Hallmark Financial Services Inc, plans to pursue an IPO of its Specialty Commercial business segment.
The initial public offering involves a non-controlling ownership stake in the unit, and it will lead to the creation of a separate company named Hallmark Specialty Group Inc. The division will not include business produced by the Aerospace & Programs business unit, the exited Binding Primary Auto business or any business produced by third-party program managers (which includes a senior care and a commercial auto program), each of which will be retained by Hallmark Financial.
Dallas-based Hallmark Financial has two other business segments beyond Specialty Commercial: Standard Commercial and Personal.
Hallmark announced in January that it was exploring the separation of its specialty commercial business to unlock its value and improve access to capital.
While the number of shares of Hallmark Specialty Group to be offered and the price range for the offering have not yet been determined, the offered shares are expected to represent an economic ownership stake of approximately 50 percent.
Hallmark Financial intends to retain at least a majority of the combined voting power of Hallmark Specialty Group’s shares through its ownership of high-vote common shares.
The IPO process is expected to be completed during the third quarter of 2021. However, the company said execution of the IPO is dependent upon, and subject to, a number of factors and uncertainties, including business and market conditions.
“Our Specialty Commercial business has grown significantly over the past 15 years. We have concluded that this transaction will allow Hallmark Financial and Hallmark Specialty Group to focus on their respective businesses and unique opportunities for long-term growth and profitability and to allocate capital and corporate resources in a manner that focuses on achieving each company’s own strategic priorities,” Mark Schwarz, Hallmark Financial’s executive chairman, president and chief executive officer, said in a statement.
Hallmark Financial said it currently has no intention of spinning off or otherwise divesting its ownership interest in Hallmark Specialty Group following the completion of the IPO.
Source: Hallmark Financial
*A version of this story ran previously in our sister publication Insurance Journal.