THE NATIONAL SECURITY GROUP, INC.
661 EAST DAVIS STREET
ELBA, ALABAMA 36323
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 14,1998
Notice is hereby given of the Annual Meeting of Stockholders of The
National Security Group, Inc., a Delaware corporation (the "Company"), to be
held at the principal executive offices of the Company in Elba, Alabama, on
Thursday, May 14, 1998 at 10:00 a.m. (Central Time) for the following purposes:
1.To elect four (4) members to the Board of Directors to serve for three year
terms and until their successors are duly elected and qualified;
2.To transact such other business as may property come before the Annual
Meeting or any adjournment thereof.
Only Stockholders of record at the close of business on April 14, 1998
shall be entitled to notice of and to vote at the Annual Meeting. Stockholders
are cordially invited to attend the Annual Meeting in person.
BY ORDER OF THE BOARD OF
DIRECTORS
\s\ Bette Ham
----------------------
Bette Ham
Secretary
Elba, Alabama
April 14,1998
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THE NATIONAL SECURITY GROUP, INC.
661 East Davis Street
Elba, Alabama 36323
PROXY STATEMENT
This document, which constitutes a Proxy Statement for The National
Security Group, Inc., (the "Company") is being furnished to the holders of the
common stock of the Company in connection with the solicitation of proxies by
the Board of Directors of the Company for use at the Annual Meeting of
Stockholders of the Company to be held at 10:00 a.m. (Central Time) on May 14,
1998 at the principal executive offices of the Company (the "Annual Meeting").
At the Annual Meeting, the Company's stockholders will vote to elect four
directors to serve for three year terms and until their successors are duly
elected and qualified.
All costs in connection with the solicitation of the enclosed proxy will be
paid by the Company.
The date of this Proxy Statement is April 14, 1998.
GENERAL
This Proxy Statement is being mailed to holders of the Company Common Stock
on or about April 14, 1998, in connection with the solicitation by the Board of
Directors of the Company of proxies to be used at the Annual Meeting to be held
at the Company's principal executive offices, 661 East Davis Street, Elba,
Alabama 36323, on Thursday, May 14, 1998, at 10:00 a.m. (Central Time).
At the Annual Meeting, the stockholders of the Company will elect four
directors to serve for three year terms. If the enclosed proxy is properly
signed and returned, your shares will be voted on all matters that properly come
before the Annual Meeting for a vote. If instructions are specified in your
signed proxy with respect to matters being voted upon, your shares will be voted
in accordance with your instructions. If no instructions are so specified, your
shares will be voted "FOR" the election of the persons nominated as directors in
the proxy statement. So far as is now known, there is no business to be acted
upon at the Annual Meeting other than as set forth above, and it is not
anticipated that other matters will be brought before the Annual Meeting. If,
however, other appropriate matters are duly brought before the Annual Meeting,
the persons appointed as proxy agents will have discretion to vote or act
thereon according to their own judgement. A proxy may be revoked if written
notice of such revocation is received by Mrs. Bette Ham, Secretary, The National
Security Group, Inc., 661 East Davis Street, Elba, Alabama 36323, at any time
before the taking of the vote at the Annual Meeting.
Whether or not you attend the Annual Meeting, your vote is important.
Accordingly, you are asked to sign and return the accompanying proxy, regardless
of the number of shares you own. Shares can be voted at the Annual Meeting only
if the holder is present or represented by proxy. The Board of Directors has
fixed the close of business on April 14, 1998, as the record date for the
determination of stockholders who are entitled to notice of, and to vote at the
Annual Meeting and any adjournments thereof. On the record date, the Company had
outstanding 2,312,820 shares of Company Stock, the holders of which are entitled
to one vote per share. No shares of any other class of Company stock are issued
or outstanding.
