The National Security Group Reports 1Q Earnings

Results for the three months ended March 31, and 2009, based on accounting principles generally accepted in the United States of America, were reported.

In a release on May 14, the Company noted details:

Three Months Ended March 31 2010 2009 Premium Income $ 15,038,000 $ 15,220,000 Investment Income 1,326,000 1,045,000 Realized Investment Gains 669,000 1,000

Other Income 299,000 141,000 Total Revenues $ 17,332,000 $ 16,407,000 Net Income $ 1,894,000 $ 1,481,000 Net Income Per Share $ 0.77 $ 0.60

The Company ended the first quarter of 2010 with a net income of $1,894,000 or $0.77 per share, compared to a net income of $1,481,000 or $0.60 per share for the same period last year. The primary factor contributing to the increase in net income was a $668,000 increase in realized investment gains. A $281,000 increase in investment income along with a $344,000 reduction in policy acquisition costs also contributed to the $413,000 or 27.9 percent increase in net income.

First quarter premium revenues for 2010 were $15,038,000 compared to $15,220,000 for the first quarter of 2009; a decrease of $182,000 or 1.2 percent. We continue to limit new business production in our dwelling lines of business in areas with high concentrations of coastal exposure along the Alabama, Mississippi and Louisiana coast. These efforts have reduced the rate of new business production which has led to a short-term stagnation in revenue growth. To offset these reductions, we are increasing marketing efforts in areas with less concentration of risk and are diversifying risk by increasing auto production. However, because some of these areas are less established markets for us we expect only moderate (low single digit) percentage increases in year over year revenue for the full year 2010.

As of March 31, shareholders' equity totaled $43,435,000 compared to $41,168,000 as of December 31, 2009; an increase of 5.5 percent. Continued recovery in the market value of securities coupled with first quarter earnings were the primary drivers of the increase in equity which was partly offset by dividends paid to shareholders of $370,000.

The National Security Group, Inc., through its property and casualty and life insurance subsidiaries, offers property, casualty, life, accident and health insurance in twelve states. The Company writes primarily personal lines property coverage including dwelling fire and windstorm, homeowners, mobile homeowners and personal non-standard automobile lines of insurance. The Company also offers life, accident and health, supplemental hospital and cancer insurance products.