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Share Name | Share Symbol | Market | Type |
---|---|---|---|
National Security Group Inc | NASDAQ:NSEC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 16.36 | 16.32 | 16.40 | 0 | 01:00:00 |
þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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63-1020300
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(State or Other Jurisdiction of
Incorporation or Organization)
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(IRS Employer
Identification No.)
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661 East Davis Street
Elba, Alabama
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36323
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(Address of principal executive offices)
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(Zip-Code)
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PART I. FINANCIAL INFORMATION
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Page No.
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Item 1. Financial Statements (unaudited)
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PART II. OTHER INFORMATION
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▪
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The insurance industry is highly competitive and the Company encounters significant competition in all lines of business from other insurance companies. Many of the competing companies have more abundant financial resources than the Company.
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▪
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Insurance is a highly regulated industry. It is possible that legislation may be enacted which would have an adverse effect on the Company’s business.
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▪
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The Company is subject to regulation by state governments for each of the states in which it conducts business. The Company cannot predict the subject of any future regulatory initiative(s) or its (their) impact on the Company’s business.
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▪
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The Company is rated by various insurance rating agencies. If a rating is downgraded from its current level by one of these agencies, sales of the Company’s products and stock could be adversely impacted.
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▪
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The Company’s financial results are adversely affected by increases in policy claims received by the Company. While a manageable risk, this fluctuation is often unpredictable.
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▪
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The Company’s investments are subject to a variety of risks. Investments are subject to defaults and changes in market value. Market value can be affected by changes in interest rates, market performance and the economy.
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▪
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The Company mitigates risk associated with life policies through implementing effective underwriting and reinsurance strategies. These factors mitigate, not eliminate, risk related to mortality and morbidity exposure. The Company has established reserves for claims and future policy benefits based on amounts determined by independent actuaries. There is no assurance that these estimated reserves will prove to be sufficient or that the Company will not incur claims exceeding reserves, which could result in operating losses.
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▪
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The Company mitigates risk associated with property and casualty policies through implementing effective underwriting and reinsurance strategies. The Company obtains reinsurance which increases underwriting capacity and limits the risk associated with policy claims. The Company is subject to credit risk with regard to reinsurers as reinsurance does not alleviate the Company’s liability to its insured’s for the ceded risks. The Company utilizes a third-party to develop a reinsurance treaty with reinsurers who are reliable and financially stable. However, there is no guarantee that booked reinsurance recoverable will actually be recovered. A reinsurer’s insolvency or inability to make payments due could have a material adverse impact on the financial condition of the Company.
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▪
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The Company’s ability to continue to pay dividends to shareholders is contingent upon profitability and capital adequacy of the insurance subsidiaries. The insurance subsidiaries operate under regulatory restrictions that could limit the ability to fund future dividend payments of the Company. An adverse event or series of events could materially impact the ability of the insurance subsidiaries to fund future dividends and consequently the Board of Directors would have to suspend the declaration of dividends to shareholders.