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A proxy may be revoked at any time prior to its exercise (i) by filing with
the Secretary of the Company either an instrument revoking the proxy or a duly
executed proxy bearing a later date or (ii) by attending the Annual Meeting and
voting in person. Attendance at the Annual Meeting by itself will not revoke a
proxy. Shares of Common Stock represented by a properly executed and returned
proxy will be treated as present at the Annual Meeting for purposes of
determining a quorum without regard to whether the proxy is marked as casting a
vote for or against or abstaining with respect to a particular matter. In
addition, shares of Common Stock represented by "broker non-votes" (i.e., shares
of Common Stock held in record name by brokers or nominees as to which (i)
instructions have not been received from the beneficial owners or persons
entitled to vote, (ii) the broker or nominee does not have discretionary voting
power or (iii) the record holder has indicated that it does not have authority
to vote such shares on the matter) generally will be treated as present for the
purposes of determining a quorum. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock of the Company present in
person or represented by proxy at the Annual Meeting and entitled to vote
thereon is required for the election of the nominees to the Board of Directors.
With respect to this matter, an abstention will have the same effect as a
negative vote, but because shares held by brokers will not be considered
entitled to vote on matters as to which brokers would hold authority, a broker
non-vote will have no effect on the vote.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall be
divided into three classes as nearly equal in number as possible. The term of
each director is three years and the terms are staggered to provide for the
election of one class of directors each year. Four directors will be elected at
the Annual Meeting. Lewis Avinger, Carolyn Brunson, Craig S. Pittman, and James
B. Saxon (the "Nominees") have been nominated by the Board of Directors for
election to serve for a term of three years. All of the nominees are currently
serving as directors of the Company.
The persons named in the enclosed proxy intend to vote "FOR" the election
of the Nominees unless the proxy is marked to indicate that such authorization
is expressly withheld. Should any of the Nominees be unable to accept nomination
or election (which the Board of Directors does not expect) or should any other
vacancy have occurred in the Board, it is the intention of the persons named in
the enclosed proxy to vote for the election of the person or persons whom the
Board of Directors recommends.
The following tables set forth the names and certain information concerning
the Nominees and each other director who will continue to serve (the "Continuing
Directors") as a director of the Company after the Annual Meeting:
NOMINEES
Positions Held Age at Director
Name with the Company Dec.31,1997 Since*
Lewis Avinger Director 75 1984
Carolyn Brunson Director 70 1978
Craig S. Pittman Director 41 1992
James B. Saxon Director 63 1982
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE ABOVE NOMINEES AS DIRECTORS.
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Continuing Directors
Age at Director End of
Name Dec.31,1997 Since* Present Term
Winfield Baird 65 1964 1999
Jerry B. Brunson 63 1979 1999
J. R. Brunson 69 1962 2000
Fred D. Clark, Jr. 37 1996 1999
D. M. English 79 1947 2000
M.L. Murdock 55 1976 1999
Walter P. Wilkerson 50 1984 2000
*In 1990 National Security Insurance Company was reorganized as a holding
company system pursuant to a plan of exchange whereby The National Security
Group, Inc., (the "Company"),became the holding company for National Security
Insurance Company (the"Life Company"), and its prior subsidiaries, National
Security Fire & Casualty Company (the "Casualty Company"), and NATSCO, Inc.,
("NATSCO"). References to tenure with the Company (in the above table and in the
following biographical section) include the individual's tenure with the Life
Company prior to the reorganization.
BIOGRAPHICAL INFORMATION
The business experience of each of the Nominees and Continuing Directors is
set forth below.
Nominees
LEWIS AVINGER is a retired Savings and Loan executive from Montgomery,
Alabama.
CAROLYN BRUNSON presently serves as the Managing Partner of Brunson
Properties (formerly the W.L. Brunson Estate), a family partnership engaged in
investments.
CRAIG PITTMAN is an attorney and Managing Partner in the firm of Pittman,
Pittman & Carwie, Mobile, Alabama.
JAMES B. SAXON is a retired executive of Anderson Products, Square D
Company, Leeds, Alabama.
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Continuing Directors
WINFIELD BAIRD is currently the President and a director of Investment
Counselors of Alabama, Inc., of Birmingham, Alabama.
JERRY B. BRUNSON is the retired immediate Past President of First Federal
Bank of Enterprise, Alabama. Since 1987 he has served as Vice Chairman of the
Company. Mr. Brunson is also a director of the Life Company, Omega One Insurance
Company, NASCO, Colonial Bank (Enterprise, Alabama branch) and the Enterprise
State Junior College Foundation.
