Hallmark Monetary mulls separation of specialty industrial enterprise
Hallmark Financial Services has announced that it is considering separating its specialty business – a business that accounts for most of its gross written premium.
The P&C insurance company consists of three business areas: commercial specialty, commercial standard and private companies. According to initial assessments by the company’s board of directors, a separation of the specialty business can “release considerable value” by separating the operational structures of its segments.
Currently, Hallmark’s Specialty Business Unit segments each operate on a unique business model, use their own distribution channels and have different return profiles.
Hallmark’s board of directors believes that the creation of two separate companies “could provide a more reasonable overall valuation and improve access to capital,” the company said in a press release.
Hallmark’s Specialty Lines segment represents 75% of the company’s gross written premium and 68% of the net written premium written in the first three quarters of 2020. The business also saw significant rate increases over the past 12 quarters, from around 7% to over 20% in the third quarter of 2020.
According to Hallmark, no final decision on the structure of the standalone trading company has been made. The transaction is also subject to the terms and conditions and approvals of the Board of Directors, as well as regulatory approvals.