Hallmark Financial Services, Inc. Acquires 80 Percent of Heath XS, LLC

FORT WORTH, Texas, Sept. 2, 2008 (GLOBE NEWSWIRE) -- Hallmark Financial
Services, Inc. (Nasdaq:HALL) announced today that it has acquired 80% of the
outstanding membership interests in Heath XS, LLC and Hardscrabble Data
Solutions, LLC (collectively referred to as "Heath Group") for cash
consideration of $15 million. The transaction was completed using existing
holding company capital.

The Heath Group is a Basking Ridge, New Jersey based underwriting facility that
annually produces approximately $50 million of lower hazard, middle market,
excess commercial automobile and commercial umbrella risks on both an admitted
and non-admitted basis through a well established network of wholesalers
throughout the United States. Jeffrey L. Heath, an insurance industry veteran
with over 30 years of reinsurance and excess underwriting experience, founded
the Heath Group and its predecessor entity in 1991. Philo Smith & Co. acted as
exclusive financial advisor and broker to Heath Group on this transaction.

Mark J. Morrison, Chief Executive Officer and President of Hallmark, said, "We
are very excited about this acquisition and the superior underwriting and risk
assessment expertise within their focused niche that the Heath Group brings to
Hallmark. The Heath Group has a market reputation that attracts loyal,
top-quality wholesale production sources and a best of class technology platform
that drives operating efficiencies and precision underwriting that Hallmark
intends to leverage to capture substantial underwriting profits. In addition,
the Heath Group continually explores new opportunities with a focus on smaller
to middle market business with profitable niches. We expect this acquisition to
be immediately accretive to earnings and to build upon synergies that exist with
Hallmark's current operations."

Jeffrey L. Heath, President of the Heath Group said, "We are pleased with the
agreement we have reached with Hallmark and look forward to a partnership that
will provide tremendous value to Hallmark's shareholders."

Hallmark Financial Services, Inc. is an insurance holding company which, through
its subsidiaries, engages in the sale of property/casualty insurance products to
businesses and individuals. Our business involves marketing, distributing,
underwriting and servicing commercial insurance, non-standard personal
automobile insurance and general aviation insurance, as well as providing other
insurance related services. Our business is geographically concentrated in the
south central and northwest regions of the United States, except for our general
aviation business which is written on a national basis. The Company is
headquartered in Fort Worth, Texas and its common stock is presently listed on
NASDAQ under the symbol "HALL."

The Hallmark Financial Services, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=4395

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CONTACT: Hallmark Financial Services, Inc.
Mark J. Morrison, President and
Chief Executive Officer
817.348.1600
www.hallmarkgrp.com