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▪
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The Company is subject to the risk of adverse settlements or judgments resulting from litigation. It is difficult to predict or quantify the expected results of litigation because the outcome depends on decisions of the court and jury that are based on facts and legal arguments presented at the trial.
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March 31,
|
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December 31,
|
||||
|
|
2012
|
|
2011
|
||||
ASSETS
|
|
(unaudited)
|
|
|
||||
Investments
|
|
|
|
|
||||
Fixed maturities held-to-maturity, at amortized cost (estimated fair value: 2012 - $3,075;
2011 - $3,497)
|
|
$
|
2,906
|
|
|
$
|
3,303
|
|
Fixed maturities available-for-sale, at estimated fair value (cost: 2012 - $70,905;
2011 -$69,980)
|
|
73,994
|
|
|
73,074
|
|
||
Equity securities available-for-sale, at estimated fair value (cost: 2012 - $4,931;
2011 - $4,931)
|
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8,971
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8,547
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||
Trading securities
|
|
20
|
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|
80
|
|
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Mortgage loans on real estate, at cost
|
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388
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390
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Investment real estate, at book value
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5,757
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5,745
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Policy loans
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1,223
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1,244
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Company owned life insurance
|
|
5,777
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5,660
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Other invested assets
|
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3,886
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|
3,929
|
|
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Total Investments
|
|
102,922
|
|
|
101,972
|
|
||
Cash
|
|
2,243
|
|
|
3,393
|
|
||
Accrued investment income
|
|
835
|
|
|
706
|
|
||
Policy receivables and agents' balances, net
|
|
8,669
|
|
|
8,805
|
|
||
Reinsurance recoverable
|
|
2,670
|
|
|
2,778
|
|
||
Deferred policy acquisition costs
|
|
9,533
|
|
|
9,558
|
|
||
Property and equipment, net
|
|
2,527
|
|
|
2,528
|
|
||
Accrued income tax recoverable
|
|
1,640
|
|
|
1,669
|
|
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Other assets
|
|
1,067
|
|
|
1,045
|
|
||
Total Assets
|
|
$
|
132,106
|
|
|
$
|
132,454
|
|
|
|
|
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|
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LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
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|
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Property and casualty benefit and loss reserves
|
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$
|
13,255
|
|
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$
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14,386
|
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Accident and health benefit and loss reserves
|
|
2,131
|
|
|
2,122
|
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Life and annuity benefit and loss reserves
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29,638
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29,605
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Unearned premiums
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24,798
|
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25,232
|
|
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Policy and contract claims
|
|
676
|
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|
652
|
|
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Other policyholder funds
|
|
1,424
|
|
|
1,408
|
|
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Short-term notes payable
|
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700
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|
485
|
|
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Long-term debt
|
|
12,372
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12,372
|
|
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Deferred income tax liability
|
|
269
|
|
|
86
|
|
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Other liabilities
