Segment Information

12 Months Ended

Dec. 31, 2011

Segment Information

10. Segment Information:

We pursue our business activities primarily through subsidiaries whose operations are organized into producing units and are supported by our insurance carrier subsidiaries. Our non-carrier insurance activities are organized by business units into the following reportable segments:

· Standard Commercial Segment. The Standard Commercial Segment includes the standard lines commercial property/casualty insurance products and services handled by our Standard Commercial business unit and the workers compensation insurance products handled by our Workers Comp business unit. Our Standard Commercial business unit is comprised of our American Hallmark Insurance Services and ECM subsidiaries. Our Workers Comp business unit is comprised of our TBIC Holdings, TBIC and TBICRM subsidiaries. The Workers Comp business unit was acquired July 1, 2011.

· Specialty Commercial Segment. The Specialty Commercial Segment includes the excess and surplus lines commercial property/casualty and medical professional liability insurance products and services handled by our E&S Commercial business unit, the general aviation insurance products and services handled by our General Aviation business unit and the commercial excess liability and umbrella products handled by our Excess & Umbrella business unit, as well as the Specialty Programs managed by Hallmark. Our E&S Commercial business unit is comprised of our TGA, PAAC and TGARSI subsidiaries. Our General Aviation business unit is comprised of our Aerospace Insurance Managers, ASRI and ACMG subsidiaries. Our Excess & Umbrella business unit is compromised of our HXS and HDS subsidiaries.

· Personal Segment. The Personal Segment includes the non-standard personal automobile, low value dwelling/homeowners, renters and motorcycle insurance products and services handled by our Personal Lines business unit which is comprised of American Hallmark General Agency, Inc. and Hallmark Claims Services, Inc., both of which do business as Hallmark Insurance Company.

The retained premium produced by these reportable segments is supported by the following insurance company subsidiaries:

· American Hallmark Insurance Company of Texas presently retains a portion of the risks on the commercial property/casualty and workers compensation policies marketed within the Standard Commercial Segment, retains a portion of the risks on personal policies marketed within the Personal Segment and retains a portion of the risks on the commercial, medical professional liability, aviation and satellite launch property/casualty policies marketed within the Specialty Commercial Segment.

· Hallmark Specialty Insurance Company presently retains a portion of the risks on the commercial property/casualty and medical professional liability policies marketed within the Specialty Commercial Segment.

· Hallmark Insurance Company presently retains a portion of the risks on both the personal policies marketed within the Personal Segment and the commercial and aviation property/casualty products marketed within the Specialty Commercial Segment.

· Hallmark National Insurance Company was acquired on December 31, 2010. Commencing January 1, 2011, HNIC retains a portion of the risks on the personal policies marketed within the Personal Segment.

· Hallmark County Mutual Insurance Companycontrol and management is maintained through our wholly owned subsidiary, CYR. CYR has as its primary asset a management agreement with HCM, which provides for CYR to have management and control of HCM. HCM is used to front certain lines of business in our Specialty Commercial and Personal Segments in Texas. HCM does not retain any business.

· Texas Builders Insurance Company was acquired on July 1, 2011 and retains a portion of the risks on the workers compensation policies marketed within our Standard Commercial Segment.

AHIC, HIC, HSIC and HNIC have entered into a pooling arrangement, pursuant to which AHIC retains 33% of the net premiums written by any of them, HIC retains 28% of the net premiums written by any of them, HSIC retains 28% of the net premiums written by any of them and HNIC retains 11% of the net premiums written by any of them. Neither HCM nor TBIC is a party to the intercompany pooling arrangement.

The following is additional business segment information for the twelve months ended December 31, 2011, 2010 and 2009 (in thousands):

	2011			2010			2009
Revenues
Standard Commercial Segment	$	72,830		$	69,670		$	76,496
Speciality Commercial Segment		142,838			131,076			131,504
Personal Segment		101,351			96,741			73,785
Corporate		5,752			9,573			5,254
Consolidated	$	322,771		$	307,060		$	287,039
Depreciation and Amortization Expense
Standard Commercial Segment	$	174		$	159		$	87
Speciality Commercial Segment		3,293			3,703			3,075
Personal Segment		1,431			666			494
Corporate		166			223			449
Consolidated	$	5,064		$	4,751		$	4,105
Interest Expense
Standard Commercial Segment	$	-		$	-		$	-
Speciality Commercial Segment		-			-			30
Personal Segment		-			-			-
Corporate		4,631			4,598			4,572
Consolidated	$	4,631		$	4,598		$	4,602
Tax Expense (Benefit)
Standard Commercial Segment	$	(378	)	$	(1,384	)	$	1,905
Speciality Commercial Segment		4,479			4,015			5,151
Personal Segment		(13,976	)		(789	)		2,482
Corporate		959			(1,017	)		(908	)
Consolidated	$	(8,916	)	$	825		$	8,630
Pre-tax Income (Loss), net of non-controlling interest
Standard Commercial Segment	$	1,329		$	(2,316	)	$	9,266
Speciality Commercial Segment		14,421			13,315			20,883
Personal Segment		(29,606	)		(705	)		11,000
Corporate		(5,881	)		(2,135	)		(7,944	)
Consolidated	$	(19,737	)	$	8,159		$	33,205

The following is additional business segment information as of the following dates (in thousands):

	December 31,
	2011		2010
Assets
Standard Commercial Segment	$	144,922	$	118,818
Specialty Commercial Segment		349,547		331,526
Personal Segment		232,138		204,660
Corporate		20,306		82,299
Consolidated	$	746,913	$	737,303