Hallmark Announces Third Quarter 2021 Results
Highlights:
- Pre-tax income was
$4.4 million for the three months endedSeptember 30, 2021 , as compared to pre-tax loss of$37.8 million reported during the same period in 2020. Pre-tax income was$14.6 million for the nine months endedSeptember 30, 2021 , as compared to a pre-tax loss of$102.5 million for the same period the prior year. - Net income was
$3.4 million , or$0.19 per diluted share, in the third quarter of 2021 as compared to net loss of$28.4 million , or$1.56 per diluted share, for the same period of 2020. Year-to-date net income was$11.6 million , or$0.64 per diluted share, as compared to a net loss of$86.5 million , or$4.77 per diluted share, for the same period of 2020. - Net combined ratio was 95.9% and 99.6% for the three and nine months ended
September 30, 2021 , compared to 132.7% and 109.4% for the same periods the prior year. - Gross premiums written for the nine months ended
September 30, 2021 decreased 14% compared to the same period of the prior year. Excluding premiums from the exited binding primary commercial auto business, gross premiums written for the nine months endedSeptember 30, 2021 would have decreased 10% compared to the same period of the prior year. (See “Non-GAAP” Financial Measures below). - Net premiums written for the nine months ended
September 30, 2021 decreased 21% compared to the same period of the prior year. Excluding premiums from the exited binding primary commercial auto business, gross premiums written for the nine months endedSeptember 30, 2021 would have decreased 15% compared to the same period of the prior year. (See “Non-GAAP” Financial Measures below). - Net catastrophe losses were
$2.8 million in the third quarter of 2021, or 3.0 points of the net combined ratio as compared to$9.6 million , or 8.2 points of the net combined ratio for the same period the prior year. Net catastrophe losses were$12.4 million for the first nine months of 2021, or 4.2 points of the net combined ratio as compared to$22.2 million , or 6.1 points of the net combined ratio for the same period the prior year. - Net investment gain was
$9.1 million for year to date 2021, which included$3.8 million of unrealized gains on equity securities, as compared to net investment loss of$27.9 million , which included$31.8 million of unrealized losses on equity and other investment securities, during the same period the prior year.
Third Quarter and Year-to-Date 2021 Financial Review
Third Quarter | Year-to-Date | ||||||||||||||||
*As Revised | *As Revised | ||||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||
($ in thousands) | |||||||||||||||||
Gross premiums written | $ | 169,104 | $ | 196,464 | -14 | % | $ | 501,838 | $ | 581,697 | -14 | % | |||||
Net premiums written | $ | 90,964 | $ | 113,056 | -20 | % | $ | 269,947 | $ | 342,430 | -21 | % | |||||
Net premiums earned | $ | 94,347 | $ | 116,720 | -19 | % | $ | 292,783 | $ | 362,017 | -19 | % | |||||
Investment income, net of expenses | $ | 2,213 | $ | 2,660 | -17 | % | $ | 7,576 | $ | 10,314 | -27 | % | |||||
Other-than-temporary impairment (1) | $ | - | $ | (1,692 | ) | nm | $ | - | $ | (1,692 | ) | nm | |||||
Net income (loss) | $ | 3,445 | $ | (28,388 | ) | 112 | % | $ | 11,571 | $ | (86,541 | ) | 113 | % | |||
Operating income (loss) (2) | $ | 3,866 | $ | (10,750 | ) | 136 | % | $ | 4,365 | $ | (1,635 | ) | 367 | % | |||
Net income (loss) per share - basic | $ | 0.19 | $ | (1.56 | ) | 112 | % | $ | 0.64 | $ | (4.77 | ) | 113 | % | |||
Net income (loss) per share - diluted | $ | 0.19 | $ | (1.56 | ) | 112 | % | $ | 0.64 | $ | (4.77 | ) | 113 | % | |||
