Hallmark Financial Services, Inc. Fourth Quarter and Year 2003 Earnings Results

Hallmark Financial Services, Inc. Fourth Quarter and Year 2003 Earnings Results



FORT WORTH, Texas, March 30  /PRNewswire-FirstCall/ -- Hallmark Financial
Services, Inc.,  ("The Company") today reported operating results for the fourth
quarter and year ended December 31, 2003.  Net loss for the quarter ended
December 31, 2003 was $0.4 million or $0.01 per diluted share, as compared to a
net loss of $0.4 million or $0.04 per diluted share for the same period in 2002.
 For the year ended December 31, 2003, the Company reported net income of $8.7
million, or $0.46 per diluted share, as compared to a net loss of $1.7 million,
or $0.15 per diluted share, for the year ended December 31, 2002.  Income before
the extraordinary gain related to the Phoenix Indemnity Insurance Company
("Phoenix") acquisition in the first quarter of 2003 and the cumulative effect
of a change in accounting principle recorded in 2002, for the year ended
December 31, 2003 was $0.7 million, as compared to breakeven results for the
same period in 2002.

Total revenues were $16.4 million and $69.6 million for the fourth quarter and
year ended December 31, 2003, respectively, as compared to $8.7 million and
$25.8 million for the corresponding 2002 periods.

The net loss reportedfor the fourth quarter 2003 includes an accrual for a
settlement of a bad faith claim in Phoenix in the amount of $2.1 million before
tax and after considering reinsurance.

"The bad faith claim against Phoenix was a big disappointment in what would have
otherwise been the most profitable quarter ever reported by Hallmark on an
operating basis.  We are, nonetheless, pleased to have the matter behind us.  We
are now focused intently on realizing the benefits in 2004 of the many positive
improvements achieved this past year.  We more than doubled the size of the
Company in both revenue and surplus, added a new line of business, expanded into
new states and strengthened our management team, all of which significantly
enhance Hallmark's future prospects," stated Mark E. Schwarz, Chief Executive
Officer.

Hallmark Financial Services, Inc. engages primarily in sale of property and
casualty insurance products.  The Company's business involves marketing,
underwriting and premium financing of non-standardpersonal 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 Companyis
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 periodic
report filings with the Securities and Exchange Commission.

                 For further information, please contact:
         Mark E. Schwarz, Chief Executive Officer at 817.348.1600
                           http://www.hallmarkgrp.com/


                    HALLMARK FINANCIAL SERVICES,INC.
                      AND CONSOLIDATED SUBSIDIARIES
                (In thousands, except earnings per share)
                        Selected Operating Results

                                            Three Months Ended December 31
          2003           2002

  Gross Premiums Written                        $ 6,934        $14,101

  Total Revenues                                $16,428        $ 8,690

  Pretax Income (Loss)                          $  (870)       $  (587)
  Income Tax Expense                            $  (473)       $  (199)
  Income before Extraordinary Gain (Loss)       $  (397)       $  (388)
  Extraordinary Gain (Loss)                     $   (32)       $   ---
  Net Income  $  (429)       $  (388)

  Basic Earnings Per Share                      $ (0.01)       $ (0.04)

  Diluted Earnings Per Share                    $ (0.01)       $ (0.04)


                                            Twelve Months Ended December 31
                                                  2003           2002

  Gross Premiums Written                        $43,338        $51,643

  Total Revenues                                $69,559        $25,797

  Pretax Income                                 $   686        $    36
  Income Tax Expense                            $    25        $    13
  Income before Cumulative Effect of Change
   in Accounting Principle and
   Extraordinary Gain                        $   661        $    23
  Cumulative Effect of Change in
   Accounting Principle                         $   ---        $(1,694)
  Extraordinary Gain                            $ 8,084        $   ---
  Net Income (Loss)                             $ 8,745        $(1,671)

  Basic Earnings (Loss) Per Share               $  0.47        $ (0.15)

  Diluted Earnings (Loss) Per Share             $  0.46        $ (0.15)


DATASOURCE: Hallmark Financial Services, Inc.



CONTACT:  Mark E. Schwarz, Chief Executive Officer of Hallmark Financial

Services, Inc., [phone]



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

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