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Section 1: 8-K (FORM 8-K)

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT Pursuant

to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): March 5, 2019

 

HALLMARK FINANCIAL SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Nevada
(State or Other Jurisdiction of Incorporation)

 

001-11252 87-0447375
(Commission File Number) (IRS Employer Identification No.)

 

777 Main Street, Suite 1000, Fort Worth, Texas 76102
(Address of Principal Executive Offices) (Zip Code)

 

817-348-1600
(Registrant’s Telephone Number, Including Area Code)
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company    ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ¨

 

 

 

 

 

 

Item 2.02 Results of Operations and Financial Condition

 

On March 5, 2019, the Registrant issued a press release announcing its financial results for the three months and fiscal year ended December 31, 2018. A copy of the Registrant’s press release is attached as Exhibit 99.1 to this Current Report.

 

Item 9.01 Financial Statements and Exhibits

 

(c)Exhibits.

 

99.1Press release dated March 5, 2019.

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized.

 

    HALLMARK FINANCIAL SERVICES, INC.

 

Date:      March 5, 2019 By: /s/ Jeffrey R. Passmore
    Jeffrey R. Passmore, Chief Accounting Officer

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

 

Hallmark Financial Services, Inc.

777 Main Street, Suite 1000,

Fort Worth, TX 76102

817.348.1600

hallmarkgrp.com

 

FOR IMMEDIATE RELEASE

 

HALLMARK FINANCIAL ANNOUNCES FOURTH QUARTER AND YEAR END 2018 EARNINGS RESULTS
HIGHLIGHTED BY SIGNIFICANTLY IMPROVED COMBINED RATIO

 

FORT WORTH, Texas, (March 5, 2019) - Hallmark Financial Services, Inc. (“Hallmark Financial”) (NASDAQ: HALL) today announced financial results for the fourth quarter and fiscal year ended December 31, 2018.

 

   Fourth Quarter   Fiscal Year 
   2018   2017   2018   2017 
$ in millions:                    
Net (Loss) Income  $(5.1)  $(10.6)  $10.3   $(11.6)
Operating Earnings (Loss) (1)  $5.1   $(10.0)  $18.4   $(11.4)
                     
$ per diluted share:                    
Net (Loss) Income  $(0.28)  $(0.59)  $0.57   $(0.63)
Operating Earnings (Loss) (1)  $0.28   $(0.55)  $1.01   $(0.62)

(1)See “Non-GAAP Financial Measures” below

 

Fourth Quarter 2018 Highlights (all comparisons to prior year period):

·Gross premiums written increased 15% to $167.2 million

 

·Net premiums written increased 17% to $94.5 million

 

·Net combined ratio improved to 96.3% compared to 118.7%

 

·Net loss of $5.1 million, or $0.28 per diluted share, compared to net loss of $10.6 million, or $0.59 per diluted share

 

·Operating earnings of $5.1 million, or $0.28 per diluted share, compared to Operating loss of $10.0 million, or $0.55 per diluted share

 

·Net investment losses of $12.9 million included $1.6 million in net realized capital gains from the sale of investment securities and a $12.5 million loss from a reduction in the amount of net unrealized capital gains that existed in our equity investments. The income statement recognition of changes in unrealized gains and losses of equity securities is related to the adoption in 2018 of new accounting rules and does not impact operating earnings.

 

Year End 2018 Highlights (all comparisons to prior year):

·Gross premiums written of $663.0 million represented an increase of 10%

 

·Net premiums written of $363.8 million were slightly lower than 2017 of $365.6 million

 

·Net combined ratio of 97.1% compared to 107.9%

 

 

 

 

 

·Net income of $10.3 million, or $0.57 per diluted share, compared to net loss of $11.6 million, or $0.63 per diluted share

 

·Operating earnings of $18.4 million, or $1.01 per diluted share, compared to Operating loss of $11.4 million, or $0.62 per diluted share

 

·Net investment losses of $10.2 million included $1.8 million in net realized gains from the sale of investment securities and a $9.3 million loss from a reduction in the amount of net unrealized capital gains that existed in our equity investments. The income statement recognition of changes in unrealized gains and losses of equity securities is related to the adoption in 2018 of new accounting rules and does not impact operating earnings.

 

·Return on beginning equity was 4.1% for fiscal 2018.

