Tra
Reinsurance (Loss Portfolio Transfer) (Details) - USD ($) $ in Thousands | Jul. 16, 2020 | Mar. 31, 2022 | Mar. 31, 2021 | Sep. 30, 2020 | Dec. 31, 2021 |
Effects of Reinsurance [Line Items] | |||||
Ceded premiums written | $ 72,638 | $ 71,521 | |||
Accounts receivable | 20,094 | $ 6,914 | |||
Reinsurance recoverable | 545,300 | ||||
LPT | |||||
Effects of Reinsurance [Line Items] | |||||
Pre-tax loss | $ 21,700 | ||||
Policyholder benefits and claims incurred, ceded | $ 240,000 | ||||
Ceded premiums written | 92,600 | ||||
Payments for Deposits with Other Institutions | 96,700 | ||||
Reinsurance contract, ultimate incurred losses | 243,600 | ||||
Reinsurance contract in excess of the first layer | 3,600 | ||||
Accounts receivable | 13,500 | ||||
Reinsurance Contract Loss Limit | 240,000 | ||||
Reinsurance recoverable | $ 52,400 | ||||
First Layer Of Reinsurance By DARAG Bermuda [Member] | LPT | |||||
Effects of Reinsurance [Line Items] | |||||
Reinsurance Retention Policy, Excess Retention, Amount Reinsured | 151,200 | ||||
Reinsurance Retention Policy, Amount Retained | 24,900 | ||||
Second Layer Of Reinsurance By DARAG Bermuda [Member] | LPT | |||||
Effects of Reinsurance [Line Items] | |||||
Reinsurance Retention Policy, Amount Retained | 27,800 | ||||
Top Layer Of Reinsurance By DARAG Guernsey [Member] | LPT | |||||
Effects of Reinsurance [Line Items] | |||||
Reinsurance Retention Policy, Amount Retained | $ 36,100 |
Subordinated Debt Securities (S
Subordinated Debt Securities (Summary of the Nature and Terms of the Junior Subordinated Debt and Trust) (Details) - Junior subordinated debt - USD ($) shares in Thousands, $ in Thousands | Aug. 23, 2007 | Jun. 21, 2005 | Mar. 31, 2022 |
Hallmark Statutory Trust I [Member] | |||
Subordinated Borrowing [Line Items] | |||
Issue date | Jun. 21, 2005 | ||
Principal amount of trust preferred securities | $ 30,000 | ||
Principal amount of junior subordinated debt securities | $ 30,928 | ||
Maturity date of junior subordinated debt securities | Jun. 15, 2035 | ||
Trust common stock | 928 | ||
Interest rate, per annum | Three Month LIBOR + 3.25% | ||
Current interest rate | 4.08% | ||
Hallmark Statutory Trust I [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Subordinated Borrowing [Line Items] | |||
Debt instrument, basis spread on variable rate | 3.25% | ||
Hallmark Statutory Trust I I [Member] | |||
Subordinated Borrowing [Line Items] | |||
Issue date | Aug. 23, 2007 | ||
Principal amount of trust preferred securities | $ 25,000 | ||
Principal amount of junior subordinated debt securities | $ 25,774 | ||
Maturity date of junior subordinated debt securities | Sep. 15, 2037 | ||
Trust common stock | 774 | ||
Interest rate, per annum | Three Month LIBOR + 2.90% | ||
Current interest rate | 3.73% | ||
Hallmark Statutory Trust I I [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Subordinated Borrowing [Line Items] | |||
Debt instrument, basis spread on variable rate | 2.90% |
Senior Unsecured Notes (Details
Senior Unsecured Notes (Details) $ in Millions | Aug. 19, 2019USD ($) | Mar. 31, 2022 |
Debt Instrument [Line Items] | ||
Ratio of Indebtedness to Net Capital | 38.3 | |
Senior unsecured notes ("Notes") due August 15, 2029 | ||
Debt Instrument [Line Items] | ||
Principal amount | $ 50 | |
Interest rate | 6.25% | |
Debt to capital ratio covenant | 35.00% |
Deferred Policy Acquisition C_3
Deferred Policy Acquisition Costs (Deferred Amortized Policy Acquisition Costs) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Deferred Policy Acquisition Costs [Abstract] | ||
Deferred, dispositions | $ (24,325) | $ (15,103) |
Amortized | 24,289 | 16,557 |
Net | $ (36) | $ 1,454 |
Earnings per Share (Narrative)
Earnings per Share (Narrative) (Details) - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share | 0 | 14,157 |
Earnings per Share (Schedule of
Earnings per Share (Schedule of Earnings Per Share, Basic and Diluted) (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings per Share [Abstract] | ||
Weighted average shares - basic | 18,172 | 18,142 |
Effect of dilutive securities | 0 | 0 |
Weighted average shares - assuming dilution | 18,172 | 18,142 |
Net Periodic Pension Cost (Sche
Net Periodic Pension Cost (Schedule of Net Benefit Costs) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Net Periodic Pension Cost [Abstract] | ||
Interest cost | $ 75 | $ 68 |
Amortization of net loss | 27 | 43 |
Expected return on plan assets | (191) | (177) |
Net periodic pension cost | (89) | (66) |
Contributed amount | $ 0 | $ 0 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Income Taxes [Abstract] | |||
Effective income tax rate, continuing operations | 21.80% | 20.10% | |
Valuation allowance | $ 0 | $ 0 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Reconciliation of Cash, Cash Equivalents and Restricted Cash to Statement of Cash Flows) (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Supplemental Cash Flow Information [Abstract] | ||||
Cash and cash equivalents | $ 183,377 | $ 352,867 | $ 281,849 | |
Restricted cash | 4,239 | 3,810 | 5,434 | |
