Specialty Underwriters' believes Hallmark Financial wants control

By Lisa Kerner

Charlotte, N.C., April 29 - Hallmark Financial Services, Inc. filed a form A with the Illinois Division of Insurance on March 30 seeking approval to acquire up to 50% of the outstanding common stock of Specialty Underwriters' Alliance, Inc., Specialty announced on Friday.

"We believe that Hallmark is setting itself up to do a creeping acquisition of control of SUA [Specialty] that would not provide any control premium to SUA stockholders," said Specialty chairman Courtney Smith.

Hallmark states in the filing that it does not intend to control Specialty, according to Smith.

However, Smith said Hallmark chairman March Schwarz has "repeatedly expressed Hallmark's desire" to control Specialty.

Hallmark asked Specialty stockholders in a letter and on www.suaitownhall.com to vote for Hallmark's director nominees Robert M. Fishman, Mark E. Pape and C. Gregory Peters on May 5.

As previously reported Hallmark, a 9.9% shareholder, believes Specialty is underperforming financially, suffering from corporate governance deficiencies and failing to create stockholder value.

Hallmark, a Fort Worth property and casualty insurer, also said Specialty amended its bylaws in August 2008, eliminating stockholders' rights to fill vacancies on the board and to call special meetings.

Specialty, a Chicago commercial insurance provider, announced that Glass, Lewis & Co. recommended that the company's stockholders reject the dissident slate.

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