The National Security Group, Inc. (NASDAQ:NSEC)
results for the three months and nine months ended September 30,
2017 and 2016, based on US generally accepted accounting
principles, were reported today as follows:
Unaudited Consolidated Financial Summary
Three months endedSeptember
30,
Nine months endedSeptember
30,
2017 2016 2017
2016 Gross premiums written $ 17,246,000 $ 17,166,000
$ 52,953,000 $ 52,623,000 Net premiums written
$ 15,499,000 $ 15,640,000 $ 48,354,000 $
48,350,000 Net premiums earned $ 15,467,000 $
15,675,000 $ 45,838,000 $ 46,067,000 Net investment income 939,000
1,005,000 2,795,000 3,025,000 Net realized investment gains 75,000
287,000 312,000 536,000 Other income 150,000
152,000 447,000 456,000
Total
Revenues 16,631,000 17,119,000
49,392,000 50,084,000 Policyholder
benefits and settlement expenses 11,184,000 10,082,000 34,911,000
27,991,000 Amortization of deferred policy acquisition costs
706,000 758,000 2,470,000 2,451,000 Commissions 2,096,000 2,088,000
5,947,000 6,313,000 General and administrative expenses 2,398,000
2,026,000 6,410,000 6,313,000 Taxes, licenses and fees 709,000
529,000 1,915,000 1,703,000 Interest expense 320,000
339,000 969,000 1,017,000
Total Benefits, Losses and Expenses 17,413,000
15,822,000 52,622,000 45,788,000
Income (Loss) Before Income Taxes (782,000 )
1,297,000 (3,230,000 ) 4,296,000
Income tax expense (benefit) (225,000 ) 367,000
(1,358,000 ) 1,129,000
Net Income
(Loss) $ (557,000 ) $ 930,000 $ (1,872,000 ) $ 3,167,000
Income (Loss) Per Common Share $ (0.22 ) $ 0.37
$ (0.74 ) $ 1.26
Reconciliation of Net
Income (Loss) to non-GAAP Measurement Net income (loss) $
(557,000 ) $ 930,000 $ (1,872,000 ) $ 3,167,000 Income tax expense
(benefit) (225,000 ) 367,000 (1,358,000 ) 1,129,000 Realized
investment gains, net (75,000 ) (287,000 )
(312,000 ) (536,000 )
Pretax Income (Loss) From
Operations $ (857,000 ) $ 1,010,000 $ (3,542,000 ) $
3,760,000
Management Commentary on Results of Operations
Summary:
For the three months ended September 30, 2017, the Company had a
net loss of $557,000, $0.22 loss per share, compared to net income
of $930,000, $0.37 income per share, for the three months ended
September 30, 2016. The pretax loss from operations in third
quarter of 2017 totaled $857,000 compared to pretax income from
operations of $1,010,000 in the third quarter of 2016. Results for
the third quarter of 2017 were negatively impacted by losses
reported from Hurricane Irma. On September 10, 2017, Hurricane Irma
made US landfall in the Florida Keys and impacted our policyholders
in Alabama, Georgia, South Carolina and Tennessee. Georgia was the
primary state in our coverage area impacted by Hurricane Irma
comprising over 85% of reported claims to date. The impact of this
catastrophe led to $2,718,000 in reported losses and contributed to
a $1,984,000 increase in quarterly P&C segment catastrophe
losses, compared to third quarter 2016. Total catastrophe related
losses from all catastrophe events in the third quarter of 2017
were $3,626,000 compared to $1,642,000 in the third quarter of
2016.
For the nine months ended September 30, 2017, the Company had a
net loss of $1,872,000, $0.74 loss per share, compared to net
income of $3,167,000, $1.26 income per share, for the nine months
ended September 30, 2016, a period over period decrease of
$5,039,000. The year to date pretax loss from operations in 2017
totaled $3,542,000 compared to pretax income from operations of
$3,760,000 in 2016. Results for 2017 were negatively impacted by an
increased frequency of severe thunderstorm activity, which
generated widespread wind, hail and tornado damage to insured
property across the Southeastern United States throughout the
nine-month period. In addition, our P&C segment was negatively
impacted by losses reported from Hurricane Irma. This increased
frequency of severe thunderstorm activity in 2017 coupled with
Hurricane Irma claims led to a year over year increase of
$7,679,000 in P&C segment catastrophe losses, compared to 2016.