J. R. BRUNSON has served as President and Chief Executive Officer of the
Company and its subsidiaries since 1978. He previously held the position of
Senior Vice President. He joined the Company in 1953. Mr. Brunson is also a
director of the Life Company, the Casualty Company, Omega One Insurance Company,
Inc., NATSCO, Inc., and NASCO, and serves on the Board of Trustees of the
University of South Alabama.
FRED CLARK, JR., is currently President of Alabama Rural Electric
Association of Cooperatives, Montgomery, Alabama. Prior to his present
affiliation he was State Director for U.S. Senator Richard Shelby, Legislative
Representative for National Rural Electric Cooperative Association, and
Legislative Assistant to U.S. Senator Howell Heflin.
D. M. ENGLISH is a retired urban renewal administrator. He became a
director of the Company upon its founding in 1947 and currently serves as its
Chairman of the Board. He has held that position since 1987. Mr. English is also
a director of the Casualty Company, Omega One Insurance Company, Inc., and
NASCO.
M.L. MURDOCK, C.P.A., has served as Senior Vice President, Chief Financial
Officer and Treasurer of the Company since 1982. Prior to that time he served as
Vice President and Controller of the Company. He initially joined the Company in
1970. Mr. Murdock is also a director of the Life Company, Omega One Insurance
Company, Inc., NASCO, and NATSCO, Inc.
WALTER R WILKERSON is a certified public accountant and partner in the firm
Barr, Brunson, Wilkerson & Bowden in Enterprise, Alabama.
BOARD COMMITTEES AND MEETINGS
During the last full fiscal year the Board of Directors of the Company held
four regularly scheduled and special meetings. All directors attended at least
75% of the meetings of the Board of Directors and the committees on which they
served during fiscal year 1997.
Compensation Committee. The Compensation Committee, whose members have been
appointed annually by the Board of Directors, is currently composed of Lewis
Avinger, Winfield Baird and Jerry B. Brunson. The Committee is responsible for
recommending officers, the salaries of officers, directors fees and officer
bonuses to the Board of Directors for full consideration. The Compensation
Committee met once in fiscal year 1997.
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Audit Committee. The Audit Committee is comprised of Fred D. Clark, Jr.,
Carolyn E. Brunson, Lewis Avinger and Walter P. Wilkerson. The principal
functions of the Audit Committee include making recommendations to the Board of
Directors concerning the selection of independent auditors, approval of proposed
independent audit fees, review of internal, independent, and regulatory audit
results, review of proposed corrective actions and results thereof with senior
management, review and approval of internal audit functions and controls and
obtaining assurances of regulatory compliance from independent auditors. The
Audit Committee met once in fiscal year 1997.
Nominating Committee. The Nominating Committee is comprised of Winfield
Baird, Jerry B. Brunson and M.L. Murdock. This committee is responsible for the
nomination of directors. No procedure has been established by the committee for
considering nominations by the stockholders. The Nominating Committee met once
in fiscal year 1997.
DIRECTORS' REMUNERATION
Remuneration of directors is adjusted annually. Directors are currently
paid an annual fee of $3,300 ($4,622 for the Chairman), plus $635 per meeting
attended and mileage reimbursement of $.31 per mile. In addition, directors
receive $250 per year for each Board committee on which he or she serves, the
total not to exceed $500.
The Company has established an "Unfunded Plan of Deferred Compensation"
which allows Directors to defer fees otherwise payable to them for attending
Board meetings or serving on committees. Participating directors may, at their
option, elect to have the deferred fees credited to either a cash account, which
accrues interest quarterly at a prime interest rate, or to a stock account,
under which such deferred amounts are treated as if they had been invested in
shares of the Company's common stock. Stock accounts may only be distributed in
their equivalent value in cash. All accounts under the plan are unfunded and do
not represent claims against specific assets of the Company.
STOCK OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth information as of March 1, 1998, as to the
number of shares of Company Common Stock beneficially owned' by (a) each of the
Company's directors, (b) the nominees for director and (c) the directors and
executive officers of the Company as a group.
