Hallmark Financial Services to Acquire Aerospace Holdings

Fort Worth, Texas-based Hallmark Financial Services Inc. has executed a definitive agreement to acquire Aerospace Holdings LLC. Aerospace, through various wholly-owned subsidiaries, including Aerospace Insurance Managers Inc., markets and services general aviation property and casualty insurance products, with a particular emphasis on private and small commercial aircraft. The transaction is expected to be effective as of Jan. 1, 2006.

“We are very pleased to announce the acquisition of Aerospace Holdings, LLC, one of the premier aviation insurance operations in the U.S. today,” stated Mark E. Schwarz, Hallmark’s president and chief executive officer. “Hallmark’s entry into the general aviation market is part of a continuing strategy to further expand into specialty lines businesses.”

Aerospace is a comprehensive insurance organization that annually produces approximately $30 million of premium in 44 states through a network of specialized aviation agents. Aerospace focuses on small aircraft and airports.

Aerospace is led by its founder and CEO, Curtis Donnell, who will remain with the company and continue to manage the operations of Aerospace.

“Donnell has over 35 years experience in the general aviation market and leads a seasoned team of underwriters and claim adjusters, most of whom have over 20 years experience and are themselves experienced pilots,” Schwarz said.

Hallmark has filed with the Securities and Exchange Commission a Current Report on Form 8-K containing additional information regarding the Aerospace purchase agreement.