For the nine months ended September 30, year to date reported
catastrophe related losses in 2017 were $12,804,000 compared to
$5,125,000 for the same period in 2016. Partially offsetting the
increase in P&C segment storm losses in the first nine months
of 2017 was a decline in fire losses of $1,444,000 compared to the
same period last year.
Three-month period ended September 30, 2017 compared to
three-month period ended September 30, 2016
Premium Revenue:For the quarter ended September 30, 2017,
net premiums earned were down $208,000 at $15,467,000 compared to
$15,675,000 in the third quarter of 2016. The decrease in net
premium earned was due to a 15.3% increase in ceded premium
associated with our catastrophe reinsurance coverage in the P&C
segment. In addition, net premium earned was down 5.1% in the life
segment for the third quarter of 2017 compared to the same period
last year.
Net Income (Loss):For the three months ended September
30, 2017, the Company had a net loss of $557,000, $0.22 loss per
share, compared to net income of $930,000, $0.37 income per share,
for the same period in 2016, a decrease of $1,487,000. As discussed
in the summary above, an increase in third quarter catastrophe
losses in the P&C segment from Hurricane Irma was the primary
factor contributing to the decline in net income.
Pretax Income (Loss) from Operations:For the quarter
ended September 30, 2017, pretax loss from operations was $857,000
compared to pretax income of $1,010,000 for the quarter ended
September 30, 2016, a decrease of $1,867,000. Losses from storm
related catastrophe events totaled $3,626,000 in the third quarter
of 2017 compared to $1,642,000 for the same period last year. The
single largest catastrophe event in the third quarter of 2017 was
Hurricane Irma which generated $2,718,000 in storm losses from 832
reported claims. In comparison, the single largest catastrophe
event in the third quarter of 2016 was a mid-August severe
thunderstorm event that totaled $647,000 from 262 reported claims.
The Company also strengthened P&C reserves for unreported
losses as an estimate of additional reported claim development
associated with third quarter storm activity. This reserve
strengthening increased third quarter 2017 policyholder benefits by
$500,000.
P&C Segment Combined Ratio:The P&C segment ended
the third quarter of 2017 with a combined ratio of 105.9% with
catastrophe losses totaling $3,626,000 and increasing the third
quarter combined ratio by 25.8 percentage points. In comparison,
third quarter 2016 cat events added $1,642,000 to prior year
policyholder benefits and settlement expenses. The P&C segment
ended the third quarter of 2016 with a combined ratio of 92.3% with
catastrophe losses contributing 11.6 percentage points to the
combined ratio.
Nine-month period ended September 30, 2017 compared to
nine-month period ended September 30, 2016
Premium Revenue:For the nine-month period ended September
30, 2017, net premiums earned were down $229,000 at $45,838,000
compared to $46,067,000 for the same period in 2016. The decrease
in net premium earned was due to a 0.4% increase in gross premium
earned in the P&C segment which was offset by a 7.3% increase
in ceded premium associated with an increase in catastrophe
reinsurance cost in the P&C segment. In addition, net earned
premium in the life segment was down 2.0% in 2017 compared to the
same period in 2016.
Net Income (Loss):For the nine-month period ended
September 30, 2017, the Company had a net loss of $1,872,000, $0.74
loss per share, compared to net income of $3,167,000, $1.26 income
per share, for the same period in 2016, a decrease of $5,039,000.
An increased frequency of catastrophe losses related to widespread
thunderstorm activity, coupled with reported losses from Hurricane
Irma, were the primary factors contributing to the decline in year
to date net income. We have incurred catastrophe losses from 24 cat
events in 2017 compared to losses from 18 cat events in 2016.
Pretax Income (Loss) from Operations:For the nine-month
period ended September 30, 2017, pretax loss from operations was
$3,542,000 compared to pretax income of $3,760,000 for the period
ended September 30, 2016, a decrease of $7,302,000. Losses reported
from catastrophe events totaled $12,804,000 in 2017 compared to
$5,125,000 for the same period last year. The single largest
catastrophe event in 2017 was Hurricane Irma which heavily impacted
Georgia along with several other states and generated $2,718,000 in
insured losses from 832 claims. In comparison, the single largest
catastrophe event in 2016 was a February severe thunderstorm event
that totaled $1,042,000 from 240 claims and primarily impacted the
state of Louisiana. The Company also strengthened P&C reserves
for unreported losses as an estimate of additional reported claim
development associated with Hurricane Irma. This reserve
strengthening increased year to date 2017 policyholder benefits by
$500,000.