|
|
8,182
|
|
|
8,091
|
|
||
Total Liabilities
|
|
93,445
|
|
|
94,439
|
|
||
Contingencies
|
|
|
|
|
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|
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Shareholders' equity
|
|
|
|
|
|
|
||
Common stock
|
|
2,467
|
|
|
2,467
|
|
||
Additional paid-in capital
|
|
4,951
|
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|
4,951
|
|
||
Accumulated other comprehensive income
|
|
4,002
|
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|
3,640
|
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Retained earnings
|
|
27,241
|
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|
26,957
|
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Total Shareholders' Equity
|
|
38,661
|
|
|
38,015
|
|
||
Total Liabilities and Shareholders' Equity
|
|
$
|
132,106
|
|
|
$
|
132,454
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Quarter Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
REVENUES
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|
||||
Net premiums earned
|
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$
|
13,496
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$
|
14,870
|
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Net investment income
|
|
1,135
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|
1,142
|
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Net realized investment gains
|
|
206
|
|
|
770
|
|
||
Other income
|
|
197
|
|
|
255
|
|
||
Total revenues
|
|
15,034
|
|
|
17,037
|
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||
EXPENSES
|
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|
|
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|
|
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Policyholder benefits paid
|
|
7,845
|
|
|
9,322
|
|
||
Policy acquisition costs
|
|
2,772
|
|
|
2,924
|
|
||
General expenses
|
|
3,077
|
|
|
2,563
|
|
||
Taxes, licenses and fees
|
|
492
|
|
|
480
|
|
||
Interest expense
|
|
292
|
|
|
285
|
|
||
Total expenses
|
|
14,478
|
|
|
15,574
|
|
||
|
|
|
|
|
||||
Income Before Income Taxes
|
|
556
|
|
|
1,463
|
|
||
|
|
|
|
|
||||
INCOME TAX (BENEFIT) EXPENSE
|
|
|
|
|
|
|
||
Current
|
|
28
|
|
|
350
|
|
||
Deferred
|
|
(3
|
)
|
|
118
|
|
||
|
|
25
|
|
|
468
|
|
||
|
|
|
|
|
||||
Net Income
|
|
$
|
531
|
|
|
$
|
995
|
|
|
|
|
|
|
||||
|
|
|
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|
||||
EARNINGS PER COMMON SHARE
|
|
$
|
0.22
|
|
|
$
|
0.40
|
|
|
|
|
|
|
||||
DIVIDENDS DECLARED PER SHARE
|
|
$
|
0.10
|
|
|
$
|
0.15
|
|
|
|
Three Months Ended
March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
|
|
|
|
||||
Net income:
|
|
$
|
531
|
|
|
$
|
995
|
|
|
|
|
|
|
||||
Other comprehensive income (loss), net of tax
|
|
|
|
|
||||
Changes in:
|
|
|
|
|
||||
Unrealized gains (losses) on securities
|
|
277
|
|
|
(180
|
)
|
||
Unrealized gain on interest rate swap
|
|
85
|
|
|
48
|
|
||
|
|
|
|
|
||||
Other comprehensive income (loss), net of tax
|
|
362
|
|
|
(132
|
)
|
||
|
|
|
|
|
||||
Comprehensive income
|
|
$
|
893
|
|
|
$
|
863
|
|
|
|
Total
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2011
|
|
$
|
38,015
|
|
|
$
|
26,957
|
|
|
$
|
3,640
|
|
|
$
|
2,467
|
|
|
$
|
4,951
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income three months ended 3/31/2012
|
|
531
|
|
|
531
|
|
|
|
|
|
|
|
|
|
|
|||||
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Unrealized gain on securities, net of reclassification adjustment of $136
|
|
277
|
|
|
|
|
|
277
|
|
|
|
|
|
|
|
|||||
Unrealized gain on interest rate swap
|
|
85
|
|
|
|
|
|
85
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total comprehensive income
|
|
893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends
|
|
(247
|
)
|
|
(247
|
)
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at March 31, 2012 (Unaudited)
|
|
$
|
38,661
|
|
|
$
|
27,241
|
|
|
$
|
4,002
|
|
|
$
|
2,467
|
|
|
$
|
4,951
|
|
|
|
Quarter Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
Cash Flows from Operating Activities
|
|
|
|
|
||||
Net income
|
|
$
|
531
|
|
|
$
|
995
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
|
|
|
||
Change in accrued investment income
|
|
(129
|
)
|
|
(3
|
)
|
||
Change in reinsurance recoverable
|
|
108
|
|
|
62
|
|
||
Change in deferred policy acquisition costs
|
|
25
|
|
|
(31
|
)
|
||
Change in accrued income tax recoverable
|
|
29
|
|
|
111
|
|
||
Change in deferred income taxes
|
|
(3
|
)
|
|
118
|
|
||
Depreciation expense
|
|
127
|
|
|
93
|
|
||
Change in policy liabilities and claims
|
|
(1,383
|
)
|
|
583
|
|
||
Other, net
|
|
(106
|
)
|
|
(1,247
|
)
|
||
Net cash (used in) provided by operating activities
|
|
(801
|
)
|
|
681
|
|
||
|
|
|
|
|
||||
Cash Flows from Investing Activities
|
|
|
|
|
|
|
||
Cost of investments acquired
|
|
(8,910
|
)
|
|
(8,172
|
)
|
||
Sale and maturity of investments
|
|
8,674
|
|
|
10,050
|
|
||
Purchase of property and equipment
|
|
(97
|
)
|
|
(12
|
)
|