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT OF
NAMES OWNED 1 COMMON STOCK
Lewis Avinger 1,000 .04%
Carolyn E. Brunson 319,926 2 13.83%
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James B. Saxon 19,260 .83%
Winfield Baird 98,258 4.25%
Jerry B. Brunson 62,442 2.70%
M.L. Murdock 1,200 .05%
J. R. Brunson 110,255 4.76%
D. M. English 104,122 4.50%
Walter P. Wilkerson 5,695 .24%
Craig Pittman 22,249 .96%
Fred Clark, Jr. 1,000 .04%
Directors and Officers
(as a group, 14 persons
including persons named 764,144 33.04%
above)
Other closely held stock (as a group, numbering 32 including immediate family
members of some directors, emeritus directors,
affiliated entities, and employee
retirement plan) 696,685 30.12%
1 For purposes of this table, an individual is considered to "beneficially
own" any shares of the Company if he or she directly or indirectly has or shares
(i) voting power, which includes power to vote or direct voting of the shares;
or (ii) investment power, which includes the power to dispose or direct the
disposition of the shares. All amounts include stock held in a spouse's name.
2 Includes stock held in Brunson Properties, a partnership (W.L. Brunson
Estate), Carolyn E. Brunson and William L. Brunson, Jr., Managing Partners.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The family relationships, not more remote than first cousin, which exist
among the directors and nominees are as follows:
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Mr. J. R. Brunson, and Mr. Jerry B. Brunson are brothers. Mrs. Carolyn
Brunson is the widow of their deceased brother, and mother of William L.
Brunson, Jr., Assistant Vice President and Assistant Secretary of the Company
and President of the Life Company. Mr. D. M. English and Mr. James B. Saxon are
their first cousins as well as first cousins of one another. Mr. J. R. Brunson
is the father of Jack E. Brunson, President of the Casualty Company. Mr. Craig
Pittman is the nephew of Mr. J. R. Brunson and Mr. Jerry B. Brunson. Mr. Pittman
is a partner in Pittman, Pittman & Carwie, Attorneys at Law, which firm provided
legal services to a subsidiary of the Company during 1997. See also the
discussion under the heading "Compensation Committee Interlocks and Insider
Participation."
EXECUTIVE COMPENSATION
The following table sets forth the remuneration paid by the Company and its
subsidiaries during the fiscal year ended December 31, 1997, to each of its
executive officers whose annual compensation exceeds $1,000,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
-------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Name Annual Restricted All Other
and Compe Stock LTIP Compen-
Principal n- Award (s) Options Payout sation
Position Year Salary ($) Bonus ($) sation ($) SARs ($) ($)*
($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. R, Brunson
President & CEO 1997 $158,543 $0 - 0 - - 0 - - 0 - - 0 - $16,187
1996 $152,645 $0 - 0 - - 0 - - 0 - - 0 - $15,419
1995 $147,939 $40,360 - 0 - - 0 - - 0 - - 0 - $16,000
M. L. Murdock
Sr. Vice President 1997 $104,740 $0 - 0 - - 0 - - 0 - - 0 - $11,930
1996 $100,547 $0 - 0 - - 0 - - 0 - - 0 - $11,537
1995 $ 96,633 $26,457 - 0 - - 0 - - 0 - - 0 - $12,378
</TABLE>
*"All other Compensation" includes the following for J. R. Brunson for the
years 1997, 1996, and 1995, respectively: Contributions to the 401 (K)
Retirement Plan of $7,929, $7,500, and $8,250; Dollar value of benefit for term
life insurance of $1,970, $1,779, and $1,61 0; and Deferred Directors Fees of
$6,290, $6,140, and $6,140. For Mr. Murdock, the totals for the years 1997,
1996, and 1995 are 401(K) contributions of $5,237, $5,027, $6,149, life
insurance benefit of $403, $370 and $339, and Deterred Directors Fees of $6,290,
$6,140 and $5,890.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is currently composed
of Lewis Avinger, Jerry B. Brunson, and Winfield M. Baird, all of whom are
outside directors of the Company. (Mr. Jerry B. Brunson serves as Vice-Chairman
of the Board of Directors, which is a non-executive position). The Committee is
responsible for recommending officers, the salaries of officers, directors'
fees, and officer bonuses to the Board of Directors for full consideration. The
committee members receive director fees as described in this Proxy Statement and
do not receive any other compensation from the Company. The Compensation
Committee has provided the following report:
The objective of the Company's executive compensation policy is to attract
and retain quality talent, which is critical to the success of the Company, and
to maintain an appropriate relationship between executive pay and Company
performance. The Company's compensation policy is relatively simple, utilizing
annual base salaries and bonuses based upon Company performance. The system
provides for moderate base salaries, but offers opportunities for executives and
supervisors to earn incentive compensation based on Company results. The Company
does not utilize stock options, rights, or other forms of long - term incentives
in its compensation scheme. Compensation has been and will continue to be tax
deductible. No executive officer will earn in excess of $ 1,000,000.
