Business & Finance
Business and Finance
Business and Finance
Fri, February 27, 2009 The National Security Group, Inc. Releases Earnings
ELBA, Ala.--([ BUSINESS WIRE ])--The National Security Group, Inc. (NASDAQ: NSEC) today announced its financial results for the year and three month periods ended December 31, 2008. Total revenues for the year decreased 11.97% to $61,233,000 compared to $69,563,000 for 2007. Leading the decrease in total revenue was a 9.62% decline in premium revenue to $56,264,000 in 2008 compared to $62,250,000 for the year 2007. The decline in revenue in the property and casualty subsidiaries combined with an increase in ceded premiums due to catastrophe reinsurance reinstatements were the primary contributors to the decline in premium revenue.
Net loss for the year ended December 31, 2008 was ($5,204,000), or ($2.11) per share compared to net income of $6,040,000, or $2.45 per share for 2007.
Net loss from continuing operations of the insurance subsidiaries was ($5,204,000) for the year ended December 31, 2008 compared to net income from continuing operations of $4,721,000 for the same period in 2007. Significant factors contributing to the 2008 net loss included catastrophe related losses and loss adjustment expenses combined with charges for other-than-temporary impairments in the Company's investment portfolio.
The Company incurred significant tornado and hurricane related catastrophe losses during 2008. Nineteen named windstorm and tornado related catastrophe events occurred in the first half 2008. Gross losses and loss adjustment expenses from these catastrophes were over $4,903,000. During the third quarter of 2008, the Company incurred substantial losses due to Hurricane Gustav and Hurricane Ike. The Company incurred total gross losses and loss adjustment expenses from Hurricane Gustav of $14,140,000 ($4,032,000 after reinsurance recoveries). With respect to Hurricane Ike, the Company incurred total gross losses and loss adjustment expenses of $4,271,000 ($3,539,000 after reinsurance recoveries). Net of reinsurance, total 2008 pre-tax income was reduced by $12,474,000 from catastrophe related losses and loss adjustment expenses. Net of tax, catastrophe related losses totaled $8,233,000 and reduced net income by $3.33 per share.
Also impacting the net loss from continuing operations was the recognition of $2,973,000 ($2,239,000 or $0. 90 per share, after tax) in other-than-temporary impairments. These write-downs were related to the Company's fixed income investments in American General Financial, Freddie Mac, Fannie Mae, Lehman Brothers, Harborview Financial and Washington Mutual.
The Company had no net income from discontinued operations in 2008. In 2007, net income from discontinued operations of $1,319,000 consisted of a gain on disposal of a 50% owned subsidiary, Mobile Attic, Inc. in the second quarter of 2007.
Fourth quarter 2008 net income declined 35.88% to $995,000, or $0.40 per share, compared to $1,552,000 or $0.63 per share for the quarter ended December 31, 2007. The recognition of other than temporary impairments on Harborview Mortgage and American General Financial in the amount of $1,196,000 ($972,000 or $0.39 per share net of tax).
Stockholders equity for the year ended December 31, 2008 was $34,648,000 compared to $48,447,000 at December 31, 2007, a decrease of $13,799,000 or 28.48%. The change in stockholders equity is composed of dividends paid to shareholders of $2,220,000; net loss of ($5,204,000) and a decline in accumulated other comprehensive income due to declines in investment portfolio market values of ($6,379,000). Year end book value per share, defined as stockholders equity divided by common shares outstanding of 2,466,600, was $14.04 at December 31, 2008 compared to $19.64 at December 31, 2007.
A summary of revenue and income statement information follows:
| Three Months | Year | ||||||||||||
| Ended December 31 | Ended December 31 | ||||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||||
| Premium Earned | $ | 14,003,000 | $ | 15,888,000 | $ | 56,264,000 | $ | 62,250,000 | |||||
| Investment Income | 1,017,000 | 1,120,000 | 4,911,000 | 4,749,000 | |||||||||
| Realized Investment Gains (Losses) | 255,000 | 964,000 | (1,049,000 | ) | 1,493,000 | ||||||||
| Other Income | 180,000 | 251,000 | 1,107,000 | 1,071,000 | |||||||||
| Total Revenues |
| 15,455,000 |
| 18,223,000 | 61,233,000 | 69,563,000 | |||||||
| Income from Continuing Operations | 995,000 | 1,552,000 | (5,204,000 | ) | 4,721,000 | ||||||||
| Income from Discontinued Operations | - | - | - | 1,319,000 | |||||||||
| Net Income | $ | 995,000 | $ | 1,552,000 | $ | (5,204,000 | ) | $ | 6,040,000 | ||||
| Income Per Share from Continuing Operations | $ | 0.40 | $ | 0.63 | $ | (2.11 | ) | $ | 1.91 | ||||
| Income Per Share from Discontinued Operations | - | - | - | 0.54 | |||||||||
| Net Income Per Share | $ | 0.40 | $ | 0.63 | $ | (2.11 | ) | $ | 2.45 | ||||
The National Security Group, Inc. is a regional insurance holding company with three wholly owned subsidiaries, offering a range of personal lines life, accident and health, property and liability insurance in twelve states. The Company is listed on the NASDAQ Global Market under the symbol: NSEC. For more financial information please visit the investor section of our website [ www.nationalsecuritygroup.com ].
