Schedule II - Condensed Financial Information of Registrant (Parent Company Only)

12 Months Ended

Dec. 31, 2021

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Financial Information of Parent Company Only Disclosure

Schedule II – Condensed Financial Information of Registrant (Parent Company Only)

HALLMARK FINANCIAL SERVICES, INC.

BALANCE SHEETS

December 31, 2021 and 2020

(In thousands)

	2021		2020
ASSETS
Cash and cash equivalents		32,482		30,066
Investment in subsidiaries		239,832		247,839
Deferred federal income taxes		50		285
Federal income tax recoverable		9,028		12,506
Other assets		19,913		19,844
Total assets	$	301,305	$	310,540
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Senior unsecured notes due 2029 (less unamortized debt issuance cost of $746 in 2021 and $844 in 2020)	$	49,254	$	49,156
Subordinated debt securities (less unamortized debt issuance cost of $743 in 2021 and $795 in 2020)		55,959		55,907
Accounts payable and other accrued expenses		20,571		34,555
Total liabilities		125,784		139,618
Stockholders’ equity:
Common stock, $.18 par value, authorized 33,333,333 shares; issued 20,872,831 shares in 2021 and in 2020		3,757		3,757
Additional paid-in capital		122,844		122,893
Retained earnings		74,703		68,915
Accumulated other comprehensive income		(1,035)		383
Treasury stock (2,700,364 shares in 2021 and 2,730,673 in 2020), at cost		(24,748)		(25,026)
Total stockholders’ equity		175,521		170,922
Total liabilities and stockholders’ equity	$	301,305	$	310,540

See accompanying report of independent registered public accounting firm.

Schedule II (Continued) – Condensed Financial Information of Registrant (Parent Company Only)

HALLMARK FINANCIAL SERVICES, INC.

STATEMENTS OF OPERATIONS

For the years ended December 31, 2021 and 2020

(In thousands)

	2021		2020
Investment income, net of expenses	$	28	$	20
Dividend income from subsidiaries		3,000		12,000
Net realized gains		—		744
Management fee income		31,714		22,844
Total revenues		34,742		35,608
Operating expenses		13,513		17,101
Interest expense		4,993		5,326
Total expenses		18,506		22,427
Income before equity in undistributed earnings of subsidiaries and income tax benefit		16,236		13,181
Income tax expense (benefit)		3,858		(5,592)
Income before equity in undistributed earnings of subsidiaries		12,378		18,773
Equity in undistributed share of loss in subsidiaries		(3,374)		(113,124)
Net income (loss)	$	9,004	$	(94,351)
Comprehensive income (loss)	$	7,586	$	(94,656)

See accompanying report of independent registered public accounting firm.

Schedule II (Continued) – Condensed Financial Information of Registrant (Parent Company Only)

HALLMARK FINANCIAL SERVICES, INC.

STATEMENTS OF CASH FLOWS

For the years ended December 31, 2021 and 2020

(In thousands)

	2021		2020
Cash flows from operating activities:
Net income (loss)	$	9,004	$	(94,351)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization expense		832		835
Deferred income tax expense (benefit)		235		768
Net realized gains		—		(744)
Undistributed share of loss of subsidiaries		3,374		113,124
Change in current federal income tax payable (recoverable)		3,478		(6,602)
Change in all other liabilities		(27,254)		(17,851)
Change in all other assets		13,942		14,368
Net cash provided by operating activities		3,611		9,547
Cash flows from investing activities:
Purchases of property and equipment		(1,195)		(716)
Purchase of investment securities		—		—
Maturities, sales and redemptions of investment securities		—		1,598
Capital contribution to subsidiaries		—		—
Net cash (used in) provided by investing activities		(1,195)		882
Increase in cash and cash equivalents		2,416		10,429
Cash and cash equivalents at beginning of year		30,066		19,637
Cash and cash equivalents at end of year	$	32,482	$	30,066
Supplemental cash flow information:
Interest paid	$	3,181	$	4,860
Income taxes paid	$	148	$	204

See accompanying report of independent registered public accounting firm.