Operating income (loss) per share - diluted (2) | $ | 0.21 | $ | (0.59 | ) | 136 | % | $ | 0.24 | $ | (0.09 | ) | 367 | % | |||
Book value per share | $ | 9.78 | $ | 9.66 | 1.3 | % | |||||||||||
* All prior period amounts have been adjusted to reflect the correction of an immaterial error relating to certain reinsurance treaties and other items related to prior periods. |
(1) Other-than-temporary impairment is included in investment gains (losses), net
(2) See “Non-GAAP Financial Measures” below
Gross Premiums Written
Gross premiums written were
Net Premiums Written
Net premiums written were
Net Premiums Earned
Net premiums earned were
Investments
Net investment income was
Net investment loss was
Fixed-income securities were
Total investments were
Pre-Tax Income (Loss)
Pre-tax income was
Loss and Loss Adjustment Expenses (“LAE”) and Net Combined Ratios
Losses and LAE for the three and nine months ended
The net loss ratio was 67.5% and 71.6% for the three and nine months ended
The expense ratio was 28.4% and 28.0% for the three and nine months ended
Net Income (Loss)
Net income was
On a diluted basis per share, net income was
Book Value Per Share
Book value per share increased 6% to
Non-GAAP Financial Measures
The Company’s financial statements are prepared in accordance with
Operating loss and operating loss per share are calculated by excluding net investment gains and losses and impairment of goodwill and other intangible assets (“Impairments”) from GAAP net income. The Impairments are unusual and infrequent charges for the Company. 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 (Loss) | Less Tax | Net | Average |
Diluted | ||||||||||
($ in thousands) | Before Tax | Effect | After Tax | Shares Diluted |
Per Share | |||||||||
Third Quarter 2021 | ||||||||||||||
Reported GAAP measures | $ | 4,391 | $ | 946 | $ | 3,445 | 18,172 | $ | 0.19 | |||||
Excluded investment (gains)/losses | $ | 533 | $ | 112 | $ | 421 | 18,172 | $ | 0.02 | |||||
Operating income | $ | 4,924 | $ | 1,058 | $ | 3,866 | 18,172 | $ | 0.21 | |||||
Third Quarter 2020 (*As Revised) | ||||||||||||||
Reported GAAP measures | $ | (37,792 | ) | $ | (9,404 | ) | $ | (28,388 | ) | 18,142 | $ | (1.56 | ) | |
Excluded loss portfolio transfer cost included in Losses and LAE | $ | 21,700 | $ | 4,557 | $ | 17,143 | 18,142 | $ | 0.94 | |||||
Excluded investment (gains)/losses | $ | 627 | $ | 132 | $ | 495 | 18,142 | $ | 0.03 | |||||
Operating loss | $ | (15,465 | ) | $ | (4,715 | ) | $ | (10,750 | ) | 18,142 | $ | (0.59 | ) | |
Year-to-Date 2021 | ||||||||||||||
Reported GAAP measures | $ | 14,608 | $ | 3,037 | $ | 11,571 | 18,162 | $ | 0.64 | |||||
Excluded investment (gains)/losses | $ | (9,122 | ) | $ | (1,916 | ) | $ | (7,206 | ) | 18,162 | $ | (0.40 | ) | |
Operating income | $ | 5,486 | $ | 1,121 | $ | 4,365 | 18,162 | $ | 0.24 | |||||
Year-to-Date 2020 (*As Revised) | ||||||||||||||
Reported GAAP measures | $ | (102,484 | ) | $ | (15,943 | ) | $ | (86,541 | ) | 18,136 | $ | (4.77 | ) | |
Excluded impairment of goodwill and other intangibles | $ | 45,996 | $ | 273 | $ | 45,723 | 18,136 | $ | 2.52 | |||||
Excluded loss portfolio transfer cost included in Losses and LAE | $ | 21,700 | $ | 4,557 | $ | 17,143 | 18,136 | $ | 0.95 | |||||
Excluded investment (gains)/losses | $ | 27,899 | $ | 5,859 | $ | 22,040 | 18,136 | $ | 1.22 | |||||
Operating loss | $ | (6,889 | ) | $ | (5,254 | ) | $ | (1,635 | ) | 18,136 | $ | (0.09 | ) | |
* All prior period amounts have been adjusted to reflect the correction of an immaterial error relating to certain reinsurance treaties and other items related to prior periods. | ||||||||||||||
In
