National Security (NASDAQ:NSEC)
Historical Stock Chart
From Jul 2019 to Jul 2024
![Click Here for more National Security Charts. Click Here for more National Security Charts.](/p.php?pid=staticchart&s=N%5ENSEC&p=8&t=15)
On October 18, 2008 the Board of Directors of The National Security
Group, Inc. (NASDAQ:NSEC), declared a quarterly dividend of $.225 per
share. This cash dividend is payable on November 28, 2008 to
shareholders of record on November 10, 2008.
In conjunction with the announcement of the regular quarterly dividend,
the Board of Directors and Company Management is releasing guidance
regarding the outlook for future dividend payments and notifying
investors of a revision to the Company’s
dividend policy:
The National Security Group, Inc. has 30-year history of providing a
steady return on investment through the payment of dividends to
shareholders. These dividends have contributed significantly to total
shareholder return and have provided a steady, predictable income stream
that is important to a large portion of our shareholder base.
Three significant events have occurred in 2008 that have forced us to
revise our dividend policy. First, we have encountered an unusually high
frequency of catastrophe related losses. In the first half of 2008 we
incurred over $2.9 million (net of tax) in tornado and windstorm-related
losses. In September of 2008 we incurred significant losses from
Hurricanes Gustav and Ike, primarily in Louisiana and Texas. Losses from
these two storms will cost in excess of $5.9 million net of reinsurance.
The unprecedented frequency of storm activity will significantly reduce
our 2008 earnings and capital position. While we remain adequately
capitalized, we must focus on restoring capital levels in order to focus
on long term growth and maximization of shareholder value.
Second, the recent adverse developments in the financial markets have
affected our investments. We will incur charges to third quarter
earnings of $1.2 million (net of tax) for Other Than Temporary
Impairments to investments we hold in our portfolio. We will also incur
reductions to our capital due to mark to market accounting rules that
will adversely affect many of our corporate bond holdings and equity
investments. We expect to ultimately recover substantially all of the
reductions not related to Other Than Temporary Impairments, but will
incur near term reductions in our capital position that must be
addressed now.
Third, due to the unprecedented events that have unfolded in the global
financial markets over the last few months we believe the ability to
raise new capital in the financial sector, especially for smaller public
companies, is going to be severely restricted. Further, if capital
becomes available, we believe it will be more expensive. Therefore, we
believe it prudent to adopt a more conservative dividend payout policy
in order to rebuild the balance sheet strength of the Company. We are
confident this will ultimately maximize long-term shareholder value.
As a consequence of these events, we are undertaking a comprehensive
plan to restore and grow capital to help us take advantage of the
opportunities that lie ahead. As part of this plan the Board of
Directors has adopted a new dividend policy under which our quarterly
dividend payouts will be reduced from $0.225 per share to approximately
$0.15 per share. The Board will work with management each year to
determine if our financial position will allow for any enhanced
dividends to be paid, based upon the operating results of the Company
and our anticipated near term capital needs. We believe these changes
are in the best long term interests of the Company and our shareholders,
and strike a compromise between maintaining a return to shareholders and
ensuring a solid capital position for the Company.
With its home office in Elba, Alabama, The National Security Group, Inc.
is an insurance holding company. Company shares are traded on the NASDAQ
Global Market under the symbol NSEC.
This news release deals primarily with forward-looking statements based
upon our estimates and expectations of future events. These statements
are subject to certain risks and uncertainties that can cause actual
results to vary materially from the expected results described in the
forward-looking statements. Forward-looking statements are identified by
words such as, but not limited to, “anticipate,”
“believe,” “estimate,”
“expect,” “hope,”
“hopeful,” “intend,”
“may,” “optimistic,”
“potential,” “preliminary,”
“project,” “should,”
“will,” and other
analogous expressions. Many factors can cause our actual results to
differ materially from those in the forward-looking statements. Thus,
because we are addressing forward looking statements through this news
release, you should view it in its entirety as a forward looking
statement providing our outlook on future business. Please see our SEC
filings on Forms 10K and 10Q for an additional discussion on important
risk factors.