||
Net cash (used in) provided by investing activities
|
|
(333
|
)
|
|
1,866
|
|
||
|
|
|
|
|
||||
Cash Flows from Financing Activities
|
|
|
|
|
|
|
||
Change in other policyholder funds
|
|
16
|
|
|
17
|
|
||
Change in short-term notes payable
|
|
215
|
|
|
(500
|
)
|
||
Dividends paid
|
|
(247
|
)
|
|
(370
|
)
|
||
Net cash used in financing activities
|
|
(16
|
)
|
|
(853
|
)
|
||
|
|
|
|
|
||||
Net change in cash and cash equivalents
|
|
(1,150
|
)
|
|
1,694
|
|
||
|
|
|
|
|
||||
Cash and cash equivalents, beginning of period
|
|
3,393
|
|
|
1,572
|
|
||
|
|
|
|
|
||||
Cash and cash equivalents, end of period
|
|
$
|
2,243
|
|
|
$
|
3,266
|
|
Layer
|
Reinsurers' Limits of Liability
|
First Layer
|
95% of $6,000,000 in excess of $4,000,000
|
Second Layer
|
95% of $7,500,000 in excess of $10,000,000
|
Third Layer
|
100% of $25,000,000 in excess of $17,500,000
|
Fourth Layer
|
100% of $30,000,000 in excess of $42,500,000
|
March 31, 2012
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
|
$
|
26,509
|
|
|
$
|
1,585
|
|
|
$
|
184
|
|
|
$
|
27,910
|
|
Trust preferred securities
|
|
537
|
|
|
—
|
|
|
9
|
|
|
528
|
|
||||
Mortgage backed securities
|
|
6,539
|
|
|
243
|
|
|
44
|
|
|
6,738
|
|
||||
Private label mortgage backed securities
|
|
9,018
|
|
|
184
|
|
|
31
|
|
|
9,171
|
|
||||
Obligations of states and political subdivisions
|
|
16,815
|
|
|
984
|
|
|
22
|
|
|
17,777
|
|
||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
|
|
11,487
|
|
|
433
|
|
|
50
|
|
|
11,870
|
|
||||
Total fixed maturities
|
|
70,905
|
|
|
3,429
|
|
|
340
|
|
|
73,994
|
|
||||
Equity securities
|
|
4,931
|
|
|
4,582
|
|
|
542
|
|
|
8,971
|
|
||||
Total
|
|
$
|
75,836
|
|
|
$
|
8,011
|
|
|
$
|
882
|
|
|
$
|
82,965
|
|
Held-to-maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage backed securities
|
|
$
|
1,831
|
|
|
$
|
118
|
|
|
$
|
—
|
|
|
$
|
1,949
|
|
Private label mortgage backed securities
|
|
47
|
|
|
1
|
|
|
—
|
|
|
48
|
|
||||
Obligations of states and political subdivisions
|
|
815
|
|
|
32
|
|
|
—
|
|
|
847
|
|
||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
|
|
213
|
|
|
18
|
|
|
—
|
|
|
231
|
|
||||
Total
|
|
$
|
2,906
|
|
|
$
|
169
|
|
|
$
|
—
|
|
|
$
|
3,075
|
|
December 31, 2011
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
|
$
|
19,907
|
|
|
$
|
1,340
|
|
|
$
|
267
|
|
|
$
|
20,980
|
|
Trust preferred securities
|
|
537
|
|
|
—
|
|
|
58
|
|
|
479
|
|
||||
Mortgage backed securities
|
|
7,587
|
|
|
307
|
|
|
23
|
|
|
7,871
|
|
||||
Private label mortgage backed securities
|
|
9,716
|
|
|
199
|
|
|
62
|
|
|
9,853
|
|
||||
Obligations of states and political subdivisions
|
|
18,355
|
|
|
1,142
|
|
|
15
|
|
|
19,482
|
|
||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
|
|
13,878
|
|
|
534
|
|
|
3
|
|
|
14,409
|
|
||||
Total fixed maturities
|
|
69,980
|
|
|
3,522
|
|
|
428
|
|
|
73,074
|
|
||||
Equity securities
|
|
4,931
|
|
|
4,206
|
|
|
590
|
|
|
8,547
|
|
||||
Total
|
|
$
|
74,911
|
|
|
$
|
7,728
|
|
|
$
|
1,018
|
|
|
$
|
81,621
|
|
Held-to-maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage backed securities
|
|
$
|
2,026
|
|
|
$
|
125
|
|
|
$
|
—
|
|
|
$
|
2,151
|
|
Private label mortgage backed securities
|
|
55
|
|
|
1
|
|
|
—
|
|
|
56
|
|
||||
Obligations of states and political subdivisions
|
|
996
|
|
|
50
|
|
|
—
|
|
|
1,046
|
|
||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
|
|
226
|
|
|
18
|
|
|
—
|
|
|
244
|
|
||||
Total
|
|
$
|
3,303
|
|
|
$
|
194
|
|
|
$
|
—
|
|
|
$
|
3,497
|
|
|
|
(Dollars in Thousands)
|
||||||
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
Available-for-sale securities:
|
|
|
|
|
||||
Due in one year or less
|
|
$
|
927
|
|
|
$
|
950
|
|
Due after one year through five years
|
|
13,127
|
|
|
13,953
|
|
||
Due after five years through ten years
|
|
21,857
|
|
|
23,232
|
|
||
Due after ten years
|
|
34,994
|
|
|
35,859
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
70,905
|
|
|
$
|
73,994
|
|
Held-to-maturity securities:
|
|
|
|
|
|
|
||
Due in one year or less
|
|
$
|
300
|
|
|
$
|
301
|
|
Due after one year through five years
|
|
516
|
|
|
547
|
|
||
Due after five years through ten years
|
|
578
|
|
|
619
|
|
||
Due after ten years
|
|
1,512
|
|
|
1,608
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
2,906
|
|
|
$
|
3,075
|
|
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
|||||||||||||||||||||
March 31, 2012
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Total
Securities in a
Loss Position
|
|||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Corporate debt securities
|
|
$
|
8,027
|
|
|
$
|
127
|
|
|
$
|
1,743
|
|
|
$
|
57
|
|
|
$
|
9,770
|
|
|
$
|
184
|
|
|
22
|
|
Trust preferred securities
|
|
—
|
|
|
—
|
|
|
528
|
|
|
9
|
|
|
528
|
|
|
9
|
|
|
1
|
|
||||||
Mortgage backed securities
|
|
1,415
|
|
|
44
|
|
|
—
|
|
|
—
|
|
|
1,415
|
|
|
44
|
|
|
4
|
|
||||||
Private label mortgage backed securities
|
|
1,026
|
|
|
1
|
|
|
1,267
|
|
|
30
|
|
|
2,293
