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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): August 7, 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.)

  

5420 Lyndon B. Johnson Freeway, Suite 1100, Dallas Texas 75240
(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)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock $0.18 par value HALL Nasdaq Global Market

 

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 2.02Results of Operations and Financial Condition

 

On August 7, 2019, the Registrant issued a press release announcing its financial results for the three and six months ended June 30, 2019. A copy of the Registrant’s press release is attached as Exhibit 99.1 to this Current Report.

 

Item 7.01Regulation FD Disclosure

 

A copy of the Registrant’s second quarter 2019 investor presentation is available on its website at www.hallmarkgrp.com.

 

Item 9.01Financial Statements and Exhibits

 

(c)Exhibits.

 

99.1Press release dated August 7, 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: August 7, 2019 By: /s/ Jeffrey R. Passmore
    Jeffrey R. Passmore, Chief Financial Officer

 

 

 

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Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

HALLMARK FINANCIAL REPORTS SECOND QUARTER 2019 RESULTS HIGHLIGHTED BY

SIGNIFICANTLY HIGHER EARNINGS AND BOOK VALUE PER SHARE GROWTH

 

DALLAS, Texas, (August 7, 2019) - Hallmark Financial Services, Inc. (“Hallmark Financial”) (NASDAQ: HALL) today announced financial results for the second quarter and six months ended June 30, 2019.

 

(Unaudited)  Second Quarter   Year-to-Date 
   2019   2018   2019   2018 
$ in millions:                
Net Income   $13.0   $5.1    $28.1   $5.7 
Operating Earnings (1)   $7.6   $4.7    $13.2   $9.1 
                     
$ per diluted share:                    
Net Income   $0.71   $0.28    $1.54   $0.31 
Operating Earnings (1)   $0.42   $0.26    $0.73   $0.50 
(1)See “Non-GAAP Financial Measures” below

 

Second Quarter 2019 Highlights (all comparisons to same prior year period):

·Gross premiums written increased 26% to $218.2 million

 

·Net premiums written increased 38% to $123.8 million

 

·Net combined ratio improved to 94.5% compared to 97.0%

 

·Net income of $13.0 million, or $0.71 per diluted share, compared to $5.1 million, or $0.28 per diluted share

 

·Operating earnings of $7.6 million, or $0.42 per diluted share, compared to $4.7 million, or $0.26 per diluted share (see “Non-GAAP Financial Measures” below)

 

·Net investment gains of $6.8 million, including $0.1 million in net realized gains and a $6.7 million increase in net unrealized gains, compared to net investment gains of $0.5 million

 

 

 

Hallmark Financial Services, Inc.

Two Lincoln Centre

5420 Lyndon B Johnson Freeway, Suite 1100

Dallas, Texas 75240-2345

www.hallmarkgrp.com

 

   

 

 

Year-to-Date June 2019 Highlights (all comparisons to same prior year period):

·Gross premiums written increased 24% to $405.6 million

 

·Net premiums written increased 33% to $241.2 million

 

·Net combined ratio improved to 95.4% compared to 97.1%

 

·Net income of $28.1 million, or $1.54 per diluted share, compared to $5.7 million, or $0.31 per diluted share

 

·Operating earnings of $13.2 million, or $0.73 per diluted share, compared to $9.1 million, or $0.50 per diluted share (see “Non-GAAP Financial Measures” below)

 

·Net investment gains of $18.8 million, including $4.2 million in net realized gains and a $14.6 million increase in net unrealized gains, compared to net investment losses of $4.3 million

 

·Annualized return on beginning stockholders’ equity of 22%

 

·Annualized operating return on beginning tangible equity of 12.6%, driven by strong underwriting results (see “Non-GAAP Financial Measures” below)

 

·Book value per share grew 12% over prior year and 13% year-to-date to $15.98

 

