National Security Group (NSEC) Expects Losses from Hurricane Matthew to Remain Within Limits of Catastrophe Reinsurance Program

October 19, 2016 5:35 PM EDT
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The National Security Group, Inc. (NASDAQ: NSEC) released estimates of fourth quarter 2016 insured losses from Hurricane Matthew incurred by property and casualty subsidiary National Security Fire & Casualty.

From October 7th to October 9th, Hurricane Matthew moved up the Atlantic Coast impacting our policyholders in Georgia and South Carolina. Our insureds’ property in the path of Matthew was exposed to category 1 hurricane and tropical storm force winds. To date we have received over 1,200 claims as a result of this event. Our current estimate of gross losses incurred from Hurricane Matthew is in the range of $3,500,000 to $4,500,000.

We maintain catastrophe reinsurance that covers losses from a single event in excess of our $4,000,000 retention. Under our catastrophe reinsurance program, reinsurers reimburse 100% of losses exceeding our $4,000,000 retention and up to the reinsurance upper limit of $72,500,000. We expect losses from Hurricane Matthew to remain well within the limits of our catastrophe reinsurance program.

Net of reinsurance recoveries, we estimate that our incurred losses from Hurricane Matthew will be in the range of $3,500,000 to $4,000,000. Net of tax, our current estimated ultimate losses from Matthew will reduce our fourth quarter and full year net income within a range of $2,310,000 to $2,640,000.

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