|
|
|
31
|
|
|
6
|
|
||||||
Obligations of state and political subdivisions
|
|
90
|
|
|
15
|
|
|
917
|
|
|
7
|
|
|
1,007
|
|
|
22
|
|
|
4
|
|
||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
|
|
2,569
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
2,569
|
|
|
50
|
|
|
6
|
|
||||||
Equity securities
|
|
91
|
|
|
8
|
|
|
948
|
|
|
534
|
|
|
1,039
|
|
|
542
|
|
|
5
|
|
||||||
|
|
$
|
13,218
|
|
|
$
|
245
|
|
|
$
|
5,403
|
|
|
$
|
637
|
|
|
$
|
18,621
|
|
|
$
|
882
|
|
|
48
|
|
|
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
|||||||||||||||||||||
December 31, 2011
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Total
Securities in a
Loss Position
|
|||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Corporate debt securities
|
|
$
|
4,703
|
|
|
$
|
166
|
|
|
$
|
899
|
|
|
$
|
101
|
|
|
$
|
5,602
|
|
|
$
|
267
|
|
|
15
|
|
Trust preferred securities
|
|
479
|
|
|
58
|
|
|
—
|
|
|
—
|
|
|
479
|
|
|
58
|
|
|
1
|
|
||||||
Mortgage backed securities
|
|
883
|
|
|
21
|
|
|
198
|
|
|
2
|
|
|
1,081
|
|
|
23
|
|
|
3
|
|
||||||
Private label mortgage backed securities
|
|
1,860
|
|
|
15
|
|
|
1,094
|
|
|
47
|
|
|
2,954
|
|
|
62
|
|
|
9
|
|
||||||
Obligations of state and political subdivisions
|
|
—
|
|
|
—
|
|
|
1,803
|
|
|
15
|
|
|
1,803
|
|
|
15
|
|
|
5
|
|
||||||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
|
|
260
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
260
|
|
|
3
|
|
|
1
|
|
||||||
Equity securities
|
|
391
|
|
|
49
|
|
|
802
|
|
|
541
|
|
|
1,193
|
|
|
590
|
|
|
6
|
|
||||||
|
|
$
|
8,576
|
|
|
$
|
312
|
|
|
$
|
4,796
|
|
|
$
|
706
|
|
|
$
|
13,372
|
|
|
$
|
1,018
|
|
|
40
|
|
|
|
(Dollars in thousands)
|
||||||
|
|
Quarter Ended March 31, 2012
|
|
Year Ended December 31, 2011
|
||||
|
|
(unaudited)
|
|
|
||||
Net change in unrealized appreciation on available-for-sale securities before deferred tax
|
|
$
|
419
|
|
|
$
|
1,792
|
|
Deferred income tax
|
|
(142
|
)
|
|
(534
|
)
|
||
Net change in unrealized appreciation on available-for-sale securities
|
|
$
|
277
|
|
|
$
|
1,258
|
|
|
|
March 31, 2012
|
|
December 31, 2011
|
||||
|
|
(unaudited)
|
|
|
||||
General insurance expenses
|
|
$
|
1,719
|
|
|
$
|
1,576
|
|
Unearned premiums
|
|
1,684
|
|
|
1,714
|
|
||
Claims liabilities
|
|
258
|
|
|
271
|
|
||
NOL carry forward
|
|
1,248
|
|
|
1,363
|
|
||
Other-than-temporary impairments on securities owned
|
|
257
|
|
|
258
|
|
||
Unrealized loss on interest rate swaps
|
|
363
|
|
|
407
|
|
||
Deferred tax assets
|
|
5,529
|
|
|
5,589
|
|
||
|
|
|
|
|
||||
Depreciation
|
|
(134
|
)
|
|
(144
|
)
|
||
Deferred policy acquisition costs
|
|
(3,241
|
)
|
|
(3,250
|
)
|
||
Unrealized gains on securities available-for-sale
|
|
(2,423
|
)
|
|
(2,281
|
)
|
||
Deferred tax liabilities
|
|
(5,798
|
)
|
|
(5,675
|
)
|
||
|
|
|
|
|
||||
Net deferred tax liability
|
|
$
|
(269
|
)
|
|
$
|
(86
|
)
|
|
|
For the three-months ended March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
Deferred policy acquisition costs
|
|
$
|
(9
|
)
|
|
$
|
158
|
|
Other-than-temporary impairments
|
|
1
|
|
|
(34
|
)
|
||
Trading securities
|
|
—
|
|
|
10
|
|
||
Unearned premiums
|
|
30
|
|
|
4
|
|
||
General insurance expenses
|
|
(143
|
)
|
|
(8
|
)
|
||
Depreciation
|
|
(10
|
)
|
|
(9
|
)
|
||
Claim liabilities
|
|
13
|
|
|
(3
|
)
|
||
NOL carry forward
|
|
115
|
|
|
—
|
|
||
|
|
|
|
|
||||
Deferred income tax (benefit) expense
|
|
$
|
(3
|
)
|
|
$
|
118
|
|
|
|
For the three-months ended March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
Federal income tax rate applied to pre-tax income
|
|
$
|
189
|
|
|
$
|
497
|
|
Dividends received deduction and tax-exempt interest
|
|
(47
|
)
|
|
(50
|
)
|
||
Company owned life insurance
|
|
(40
|
)
|
|
(22
|
)
|
||
Small life deduction
|
|
(55
|
)
|
|
(110
|
)
|
||
Other, net
|
|
(22
|
)
|
|
153
|
|
||
|
|
|
|
|
||||
Federal income tax expense
|
|
$
|
25
|
|
|
$
|
468
|
|
|
|
(Dollars in thousands)
|
||||||
|
|
2012
|
|
2011
|
||||
Line of credit with variable interest rate equal to the WSJ prime rate, subject to a 5.0% floor. Interest payments due quarterly. Unsecured.
|
|
$
|
700
|
|
|
$
|
485
|
|
|
|
(Dollars in thousands)
|
||||||
|
|
2012
|
|
2011
|
||||
|
|
|
|
|
||||
Subordinated debentures issued on December 15, 2005 with fixed interest rate of 8.83% each distribution period thereafter until December 15, 2015 when the coupon rate shall equal the 3-month LIBOR plus 3.75% applied to the outstanding principal; maturity December 2035. Interest payments due quarterly. All may be redeemed at any time following the tenth anniversary of issuance. Unsecured.
|
|
$
|
9,279
|
|
|
$
|
9,279
|
|
|
|
|
|
|
||||
Subordinated debentures issued on June 21, 2007 with a floating interest rate equal to the 3 Month LIBOR plus 3.40% applied to the outstanding principal; maturity June 15, 2037. Interest payments due quarterly. All may be redeemed at any time following the fifth anniversary of issuance. Unsecured.
