A.M. Best Comments on Ratings of The National Security Group, Inc. and Its Subsidiaries

A.M. Best Co. has commented that the financial strength ratings (FSR) and issuer credit ratings (ICR) of the property/casualty and life/health subsidiaries of The National Security Group, Inc. (NSGI) (Wilmington, DE) (NASDAQ: NSEC) are unchanged. A.M. Best also has commented that the ICR of NSGI and the outlook for all ratings is unchanged. (See below for a detailed listing of the companies and ratings.)

This comment follows NSGI’s June 20, 2012, filing of Form 8-K in which it was announced that the company had reached a settlement in the Mobile Attic litigation. Final terms of the settlement are yet to be worked out; however, in A.M. Best’s opinion, the preliminary terms of a structured settlement in which NSGI will pay $13 million over the next nine years, should not have a significant adverse affect on the financial strength of the insurance operating companies or the financial leverage of the holding company.

A.M. Best will continue to monitor the situation as terms and conditions of the structured settlement are finalized and implemented.

The FSR of B++ (Good) and the ICR of “bbb” are unchanged with a negative outlook for National Security Fire and Casualty Company.

The FSR of B+ (Good) and the ICR of “bbb-” are unchanged with a stable outlook for Omega One Insurance Company, Inc.

The FSR of B (Fair) and the ICR of “bb+” are unchanged with a stable outlook for National Security Insurance Company.

The ICR of “bb” is unchanged with a negative outlook for The National Security Group, Inc.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

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