   Second Quarter   Year-to-Date 
   2019   2018   % Change   2019   2018   % Change 
($ in thousands, unaudited)                    
Gross premiums written   218,236    173,219    26%   405,552    326,724    24
Net premiums written   123,843    89,846    38%   241,246    181,279    33%
Net premiums earned   106,499    90,978    17%   205,529    182,925    12%
Investment income, net of expenses   5,412    4,406    23%   10,523    8,846    19%
Investment gains (losses), net   6,817    533    1,179%   18,754    (4,302)   536%
Net income   13,029    5,090    156%   28,054    5,737    389%
Operating earnings (1)   7,644    4,669    64%   13,238    9,136    45%
Net income per share - basic   $0.72   $0.28    157%   $1.55   $0.32    384%
Net income per share - diluted   $0.71   $0.28    154%   $1.54   $0.31    397%
Operating earnings per share - diluted (1)   $0.42   $0.26    62%   $0.73   $0.50    46%
Book value per share   $15.98   $14.23    12%               

 

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

 

Management Commentary

Overview

Naveen Anand, President and Chief Executive Officer, stated, “The second quarter 2019 results reflect our continued positive momentum as we effectively execute our strategy of building a national specialty business. Operating earnings increased by 64% over the comparable prior year period driven by continued improvement in underwriting results and increased premiums in our specialty markets. For the second quarter, our net combined ratio improved to 94.5% from 97.0% last year. Annualized operating return on tangible equity improved to 12.6%. Rate increases across most of our portfolio were strong and a key contributor to our growth in gross premiums written, along with new business, driven by sharp increase in submissions.

 

   
  Page 2 of 11 

 

 

Premiums / Segment Overview

Mr. Anand continued, “These rate increases materialized in our Specialty Commercial Segment, which grew second quarter gross premiums written by 27% over last year and achieved a second quarter net combined ratio of 91.8% versus 95.2% last year. For the quarter, we achieved written rate increases in the double digits, driven by commercial auto as well as most of our E&S lines. Submissions increased over 25% as compared to the first six months of 2018 in the Specialty Commercial Segment. E&S property, commercial auto, E&S casualty and professional liability product lines saw the largest increases in submissions reflecting the market dislocation in these lines. The environment in primary commercial auto remains challenging from a severity perspective and we continue to make strides in improving risk selection, culling our portfolio and increasing rates to exceed rising loss trends.

 

“Our Personal Segment produced a second quarter 91.5% net combined ratio compared to 105.1% last year. Our Standard Commercial Segment grew second quarter gross written premiums by $0.3 million compared to the prior year. This segment produced a second quarter net combined ratio of 94.2% which included 4.0% attributable to catastrophe losses,” concluded Mr. Anand.

 

Executive Chairman’s Remarks

Mark E. Schwarz, Executive Chairman of Hallmark Financial, stated, “Book value per share increased 13% to $15.98 during the first six months of 2019, a high-water mark for the Company, driven largely by an increase in the market valuation of our investment portfolio, particularly equities, as well as strong operating earnings. Our net investment income was $10.5 million for the first six months of 2019, representing a 19% increase compared to the prior year period. Our total investments and cash increased 5% during the first six months of 2019 to $700.9 million or $38.67 per share.”

 

Second Quarter and Year-to-Date 2019 Financial Review

 

Gross Premiums Written

During the three and six months ended June 30, 2019, Hallmark Financial’s gross premiums written were $218.2 million and $405.6 million, respectively, representing an increase of 26% and 24%, respectively, from the $173.2 million and $326.7 million in gross premiums written for the same periods in 2018.

 

Net Premiums Written

During the three and six months ended June 30, 2019, Hallmark Financial’s net premiums written were $123.8 million and $241.2 million, respectively, representing an increase of 38% and 33%, respectively, from the $89.8 million and $181.3 million in net premiums written for the same periods of 2018. The increase in net premiums written for the three and six months ended June 30, 2019 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.

 

   
  Page 3 of 11 

 

 

Net Premiums Earned

Hallmark Financial’s net premiums earned were $106.5 million and $205.5 million for the three and six months ended June 30, 2019, respectively, as compared to $91.0 million and $182.9 million for the same periods in 2018.

 

Pre-Tax Income

Hallmark Financial had pre-tax income of $16.5 million and $35.4 million for the three and six months ended June 30, 2019, respectively, as compared to $6.4 million and $7.2 million reported during the same periods in 2018.

 

The improvement in income before tax for the three and six months ended June 30, 2019 was largely due to increased net unrealized gains on our equity and other investments of $6.7 million and $14.6 million, respectively, as compared to an increase in net unrealized gains of $0.2 million and a decrease in net unrealized gains of $4.7 million reported for the same periods in 2018. Also contributing to the improvement in income before tax for the quarter and year-to-date was increased net premiums earned, higher finance charges and higher net investment income. Year-to-date net realized gains of $4.2 million as compared to $0.4 million for the comparable prior year period also contributed to the improvement in year-to-date income before tax.