|
|
3,093
|
|
|
3,093
|
|
||
|
|
$
|
12,372
|
|
|
$
|
12,372
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||
Description
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturities available-for-sale
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
|
$
|
27,910
|
|
|
$
|
—
|
|
|
$
|
27,910
|
|
|
$
|
—
|
|
Trust preferred securities
|
|
528
|
|
|
—
|
|
|
528
|
|
|
—
|
|
||||
Mortgage backed securities
|
|
6,738
|
|
|
—
|
|
|
6,738
|
|
|
—
|
|
||||
Private label mortgage backed securities
|
|
9,171
|
|
|
—
|
|
|
9,171
|
|
|
—
|
|
||||
Obligations of states and political subdivisions
|
|
17,777
|
|
|
—
|
|
|
17,777
|
|
|
—
|
|
||||
U.S. Treasury securities and obligations of
|
|
|
|
|
|
|
|
|
|
|
|
|||||
U.S. Government corporations and agencies
|
|
11,870
|
|
|
11,870
|
|
|
—
|
|
|
—
|
|
||||
Trading securities
|
|
20
|
|
|
20
|
|
|
—
|
|
|
—
|
|
||||
Equity securities available-for-sale
|
|
8,971
|
|
|
8,329
|
|
|
—
|
|
|
642
|
|
||||
Total Financial Assets
|
|
$
|
82,985
|
|
|
$
|
20,219
|
|
|
$
|
62,124
|
|
|
$
|
642
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest rate swap
|
|
$
|
1,068
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,068
|
|
Total Financial Liabilities
|
|
$
|
1,068
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,068
|
|
For the quarter ended March 31, 2012
|
|
Equity Securities Available-for-Sale
|
|
Interest Rate Swap
|
||||
Beginning balance
|
|
$
|
642
|
|
|
$
|
(1,196
|
)
|
Total gains or losses (realized and
|
|
|
|
|
|
|
||
unrealized):
|
|
|
|
|
|
|
||
Included in earnings
|
|
—
|
|
|
—
|
|
||
Included in other comprehensive income
|
|
—
|
|
|
128
|
|
||
Purchases:
|
|
—
|
|
|
—
|
|
||
Sales:
|
|
—
|
|
|
—
|
|
||
Issuances:
|
|
—
|
|
|
—
|
|
||
Settlements
|
|
—
|
|
|
—
|
|
||
Transfers in/(out) of Level 3
|
|
—
|
|
|
—
|
|
||
Ending balance
|
|
$
|
642
|
|
|
$
|
(1,068
|
)
|
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held as of March 31, 2012:
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||
Description
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturities available-for-sale
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
|
$
|
20,980
|
|
|
$
|
—
|
|
|
$
|
20,980
|
|
|
$
|
—
|
|
Trust preferred securities
|
|
479
|
|
|
—
|
|
|
479
|
|
|
—
|
|
||||
Mortgage backed securities
|
|
7,871
|
|
|
—
|
|
|
7,871
|
|
|
—
|
|
||||
Private label mortgage backed securities
|
|
9,853
|
|
|
—
|
|
|
9,853
|
|
|
—
|
|
||||
Obligations of states and political subdivisions
|
|
19,482
|
|
|
—
|
|
|
19,482
|
|
|
—
|
|
||||
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies
|
|
14,409
|
|
|
14,409
|
|
|
—
|
|
|
—
|
|
||||
Trading securities
|
|
80
|
|
|
80
|
|
|
—
|
|
|
—
|
|
||||
Equity securities available-for-sale
|
|
8,547
|
|
|
7,905
|
|
|
—
|
|
|
642
|
|
||||
Total Financial Assets
|
|
$
|
81,701
|
|
|
$
|
22,394
|
|
|
$
|
58,665
|
|
|
$
|
642
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swap
|
|
$
|
1,196
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,196
|
|
Total Financial Liabilities
|
|
$
|
1,196
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,196
|
|
For the year ended December 31, 2011
|
|
Equity Securities Available-for-Sale
|
|
Interest Rate Swap
|
||||
Beginning balance
|
|
$
|
787
|
|
|
$
|
(227
|
)
|
Total gains or losses (realized and
|
|
|
|
|
|
|
||
unrealized):
|
|
|
|
|
|
|
||
Included in earnings
|
|
(145
|
)
|
|
—
|
|
||
Included in other comprehensive income
|
|
—
|
|
|
(969
|
)
|
||
Purchases:
|
|
—
|
|
|
—
|
|
||
Sales:
|
|
—
|
|
|
—
|
|
||
Issuances:
|
|
—
|
|
|
—
|
|
||
Settlements
|
|
—
|
|
|
—
|
|
||
Transfers in/(out) of Level 3
|
|
—
|
|
|
—
|
|
||
Ending balance
|
|
$
|
642
|
|
|
$
|
(1,196
|
)
|
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held as of December 31, 2011:
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
