The National Security Group, Inc. Releases Estimates of Second Quarter Catastrophe Losses
July 17 2020 - 4:00PM
Business Wire
The National Security Group, Inc. (NASDAQ:NSEC) released a
preliminary estimate of catastrophe losses (referred to as "cat
events" or "catastrophe events" throughout the remainder of this
release) from property and casualty subsidiary National Security
Fire & Casualty (NSFC) for the three and six months periods
ending June 30, 2020.
During the second quarter of 2020, NSFC was negatively impacted
by multiple severe weather events that contributed to elevated
insured losses due to damage from strong winds, hail and tornadoes.
NSFC was impacted by 15 catastrophe events which produced 1,464
reported policyholder claims totaling $9,739,000. In comparison,
NSFC was impacted by 11 catastrophe events during the second
quarter of 2019 from 378 reported claims totaling $1,908,000. April
of 2020 was our most active month of any spring storm season since
2011, with six cat events occurring during the month. These six cat
events impacted policyholders in every state in which NSFC operates
and generated $7,806,000 in insured losses during the second
quarter of 2020 from 1,133 reported claims through June 30, 2020.
For comparison, in April of 2019, we incurred losses from five cat
events totaling $1,092,000 from 221 reported claims.
For the first six months of 2020, NSFC had 2,002 reported claims
from 20 cat events through June 30, 2020 totaling $11,991,000. In
comparison, NSFC was impacted by 14 cat events through June 30,
2019 from 519 reported claims totaling $2,863,000. Our second
quarter and year to date results of operations for the period ended
June 30, 2020 will be materially impacted by these catastrophe
losses.
Three of the largest current year cat events occurred from April
10, 2020 through April 24, 2020. Claims reported through June 30,
2020 from these three cat events totaled $7,396,000 and accounted
for 75.9% of all second quarter 2020 catastrophe losses impacting
NSFC.
The Company maintains catastrophe reinsurance coverage to
mitigate loss exposure from catastrophic events. With our 2020
catastrophe contract placement, our single event catastrophe
retention remained unchanged from the prior year at $4 million. In
our 2020 contract, we maintained our underlying second event layer
of $2 million in excess of $2 million. This additional coverage
effectively lowers our second event retention to $2 million. Also
unchanged from last year, we maintain catastrophe reinsurance
covering incurred claims of a single catastrophe event up to $72.5
million. Our catastrophe reinsurance has a reinstatement provision
for one event and covers the cost of a second event up to the same
$72.5 million upper limit. While we were impacted by multiple
catastrophe events in the second quarter of 2020, based on current
development none of these events individually exceeded our $4
million first event catastrophe reinsurance retention.
After a significant decline in late February and March, our
investment portfolio improved significantly in the second quarter
of 2020 with consolidated pre-tax gains totaling approximately $4
million. The increase was primarily related to net investment gains
in equity securities coupled with an increase in unrealized gains
in fixed maturity securities.
About The National Security Group, Inc
The National Security Group, Inc. (NASDAQ Symbol: NSEC), through
its property and casualty and life insurance subsidiaries, offers
property, casualty, life, accident and health insurance in ten
states. The Company primarily writes personal lines property
coverage including specialty market 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.
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.
Significant uncertainties still remain regarding the ultimate
impacts of the COVID-19 pandemic on future premium, losses and
investment results. These uncertainties could have a material
adverse impact on our net income and results of operations.
Additional information and disclosures related to risk factors are
discussed in our 2019 Annual Report on Form 10-K as well as our
latest Form 10-Q and should be read in conjunction with this Form
8-K.
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version on businesswire.com: https://www.businesswire.com/news/home/20200717005553/en/
Brian McLeod Chief Financial Officer @ (334) 897-2273.
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