 

·Operating return on beginning tangible equity was 8.9% for fiscal 2018 (see “non-GAAP Financial Measures” below).

 

·Book Value Per Share grew 3% to $14.17 in 2018.

 

   Fourth Quarter   Fiscal Year 
   2018   2017   % Change   2018   2017   % Change 
($ in thousands, unaudited)                
Gross premiums written   167,179    145,837    15%   663,015    604,156    10%
Net premiums written   94,507    81,121    17%   363,798    365,583    0%
Net premiums earned   91,300    92,319    -1%   363,087    361,037    1%
Investment income, net of expenses   4,526    4,513    0%   18,232    18,874    -3%
Investment losses, net   (12,873)   (896)   -1337%   (10,195)   (205)   -4873%
Net income (loss)   (5,075)   (10,629)   52%   10,347    (11,553)   190%
Operating earnings (loss) (1)   5,095    (10,047)   151%   18,401    (11,420)   261%
Net income (loss) per share - basic  $(0.28)  $(0.59)   53%  $0.57   $(0.63)   190%
Net income (loss) per share - diluted  $(0.28)  $(0.59)   53%  $0.57   $(0.63)   190%
Operating earnings per share - diluted (1)  $0.28   $(0.55)   151%  $1.01   $(0.62)   263%
Book value per share                 $14.17   $13.82    3%

(1)See “Non-GAAP Financial Measures” below

 

Management Commentary

Overview

Naveen Anand, President and Chief Executive Officer, stated, “I am pleased to report that Hallmark Financial continued its trend of underwriting profitability in 2018 with a strong fourth quarter. This increasing momentum in our underwriting results reflects the successful and continued execution of our strategic plan. We are well positioned as we move into 2019 to focus on consistent execution of our plan as we put the “fix and build” part of our strategic journey in the rear-view mirror.

 

“Robust rate increases in most of our lines of business, as well as targeted growth, drove increases in our gross premiums written for both the fourth quarter and full year 2018. We achieved net combined ratios of 96.3% and 97.1% for the fourth quarter and full year 2018, respectively. This is a much-improved result from the 118.7% and 107.9% net combined ratios for the same periods in 2017. Additionally, the improved fourth quarter expense ratio of 25.7% reflects our focus on managing expenses while continuing to make strategic investments in technology, infrastructure and talent.

 

 

 

 

 

“Accident year net combined ratios, excluding catastrophe losses and prior year development, were 91.3% in the fourth quarter and 92.9% for the year. The net impact of losses from catastrophe events were in line with expectations, with an impact to the combined ratio of 5.1% for the quarter and 2.6% for the full year, with the largest impact from Hurricane Michael. Prior year development improved in 2018 and was slightly favorable for the fourth quarter (0.1% impact to the combined ratio) as the actions taken in underwriting and claims are beginning to have the expected impact.”

 

Premiums / Segment Overview

Mr. Anand continued, “The Specialty Commercial Segment continues to grow at a steady rate, with gross premiums increasing by 10% and 8% for the fourth quarter and full year 2018, respectively, as compared to the same periods the prior year. These increases were driven by both new business and robust rate increases in commercial auto, property, aviation, casualty and professional lines. The fourth quarter and full year net combined ratios for this segment were 96.8% and 97.8%, respectively, which included 7.6% and 2.3%, respectively, attributable to catastrophe losses and 1.2% and 6.4%, respectively, attributable to unfavorable prior year reserve development.

 

“The Standard Commercial Segment grew gross premiums written by 9% and 10% for the fourth quarter and full year 2018, respectively, as compared to the same periods the prior year, and produced net combined ratios of 95.1% and 88.0% for the fourth quarter and full year 2018 as compared to 94.7% and 102.8% for the same periods in 2017. We launched two new states in the segment during the fourth quarter of 2018, increasing our total footprint from 11 states last year to 14 currently. We look to expand this segment into one to two new states per year.

 

“The Personal Segment results continued to improve during the fourth quarter of 2018, as the impact from pricing and claims improvements contributed to an 83.2% net combined ratio for the quarter and 94.9% net combined ratio for the year. We will look to opportunistically grow this segment and position it to deliver sustained profitable results.