YTD Gross Written Premium | YTD Net Written Premium | ||||||||||||||||||
2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||||
($ in thousands) | |||||||||||||||||||
Reported written premium | $ | 501,838 | $ | 581,697 | -14 | % | $ | 269,947 | $ | 342,430 | -21 | % | |||||||
Less primary binding commercial auto | $ | 218 | $ | 24,798 | -99 | % | $ | 48 | $ | 23,250 | -100 | % | |||||||
Written premium excluding primary binding commercial auto | $ | 501,620 | $ | 556,899 | -10 | % | $ | 269,899 | $ | 319,180 | -15 | % | |||||||
About Hallmark
Hallmark 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, Hallmark markets, underwrites and services commercial and personal insurance in select markets. Hallmark is headquartered in
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
For further information, please contact:
817.348.1600
www.hallmarkgrp.com
Consolidated Balance Sheets | ||||||
($ in thousands, except par value) | ||||||
ASSETS | 2021 | 2020 | ||||
Investments: | (unaudited) | * As Revised | ||||
Debt securities, available-for-sale, at fair value (amortized cost: |
$ | 317,916 | $ | 507,279 | ||
Equity securities (cost: |
45,362 | 29,388 | ||||
Total investments | 363,278 | 536,667 | ||||
Cash and cash equivalents | 325,833 | 102,580 | ||||
Restricted cash | 3,793 | 5,728 | ||||
Ceded unearned premiums | 145,858 | 143,446 | ||||
Premiums receivable | 85,177 | 120,332 | ||||
Accounts receivable | 6,595 | 5,967 | ||||
Receivable for securities | 5,613 | 913 | ||||
Reinsurance recoverable | 515,088 | 497,846 | ||||
Deferred policy acquisition costs | 10,494 | 17,840 | ||||
Intangible assets, net | 944 | 1,322 | ||||
Federal income tax recoverable | 17,347 | 24,691 | ||||
Deferred federal income taxes, net | 9,326 | 8,724 | ||||
Prepaid expenses | 4,683 | 2,648 | ||||
Other assets | 26,179 | 28,013 | ||||
Total Assets | $ | 1,520,208 | $ | 1,496,717 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Liabilities: | ||||||
Senior unsecured notes due 2029 (less unamortized debt issuance costs of |
$ | 49,230 | $ | 49,156 | ||
Subordinated debt securities (less unamortized debt issuance costs of |
55,946 | 55,907 | ||||
Reserves for unpaid losses and loss adjustment expenses | 815,381 | 789,768 | ||||
Unearned premiums | 300,383 | 320,806 | ||||
Reinsurance payable | 71,183 | 61,100 | ||||
Pension liability | 1,530 | 1,859 | ||||
Payable for securities | 1,047 | - | ||||
Accounts payable and other accrued expenses | 47,728 | 50,415 | ||||
Total Liabilities | 1,342,428 | 1,329,011 | ||||
Commitments and contingencies | ||||||
Stockholders' equity: | ||||||
Common stock, |
3,757 | 3,757 | ||||
Additional paid-in capital | 122,773 | 122,893 | ||||
Retained earnings | 77,270 | 65,699 | ||||
Accumulated other comprehensive income | (1,272 | ) | 383 | |||
(24,748 | ) | (25,026 | ) | |||
Total Stockholders Equity | 177,780 | 167,706 | ||||
Total Liabilities & Stockholders Equity | $ | 1,520,208 | $ | 1,496,717 | ||
*All prior period amounts have been adjusted to reflect the correction of an immaterial error relating to certain reinsurance treaties and other items related to prior periods. | ||||||
Consolidated Statements of Operations | Three Months Ended | Nine Months Ended | |||||||||||
($ in thousands, except per share amounts, unaudited) | |||||||||||||
*As Revised | *As Revised | ||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||
Gross premiums written | $ | 169,104 | $ | 196,464 | $ | 501,838 | $ | 581,697 | |||||
Ceded premiums written | (78,140 | ) | (83,408 | ) | (231,891 | ) | (239,267 | ) | |||||
Net premiums written | 90,964 | 113,056 | 269,947 | 342,430 | |||||||||