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Executive salary levels within the Company reflect a number of factors
including the size and location of the Company, and the length of service of the
executives. Bonuses are discretionary with the Board, and require as a
precondition that Company results for a given year reach a threshold level of
return on shareholders' equity. The threshold is determined by the Executive
Committee and takes into consideration a number of factors including current
financial markets and historic patterns of Company operations.
The base salary of the Company's President and Chief Executive Officer, Mr.
J. R. Brunson, results from a base amount set many years ago and has been
adjusted for annual raises. Mr. Brunson has served as President since 1978 and
has been employed by the Company since 1953. The 1997 base salary reflects a
3.8% raise over the 1996 base amount. Bonuses awarded in a given year are based
on the previous years results. There were no bonuses awarded in 1997 to the
Company's President, Sr. Vice-President M.L. Murdock, or other executive
officers and supervisors, due to performance thresholds not being met in 1996.
1997 results were improved, and it is anticipated that moderate bonuses in the
3% range will be awarded to the Company's executive officers and supervisory
personnel. Mr. Brunson and Mr. Murdock were the only executive officers of the
Company whose annual compensation exceeded $100,000 in 1997.
Contributions to executive officers under the Company's 401(K) Retirement
Plan are made on the same basis as are contributions to all other participants
in the Plan.
The Committee does not anticipate any significant changes in the Company's
executive compensation during 1998. There are no plans to integrate options,
rights or other forms of long-term incentives. The Company does not provide for
long-term employment contracts or severance agreements. Bonuses will continue to
be performance- based. The Committee believes that the Company's salary and
incentive compensation programs are competitive and appropriate for National
Security.
Lewis Avinger
Jerry B. Brunson
Winfield Baird
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is currently comprised
of Lewis Avinger, Winfield Baird, and Jerry B. Brunson. Mr. Avinger and Mr.
Baird are outside directors. Mr. Brunson serves as Vice - Chairman of the Board
of Directors, which is a non-executive position. The Committee members receive
director fees as described in this Proxy Statement and do not receive any other
compensation from the Company. During 1997 Mr. Avinger received director
compensation of $6,290.00; Mr. Baird's director compensation in the amount of
$6,290.00 was deferred; and Mr. Brunson's director compensation in the amount of
$6,290.00 was deferred.
EMPLOYEE BENEFITS
401 (K) Plan
The Company contributes an amount equal to twice the employees' salary
deferral amounts, not exceeding 5% of total compensation of all eligible
employees, to a Retirement Savings Plan established under ss.401 K of the
Internal Revenue Service Code of 1986 (the "Company 401 (K) Plan"). All full -
time employees who have completed 1,000 hours of service on either January 1 or
July 1 are eligible to participate. The Company contributions are annually
allocated among the participants' plan accounts based on compensation received
during the year for which contribution is made. Amounts allocated vest as
scheduled in the Company 401 (K) Plan. Benefits are generally payable only upon
termination, retirement, disability or death.
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COMPANY PERFORMANCE
The following graph shows a five year comparison of cumulative returns for
the Company, the NASDAQ STOCK MARKET INDEX (U.S.) and the NASDAQ Insurance
Stocks Index. The cumulative total return is based on change in the year - end
stock price plus reinvested dividends for each of the periods shown.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
NASDAQ NASDAQ
Measurement period STOCK MARKET INSURANCE
(Fiscal year Covered) NATIONAL SECURITY (U.S.) INDEX STOCK INDEX
1992 100.00 100.00 100.00
1993 129.49 114.80 106.96
1994 130.53 112.21 100.68
1995 105.84 158.70 143.01
1996 113.57 195.19 163.03
1997 164.62 239.53 239.18
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth those persons who beneficially owned, as of
March 1, 1998, five percent or more of the Company Common Stock. Unless
otherwise noted, each beneficial owner has sole voting and investment powers.
