The National Security Group, Inc. Releases Third Quarter Earnings

The National Security Group, Inc. (the Company) (Nasdaq: NSEC), today reported results for the quarter and nine months ended September 30, 2009 and 2008, based on accounting principles generally accepted in the United States of America, as follows:

    
      
        
        
        
           
        
        
        
        
          Three Months Ended September 30
        
        
           
        
        
        
        
          Nine Months Ended September 30
        
      
      
        
        
        
        
        
        
        
        
        
           
        
        
        
        
        
        
        
        
        
        
        
        
           
        
        
        
        
        
      
      
        
        
        
        
        
        
        
          2009
        
        
        
        
        
        
          2008
        
        
        
        
        
        
          2009
        
        
        
        
        
        
          2008
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Premium Income
        
        
        
        
          $
        
        
          14,357,000
        
        
        
        
          $
        
        
          11,707,000
        
        
        
        
        
        
          $
        
        
          44,950,000
        
        
        
        
        
        
          $
        
        
          42,261,000
        
        
        
      
      
        
          Investment Income
        
        
        
        
        
        
          1,376,000
        
        
        
        
        
        
          1,332,000
        
        
        
        
        
        
        
        
          4,214,000
        
        
        
        
        
        
        
        
          3,616,000
        
        
        
      
      
        
          Realized Investment (Losses) Gains
        
        
        
        
        
        
          79,000
        
        
        
        
        
        
          (1,452,000
        
        
          )
        
        
        
        
        
        
          (151,000
        
        
          )
        
        
        
        
        
        
          (1,026,000
        
        
          )
        
      
      
        
          Other Income
        
        
        
        
        
        
          208,000
        
        
        
        
        
        
          254,000
        
        
           
        
        
        
        
        
        
          541,000
        
        
           
        
        
        
        
        
        
          927,000
        
        
           
        
      
      
        
          Total Revenues
        
        
        
        
          $
        
        
          16,020,000
        
        
        
        
          $
        
        
          11,841,000
        
        
           
        
        
        
        
          $
        
        
          49,554,000
        
        
           
        
        
        
        
          $
        
        
          45,778,000
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net (Loss) Income
        
        
        
        
          $
        
        
          651,000
        
        
        
        
          $
        
        
          (6,945,000
        
        
          )
        
        
        
        
          $
        
        
          2,224,000
        
        
           
        
        
        
        
          $
        
        
          (6,199,000
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net (Loss) Earnings Per Common Share
        
        
        
        
          $
        
        
          0.26
        
        
        
        
          $
        
        
          (2.82
        
        
          )
        
        
        
        
          $
        
        
          0.90
        
        
           
        
        
        
        
          $
        
        
          (2.51
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
    
    

The Company reported net income of $651,000 ($0.26 per share) for the three-months ended September 30, 2009 compared to a net loss of $6,945,000 ($2.82 per share) for same period last year. The improvement in net income is primarily related to the lack of hurricane activity and fewer investment write downs due to other-than-temporary impairments during the quarter ended September 30, 2009. Results for the quarter ended September 30, 2008 were adversely impacted by losses incurred from Hurricanes Gustav and Ike and $1,722,000 in other-than-temporary impairments on investments.

The Company reported net income of $2,224,000 ($0.90 per share) for the nine-months ended September 30, 2009 compared to a net loss of $6,199,000 ($2.51 per share) for the same period last year. As with results for the quarter, the improvement in year-to-date net income compared to the same period last year is related to the lack of hurricane activity and only $286,000 in other-than-temporary impairments compared to $1,722,000 being recognized in earnings.

Premium revenue for the three-month period ended September 30, 2009 increased $2,650,000 compared to the same period last year. Catastrophe reinstatement premium related to Hurricane Gustav reduced third quarter 2008 premium revenue by $1,600,000 in 2008 and was the primary contributor to lower premium revenue in 2008 compared to 2009.

Premium revenue for the nine-months ended September 30, 2009 increased 6.4% to $44,950,000 compared to $42,261,000 for the same period last year. Moderate increases in written premiums in the dwelling property lines of business during 2009 coupled with a reduction in ceded reinsurance premium cost were the primary factors contributing to the increase in earned premium.

Shareholders’ equity as of September 30, 3009 increased $5,777,000 to $40,425,000 from $34,648,000 at December 31, 2008. The most significant factor leading to the increase was the recovery in market value of available-for-sale securities which totaled $4,533,000, net of tax. Adding to the improvement in the Company’s capital position was year-to-date net income of $2,224,000 and a gain on the interest rate swap of $130,000. Shareholders’ equity at September 30, 2009 was reduced by dividends paid of $1,110,000.

The National Security Group, Inc., through its property & casualty and life insurance subsidiaries, offers property, casualty, life, accident and health insurance in twelve states. For more financial information please visit the investor section our website www.nationalsecuritygroup.com.