A.M. Best Affirms Credit Ratings of The National Security Group, Inc. and Its Subsidiaries; Revises Outlooks to Positive for Life Health Affiliate

A.M. Best has affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of National Security Fire and Casualty Company (NSFC). In addition, A.M. Best has affirmed the FSR of B+ (Good) and Long-Term ICR of “bbb-” of NSFC’s wholly owned subsidiary, Omega One Insurance Company, Inc. (Omega).

Concurrently, A.M. Best has affirmed the Long-Term ICR of “bb” of the parent holding company, The National Security Group, Inc. (NSGI) (Wilmington, DE) [NASDAQ: NSEC]. The outlook of these Credit Ratings (ratings) is stable.

A.M. Best also has revised the outlooks to positive from stable and affirmed the FSR of B+ (Good) and Long-Term ICR of “bbb-” of NSFC’s affiliated life/health insurer, National Security Insurance Company (NSIC). All companies are domiciled in Elba, AL, unless otherwise specified.

The ratings reflect NSFC’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).

The ratings of NSFC are based on the consolidation of the company with Omega. The ratings and outlooks for NSFC reflect its risk-adjusted capitalization being at the strongest level, along with the increasing stability at its parent, NSGI, as a result of the continuing retirement and reduction of debt levels. Management has developed a long-term plan to reduce holding company debt, and the earnings of the insurance subsidiaries will assist in the process. As a property writer, and given NSFC’s limited business profile with a geographic concentration of its operations in the southeastern United States, NSFC’s underwriting and operating results will remain susceptible to the effects of frequent and severe weather-related events.

The ratings of Omega reflect its risk-adjusted capitalization being at the strongest level and low underwriting leverage. A.M. Best expects Omega’s earnings to remain marginal because of its very limited business profile, and as a consequence, capitalization levels will improve slowly. Earnings could be negatively impacted if severe weather events breach the level of reinsurance cover Omega provides to NSFC and triggers a claim.

The ratings of NSIC reflect its balance sheet strength, which A.M. Best categorizes as adequate, as well as its adequate operating performance, limited business profile and appropriate ERM. The positive outlook reflects the diminishing potential adverse impact of debt at NSGI as a result of successful debt reduction efforts. In addition, A.M. Best anticipates that NSIC's financial resources will not be impacted materially, as it supports the overall expense and debt obligations of NSGI.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20180412006267/en/