 

Loss and Loss Adjustment Expenses (“LAE”) and Net Combined Ratio

These increases in revenue were partially offset by increased losses and LAE for the three and six months ended June 30, 2019 of $9.6 million and $16.0 million, respectively, as compared to the prior year periods due primarily to increased net premiums earned.

 

Hallmark Financial reported $1.5 million and $1.4 million, respectively, of unfavorable net prior year loss reserve development during the three and six months ended June 30, 2019 as compared to $5.0 million and $4.5 million, respectively, of unfavorable net prior year loss reserve development during the same periods of 2018.

 

Hallmark Financial had a net loss ratio of 68.8% and 69.7% for the three and six months ended June 30, 2019, respectively, as compared to 70.0% and 69.6% reported during the same periods in 2018. Catastrophe losses contributed 1.9% and 2.0% to the net loss ratios for the three and six months ended June 30, 2019, as compared to 2.2% and 1.6% for the same periods of the prior year.

 

The expense ratio was 25.7% for both the three and six months ended June 30, 2019, respectively, as compared to 27.0% and 27.5% reported during the same periods in 2018. The Company reported a net combined ratio of 94.5% and 95.4% for the three and six months ended June 30, 2019, compared to 97.0% and 97.1% during the same periods in 2018.

 

   
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Net Income

Hallmark Financial reported net income of $13.0 million and $28.1 million for the three and six months ended June 30, 2019 as compared to $5.1 million and $5.7 million for the three and six months ended June 30, 2018.

 

On a diluted basis per share, the Company reported net income of $0.71 per share and $1.54 per share for the three and six months ended June 30, 2019 as compared to $0.28 per share and $0.31 per share for the three and six months ended June 30, 2018.

 

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.

 

   
  Page 5 of 11 

 

 

 

               Weighted     
   Income   Less Tax   Net   Average   Diluted 
($ in thousands)  Before Tax   Effect   After Tax   Shares Diluted   Per Share 
Second Quarter 2019                         
Reported GAAP measures  $16,484   $3,455   $13,029    18,251   $0.71 
Excluded investment (gains)/losses  $(6,817)  $(1,432)  $(5,385)   18,251   $(0.30)
Operating earnings  $9,667   $2,023   $7,644    18,251   $0.42 
                          
Second Quarter 2018                         
Reported GAAP measures  $6,372   $1,282   $5,090    18,174   $0.28 
Excluded investment (gains)/losses  $(533)  $(112)  $(421)   18,174   $(0.02)
Operating earnings  $5,839   $1,170   $4,669    18,174   $0.26 
                          
Year-to-Date 2019                         
Reported GAAP measures  $35,402   $7,348   $28,054    18,250   $1.54 
Excluded investment (gains)/losses  $(18,754)  $(3,938)  $(14,816)   18,250   $(0.81)
Operating earnings  $16,648   $3,410   $13,238    18,250   $0.73 
                          
Year-to-Date 2018                         
Reported GAAP measures  $7,181   $1,444   $5,737    18,230   $0.31 
Excluded investment (gains)/losses  $4,302   $903   $3,399    18,230   $0.19 
Operating earnings  $11,483   $2,347   $9,136    18,230   $0.50 

 

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.

 

Year-to-date 2019 net income      28,054   a
Excluded investment gains, net of tax    (14,816)    
Year-to-date 2019 operating earnings      13,238   b
Annualized year-to-date 2019 net income      56,108   (a x 2)
Annualized year-to-date 2019 operating earnings      26,476   (b x 2)
       
Beginning GAAP equity    255,532   c
Reverse goodwill    (44,695)    
Beginning tangible equity    210,837   d
       
Annualized return on beginning GAAP equity 22.0%   (a x 2) / c
Annualized operating return on beginning tangible equity 12.6%   (b x 2) / d

 

   
  Page 6 of 11 

 

 

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 Dallas, Texas and its common stock is listed on NASDAQ under the symbol "HALL."

 

Forward-looking statements in this release are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that actual results may differ materially from such forward-looking statements. Forward-looking statements involve risks and uncertainties including, but not limited to, continued acceptance of the Company’s products and services in the marketplace, competitive factors, interest rate trends, general economic conditions, the availability of financing, underwriting loss experience and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.