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ 187,616 | $ 356,677 | $ 287,283 | $ 108,308 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information (Supplemental Cash Flow Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Supplemental Cash Flow Information [Abstract] | ||
Interest paid | $ 1,577 | $ 1,576 |
Receivable for securities related to investment disposals | 1,209 | 1,382 |
Payable for securities related to investment purchases | $ 2,374 | $ 10,979 |
Commitments and Contingencies (
Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Commitments and Contingencies [Abstract] | ||
Guaranty association assessments | $ 0 | $ 0 |
Changes in Accumulated Other _3
Changes in Accumulated Other Comprehensive (Loss) Income Balances (Schedule of Accumulated Other Comprehensive (Loss) Income ) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | $ (1,035) | |
Other comprehensive (loss) income: | ||
Change in net actuarial gain | 27 | $ 43 |
Tax effect on change in net actuarial gain | (6) | (9) |
Unrealized holding gains arising during the period | (3,081) | 585 |
Tax effect on unrealized holding losses arising during the period | 647 | (123) |
Reclassification adjustment for gains included in net income | (146) | (1,403) |
Tax effect on reclassification adjustment for gains included in income tax expense | 31 | 295 |
Other comprehensive loss, net of tax | (2,528) | (612) |
Ending Balance | (3,563) | |
Pension Liability [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | (2,641) | (3,762) |
Other comprehensive (loss) income: | ||
Change in net actuarial gain | 27 | 43 |
Tax effect on change in net actuarial gain | (6) | (9) |
Unrealized holding gains arising during the period | 0 | 0 |
Tax effect on unrealized holding losses arising during the period | 0 | 0 |
Reclassification adjustment for gains included in net income | 0 | 0 |
Tax effect on reclassification adjustment for gains included in income tax expense | 0 | 0 |
Other comprehensive loss, net of tax | 21 | 34 |
Ending Balance | (2,620) | (3,728) |
Unrealized Gains (Loss) [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | 1,606 | 4,145 |
Other comprehensive (loss) income: | ||
Change in net actuarial gain | 0 | 0 |
Tax effect on change in net actuarial gain | 0 | 0 |
Unrealized holding gains arising during the period | (3,081) | 585 |
Tax effect on unrealized holding losses arising during the period | 647 | (123) |
Reclassification adjustment for gains included in net income | (146) | (1,403) |
Tax effect on reclassification adjustment for gains included in income tax expense | 31 | 295 |
Other comprehensive loss, net of tax | (2,549) | (646) |
Ending Balance | (943) | 3,499 |
Accumulated Other Comprehensive Income (Loss) [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | (1,035) | 383 |
Other comprehensive (loss) income: | ||
Change in net actuarial gain | 27 | 43 |
Tax effect on change in net actuarial gain | (6) | (9) |
Unrealized holding gains arising during the period | (3,081) | 585 |
Tax effect on unrealized holding losses arising during the period | 647 | (123) |
Reclassification adjustment for gains included in net income | (146) | (1,403) |
Tax effect on reclassification adjustment for gains included in income tax expense | 31 | 295 |
Other comprehensive loss, net of tax | (2,528) | (612) |
Ending Balance | $ (3,563) | $ (229) |
Leases (Narrative) (Details)
Leases (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2022 | |
Lessee, Lease, Description [Line Items] | |
Options to extend | true |
Minimum [Member] | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 1 year |
Maximum [Member] | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 12 years |
Leases (Components of Lease Exp
Leases (Components of Lease Expense and Other Lease Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Leases [Abstract] | ||
Operating lease cost | $ 673 | $ 719 |
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases | 547 | 545 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 0 | $ 0 |
Leases (Component of Lease and
Leases (Component of Lease and Other Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Operating lease right-of-use assets | $ 13,495 | $ 13,211 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets | Other Assets |
Operating lease liabilities | $ 15,455 | $ 15,062 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities |
Weighted-average remaining lease term - operating leases | 11 years | 11 years 4 months 24 days |
Weighted-average discount rate - operating leases | 6.22% | 6.22% |
Short-term lease payments | $ 100 |
Leases (Maturities) (Details)
Leases (Maturities) (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Future minimum lease payments under non-cancellable leases: | ||
2022 | $ 1,772 | $ 2,171 |
2023 | 2,224 | 2,023 |
2024 | 2,421 | 2,216 |
2025 | 2,537 | 2,450 |
2026 | 2,497 | 2,497 |
Thereafter | 15,767 | 15,767 |
Total future minimum lease payments | 27,218 | 27,124 |
Less imputed interest | (11,763) | (12,062) |
Total operating lease liability | $ 15,455 | $ 15,062 |