 

“In the fourth quarter, the Company successfully completed the placement of a consolidated casualty treaty which replaces multiple reinsurance arrangements that cover multiple lines of business. This structure increases our scale in purchasing reinsurance and provides additional flexibility going forward to allocate capital to our various lines of business,” concluded Mr. Anand.

 

Executive Chairman’s Remarks

Mark E. Schwarz, Executive Chairman of Hallmark Financial, stated, “Despite the significant fourth quarter decline in equity markets we achieved a modest positive total investment return for the full year. 2018 was the first year the inherent volatility in equity securities prices was recorded in our income statement. Previously changes in unrealized gains and losses on equity investments were recorded in other comprehensive income. The new accounting treatment has no effect on our operating earnings, consolidated shareholders’ equity or book value per share as compared to prior periods.

 

“The trend in net investment income improved in the fourth quarter with a flat comparison to the prior year and was down 3% for the full year due to a reduction in the amount of fixed maturity securities held in our portfolio, offset by an increase in the book yield on these investments. Book value per share increased 3% to $14.17 for the full year. Our year ending total investments and cash was $668 million or $37.08 per share,” concluded Mr. Schwarz.

 

 

 

 

 

Fourth Quarter and Fiscal 2018 Commentary

 

Hallmark Financial reported a net loss of $5.1 million and net income of $10.3 million for the three months and fiscal year ended December 31, 2018, respectively, as compared to net losses of $10.6 million and $11.6 million for the three months and fiscal year ended December 31, 2017, respectively. On a diluted basis per share, the Company reported a net loss of $0.28 per share and net income of $0.57 per share for the three months and fiscal year ended December 31, 2018, respectively, as compared to net losses of $0.59 per share and $0.63 per share for the three months and fiscal year ended December 31, 2017, respectively.

 

During the three months and year ended December 31, 2018, Hallmark Financial’s gross premiums written were $167.2 million and $663.0 million, representing an increase of 15% and 10%, respectively from the $145.8 million and $604.2 million in gross premiums written for the same periods in 2017. During the three months and fiscal year ended December 31, 2018, Hallmark Financial’s net premiums written were $94.5 million and $363.8 million, respectively, representing an increase of 17% and a slight decrease, respectively from the $81.1 million and $365.6 million in net premiums written for the same periods of 2017. The increase in net premiums written for the three months ended December 31, 2018 was primarily due to premium growth in both the Specialty Commercial and Personal Segments as well as increased net retention of business in the Personal Segment for the quarter. Hallmark Financial’s net premiums earned were $91.3 million and $363.1 million for the three months and fiscal year ended December 31, 2018, respectively, as compared to $92.3 million and $361.0 million for the same periods in 2017. Hallmark Financial had a pre-tax loss of $6.5 million and pre-tax income of $12.8 million, for the three months and fiscal year ended December 31, 2018, respectively, as compared to pre-tax losses of $16.0 million and $16.6 million reported during the same periods in 2017.

 

The improvement in income before tax for the three months and fiscal year ended December 31, 2018 was largely due to decreased losses and loss adjustment expenses and decreased operating expenses partially offset by increased investment losses. The investment losses reported during the three months and fiscal year ended December 31, 2018 included $12.5 million and $9.3 million, respectively, in loss attributable to the adoption effective January 1, 2018 of Accounting Standards Update No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” which requires equity investments that are not consolidated or accounted for under the equity method of accounting to be measured at fair value with changes in fair value recognized in net income. The decrease in loss and LAE was primarily the result of favorable net prior year loss reserve development of $0.1 million and unfavorable net prior year loss reserve development of $6.0 million for the three months and fiscal year ended December 31, 2018, respectively, as compared to unfavorable net prior year loss reserve development of $19.9 million and $40.1 million during the same periods of 2017. The decrease in operating expenses was primarily due to lower production related expenses due primarily to increased ceding commission in the Specialty Commercial Segment, partially offset by increased salary and related expenses, professional service fees and other operating expenses.

 

 

 

 

 

Non-GAAP Financial Measures

 

The Company’s financial statements are prepared in accordance with United States generally accepted accounting principles (“GAAP”). However, the Company also presents and discusses certain non-GAAP financial measures that it believes are useful to investors as measures of operating performance. Management may also use such non-GAAP financial measures in evaluating the effectiveness of business strategies and for planning and budgeting purposes. However, these non-GAAP financial measures should not be viewed as an alternative or substitute for the results reflected in the Company’s GAAP financial statements. In addition, the Company’s definitions of these items may not be comparable to the definitions used by other companies.

