We are a diversified property/casualty insurance group that serves businesses
and individuals in specialty and niche markets.
We offer standard commercial insurance, specialty commercial insurance and personal
insurance in selected market subcategories that are characteristically low-severity
and predominately short-tailed risks. We focus on marketing, distributing, underwriting
and servicing property/casualty insurance products that require specialized
underwriting expertise or market knowledge. We believe this approach provides
us the best opportunity to achieve favorable policy terms and pricing. The insurance
policies we produce are written by our six insurance company subsidiaries as
well as unaffiliated insurers.
We market, distribute, underwrite and service our property/casualty insurance
products primarily through subsidiaries whose operations are organized into
product-specific operating units that are supported by our insurance company
subsidiaries. Our Standard Commercial P&C operating unit offers industry-specific
commercial insurance products and services in the standard market. Our Workers
Compensation operating unit specializes in small and middle market workers compensation
business. Effective July 1, 2015, this operating unit no longer markets or retains
any risk on new or renewal policies. Our MGA Commercial Products operating unit
offers commercial insurance products and services in the excess and surplus
lines market. Our Specialty Commercial operating unit offers general aviation
and satellite launch insurance products and services, low and middle market
commercial umbrella and primary/excess liability insurance, medical professional
liability insurance products and services, and primary/excess commercial property
coverages for both catastrophe and non-catastrophe exposures. Our Specialty
Personal Lines operating unit offers non-standard personal automobile and renters
insurance products and services.
Each operating unit has its own management team with significant experience
in distributing products to its target markets and proven success in achieving
underwriting profitability and providing efficient claims management. Each operating
unit is responsible for marketing, distribution, underwriting and claims management
while we provide capital management, reinsurance, actuarial, investment, financial
reporting, technology and legal services and other administrative support at
the parent level. We believe this approach optimizes our operating results by
allowing us to effectively penetrate our selected specialty and niche markets
while maintaining operational controls, managing risks, controlling overhead
and efficiently allocating our capital across operating units. We expect future
growth to be derived from organic growth in the premium production of our existing
operating units and selected opportunistic acquisitions that meet our criteria.
We market commercial and personal lines property/casualty insurance products
which are tailored to the risks and coverages required by the insured. We believe
that most of our target markets are underserved by larger property/casualty
insurers because of the specialized nature of the underwriting required. We
are able to offer these products profitably as a result of the expertise of
our experienced underwriters. We also believe our long-standing relationships
with independent general agencies and retail agents and the service we provide
differentiate us from larger property/casualty insurers.
Our Standard Commercial P&C operating unit primarily underwrites low-severity,
short-tailed commercial property/casualty insurance products in the standard
market. These products have historically produced stable loss results and include
general liability, commercial automobile, commercial property and umbrella coverages.
Our Standard Commercial P&C operating unit currently markets its products
through a network of 347 independent agents primarily serving businesses in
the non-urban areas of Texas, New Mexico, Oregon, Idaho, Montana, Washington,
Utah, Wyoming, Arkansas, Hawaii and Missouri. In addition, our Standard Commercial
P&C operating unit offers occupational accident coverage in Texas through
an underwriting agency that specializes in the occupational accident insurance
market.
Our MGA Commercial Products operating unit primarily offers commercial property/casualty
insurance products in the excess and surplus lines market. Excess and surplus
lines insurance provides coverage for difficult to place risks that do not fit
the underwriting criteria of insurers operating in the standard market. Our
MGA Commercial Products operating unit focuses on middle market commercial risks
that do not meet the underwriting requirements of standard insurers due to factors
such as loss history, number of years in business, minimum premium size and
types of business operation. Our MGA Commercial Products operating unit primarily
writes commercial automobile, general liability, commercial property and excess
casualty. Our MGA Commercial Products operating unit markets its products in
27 states through 9 wholesale brokers, a program underwriter and 89 general
agency offices, as well as 110 independent retail agents in Texas and Oregon.
