3/1/2004 Aerospace Offers Increased Hull Coverage

    5/20/2004 Aerospace Announces Higher Airport Liability Limits

    8/6/2004 Aerospace Introduces Airport Products & Completed Operations Program

    2/14/2005 Surplus Lines Program Introduced for Aircraft and Airport Business

    3/2/2005 New California Market Announced

    9/1/2005 New Policy Form Adopted

    9/7/2005 New Market for New York

    11/1/2005 Admitted Market for New Jersey

>  1/10/2006 Aerospace Announces Acquisition by Hallmark Financial Services, Inc.

    6/23/2006 Aerospace Announces Alliance with Phoenix Indemnity Insurance Company

    11/9/2006 Upgrade Policy Handling Procedures For Pilots
Aerospace Announces Acquisition by Hallmark Financial Services, Inc.

January 10, 2006 - Aerospace Holdings, LLC is pleased to announce that it and its various subsidiaries have joined Hallmark Financial Services, Inc. through a definitive acquisition agreement.

Aerospace Insurance Managers, Inc., the principal operating unit of the Aerospace group, markets and services general aviation property and casualty insurance products, with a particular emphasis on private and small commercial aircraft. Aerospace has been in operation since 1999. The transaction was effective as of January 1, 2006.

“We welcome the opportunity to become part of the Hallmark group at this time in our development. Their prestige, strength and facilities give Aerospace the prospects of even more stability and options than ever before for our producers and policyholders.” said Aerospace founder, Curtis R. Donnell. As a wholly-owned subsidiary of Hallmark, Aerospace will continue to provide its customary aviation insurance products and services under the direction of its existing management.

Hallmark Financial Services, Inc. engages primarily in the sale of property and casualty insurance products. The Company's business involves marketing and underwriting of non-standard personal automobile insurance primarily in Texas, Arizona and New Mexico; marketing and underwriting commercial insurance primarily in Texas, New Mexico, Idaho, Oregon, Montana and Washington; third party claims administration; and other insurance related services. The Company is headquartered in Fort Worth, Texas and its common stock is listed on the American Stock Exchange under the symbol "HAF”.

“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 an established network of specialized aviation agents. Aerospace focuses on small aircraft and airports where competition is relatively stable and adequate pricing generally prevails. Aerospace is led by its founder and CEO, Curtis Donnell, who will remain with the company and continue to manage the operations of Aerospace. Mr. 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," Mr. Schwarz continued.

For further information, please contact:

Mr. Curtis Donnell, President

Phone: 972-852-1200



PH: 1.888.880.1289 | 15280 Addison Road, Suite 250 | Addison, Texas 75001