The National Security Group, Inc. (NASDAQ:
NSEC) financial results for the three-months and six-months ended
June 30, 2012 and 2011, based on accounting principles generally
accepted in the United States of America, were reported today as
follows:
Three Months Ended June 30 Six Months
Ended June 30 2012 2011 2012 2011
Premium Earned $ 12,533,000 $ 13,321,000 $ 26,029,000 $
28,191,000 Investment Income 1,066,000 1,171,000 2,201,000
2,228,000 Realized Investment Gains 865,000 261,000 1,071,000
1,031,000 Other Income 193,000 256,000
390,000 511,000 Total Revenues $
14,657,000 $ 15,009,000 $ 29,691,000 $
31,961,000 Net Loss $ (7,306,000 ) $ (4,945,000 ) $
(6,775,000 ) $ (3,950,000 ) Net Loss Per Share $ (2.96 ) $
(2.00 ) $ (2.75 ) $ (1.60 )
On June 20, 2012, The National Security Group, Inc. (the
Company) reached a settlement agreement in the Mobile Attic related
litigation previously disclosed in its annual and quarterly reports
filed with the Securities and Exchange Commission on forms 10-K and
10-Q. The Company and the plaintiff entered into an agreement
before the Court to end all outstanding litigation between the
parties. The agreement will consist of a settlement in which the
Company will pay the plaintiff $13,000,000 over 9 years on terms
and conditions to be finalized by the parties in the final
definitive agreement. The financial impact of this settlement is
reflected in the current year net income figures presented in the
table above and discussion below.
For the three-months ended June 30, 2012, the Company had a
net loss of $7,306,000, $2.96 per share, compared to a net loss of
$4,945,000, $2.00 per share, for the same period last year. The
primary factor contributing to the net loss for the three-months
ended June 30, 2012 was the settlement of longstanding
litigation related to the Company's sale of an investment in Mobile
Attic, Inc. The settlement and associated legal fees resulted in a
charge to pretax earnings of $12,670,000 in the second quarter and
resulted in a net of tax reduction in second quarter net income of
$8,362,000. For the three-months ended June 30, 2011, the net loss
included a significant increase in policyholder benefits paid
resulting from tornado and wind claims related to a series of
severe weather events occurring during the month of April 2011
which caused widespread destruction and led to $12,632,000 in gross
incurred losses and adjustment expenses. Net of reinsurance
recoveries, these events reduced pretax earnings by $6,518,000 and
reduced net income by $4,302,000 in the second quarter of 2011.
For the six-months ended June 30, 2012, the Company had a net
loss of $6,775,000, $2.75 per share, compared to a net loss of
$3,950,000, $1.60 per share, for the same period last year.
Litigation settlement and defense cost reduced net income for the
first six months of 2012 by $8,751,000, net of tax, resulting in a
net loss for the period. The first six months of 2011 were
adversely impacted by the previously mentioned tornado and wind
related losses which occurred during the month of April.
Year-to-date earned premium revenue was $26,029,000 for the
six-months ended June 30, 2012 compared to $28,191,000 for the
same period last year. The primary factor contributing to the
decline in premium revenue was the decision, in late 2011, to
discontinue to automobile line of business due to lack of
underwriting profitability.
Shareholders’ equity as of June 30, 2012 was $30,663,000,
down $7,352,000 compared to $38,015,000 as of December 31,
2011. Book value per share decreased $2.98 per share for the period
ended June 30, 2012 to $12.43 per share compared to $15.41 per
share at December 31, 2011. The decline in book value was
primarily caused by the net loss of $6,775,000 in the first six
months of 2012.
The National Security Group, Inc. (NASDAQ Symbol: NSEC), through
its property & casualty and life insurance subsidiaries, offers
property, casualty, life, accident and health insurance in twelve
states. The Company writes primarily personal lines property
coverage including dwelling fire and windstorm, homeowners, and
mobile homeowners lines of insurance. The Company also offers life,
accident and health, supplemental hospital and cancer insurance
products. The Company was founded in 1947 and is based in Elba,
Alabama. Additional information about the Company, including
additional details of recent financial results, can be found on our
website: www.nationalsecuritygroup.com.
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