 

Operating earnings and operating earnings per share are calculated by excluding net investment gains and losses from GAAP net income. Management believes that operating earnings and operating earnings per share provide useful information to investors about the performance of and underlying trends in the Company’s core insurance operations. Net income and net income per share are the GAAP measures that are most directly comparable to operating earnings and operating earnings per share. A reconciliation of operating earnings and operating earnings per share to the most comparable GAAP financial measures is presented below.

 

               Weighted     
   Income   Less Tax   Net   Average   Diluted 
($ in thousands)  Before Tax   Effect   After Tax   Shares Diluted   Per Share 
Fourth Quarter 2018                         
Reported GAAP measures  $(6,453)  $(1,378)  $(5,075)   18,055   $(0.28)
Excluded investment losses/gains  $12,873   $2,703   $10,170    18,198   $0.56 
Operating earnings  $6,420   $1,325   $5,095    18,198   $0.28 
                          
Fourth Quarter 2017                         
Reported GAAP measures  $(15,967)  $(5,338)  $(10,629)   18,162   $(0.59)
Excluded investment losses/gains  $896   $314   $582    18,162   $0.04 
Operating loss  $(15,071)  $(5,024)  $(10,047)   18,162   $(0.55)
                          
Fiscal 2018                         
Reported GAAP measures  $12,803   $2,456   $10,347    18,201   $0.57 
Excluded investment losses/gains  $10,195   $2,141   $8,054    18,201   $0.44 
Operating earnings  $22,998   $4,597   $18,401    18,201   $1.01 
                          
Fiscal 2017                         
Reported GAAP measures  $(16,572)  $(5,019)  $(11,553)   18,343   $(0.63)
Excluded investment losses/gains  $205   $72   $133    18,343   $0.01 
Operating loss  $(16,367)  $(4,947)  $(11,420)   18,343   $(0.62)

 

Operating return on beginning tangible equity is calculated as operating earnings divided by GAAP equity at the beginning of the period excluding goodwill. Management believes that operating return on beginning tangible equity provides useful information to investors about the performance of the Company’s core insurance operations relative to its core shareholder equity exclusive of non-depreciable goodwill from prior acquisitions. Return on beginning equity is the GAAP measure that is most directly comparable to operating return on beginning tangible equity. A reconciliation of operating return on beginning tangible equity to return on beginning equity is presented below.

 

 

 

 

 

Fiscal 2018 net income   10,347a
Excluded investment losses, net of tax   8,054 
Fiscal 2018 operating earnings   18,401b
      
Beginning GAAP equity   251,118c
Reverse goodwill   (44,695)
Beginning tangible equity   206,423d
      
Return on beginning GAAP equity   4.1%(a/c)
Operating return on beginning tangible equity   8.9%(b/d)

 

About Hallmark Financial

 

Hallmark Financial is a specialty property and casualty insurance holding company with a diversified portfolio of insurance products written on a national platform. With six insurance subsidiaries and offices in Dallas-Fort Worth, San Antonio, Chicago, Jersey City and Atlanta, Hallmark Financial markets, underwrites and services over $650 million annually in commercial and personal insurance premiums in select markets. Hallmark Financial is headquartered in Fort Worth, Texas and its common stock is listed on NASDAQ under the symbol "HALL."

 

Forward-looking statements in this release are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that actual results may differ 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, general economic conditions, the availability of financing, underwriting loss experience and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.

 

For further information, please contact:

Mr. Naveen Anand, President and Chief Executive Officer at 817.348.1600

www.hallmarkgrp.com

 

 

 

 

 