 

For further information, please contact:

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

www.hallmarkgrp.com

 

   
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Hallmark Financial Services, Inc. and Subsidiaries
Consolidated Balance Sheets        
($ in thousands, except par value)  Jun. 30   Dec. 31 
ASSETS  2019   2018 
Investments:   (unaudited)      
Debt securities, available-for-sale, at fair value (amortized cost: $530,516 in 2019 and $550,268 in 2018)  $533,148   $545,870 
Equity securities (cost: $68,709 in 2019 and $68,709 in 2018)   94,012    80,896 
Other investment (cost: $3,763 in 2019 and $3,763 in 2018)   2,585    1,148 
Total investments   629,745    627,914 
Cash and cash equivalents   67,670    35,594 
Restricted cash   3,486    4,877 
Ceded unearned premiums   150,883    133,031 
Premiums receivable   144,674    119,778 
Accounts receivable   1,332    1,619 
Receivable for securities   2,581    3,369 
Reinsurance recoverable   300,155    252,029 
Deferred policy acquisition costs   20,308    14,291 
Goodwill   44,695    44,695 
Intangible assets, net   6,323    7,555 
Deferred federal income taxes, net   -    4,983 
Prepaid expenses   3,282    2,588 
Other assets   30,634    12,571 
Total Assets  $1,405,768   $1,264,894 
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Liabilities:          
Revolving credit facility payable  $30,000   $30,000 
Subordinated debt securities (less unamortized debt issuance cost of $872 in 2019 and $898 in 2018)   55,830    55,804 
Reserves for unpaid losses and loss adjustment expenses   551,543    527,247 
Unearned premiums   351,630    298,061 
Reinsurance balances payable   73,977    67,328 
Current federal income tax payable   870    4 
Deferred federal income taxes, net   143    - 
Pension liability   1,946    2,018 
Payable for securities   3,167    698 
Accounts payable and other accrued expenses   47,126    28,202 
Total Liabilities   1,116,232    1,009,362 
Commitments and contingencies          
Stockholders’ equity:          
Common stock, $.18 par value, authorized 33,333,333 shares; issued 20,872,831 shares in 2019 and 2018   3,757    3,757 
Additional paid-in capital   122,778    123,168 
Retained earnings   189,249    161,195 
Accumulated other comprehensive loss   (1,047)   (6,660)
Treasury stock (2,749,738 shares in 2019 and 2,846,131 shares in 2018), at cost   (25,201)   (25,928)
Total Stockholders’ Equity   289,536    255,532 
Total Liabilities & Stockholders' Equity  $1,405,768   $1,264,894 

 

   
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Hallmark Financial Services, Inc. and Subsidiaries
Consolidated Statements of Operations  Three Months Ended   Six Months Ended 
($ in thousands, except per share amounts)  June 30,   June 30, 
   2019   2018   2019   2018 
   (unaudited)   (unaudited)   (unaudited)   (unaudited) 
Gross premiums written  $218,236   $173,219   $405,552   $326,724 
Ceded premiums written   (94,393)   (83,373)   (164,306)   (145,445)
Net premiums written   123,843    89,846    241,246    181,279 
Change in unearned premiums   (17,344)   1,132    (35,717)   1,646 
Net premiums earned   106,499    90,978    205,529    182,925 
                     
Investment income, net of expenses   5,412    4,406    10,523    8,846 
Investment gains (losses), net   6,817    533    18,754    (4,302)
Finance charges   1,797    1,161    3,531    2,201 
Commission and fees   364    1,032    657    1,735 
Other income   14    15    30    61 
Total revenues   120,903    98,125    239,024    191,466 
                     
Losses and loss adjustment expenses   73,226    63,648    143,313    127,323 
Operating expenses   29,336    26,360    56,582    53,573 
Interest expense   1,240    1,128    2,493    2,155 
Amortization of intangible assets   617    617    1,234    1,234 
Total expenses   104,419    91,753    203,622    184,285 
                     
Income before tax   16,484    6,372    35,402    7,181 
Income tax expense   3,455    1,282    7,348    1,444 
Net income  $13,029   $5,090   $28,054   $5,737 
                     
