Exhibit 99.1
FOR IMMEDIATE RELEASE
HALLMARK FINANCIAL SERVICES, INC.
FOURTH QUARTER AND YEAR 2005 EARNINGS RESULTS
FORT WORTH, Texas, (March 22, 2006) - Hallmark Financial Services, Inc.
today reported operating results for the quarter and year ended December 31,
2005. Net income for the quarter ended December 31, 2005, was $2.9 million
as compared to $1.4 million for the same period in 2004. Net income for the
year ended December 31, 2005, increased 57.1% to $9.2 million, or $0.13 per
diluted share, as compared to net income of $5.8 million, or $0.14 per
diluted share, for the same period in 2004. The decrease in net income per
diluted share was primarily attributable to an increase in the weighted
average shares outstanding as the result of a successful stockholder rights
offering completed in the second quarter of 2005.
Total revenues for the quarter and year ended December 31, 2005, also
increased as compared to the same periods of 2004. Total revenue for the
fourth quarter increased 65.9% to $26.6 million in 2005 as compared to $16.1
million in 2004. Total revenue of $87.0 million for the 2005 fiscal year
was $23.9 million greater than the $63.1 million in total revenue for fiscal
2004.
"I am pleased to report that the operating results for fiscal 2005 were the
best in the Company's history," stated Mark E. Schwarz, Chief Executive
Officer. "We look forward to building on our success with the recently
completed acquisitions of Texas General Agency and Aerospace Insurance
Managers," Mr. Schwarz continued.
"The increase in total revenues for the quarter and year ended December 31,
2005, as compared to the same periods in fiscal 2004, were mostly
attributable to American Hallmark Insurance Company retaining the commercial
business previously produced for a third party insurer," stated Mark J.
Morrison, Chief Operating Officer and Chief Financial Officer. "The increase
in net income for the quarter and year ended December 31, 2005, versus the
same periods in fiscal 2004 reflects continued favorable loss development in
both operating units, increased premium retention and additional investment
income from the successful completion of our capital plan in the second
quarter of fiscal 2005," Mr. Morrison concluded.
Hallmark Financial Services, Inc. engages primarily in sale of property and
casualty insurance products. The Company's business involves marketing and
underwriting commercial insurance in Texas, New Mexico, Idaho, Oregon,
Montana and Washington; marketing and underwriting non-standard personal
automobile insurance in Texas, New Mexico and Arizona; marketing of general
aviation insurance in 44 states; claims administration; and other insurance
related services. The Company is headquartered in Fort Worth, Texas and its
common stock is listed on the American Stock Exchange under the symbol
"HAF".
Forward-looking statements in this Release are made pursuant to the "safe
harbor" provisions of the Private Securities Litigation Act of 1995.
Investors are cautioned that actual results may differ substantially from
such forward-looking statements. Forward-looking statements involve risks
and uncertainties including, but not limited to, continued acceptance of the
Company's products and services in the marketplace, competitive factors,
interest rate trends, the availability of financing, underwriting loss
experience and other risks detailed from time to time in the Company's
periodic report filings with the Securities and Exchange Commission.
For further information, please contact:
Mark J. Morrison, Chief Operating Officer at 817.348.1600
www.hallmarkgrp.com
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HALLMARK FINANCIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Twelve Months Ended
December 31 December 31
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2005 2004 2005 2004
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Gross premiums written $ 26,482 $ 10,215 $ 89,467 $ 33,389
Ceded premiums written (663) (347) (1,215) (322)
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Net premiums written 25,819 9,868 88,252 33,067
Change in net unearned premiums (5,362) (1,095) (29,068) (622)
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Net premiums earned 20,457 8,773 59,184 32,445
Investment income, net of expenses 1,562 392 3,836 1,386
Realized gain (loss) 6 30 58 (27)
Finance charges 508 539 2,044 2,183
Commission and fees 3,169 4,865 16,703 21,100
Processing and service fees 931 1,443 5,183 6,003
Other income 5 10 27 31
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Total revenues 26,638 16,052 87,035 63,121
Losses and loss adjustment expenses 11,200 5,037 33,784 19,137
Other operating costs and expenses 10,740 8,944 38,492 35,290
Interest expense 600 3 1,264 64
Amortization of intangible asset (4) 7 27 28
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Total expenses 22,536 13,991 73,567 54,519
Income before income tax expense 4,102 2,061 13,468 8,602
Income tax expense 1,208 660 4,282 2,753
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Net income $ 2,894 $ 1,401 $ 9,186 $ 5,849
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Basic earnings per share $ 0.03 $ 0.03 $ 0.13 $ 0.14
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Diluted earnings per share $ 0.03 $ 0.03 $ 0.13 $ 0.14
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