UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 27, 2003
HALLMARK FINANCIAL SERVICES, INC.
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(Exact name of registrant as specified in its charter)
Nevada 0-16090 87-0447375
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(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
14651 Dallas Parkway, Suite 900, Dallas, Texas 75254
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 404-1637
Not Applicable
(Former name or former address, if changed since last report.)
Item 2. Acquisition or Disposition of Assets.
On January 27, 2003, the Registrant received approval from The Arizona
Department of Insurance of its acquisition from Millers American Group, Inc.
("Millers") all of the outstanding stock of Phoenix Indemnity Insurance
Company ("Phoenix Indemnity"), an Arizona based non-standard automobile
insurance company. The effective date of the transaction is January 1, 2003.
As reported in the Registrant's Form 8-K filed on November 8, 2002 and
December 4, 2002, the Registrant previously purchased from a bank a
promissory note in default payable by Millers (the "Millers Note") which is
guaranteed by Trilogy Holdings, Inc. ("Trilogy"), a wholly-owned subsidiary
of Millers, and is secured by all of the issued and outstanding capital
stock of The Millers Insurance Company ("MIC"), a Texas-based property and
casualty insurance carrier, and Phoenix Indemnity. There is no other
material relationship between Millers and the Registrant or any of its
affiliates, any director or officer of the Registrant, or any associate of
any such director or officer.
In lieu of immediate foreclosure of the collateral securing the Millers
Note, the Registrant negotiated with Millers to accept all of the
outstanding capital stock of Phoenix in satisfaction of $7.0 million of the
outstanding balance of the Millers Note. The proposed exchange was
contingent on execution of a mutually acceptable definitive agreement and
regulatory approval of the Registrant's Form A application for change of
control previously filed with the Arizona Department of Insurance. The
Arizona Department of Insurance approved the transaction on January 27,
2003. The effective date of the transaction is January 1, 2003.
Joseph G. Smith will continue as the President of Phoenix Indemnity and
the Company will continue to focus its operations on non-standard automobile
insurance in the states of Arizona and New Mexico.
The Registrant intends to continue to hold the capital stock of MIC as
collateral for the remaining balance of the Millers Note while the parties
evaluate the recapitalization or reorganization of MIC. There can be no
assurance that MIC will ever be recapitalized or reorganized, that the
Registrant will otherwise foreclose on such collateral or successfully
enforce its guaranty against Trilogy, or that the remaining balance of the
Millers Note will ever be paid.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) The Registrant intends to provide required financial statements of the
business acquired in an amendment to this Form 8-K filed within 60 days
after the date this initial report on Form 8-K was due.
(b) The Registrant intends to provide required pro forma financial
information in an amendment to this Form 8-K filed within 60 days after
the date this initial report on Form 8-K was due.
(c) Exhibits.
2(a) Purchase Agreement dated December 6, 2002, among Hallmark
Financial Services, Inc., Millers American Group, Inc. and
Trilogy Holdings, Inc..
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
HALLMARK FINANCIAL SERVICES, INC.
Date: January 29, 2003 By: /s/ Timothy A. Bienek
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Timothy A. Bienek, President and
Chief Operating Officer