AM Best Comments on Credit Ratings of Hallmark Financial Services, Inc. and Its Subsidiaries Following Announced Specialty Commercial Business Separation Plan

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has commented that the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb-” and the Long-Term Issue Credit Ratings (Long-Term IR) of Hallmark Financial Services, Inc. (Hallmark Financial) [NASDAQ: HALL] are unchanged, following the recent announcement that Hallmark Financial is exploring opportunities to segregate its specialty commercial segment. Concurrently, the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term ICRs of “a-” of the members of Hallmark Insurance Group also remain unchanged. The outlook of these Credit Ratings (ratings) is negative. Operations are headquartered in Dallas, TX. (See below for a detailed listing of the companies and ratings).

On Jan. 21, 2021, Hallmark Financial announced its intention to explore opportunities to segregate its specialty commercial segment from its other business segments to create separately operated companies. The Hallmark Financial board of directors believes establishing separation of the operational structures of its business segments may achieve a more appropriate aggregate valuation and improve access to capital.

AM Best awaits additional necessary details on how this separation may proceed, the impact it will have on the overall capital structure and the credit quality of each segment, along with a planned timeline. AM Best will continue to monitor Hallmark Financial results and react accordingly as details arise.

The FSR of A- (Excellent) and the Long-Term ICRs of “a-” remain unchanged for the following members of Hallmark Insurance Group:

• American Hallmark Insurance Company of Texas
• Hallmark Insurance Company
• Hallmark Specialty Insurance Company
• Hallmark County Mutual Insurance Company
• Hallmark National Insurance Company

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