In Thousands of Dollars
|
||||||||||||||
|
|
March 31, 2012
|
|
December 31, 2011
|
||||||||||||
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
||||||||
Assets and related instruments
|
|
|
|
|
|
|
|
|
||||||||
Mortgage loans
|
|
$
|
388
|
|
|
$
|
388
|
|
|
$
|
390
|
|
|
$
|
390
|
|
Policy loans
|
|
1,223
|
|
|
1,223
|
|
|
1,244
|
|
|
1,244
|
|
||||
Company owned life insurance
|
|
5,777
|
|
|
5,777
|
|
|
5,660
|
|
|
5,660
|
|
||||
Other invested assets
|
|
3,886
|
|
|
3,886
|
|
|
3,929
|
|
|
3,929
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Liabilities and related instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other policyholder funds
|
|
1,424
|
|
|
1,424
|
|
|
1,408
|
|
|
1,408
|
|
||||
Short-term debt
|
|
700
|
|
|
700
|
|
|
485
|
|
|
485
|
|
||||
Long-term debt
|
|
12,372
|
|
|
12,372
|
|
|
12,372
|
|
|
12,372
|
|
Quarter ended March 31, 2012
|
Total
|
|
P&C Insurance Operations
|
|
Life Insurance Operations
|
|
Non-Insurance Operations
|
||||||||
REVENUE
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
$
|
13,496
|
|
|
$
|
11,744
|
|
|
$
|
1,752
|
|
|
$
|
—
|
|
Net investment income
|
1,135
|
|
|
611
|
|
|
508
|
|
|
16
|
|
||||
Net realized investment gains
|
206
|
|
|
132
|
|
|
72
|
|
|
2
|
|
||||
Other income
|
197
|
|
|
196
|
|
|
1
|
|
|
—
|
|
||||
|
15,034
|
|
|
12,683
|
|
|
2,333
|
|
|
18
|
|
||||
BENEFITS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Policyholder benefits paid
|
7,845
|
|
|
6,413
|
|
|
1,432
|
|
|
—
|
|
||||
Policy acquisition costs
|
2,772
|
|
|
2,544
|
|
|
228
|
|
|
—
|
|
||||
General and administrative expenses
|
3,077
|
|
|
1,829
|
|
|
448
|
|
|
800
|
|
||||
Taxes, licenses and fees
|
492
|
|
|
430
|
|
|
62
|
|
|
—
|
|
||||
Interest expense
|
292
|
|
|
—
|
|
|
19
|
|
|
273
|
|
||||
|
14,478
|
|
|
11,216
|
|
|
2,189
|
|
|
1,073
|
|
||||
Income Before Income Taxes
|
$
|
556
|
|
|
$
|
1,467
|
|
|
$
|
144
|
|
|
$
|
(1,055
|
)
|
Quarter ended March 31, 2011
|
Total
|
|
P&C Insurance Operations
|
|
Life Insurance Operations
|
|
Non-Insurance Operations
|
||||||||
REVENUE
|
|
|
|
|
|
|
|
||||||||
Net premiums earned
|
$
|
14,870
|
|
|
$
|
13,001
|
|
|
$
|
1,869
|
|
|
$
|
—
|
|
Net investment income
|
1,142
|
|
|
627
|
|
|
497
|
|
|
18
|
|
||||
Net realized investment gains
|
770
|
|
|
386
|
|
|
354
|
|
|
30
|
|
||||
Other income
|
255
|
|
|
255
|
|
|
—
|
|
|
—
|
|
||||
|
17,037
|
|
|
14,269
|
|
|
2,720
|
|
|
48
|
|
||||
BENEFITS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Policyholder benefits paid
|
9,322
|
|
|
7,811
|
|
|
1,511
|
|
|
—
|
|
||||
Policy acquisition costs
|
2,924
|
|
|
2,740
|
|
|
184
|
|
|
—
|
|
||||
General and administrative expenses
|
2,563
|
|
|
1,451
|
|
|
580
|
|
|
532
|
|
||||
Taxes, licenses and fees
|
480
|
|
|
360
|
|
|
120
|
|
|
—
|
|
||||
Interest expense
|
285
|
|
|
—
|
|
|
15
|
|
|
270
|
|
||||
|
15,574
|
|
|
12,362
|
|
|
2,410
|
|
|
802
|
|
||||
Income (Loss) Before Income Taxes
|
$
|
1,463
|
|
|
$
|
1,907
|
|
|
$
|
310
|
|
|
$
|
(754
|
)
|
|
|
Quarter Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
Premiums written:
|
|
|
|
|
|
|
||
Life, accident and health operations:
|
|
|
|
|
|
|
||
Traditional life insurance
|
|
$
|
1,210
|
|
|
$
|
1,305
|
|
Accident and health insurance
|
|
464
|
|
|
484
|
|
||
Total life, accident and health
|
|
1,674
|
|
|
1,789
|
|
||
|
|
|
|
|
||||
Property and Casualty operations:
|
|
|
|
|
|
|
||
Dwelling fire & extended coverage
|
|
6,927
|
|
|
6,697
|
|
||
Homeowners (Including mobile homeowners)
|
|
5,487
|
|
|
6,007
|
|
||
Ocean marine
|
|
84
|
|
|
119
|
|
||
Other liability
|
|
357
|
|
|
334
|
|
||
Private passenger auto liability
|
|
69
|
|
|
854
|
|
||
Commercial auto liability
|
|
6
|
|
|
119
|
|
||
Auto physical damage
|
|
36
|
|
|
336
|
|
||
Total property and casualty
|
|
