Hallmark Financial Services Inc., the Fort Worth, Texas-basedinsurer, said it has completed its acquisition of AerospaceHoldings, LLC, which provides small aircraft coverage.

Aerospace Holdings, headquartered in Edison, Texas, throughAerospace Insurance Managers Inc. and subsidiaries, markets andservices general aviation property-casualty insurance products,with emphasis on private and small-commercial aircraft. Hallmarksaid that Aerospace produces approximately $30 million in premium,writing aviation insurance in 44 states.

Curtis Donnell, founder and principal officer of AerospaceHoldings, will continue to manage the operation.

Hallmark said it funded the acquisition of Aerospace Holdingsthrough a $12.5 million loan from Newcastle Partners, L.P., anaffiliate of Hallmark's chairman and chief executive officer, MarkE. Schwarz. The company intends to retire the bridge loan with theproceeds from a rights offering to its shareholders later thisyear.

Hallmark Financial engages primarily in the sale of p-cinsurance products. The company's business involves marketing andunderwriting of nonstandard personal automobile insurance primarilyin Texas, Arizona and New Mexico; marketing and underwriting ofcommercial insurance primarily in Texas, New Mexico, Idaho, Oregon,Montana and Washington; third-party claims administration; andother insurance-related services.