The National Security Group, Inc., released estimates of 2017 year to date spring storm losses incurred by property/casualty subsidiary National Security Fire & Casualty, a primarily personal lines insurer offering coverage in 10 states, and a preliminary estimate of the impact of storm losses on first quarter results.
During the first quarter of 2017, National Security Fire & Casualty Company (NSFC) was impacted by eight catastrophe events which produced 731 claims with reported losses (including loss adjustment expenses) totaling $3,521,000. In comparison, NSFC was impacted by seven catastrophe events during the first quarter of 2016 leading to 385 claims totaling $1,447,000. The $2,074,000 increase in first quarter 2017 catastrophe losses compared to last year will adversely impact our first quarter financial results.
Higher than normal temperatures in January of 2017 led to an early start to the traditional “spring storm season” which usually leads to increases in storm activity in March, April and May. According to weather.com, January’s tornado outbreak was the third largest outbreak during the winter months on record and caused extensive damage in the Southeastern U.S., primarily in the state of Georgia. While the claims incurred from 2017 cat events were widespread across our coverage area, incurred losses from these cat events heavily impacted Georgia, Alabama and Mississippi. Incurred losses from cat events impacting Georgia made up approximately 50 percent of all losses incurred from cat events in the first quarter of 2017. Furthermore, incurred losses from cat events impacting Alabama and Mississippi made up an additional 37 percent of all claims incurred from cat events in the first quarter of 2017.
The unusually warm weather in the Southeastern U.S. led to an increase in both frequency and severity of storm related losses throughout the first quarter. The 731 catastrophe related claims incurred during the first quarter of 2017 averaged approximately $4,800 per claim; in comparison, the 385 catastrophe related claims in the first quarter of last year averaged approximately $3,800 per claim.
Due to the negative impact of the cat losses, the insurer expects to end the first quarter of 2017 with a consolidated net loss in the range of $300,000 to $450,000. First quarter financial results are scheduled to be released on May 12, 2017.
During the first week of April 2017, NSFC was impacted by two additional cat events. As of April 20, 2017, the insurer has incurred 260 claims from the cat events totaling $1,013,000. The insurer estimates the early catastrophe losses will reduce second quarter net income by approximately $669,000.
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