12,966
|
|
|
14,466
|
|
||
|
|
|
|
|
||||
Gross premiums written
|
|
14,640
|
|
|
16,255
|
|
||
Reinsurance premium ceded
|
|
(1,683
|
)
|
|
(1,529
|
)
|
||
|
|
|
|
|
||||
Net premiums written
|
|
$
|
12,957
|
|
|
$
|
14,726
|
|
|
|
Quarter Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2012
|
|
2011
|
||||
Premiums earned:
|
|
|
|
|
||||
Life, accident and health operations:
|
|
|
|
|
||||
Traditional life insurance
|
|
$
|
1,288
|
|
|
$
|
1,386
|
|
Accident and health insurance
|
|
464
|
|
|
483
|
|
||
Total life, accident and health
|
|
1,752
|
|
|
1,869
|
|
||
|
|
|
|
|
||||
Property and Casualty operations:
|
|
|
|
|
||||
Dwelling fire & extended coverage
|
|
6,547
|
|
|
6,499
|
|
||
Homeowners (Including mobile homeowners)
|
|
5,904
|
|
|
6,244
|
|
||
Ocean marine
|
|
268
|
|
|
319
|
|
||
Other liability
|
|
340
|
|
|
310
|
|
||
Private passenger auto liability
|
|
235
|
|
|
756
|
|
||
Commercial auto liability
|
|
6
|
|
|
119
|
|
||
Auto physical damage
|
|
107
|
|
|
297
|
|
||
Total property and casualty
|
|
13,407
|
|
|
14,544
|
|
||
|
|
|
|
|
||||
Gross premiums earned
|
|
15,159
|
|
|
16,413
|
|
||
Reinsurance premium ceded
|
|
(1,663
|
)
|
|
(1,543
|
)
|
||
|
|
|
|
|
||||
Net premiums earned
|
|
$
|
13,496
|
|
|
$
|
14,870
|
|
|
March 31, 2012
|
|
December 31, 2011
|
||||||||||
|
Authorized
|
Issued
|
Outstanding
|
|
Authorized
|
Issued
|
Outstanding
|
||||||
Preferred Stock, $1 par value
|
500,000
|
|
—
|
|
—
|
|
|
500,000
|
|
—
|
|
—
|
|
Class A Common Stock, $1 par value
|
2,000,000
|
|
—
|
|
—
|
|
|
2,000,000
|
|
—
|
|
—
|
|
Common Stock, $1 par value
|
3,000,000
|
|
2,466,600
|
|
2,466,600
|
|
|
3,000,000
|
|
2,466,600
|
|
2,466,600
|
|
|
|
Quarter Ended
|
|
Percent
|
|||||||
|
|
2012
|
|
2011
|
|
increase (decrease)
|
|||||
Life, accident and health operations:
|
|
|
|
|
|
|
|||||
Traditional life insurance
|
|
$
|
1,288,000
|
|
|
$
|
1,386,000
|
|
|
(7.1
|
)%
|
Accident and health insurance
|
|
464,000
|
|
|
483,000
|
|
|
(3.9
|
)%
|
||
Total life, accident and health
|
|
1,752,000
|
|
|
1,869,000
|
|
|
(6.3
|
)%
|
||
|
|
|
|
|
|
|
|||||
Property and Casualty operations:
|
|
|
|
|
|
|
|
|
|
||
Dwelling fire & extended coverage
|
|
6,547,000
|
|
|
6,499,000
|
|
|
0.7
|
%
|
||
Homeowners (Including mobile homeowners)
|
|
5,904,000
|
|
|
6,244,000
|
|
|
(5.4
|
)%
|
||
Ocean marine
|
|
268,000
|
|
|
319,000
|
|
|
(16.0
|
)%
|
||
Other liability
|
|
340,000
|
|
|
310,000
|
|
|
9.7
|
%
|
||
Private passenger auto liability
|
|
235,000
|
|
|
756,000
|
|
|
(68.9
|
)%
|
||
Commercial auto liability
|
|
6,000
|
|
|
119,000
|
|
|
(95.0
|
)%
|
||
Auto physical damage
|
|
107,000
|
|
|
297,000
|
|
|
(64.0
|
)%
|
||
Reinsurance premium ceded
|
|
(1,663,000
|
)
|
|
(1,543,000
|
)
|
|
7.8
|
%
|
||
Total property and casualty
|
|
11,744,000
|
|
|
13,001,000
|
|
|
(9.7
|
)%
|
||
|
|
|
|
|
|
|
|||||
Total earned premium revenue
|
|
$
|
13,496,000
|
|
|
$
|
14,870,000
|
|
|
(9.3
|
)%
|
31.1
|
Certification Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
31.2
|
Certification Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
32.1
|
Certification Pursuant to 18 U. S. C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
Date of Report
|
|
Date Filed
|
|
Description
|
|
|
|
|
|
January 20, 2012
|
|
January 23, 2012
|
|
Press release, dated January 23, 2012, issued by The National Security Group, Inc.
|
|
|
|
|
|
March 26, 2012
|
|
March 26, 2012
|
|
Press release, dated March 26, 2012 issued by The National Security Group, Inc.
|
/s/ William L. Brunson, Jr.
|
|
/s/ Brian R. McLeod
|
William L. Brunson, Jr.
|
|
Brian R. McLeod
|
President and Chief Executive Officer
|
|
Vice President and Chief Financial Officer
|
1 Year National Security Chart |
1 Month National Security Chart |
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