AM Best keeps Hallmark under review to assess filing delays
AM Best has maintained the under review with negative implications status for up-for-sale US specialty insurer Hallmark Financial’s A- financial strength rating.
The ratings agency placed the ratings under review with negative implications in March following the announcement by Dallas-Texas-based Hallmark Financial that its 2019 statutory results will include a pre-tax adverse prior year loss development of $63.8mn, net of reinsurance.
At the time, AM Best indicated that the ratings would remain under review until full-year reserve information was assessed.
“The maintaining of the under review with negative implications status follows an announcement by Hallmark Financial that it received notice from Nasdaq on 13 May as a result of the company’s failure to file its Form 10-Q for the period ending 31 March 2020, and because it remains delinquent in filing its Form 10-K for the year ended 31 December 2019,” AM Best explained.
The ratings agency said it requires additional time to gauge the depth and breadth of the issues underlying the filing delays, in particular the impact of the adverse reserve development on the group’s risk-adjusted capitalization, operating performance, business profile and enterprise risk management assessments.
“AM Best will look to resolve the under review status once there is more clarity on the company’s plan to regain compliance with Nasdaq and full-year reserve information is reviewed,” it said.
AM Best has maintained the under review with negative implications status for the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” of the members of Hallmark Insurance Group, as well as the ICR of “bbb-” and the long-term issue credit ratings of parent Hallmark Financial Services.
Hallmark’s share price has slumped since it first revealed its troubles in March. It closed last night at $5.45, down 8.7 percent for the day. This was down 71 percent on its 2020 peak of $18.80 on 21 January.