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A.M. Best Affirms Ratings of Hallmark Insurance Group and Its Members

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  Published in Business and Finance on Friday, May 7th 2010 at 16:30 GMT by Market Wire
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OLDWICK, N.J.--([ BUSINESS WIRE ])--A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of aa-a of Hallmark Insurance Group (Hallmark Group) (Fort Worth, TX) and its operating members. Additionally, A.M. Best has affirmed the ICR of abbb-a for the groupa™s holding company parent, Hallmark Financial Services, Inc. (Hallmark Financial) (Nevada) (NASDAQ: HALL). The outlook for all ratings is stable. (See below for a detailed listing of the companies.)

The affirmation of the ratings reflects Hallmark Groupa™s strong risk-adjusted capitalization, consistent operating performance and the financial flexibility afforded by Hallmark Financial. Furthermore, the ratings consider Hallmark Groupa™s organic surplus growth through profitable underwriting performance and solid investment income in recent years. In addition, the acquisitions of various agency production sources by Hallmark Financial have resulted in a greater geographic and product spread of risk for Hallmark Group.

These rating factors are partially offset by Hallmark Groupa™s continued execution risk associated with the development of various parent company acquisitions, as well as geographic and product expansion initiatives. Since more than half of Hallmark Groupa™s direct premiums written are concentrated in three key states, earnings remain susceptible to increased competition and changes in the regulatory, judicial and legislative environments.

The FSR of A- (Excellent) and ICRs of aa-a have been affirmed for Hallmark Insurance Group and its following members:

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

For Besta™s Credit Ratings, an overview of the rating process and rating methodologies, please visit [ www.ambest.com/ratings ].

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at [ www.ambest.com/ratings/methodology ].

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit [ www.ambest.com ].