Amount and Nature
of Beneficial Percentage
Ownership of of
Name and Address Company Common Stock Class
Brunson Properties, a partnership 302,547 13%
(W.L. Brunson Estate)
Elba, Alabama 36323
SunTrust Bank as Trustee, 233,938 10%
National Security Retirement Savings Plan,
Chattanooga, TN 37402
Franklin Resources, Inc. 232,907 10%
777 Mariners Island Blvd.
San Mateo, CA 94403
INDEPENDENT ACCOUNTANTS
The firm of Dudley, Hopton-Jones, Sims & Freeman, certified public
accountants, is the independent accountant for the Company and its subsidiaries
and has performed the audit function for the year ending December 31, 1997. The
independent accountant is appointed by the Board of Directors after receiving
the recommendation of the Audit Committee. Such appointment is customarily made
in July of each year. Consequently, the independent accountant for the fiscal
year ending December 31, 1998 has not yet been appointed. No plans have been
made for a representative of Dudley, Hopton-Jones, Sims & Freeman to be present
at the Annual Meeting.
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DIRECTOR AND OFFICER SECURITIES REPORTS
The Federal Securities laws require the Company's directors and executive
officers to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of the Company's common stock. To
the best of the Company's knowledge, all persons subject to these reporting
requirements filed the required reports on a timely basis.
STOCKHOLDERS' PROPOSALS
In order for a proposal by a stockholder of the Company to be eligible to
be included in the proxy state ment and proxy form for the Annual Stockholders'
Meeting to be held in 1999, the proposal must be received by the Company at its
headquarters, 661 E. Davis Street, Elba, Alabama 36323, on or before January 14,
1999. The Board of Directors will review any stockholder proposals that are
filed to determine whether such proposals meet applicable criteria for inclusion
in the 1999 Proxy Statement for consideration at the 1999 Annual Meeting.
TRANSFER AGENT AND REGISTRAR
The Company is the Transfer Agent and Registrar for the Company Common
Stock.
ANNUAL REPORTS AND FINANCIAL STATEMENT
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1997 accompanies this Proxy Statement. Additional copies of
the Company's Annual Report to Stockholders, and/or a copy of the Company's
annual report on Form 10-K filed with the Securities and Exchange Commission may
be obtained by written request to the Chief Financial Officer of the Company at
the address indicated above.
OTHER MATTERS
The Board of Directors of the Company does not know any other matters to be
brought before the meeting. If any other matters, not now known, property come
before the Meeting or any adjournments thereof, the persons named in the
enclosed proxy, or their substitutes, will vote the proxy in accordance with
their judgement in such matters.
Date: April 14, 1998
THE NATIONAL SECURITY
GROUP, INC.
J. R. Brunson
President
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THE NATIONAL SECURITY GROUP, INC
PROXY MAY 14, 1998 ANNUAL MEETING OF SHAREHOLDERS PROXY
The undersigned hereby appoints J.R. Brunson, and Bette Ham, or either of
them, as Proxies, each with power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated hereon, and in their
discretion with respect to any other business properly brought before the
meeting, all the shares of stock of The National Security Group, Inc., which the
undersigned is entitled to vote at the annual meeting of shareholders to be held
on May 14, 1998 or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. This proxy,
when properly executed, will be voted in the manner directed herein by the
undersigned shareholder(s). If no direction is made, the Proxy will be voted
"FOR" the election of all nominees for the directors and the proposals on the
reverse side hereof.
Signature
---------------------------
Date
---------------------------
Signature
---------------------------
Date
---------------------------
Please sign, date and return this proxy in the enclosed postage paid
envelope. (Please sign exactly as your name appears above. If shares are held
jointly, each shareholder should sign. If signing as attorney, executor,
administrator, trustee, or guardian, please give full title)
1. The election as directors of the FOUR nominees listed below to serve for
3-year terms expiring in 2001.
-- For all nominees listed below (except as marked to the contrary below)
-- Withhold authority to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual nominee, strike
through the nominee's name on the list below:
LEWIS AVINGER CAROLYN BRUNSON CRAIG S. PITTMAN JAMES B. SAXON
2. In their discretion on such other business as may properly be brought before
the meeting or any adjournment thereof.
<PAGE>
