Hallmark Financial Services, Inc. Completes Placement of Trust Preferred Securities

Hallmark Financial Services, Inc. Completes Placement of Trust
Preferred Securities 


FORT WORTH, Texas, June 21  /PRNewswire-FirstCall/ -- Hallmark Financial
Services, Inc. (AMEX:HAF.EC) today announced the completion of the private
placement of $30 million in trust preferred securities by a newly formed and
wholly owned trust subsidiary.  The proceeds of this placement, together with
$45 million in proceeds from the Company's recently completed shareholder
rights offering, have been contributed to the Company's two insurance
subsidiaries, American Hallmark Insurance Company of Texas and Phoenix
Indemnity Insurance Company, in order to strengthen their financial condition
and underwriting capacity.

The $30 million in trust preferred securities bears interest at a fixed annual
rate of 7.725% for the first ten years and at a floating annual rate of LIBOR
plus 3.250% thereafter until maturity or redemption.  Interest on the trust
preferred securities is payable quarterly in arrears, but may be deferred from
time to time at the election of the Company for up to 20 consecutive quarters. 
The trust preferred securities have a 30-year term, but are redeemable by the
Company at par commencing in June 2010.

In a related development, the Company also announced that A.M. Best Co. has
raised the financial strength ratings of both insurance subsidiaries.  In light
of the improved operating performance and enhanced capital surplus of each
insurer, A.M. Best has upgraded the financial strength rating of American
Hallmark Insurance Company of Texas from "B (Fair)" to "A- (Excellent)" and has
upgraded the financial strength rating of Phoenix Indemnity Insurance Company
from "B- (Fair)" to "B+ (Very Good)".

"The issuance of these trust preferred securities represents a significant
additional step in implementing our strategic plan to enhance the structure and
broaden the scope of our insurance operations," stated Mark E. Schwarz,
Hallmark's President and Chief Executive Officer.  "We continue to pursue the
regulatory process necessary to consolidate our non-standard automobile
insurance business into one insurance subsidiary and to convert our other
personal lines insurance subsidiary to a commercial lines insurance carrier. We
expect to begin underwriting commercial lines insurance in Texas and Oregon
early in the third quarter," Mr. Schwarz continued.

Mark J. Morrison, Hallmark's Chief Operating Officer and Chief Financial
Officer, stated, "We are gratified that A.M. Best has recognized the strong
operating performance and enhanced financial strength of our insurance
subsidiaries.  With the infusion of this $75 million in additional working
capital and the significant improvement in our A.M. Best ratings, we believe
that we are well positioned to write and retain additional personal lines
business and to directly write commercial lines business upon completing the
realignment of our insurance operations."

Hallmark Financial Services, Inc. engages primarily in the sale of property and
casualty insurance products.  The Company's business involves marketing and
underwriting of non-standard personal automobile insurance primarily in Texas,
Arizona and New Mexico, marketing commercial insurance primarily in Texas, New
Mexico, Idaho, Oregon and Washington, third party claims administration, and
other insurance related services.  The Company is headquartered in Fort Worth,
Texas, and its common stock is listed on the American Stock Exchange under the
symbol "HAF.EC".

Forward-looking statements in this release are made pursuant to the "safe
harbor" provisions of the Private Securities Litigation Act of 1995. Investors
are cautioned that actual results may differ substantially from such
forward-looking statements.  Forward-looking statements involve risks and
uncertainties including, but not limited to, continued acceptance of the
Company's products and services in the marketplace, competitive factors,
interest rate trends, the availability of financing, underwriting loss
experience and other risks detailed from time to time in the Company's
registration statement and periodic reports filed with the Securities and
Exchange Commission.

                 For further information, please contact:
                             Mark J. Morrison
            Chief Operating Officer & Chief Financial Officer
                               817.348.1600
                        http://www.hallmarkgrp.com/

DATASOURCE: Hallmark Financial Services, Inc.



CONTACT:  Mark J. Morrison, Chief Operating Officer & Chief Financial

Officer of Hallmark Financial Services, Inc., [phone]



Web site:  http://www.hallmarkgrp.com/ 

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