Change in unearned premiums | 3,383 | 3,664 | 22,836 | 19,587 | |||||||||
Net premiums earned | 94,347 | 116,720 | 292,783 | 362,017 | |||||||||
Investment income, net of expenses | 2,213 | 2,660 | 7,576 | 10,314 | |||||||||
Investment (losses) gains, net | (533 | ) | (627 | ) | 9,122 | (27,899 | ) | ||||||
Finance charges | 1,076 | 1,316 | 3,318 | 4,488 | |||||||||
Commission and fees | 232 | 209 | 742 | 793 | |||||||||
Other income | 15 | 15 | 50 | 48 | |||||||||
Total revenues | 97,350 | 120,293 | 313,591 | 349,761 | |||||||||
Losses and loss adjustment expenses | 63,706 | 122,555 | 209,674 | 308,278 | |||||||||
Operating expenses | 27,882 | 33,640 | 85,188 | 92,059 | |||||||||
Interest expense | 1,245 | 1,273 | 3,743 | 4,061 | |||||||||
Impairment of goodwill and other intangible assets | 0 | 0 | 0 | 45,996 | |||||||||
Amortization of intangible assets | 126 | 617 | 378 | 1,851 | |||||||||
Total expenses | 92,959 | 158,085 | 298,983 | 452,245 | |||||||||
Income (loss) before tax | 4,391 | (37,792 | ) | 14,608 | (102,484 | ) | |||||||
Income tax expense (benefit) | 946 | (9,404 | ) | 3,037 | (15,943 | ) | |||||||
Net (loss) income | $ | 3,445 | $ | (28,388 | ) | $ | 11,571 | $ | (86,541 | ) | |||
Net (loss) income per share: | |||||||||||||
Basic | $ | 0.19 | $ | (1.56 | ) | $ | 0.64 | $ | (4.77 | ) | |||
Diluted | $ | 0.19 | $ | (1.56 | ) | $ | 0.64 | $ | (4.77 | ) | |||
* All prior period amounts have been adjusted to reflect the correction of an immaterial error relating to certain reinsurance treaties and other items related to prior periods. | |||||||||||||
Consolidated Segment Data |
||||||||||||||||||||||||||||||
Three Months Ended |
||||||||||||||||||||||||||||||
Specialty Commercial Segment |
Standard Commercial Segment |
Personal Segment | Corporate | Consolidated | ||||||||||||||||||||||||||
* As Revised |
* As Revised |
|||||||||||||||||||||||||||||
($ in thousands, unaudited) | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Gross premiums written | $ | 126,716 | $ | 150,016 | $ | 24,935 | $ | 24,726 | $ | 17,453 | $ | 21,722 | $ | - | $ | - | $ | 169,104 | $ | 196,464 | ||||||||||
Ceded premiums written | (69,424 | ) | (72,977 | ) | (8,644 | ) | (7,270 | ) | (72 | ) | (3,161 | ) | - | - | (78,140 | ) | (83,408 | ) | ||||||||||||
Net premiums written | 57,292 | 77,039 | 16,291 | 17,456 | 17,381 | 18,561 | - | - | 90,964 | 113,056 | ||||||||||||||||||||
Change in unearned premiums | 2,623 | 3,979 | 1,177 | (744 | ) | (417 | ) | 429 | - | - | 3,383 | 3,664 | ||||||||||||||||||
Net premiums earned | 59,915 | 81,018 | 17,468 | 16,712 | 16,964 | 18,990 | - | - | 94,347 | 116,720 | ||||||||||||||||||||
Total revenues | 62,493 | 83,749 | 18,156 | 17,398 | 18,316 | 20,513 | (1,616 | ) | (1,367 | ) | 97,349 | 120,293 | ||||||||||||||||||
Losses and loss adjustment expenses | 36,560 | 92,625 | 10,411 | 14,683 | 16,735 | 15,247 | - | - | 63,706 | 122,555 | ||||||||||||||||||||
Pre-tax income (loss) | 12,620 | (27,237 | ) | 1,957 | (1,672 | ) | (3,887 | ) | (2,065 | ) | (6,299 | ) | (6,818 | ) | 4,391 | (37,792 | ) | |||||||||||||
Net loss ratio (1) | 61.0 | % | 114.3 | % | 59.6 | % | 87.9 | % | 98.7 | % | 80.3 | % | 67.5 | % | 105.0 | % | ||||||||||||||
Net expense ratio (1) | 22.0 | % | 22.2 | % | 32.9 | % | 26.1 | % | 26.1 | % | 32.0 | % | 28.4 | % | 27.7 | % | ||||||||||||||
Net combined ratio (1) | 83.0 | % | 136.5 | % | 92.5 | % | 114.0 | % | 124.8 | % | 112.3 | % | 95.9 | % | 132.7 | % | ||||||||||||||
Net (Unfavorable) Favorable Prior |
(1,305 | ) | (11,493 | ) | 993 | (1,431 | ) | (1,197 | ) | (987 | ) | (1,509 | ) | (13,911 | ) |
(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.