P&C Segment Combined Ratio:The P&C segment ended
the first nine months of 2017 with a combined ratio of 108.5% with
reported catastrophe losses totaling $12,804,000 and increasing the
combined ratio by 30.8 percentage points. In comparison, 2016
reported cat event losses added $5,125,000 to prior year
policyholder benefits and settlement expenses. The P&C segment
ended the first nine months of 2016 with a combined ratio of 91.4%
with catastrophe losses contributing 12.3 percentage points to the
combined ratio.
Overview - Balance Sheet highlights at
September 30, 2017 compared to December 31, 2016
Selected Balance Sheet Highlights
September 30,2017
December 31,2016
(UNAUDITED) Invested Assets $ 112,203,000 $ 113,156,000 Cash $
9,770,000 $ 7,368,000 Total Assets $ 151,315,000 $ 148,579,000
Policy Liabilities $ 80,687,000 $ 76,174,000 Total Debt $
16,635,000 $ 17,126,000 Accumulated Other Comprehensive Income $
2,245,000 $ 1,007,000
Shareholders’ Equity
$ 47,116,000 $ 48,052,000 Book Value Per Share $ 18.68 $ 19.09
Management Commentary on Financial Position
Invested Assets:Invested assets as of September 30, 2017
were $112,203,000, down $953,000 or 0.8%, compared to $113,156,000
as of December 31, 2016. Growth of invested assets was adversely
impacted by increased claim payments associated with losses from
catastrophe events in 2017, a decline in cash flow from operations
and the maintenance of higher levels of liquidity due to the
increase in P&C segment insurance claims throughout the first
nine months of 2017.
Cash:The Company, primarily through its insurance
subsidiaries, had $9,770,000 in cash and cash equivalents at
September 30, 2017, compared to $7,368,000 at December 31,
2016. The moderate increase in cash was due to an increase in cash
flow provided from investments and delays in the reinvestment of
invested assets due to increased storm activity in 2017.
Total Assets:Total assets as of September 30, 2017 were
$151,315,000 compared to $148,579,000 at December 31, 2016. While
total assets increased in 2017, growth was negatively impacted by
increased loss payments associated with the higher frequency of
catastrophe events.
Policy Liabilities:Policy liabilities were $80,687,000 at
September 30, 2017 compared to $76,174,000 at December 31, 2016; an
increase of $4,513,000 or 5.9%. The primary reasons for the
increase in policy liabilities in 2017 compared to 2016 were a
$1,366,000 increase in P&C segment claims, primarily from
Hurricane Irma, coupled with a $2,626,000 increase in unearned
premiums. Due to the timing of insurance renewals across our entire
book of P&C segment business, unearned premium tends to peak
during the second and third quarters and decline as yearend
approaches, which is the primary factor contributing to the
increase in unearned premium at September 30, 2017 compared to
December 31, 2016.
Debt Outstanding:Total debt at September 30, 2017 was
$16,635,000 compared to $17,126,000 at December 31, 2016. Debt was
reduced $491,000 during the first nine months of 2017 due to a
reduction in short-term debt outstanding. The improvement of
balance sheet strength through reduction of debt continues to be a
primary focus of management.
Shareholders’ Equity:Shareholders’ equity as of September
30, 2017 was $47,116,000, down $936,000, compared to
December 31, 2016 Shareholders’ equity of $48,052,000. Book
value per share was $18.68 at September 30, 2017, compared to
$19.09 per share at December 31, 2016, a decrease of $0.41.
Despite the adverse impact of multiple catastrophe events in 2017,
as well as Hurricane Irma losses, the Company had only a 2.1%
decrease in book value per share and a 1.9% decrease in
Shareholders’ Equity during the first nine months of 2017. The
primary factor contributing to the decrease in Shareholders’ equity
was a net loss of $1,872,000. In addition, Shareholders’ equity was
also reduced by dividends paid of $378,000. Offsetting the
decreases was an increase in accumulated other comprehensive income
of $1,238,000. The increase in accumulated other comprehensive
income was driven by increases in market values of
available-for-sale investment securities.
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 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171113006281/en/
The National Security Group, Inc.Brian McLeod, 334-897-2273Chief
Financial Officer
National Security (NASDAQ:NSEC)
Historical Stock Chart
From Jun 2024 to Jul 2024
National Security (NASDAQ:NSEC)
Historical Stock Chart
From Jul 2023 to Jul 2024