Our Specialty Commercial operating unit offers small and middle market commercial
excess liability, umbrella and general liability insurance on both an admitted
and non-admitted basis; general aviation property/casualty insurance primarily
for private and small commercial aircraft and airports; satellite launch property/casualty
insurance products; medical professional liability insurance on an excess and
surplus lines basis; and primary/excess commercial property coverages on an
excess and surplus lines basis for both catastrophe and non-catastrophe exposures.
The principal focus of the excess & umbrella insurance products offered
is transportation (trucking for hire and specialty automobile coverage). The
Specialty Commercial operating unit also provides excess liability coverage
for small to midsize businesses in class categories such as contracting, manufacturing,
hospitality and service (non-transportation). Typical risks range from one power
unit to fleets of up to 200 power units and up to $75M in receipts (non-construction)
or $30M in receipts (construction) from operations. Our Specialty Commercial
operating unit markets these excess & umbrella products through 132 wholesale
brokers in 50 states. The aircraft liability and hull insurance products underwritten
by our Specialty Commercial operating unit are targeted to transitional or non-standard
pilots who may have difficulty obtaining insurance from a standard carrier.
Airport liability insurance is marketed to smaller, regional airports. Our Specialty
Commercial operating unit markets these general aviation insurance products
through 182 independent specialty brokers in 48 states. The satellite launch
property/casualty policies produced by our Specialty Commercial operating unit
are marketed through underwriting agencies with technical knowledge of space
insurance. We can retain up to $2.0 million per risk for satellite launches
and in-orbit coverage for up to 12 months. The medical professional liability
insurance underwritten on an excess and surplus basis by our Specialty Commercial
operating unit focuses on healthcare professionals that do not meet the underwriting
requirements of standard insurers due to factors such as loss history, number
of years in business, minimum premium size and types of business operation.
Our Specialty Commercial operating unit markets these medical professional liability
insurance products through 23 wholesale brokers in 49 states. The primary/excess
commercial property coverages underwritten by our Specialty Commercial operating
unit specializes in shared and layered accounts on a non-admitted basis which
target regional and national property programs. Our Specialty Commercial operating
unit markets these products through 60 wholesale brokers in 42 states.
Our Specialty Personal Lines operating unit offers non-standard personal automobile
policies, which generally provide the minimum limits of liability coverage mandated
by state law to drivers who find it difficult to obtain insurance from standard
carriers due to various factors including age, driving record, claims history
or limited financial resources. Our Specialty Personal Lines operating unit
also provides a renters insurance product that complements our non-standard
auto offering and fits well in our distribution channel. During the fourth quarter
of 2014, our Specialty Personal Lines operating unit discontinued the low value
dwelling/homeowner’s and manufactured homes insurance products it previously
offered. Our Specialty Personal Lines operating unit markets these policies
through 3,702 independent retail agents in 14 states.
Our insurance company subsidiaries are American Hallmark Insurance Company of
Texas (“AHIC”), Hallmark Insurance Company (“HIC”),
Hallmark Specialty Insurance Company (“HSIC”), Hallmark County Mutual
Insurance Company (“HCM”), Hallmark National Insurance Company (“HNIC”)
and Texas Builders Insurance Company (“TBIC”). AHIC, HIC, HSIC and
HNIC have entered into a pooling arrangement, pursuant to which AHIC retains
34% of the net premiums written by any of them, HIC retains 32% of the net premiums
written by any of them, HSIC retains 24% of the net premiums written by any
of them and HNIC retains 10% of the net premiums written by any of them. A.M.
Best Company (“A.M. Best”), a nationally recognized insurance industry
rating service and publisher, has pooled its ratings of these four insurance
company subsidiaries and assigned a financial strength rating of “A–”
(Excellent) and an issuer credit rating of “a-” to each of these
individual insurance company subsidiaries and to the pool formed by these four
insurance company subsidiaries. Also, A.M. Best has assigned a financial strength
rating of “A–” (Excellent) and an issuer credit rating of
“a-” to HCM. A.M. Best does not assign a financial strength rating
or an issuer credit rating to TBIC.
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