HALLMARK FINANCIAL SERVICES, INC. (NASDAQ:HALL) Files An 8-K Changes in Registrant’s Certifying Accountant
Item 4.01 Changes in Registrant’s Certifying Accountants
On March 5, 2020, Hallmark Financial Services, Inc. (the “Company”) dismissed BDO USA, LLP (“BDO”) as the Company’s independent registered public accounting firm, effective immediately. BDO’s audit reports on the Company’s consolidated financial statements as of and for the years ended December 31, 2017 and 2018, did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. The decision to change accountants was approved by the Audit Committee of the Company’s board of directors (the “Audit Committee”).
During the two fiscal years ended December 31, 2018, and the subsequent interim periods through the filing of the Company’s Form 10-Q for the quarter ended September 30, 2019, there were no disagreements (as defined in Item 3.04 of Regulation S-K) between the Company and BDO. Subsequently, a disagreement arose regarding certain matters related to (a) the Company’s processes for estimating reserves for unpaid losses and loss adjustment expenses, (b) the resulting potential impact on the Company’s assessment of the associated internal controls over financial reporting, and (c) the resulting potential impact on recorded amounts of those reserves, all as of the quarter ended September 30, 2019, and the year ended December 31, 2019. The Audit Committee has discussed the subject matter of the disagreement with BDO and has authorized BDO to respond fully to the inquiries of any successor independent registered public accounting firm concerning the subject matter of such disagreement.
The Company has provided BDO with a copy of the disclosures contained in this Form 8-K and has requested that BDO furnish to the Company a letter addressed to the Securities and Exchange Commission stating whether BDO agrees with the statements contained herein and, if not, stating the respects in which it does not agree. A copy of BDO’s letter will be attached as an exhibit to an amendment to this Form 8-K.
Item 7.01 Regulation FD Disclosure
As a result of the dismissal of BDO as its independent auditors, the Company does not expect to timely file its Annual Report on Form 10-K for the year ended December 31, 2019.
About HALLMARK FINANCIAL SERVICES, INC. (NASDAQ:HALL)
Hallmark Financial Services, Inc. is an insurance holding company. The Company markets, distributes, underwrites and services its property/casualty insurance products to businesses and individuals. Its business involves marketing, distributing, underwriting and servicing insurance products, as well as providing other insurance related services. Its segments include Standard Commercial Segment, Specialty Commercial Segment and Personal Segment. The Company’s Standard Commercial P&C operating unit primarily underwrites low-severity, short-tailed commercial property/casualty insurance products in the standard market. The Company reinsures a portion of the risk it underwrites in order to control the exposure to losses and to protect capital resources. Its Workers Compensation operating unit specializes in small and middle market workers compensation business. Its Specialty Commercial operating unit offers general aviation and satellite launch insurance products and services.