Winter storms projected losses for National Security Group, Inc.

  
    
  
  
    
      The National Security Group, Inc. (NASDAQ: NSEC):
    
    
      Severe weather in late January and early February contributed to tornado 
      outbreaks resulting in reported losses of over $1.1 million in insured 
      losses incurred by Company subsidiaries National Security Fire and 
      Casualty Company and Omega One Insurance Company.
    
    
      Management maintains a comprehensive risk management program to mitigate 
      the impact of catastrophic events. A primary component of the risk 
      management program is catastrophe reinsurance, which limits losses to 
      the Company as a result of catastrophic events above the Company’s 
      retention, currently $3.5 million. As Catastrophes 26, 27 and 29 did not 
      exceed the Company’s retention (individually 
      or in total) these losses will have a material impact on the Company’s 
      first quarter 2008 results of operations.
    
    
      Based on preliminary estimates, first quarter net income will be reduced 
      by $792 thousand, or a reduction in earnings per share as a result of 
      this event is expected to be $0.32 per share. The projected impact on 
      earnings is based on total Company insured losses of $1.2 million on a 
      pre-tax basis.
    
    
      Loss estimates were derived by an evaluation of reported claims which is 
      the best information available to management at this time. The estimates 
      could be materially affected by, among other things, the number of 
      insureds impacted by the tornados, the amount and timing of losses 
      actually incurred and reported by insureds, and the preliminary nature 
      of current estimates.
    
    
      While a material impact on earnings cannot be avoided, our ability to 
      continue operations, serve our policyholders and strive to provide 
      long-term value to our stockholders will not be affected.
    
    
      About The National Security Group Inc.
    
    
      The National Security Group Inc. through its insurance subsidiaries 
      provides property, liability, life, accident and supplemental health 
      insurance products in thirteen states. Primary property and casualty 
      insurance subsidiaries are National Security Fire and Casualty and Omega 
      One Insurance Company, which provide primarily personal lines dwelling, 
      homeowners, mobile homeowners, and automobile insurance coverage in 
      twelve states, primarily in the Southeastern United States. National 
      Security Insurance Company is a wholly owned subsidiary providing life, 
      accident and supplemental health insurance coverage in five states. The 
      Company is listed on the NASDAQ Global Market under the symbol: NSEC.
    
    
      Information about forward-looking statements
    
    
      Any statement contained in this report which is not a historical fact, 
      or which might otherwise be considered an opinion or projection 
      concerning the Company or its business, whether expressed or implied, is 
      meant as and should be considered a forward-looking statement as that 
      term is defined in the Private Securities Litigation Reform Act of 1995. 
      Forward-looking statements are based on assumptions and opinions 
      concerning a variety of known and unknown risks, including but not 
      limited to changes in market conditions, natural disasters and other 
      catastrophic events, increased competition, changes in availability and 
      cost of reinsurance, changes in governmental regulations, technological 
      changes, political and legal contingencies and general economic 
      conditions, as well as other risks and uncertainties more completely 
      described in the Company’s filings with the 
      Securities and Exchange Commission. If any of these assumptions or 
      opinions proves incorrect, any forward-looking statements made on the 
      basis of such assumptions or opinions may also prove materially 
      incorrect in one or more respects and may cause future results to differ 
      materially from those contemplated, projected, estimated or budgeted in 
      such forward-looking statements.