Hallmark Financial Services, Inc. and Subsidiaries

Consolidated Balance Sheets

($ in thousands, except par value)  Dec. 31   Dec. 31 
   2018   2017 
   (unaudited)     
ASSETS          
Investments:          
Debt securities, available-for-sale, at fair value (amortized cost: $550,268 in 2018 and $604,999 in 2017)  $545,870   $605,746 
Equity securities (cost: $68,709 in 2018 and $30,253 in 2017)   80,896    51,763 
Other investment (cost: $3,763 in 2018 and $3,763 in 2017)   1,148    3,824 
Total investments   627,914    661,333 
Cash and cash equivalents   35,594    64,982 
Restricted cash   4,877    2,651 
Ceded unearned premiums   133,031    112,323 
Premiums receivable   119,778    104,373 
Accounts receivable   1,619    1,513 
Receivable for securities   3,369    5,235 
Reinsurance recoverable   252,029    182,928 
Deferred policy acquisition costs   14,291    16,002 
Goodwill   44,695    44,695 
Intangible assets, net   7,555    10,023 
Deferred federal income taxes, net   4,983    1,937 
Federal income tax recoverable   -    7,532 
Prepaid expenses   2,588    1,743 
Other assets   12,571    13,856 
Total Assets  $1,264,894   $1,231,126 
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Liabilities:          
Revolving credit facility payable  $30,000   $30,000 
Subordinated debt securities (less unamortized debt issuance cost of $889 in 2018 and $949 in 2017)   55,804    55,753 
Reserves for unpaid losses and loss adjustment expenses   527,247    527,100 
Unearned premiums   298,061    276,642 
Reinsurance balances payable   67,328    52,487 
Current federal income tax payable   4    - 
Pension liability   2,018    1,605 
Payable for securities   698    7,488 
Accounts payable and other accrued expenses   28,202    28,933 
Total Liabilities   1,009,362    980,008 
Commitments and contingencies          
Stockholders’ equity:          
Common stock, $.18 par value, authorized 33,333,333 shares; issued 20,872,831 shares in 2018 and 2017   3,757    3,757 
Additional paid-in capital   123,168    123,180 
Retained earnings   161,195    136,474 
Accumulated other comprehensive income   (6,660)   12,234 
Treasury stock (2,846,131 shares in 2018 and 2,703,803 shares in 2017), at cost   (25,928)   (24,527)
Total Stockholders’ Equity   255,532    251,118 
Total Liabilities & Stockholders' Equity  $1,264,894   $1,231,126 

 

 

 

 

 

Hallmark Financial Services, Inc. and Subsidiaries
Consolidated Statements of Operations  Three Months Ended   Fiscal Year Ended 
($ in thousands, except share amounts)  December 31,   December 31, 
   2018   2017   2018   2017 
   (unaudited)   (unaudited)   (unaudited)     
Gross premiums written  $167,179   $145,837   $663,015   $604,156 
Ceded premiums written   (72,672)   (64,716)   (299,217)   (238,573)
Net premiums written   94,507    81,121    363,798    365,583 
Change in unearned premiums   (3,207)   11,198    (711)   (4,546)
Net premiums earned   91,300    92,319    363,087    361,037 
                     
Investment income, net of expenses   4,526    4,513    18,232    18,874 
Investment losses, net   (12,873)   (896)   (10,195)   (205)
Finance charges   1,567    986    5,115    3,867 
Commission and fees   324    384    2,928    1,679 
Other income   12    69    101    269 
Total revenues   84,856    97,375    379,268    385,521 
                     
Losses and loss adjustment expenses   64,460    83,383    256,028    288,308 
Operating expenses   25,022    28,360    103,424    106,805 
Interest expense   1,210    982    4,545    4,512 
Amortization of intangible assets   617    617    2,468    2,468 
Total expenses   91,309    113,342    366,465    402,093 
                     
Income (loss) before tax   (6,453)   (15,967)   12,803    (16,572)
Income tax expense (benefit)   (1,378)   (5,338)   2,456    (5,019)
Net income (loss)  $(5,075)  $(10,629)  $10,347   $(11,553)
                     
Net income (loss) per share:                    
Basic  $(0.28)  $(0.59)  $0.57   $(0.63)
Diluted  $(0.28)  $(0.59)  $0.57   $(0.63)

 

 

 

 

 

Hallmark Financial Services, Inc. and Subsidiaries

Consolidated Segment Data

Three Months Ended Dec. 31 (unaudited)

 