Net income per share:                    
Basic  $0.72   $0.28   $1.55   $0.32 
Diluted  $0.71   $0.28   $1.54   $0.31 

 

   
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Hallmark Financial Services, Inc. and Subsidiaries
Consolidated Segment Data   
Three Months Ended Jun. 30       
  

Specialty Commercial

Segment

  

Standard Commercial

Segment

   Personal Segment   Corporate   Consolidated 
($ in thousands, unaudited)  2019   2018   2019   2018   2019   2018   2019   2018   2019   2018 
Gross premiums written  $172,940   $136,079   $21,835   $21,574   $23,461   $15,566   $-   $-   $218,236   $173,219 
Ceded premiums written   (83,370)   (72,083)   (7,170)   (2,645)   (3,853)   (8,645)   -    -    (94,393)   (83,373)
Net premiums written   89,570    63,996    14,665    18,929    19,608    6,921    -    -    123,843    89,846 
Change in unearned premiums   (20,216)   2,333    1,611    (824)   1,261    (377)   -    -    (17,344)   1,132 
Net premiums earned   69,354    66,329    16,276    18,105    20,869    6,544    -    -    106,499    90,978 
                                                   
Total revenues   73,592    72,081    17,310    19,247    23,116    7,916    6,885    (1,119)   120,903    98,125 
                                                   
Losses and loss adjustment expenses   48,374    48,352    10,613    10,621    14,239    4,675    -    -    73,226    63,648 
                                                   
Pre-tax income (loss)   10,427    8,770    2,057    2,656    2,441    (1)   1,559    (5,053)   16,484    6,372 
                                                   
Net loss ratio (1)   69.7%   72.9%   65.2%   58.7%   68.2%   71.4%             68.8%   70.0%
Net expense ratio (1)   22.1%   22.3%   29.0%   33.2%   23.3%   33.7%             25.7%   27.0%
Net combined ratio (1)   91.8%   95.2%   94.2%   91.9%   91.5%   105.1%             94.5%   97.0%
                                                   
Favorable (Unfavorable) Prior Year Development   (3,277)   (5,849)   1,778    507    29    359    -    -    (1,470)   (4,983)

 

(1)The 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.

 

   
  Page 10 of 11 

 

 

Hallmark Financial Services, Inc. and Subsidiaries
Consolidated Segment Data  
Six Months Ended Jun. 30                    

  

Specialty Commercial

Segment

  

Standard Commercial

Segment

   Personal Segment   Corporate   Consolidated 
($ in thousands, unaudited)  2019   2018   2019   2018   2019   2018   2019   2018   2019   2018 
Gross premiums written  $307,339   $250,892   $47,363   $44,371   $50,850   $31,461   $-   $-   $405,552   $326,724 
Ceded premiums written   (140,731)   (122,741)   (15,273)   (5,200)   (8,302)   (17,504)   -    -    (164,306)   (145,445)
Net premiums written   166,608    128,151    32,090    39,171    42,548    13,957    -    -    241,246    181,279 
Change in unearned premiums   (33,066)   5,868    1,560    (3,199)   (4,211)   (1,023)   -    -    (35,717)   1,646 
Net premiums earned   133,542    134,019    33,650    35,972    38,337    12,934    -    -    205,529    182,925 
                                                   
Total revenues   141,559    145,205    35,683    38,122    42,599    15,536    19,183    (7,397)   239,024    191,466 
                                                   
Losses and loss adjustment expenses   94,323    95,895    22,264    22,301    26,726    9,127    -    -    143,313    127,323 
                                                   
Pre-tax income (loss)   18,395    18,528    3,564    3,975    4,014    (23)   9,429    (15,299)   35,402    7,181 
                                                   
Net loss ratio (1)   70.6%   71.6%   66.2%   62.0%   69.7%   70.6%             69.7%   69.6%
Net expense ratio (1)   22.2%   23.0%   29.7%   33.2%   22.8%   34.6%             25.7%   27.5%
Net combined ratio (1)   92.8%   94.6%   95.9%   95.2%   92.5%   105.2%             95.4%   97.1%
                                                   
Net Favorable (Unfavorable) Prior Year Development   (5,203)   (6,861)   3,583    1,560    216    848    -    -    (1,404)   (4,453)

 

(1)The 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.

 

   
  Page 11 of 11 

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