National Security Group Inc. expects ultimate gross losses incurred by property and casualty subsidiary National Security Fire & Casualty Co. from Hurricane Michael to be in the range of $10 million to $15 million.
National Security Group said any losses above its $4 million retention are covered by catastrophe reinsurance to the upper limit of its catastrophe coverage of $72.5 million. However, based on estimate of gross losses, losses from Hurricane Michael are expected to remain well below the upper limits of the company's catastrophe reinsurance coverage.
National Security Group's pretax loss, net of reinsurance, due to Hurricane Michael is expected to be $4 million. The company said it anticipates pretax loss, net of reinsurance, from Hurricane Michael to reduce its 2018 earnings by about $3.2 million and will lower EPS by $1.25. The impact of Hurricane Michael will be reflected in the company's fourth-quarter results.
While net losses from Hurricane Michael will have a material impact on 2018 earnings, National Security Group said it does not expect the storm to adversely impact capital position.