According to the Complaint, Hallmark Financial Services, Inc. is a diversified property/casualty insurance group.
On March 2, 2020, Hallmark Financial announced that it had decided to exit from its Binding Primary Commercial Auto business and reported a $63.8 million loss development for prior underwriting years.
On March 11, 2020, Hallmark Financial disclosed that it had dismissed its independent auditor, BDO USA, LLP, due to a disagreement regarding estimates for reserves for unpaid losses, among other things.
The Complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, the Complaint alleges Defendants failed to disclose to investors: (1) that the Company lacked effective internal controls over accounting and financial reporting related to reserves for unpaid losses; (2) that the Company improperly accounted for reserve for unpaid losses and loss adjustment expenses related to its Binding Primary Commercial Auto business; (3) that, as a result, Hallmark Financial would be forced to report a $63.8 million loss development for prior underwriting years; (4) that, as a result, Hallmark Financial would exit from its Binding Primary Commercial Auto business; and (5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On July 21, 2020, the Court issued an Order appointing Lead Plaintiff and Counsel. Lead Plaintiff filed an amended Complaint on September 30. Defendants filed a Motion to Dismiss the amended Complaint on December 4. On July 28, 2021, the Court issued an Order granting Defendants' Motion to Dismiss. The case was dismissed without prejudice. Lead Plaintiff decided not to file a second amended Complaint. On September 24, the parties filed a joint stipulation to dismiss the case with prejudice.
