DALLAS, Jan. 30 /PRNewswire-FirstCall/ -- Hallmark Financial Services, Inc. (NYSE:HAF) today announced the completion of its previously disclosed acquisition of Texas General Agency, Inc. and certain affiliates. TGA is a managing general agency involved in the marketing and servicing of property and casualty insurance products, with a particular emphasis on commercial automobile and general liability risks. The acquisition also included TGA's wholly-owned insurance subsidiary, Gulf States Insurance Company, which reinsures a portion of the business written by TGA; TGA Special Risk, Inc., which brokers mobile home insurance; and Pan American Acceptance Corporation, which provides premium financing for property and casualty insurance products marketed by TGA and TGASRI. Samuel M. Cangelosi, Donate A. Cangelosi and Donald E. Meyer, the sellers and principal officers of TGA, have been retained to continue managing the operations of the acquired enterprise. "We are excited by the opportunities TGA provides for expanding the scope of our commercial lines insurance marketing and underwriting business," stated Mark J. Morrison, Hallmark's Chief Operating Officer and Chief Financial Officer. "We look forward to realizing the potential that TGA's experienced management team and agency network adds to our existing commercial lines operations," Mr. Morrison continued. Hallmark funded the approximately $14.6 million required to close the acquisition from available borrowing capacity under its revolving credit facility with Frost National Bank. Hallmark also privately placed $25.0 million in subordinated convertible notes to two newly formed investment partnerships managed by Newcastle Capital Management, L.P., which is controlled by Mark E. Schwarz, Hallmark's Chairman and Chief Executive Officer. The proceeds of the private placement were used to establish a trust account to secure additional purchase price and non-compete payments due to the TGA sellers in January 2007 and 2008. Upon shareholder approval, the privately placed notes will become convertible by the holders into approximately 19.5 million shares of Hallmark's common stock (subject to certain anti-dilution provisions), and will be automatically converted to such common stock at their maturity in July, 2007. 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 and underwriting of commercial insurance primarily in Texas, New Mexico, Idaho, Oregon, Montana and Washington; marketing of general aviation insurance in 44 states; 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". 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 J. Morrison, Chief Operating Officer at 817.348.1600 http://www.hallmarkgrp.com/ DATASOURCE: Hallmark Financial Services, Inc. CONTACT: Mark J. Morrison, Chief Operating Officer of Hallmark Financial Services, Inc., +1-817-348-1600 Web site: http://www.hallmarkgrp.com/

Copyright