   Specialty Commercial
Segment
   Standard Commercial
Segment
   Personal
Segment
   Corporate   Consolidated 
($ in thousands)  2018   2017   2018   2017   2018   2017   2018   2017   2018   2017 
Gross premiums written  $125,315   $114,340   $20,190   $18,526   $21,674   $12,971   $-   $-   $167,179   $145,837 
Ceded premiums written   (60,930)   (55,182)   (9,301)   (2,124)   (2,441)   (7,410)   -    -    (72,672)   (64,716)
Net premiums written   64,385    59,158    10,889    16,402    19,233    5,561    -    -    94,507    81,121 
Change in unearned premiums   (2,616)   8,627    6,747    789    (7,338)   1,782    -    -    (3,207)   11,198 
Net premiums earned   61,769    67,785    17,636    17,191    11,895    7,343    -    -    91,300    92,319 
                                                   
Total revenues   66,776    72,889    18,569    17,853    13,732    8,511    (14,221)   (1,878)   84,856    97,375 
                                                   
Losses and loss adjustment expenses   46,267    67,032    10,834    10,558    7,359    5,793    -    -    64,460    83,383 
                                                   
Pre-tax income (loss)   7,800    (11,006)   1,851    1,559    2,400    (747)   (18,504)   (5,773)   (6,453)   (15,967)
                                                   
Net loss ratio (1)   74.9%   98.9%   61.4%   61.4%   61.9%   78.9%             70.6%   90.3%
Net expense ratio (1)   21.9%   24.1%   33.7%   33.3%   21.3%   35.4%             25.7%   28.4%
Net combined ratio (1)   96.8%   123.0%   95.1%   94.7%   83.2%   114.3%             96.3%   118.7%
                                                   
Favorable (Unfavorable) Prior Year Development   (727)   (22,653)   164    2,564    672    224    -    -    109    (19,865)

 

1The net loss ratio is calculated as incurred losses and loss adjustment expenses divided by net premiums earned, each determined in accordance with GAAP. The net expense ratio is calculated as total underwriting expenses offset by agency fee income divided by net premiums earned, each determined in accordance with GAAP. The net combined ratio is calculated as the sum of the net loss ratio and the net expense ratio.

 

 

 

 

 

Hallmark Financial Services, Inc. and Subsidiaries

Consolidated Segment Data

Fiscal Year Ended Dec. 31 (2018 unaudited)

 

   Specialty Commercial
Segment
   Standard Commercial
Segment
   Personal
Segment
   Corporate   Consolidated 
($ in thousands)  2018   2017   2018   2017   2018   2017   2018   2017   2018   2017 
Gross premiums written  $501,806   $464,714   $86,121   $78,228   $75,088   $61,214   $-   $-   $663,015   $604,156 
Ceded premiums written   (250,075)   (199,692)   (16,899)   (8,940)   (32,243)   (29,941)   -    -    (299,217)   (238,573)
Net premiums written   251,731    265,022    69,222    69,288    42,845    31,273    -    -    363,798    365,583 
Change in unearned premiums   6,455    (5,936)   3,099    (3,070)   (10,265)   4,460    -    -    (711)   (4,546)
Net premiums earned   258,186    259,086    72,321    66,218    32,580    35,733    -    -    363,087    361,037 
                                                   
Total revenues   280,283    277,946    76,548    70,302    38,623    40,462    (16,186)   (3,189)   379,268    385,521 
                                                   
Losses and loss adjustment expenses   194,268    213,050    39,396    45,227    22,364    30,031    -    -    256,028    288,308 
                                                   
Pre-tax income (loss)   28,780    2,012    13,090    2,440    3,061    (3,058)   (32,128)   (17,966)   12,803    (16,572)
                                                   
Net loss ratio (1)   75.2%   82.2%   54.5%   68.3%   68.6%   84.0%             70.5%   79.9%
Net expense ratio (1)   22.6%   23.7%   33.5%   34.5%   26.3%   29.3%             26.6%   28.0%
Net combined ratio (1)   97.8%   105.9%   88.0%   102.8%   94.9%   113.3%             97.1%   107.9%
                                                   
Favorable (Unfavorable) Prior Year Development   (16,457)   (40,477)   8,993    970    1,511    (598)   -    -    (5,953)   (40,105)

  

1The net loss ratio is calculated as incurred losses and loss adjustment expenses divided by net premiums earned, each determined in accordance with GAAP. The net expense ratio is calculated as total underwriting expenses offset by agency fee income divided by net premiums earned, each determined in accordance with GAAP. The net combined ratio is calculated as the sum of the net loss ratio and the net expense ratio.

 

 

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