* All prior period amounts have been adjusted to reflect the correction of an immaterial error relating to certain reinsurance treaties and other items related to prior periods.
Consolidated Segment Data | ||||||||||||||||||||||||||||||
Nine Months Ended |
||||||||||||||||||||||||||||||
Specialty Commercial Segment |
Standard Commercial Segment |
Personal Segment | Corporate | Consolidated | ||||||||||||||||||||||||||
* As Revised |
* As Revised |
|||||||||||||||||||||||||||||
($ in thousands, unaudited) | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Gross premiums written | $ | 366,896 | $ | 438,113 | $ | 82,382 | $ | 74,944 | $ | 52,560 | $ | 68,640 | $ | - | $ | - | $ | 501,838 | $ | 581,697 | ||||||||||
Ceded premiums written | (202,433 | ) | (207,699 | ) | (29,224 | ) | (21,770 | ) | (234 | ) | (9,798 | ) | - | - | (231,891 | ) | (239,267 | ) | ||||||||||||
Net premiums written | 164,463 | 230,414 | 53,158 | 53,174 | 52,326 | 58,842 | - | - | 269,947 | 342,430 | ||||||||||||||||||||
Change in unearned premiums | 24,985 | 21,681 | (2,077 | ) | (3,643 | ) | (72 | ) | 1,549 | - | - | 22,836 | 19,587 | |||||||||||||||||
Net premiums earned | 189,448 | 252,095 | 51,081 | 49,531 | 52,254 | 60,391 | - | - | 292,783 | 362,017 | ||||||||||||||||||||
Total revenues | 196,982 | 262,761 | 53,084 | 52,130 | 56,390 | 65,300 | 7,134 | (30,430 | ) | 313,590 | 349,761 | |||||||||||||||||||
Losses and loss adjustment expenses | 125,655 | 220,215 | 36,640 | 37,313 | 47,379 | 50,750 | - | - | 209,674 | 308,278 | ||||||||||||||||||||
Pre-tax income (loss) | 28,816 | (5,752 | ) | 347 | (154 | ) | (8,275 | ) | (5,836 | ) | (6,280 | ) | (90,742 | ) | 14,608 | (102,484 | ) | |||||||||||||
Net loss ratio (1) | 66.3 | % | 87.4 | % | 71.7 | % | 75.3 | % | 90.7 | % | 84.0 | % | 71.6 | % | 85.2 | % | ||||||||||||||
Net expense ratio (1) | 23.4 | % | 19.3 | % | 32.1 | % | 30.6 | % | 27.9 | % | 27.0 | % | 28.0 | % | 24.2 | % | ||||||||||||||
Net combined ratio (1) | 89.7 | % | 106.7 | % | 103.8 | % | 105.9 | % | 118.6 | % | 111.0 | % | 99.6 | % | 109.4 | % | ||||||||||||||
Net (Unfavorable) Favorable Prior |
(533 | ) | (23,961 | ) | 2,336 | (2,350 | ) | (4,356 | ) | (6,948 | ) | (2,553 | ) | (33,259 | ) |
(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.
* All prior period amounts have been adjusted to reflect the correction of an immaterial error relating to certain reinsurance treaties and other items related to prior periods.
https://www.globenewswire.com/NewsRoom/AttachmentNg/5a72e132-5d9d-45a6-9d0a-77177ace18f6
Source:
GoHealth Named Top Place to Work for Three of its Offices
VERICITY, INC. – 10-Q – Management's Discussion and Analysis of Financial Condition and Results of Operations for the three and nine months ended September 30, 2021 and 2020
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News