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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarter ended September 30, 2003

Commission File Number: 0-18649

THE NATIONAL SECURITY GROUP, INC.
(Exact name of registrant as specified in its charter)

661 East Davis Street, Elba, Alabama 36323
(Address and Zip code of principal executive offices)

        Registrant’s telephone number, including area code           (334) 897-2273

Not Applicable
(Former name, address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes (X) No ( )

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

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THE NATIONAL SECURITY GROUP, INC

INDEX

PART I. FINANCIAL INFORMATION

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Part I. FINANCIAL INFORMATION

Item 1. Financial Statements
THE NATIONAL SECURITY GROUP, INC.

CONSOLIDATED UNAUDITED STATEMENTS OF INCOME
(In thousands, except per share amounts)

The Notes to Financial Statements are an integral part of these statements.

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THE NATIONAL SECURITY GROUP, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amount)

The Notes to the Financial Statements are an integral part of these statements.

4

THE NATIONAL SECURITY GROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except per share amounts)

The Notes to the Financial Statements are an integral part of these statements.

5

THE NATIONAL SECURITY GROUP, INC.

CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
(In thousands)

The Notes to the Financial Statements are an integral part of these statements.

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THE NATIONAL SECURITY GROUP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

Note 1-Basis of Presentation

In the opinion of the Company, the accompanying consolidated unaudited financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly its financial position, results of operations and cash flows. The accompanying financial statements have been prepared on the basis of accounting principles generally accepted in the United States of America. A summary of the more significant accounting policies related to the Company’s business is set forth in the notes to its audited consolidated financial statements for the fiscal year ended December 31, 2002. The results of the operations for the nine-month and three-month periods ended September 30, 2003 are not necessarily indicative of the results to be expected for the full year.

The accompanying consolidated unaudited financial statements include the accounts of The National Security Group, Inc. (the Company) and its wholly owned subsidiaries: National Security Insurance Company (NSIC), National Security Fire and Casualty Company (NSFC) and Natsco, Inc. (Natsco). NSFC includes a wholly owned subsidiary, Omega One Insurance Company.

The accompanying consolidated unaudited financial statements also include an investment in affiliate, which consists of a fifty percent interest in The Mobile Attic, Inc. The Mobile Attic, Inc. is a portable storage leasing company which began operations in 2001. The Company accounts for this investment using the equity method.

Note 2-Reinsurance

National Security Fire and Casualty Company (“NSFC”), Omega One Insurance Company (“OMEGA”), and National Security Insurance Company (“NSIC”) wholly owned subsidiaries of the Company, reinsure certain portions of insurance risk, which exceed various retention limits. NSFC, OMEGA, and NSIC are liable for these amounts in the event assuming companies are unable to meet their obligations.

Note 3-Calculation of Earnings Per Share

Earnings per share were based on net income divided by the weighted average common shares outstanding. The weighted average number of shares outstanding for the period ending September 30, 2003 was 2,466,600 and for the period ending September 30, 2002 was 2,466,600.

Note 4-Changes in Shareholder’s Equity (in thousands)

During the nine months ended September 30, 2003 and 2002, there were no changes in shareholders’ equity except for net income of $3,008 and $616 respectively; dividends paid of $1,517 and $1,480 respectively; and unrealized investment gains (losses), net of applicable taxes, of $1,460 and $(2,218) respectively.

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THE NATIONAL SECURITY GROUP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)

Note 5 — Deferred Taxes

The tax effect of significant temporary differences representing deferred tax assets and liabilities are as follows:
(in thousands)

Deferred taxes are determined based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of the enacted tax laws.

Note 6-Contingencies

Litigation

The Company and its subsidiaries continue to be named as parties to litigation related to the conduct of their insurance operations. These suits involve alleged breaches of contracts, torts, including bad faith and fraud claims based on alleged wrongful or fraudulent acts of agents of the Company’s subsidiaries, and miscellaneous other causes of action. Most of these lawsuits include claims for punitive damages in addition to other specified relief.

In two separately filed actions, NSIC is named as a defendant in purported class actions relating to the past sale of industrial burial insurance. The actions address whether the premiums charged were “excessive” relative to the benefit provided and whether the premiums charged were in any manner discriminatory relative to the race of the person insured. In addition, several individual actions on behalf of specifically named persons have been filed with similar allegations. These actions are in the initial phases and little discovery has been undertaken and no class has been certified. While the cases entail separate and distinguishable facts, the legal issues are similar to the issues pending in numerous other actions currently pending nationwide against numerous insurers. While NSIC did at one time sell industrial burial insurance, no such plans have been sold for several decades.

The company establishes and maintains reserves on contingent liabilities to the extent losses are probable and amounts are estimable. In many instances, however, it is not feasible to predict the ultimate outcome with any degree of accuracy. While a resolution of these matters may significantly impact consolidated earnings and the Company’s consolidated financial position, it remains management’s opinion, based on information presently available, that the ultimate resolution of these matters will not have a material impact on the Company’s consolidated financial position. However, it should be noted that instances of class action lawsuits against insurance companies appear to be increasing in several states in which insurance subsidiaries of the company operate.

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THE NATIONAL SECURITY GROUP, INC.

NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
(Continued)

Note 6-Contingencies (continued)

Financial Guarantee

At March 31, 2002, the Company guaranteed the $5 million balance on the line of credit of its affiliate, Mobile Attic, Inc. The Mobile Attic used the proceeds from this borrowing to acquire portable storage units which are leased to building contractors, retail establishments, and individual consumers through a network of independently operated dealerships currently located in Alabama, Florida and Tennessee. With the additional borrowing the Mobile Attic was able to further expand operations by granting additional independently operated dealerships throughout the Southeastern United States.

On May 29, 2003, the Company guaranteed an additional $6 million line of credit, of which the proceeds were used for further expansion of operations through the acquisition of additional portable storage units. At September 30, 2003 The Mobile Attic had $30,000 in available capacity on existing lines of credit. The Company has intentions of adding an additional $2 million to the existing line of credit during the fourth quarter.

The maximum potential of future payments under the guarantee, not reduced by the effect of any amounts possibly recovered under recourse or collateralization provisions in the guarantee would be $11 million. All assets of the Mobile Attic, to include but not limited to, portable storage units, equipment and inventory, serve as collateral, that upon the occurrence of any triggering event or condition under the guarantee, the Company, as guarantor, can obtain and liquidate to recover all or a portion of the amounts paid under the guarantee. The approximate extent to which the proceeds from liquidation of those assets would be expected to cover the maximum potential amount of future payments under the guarantee can not be reasonably estimated. The total assets of the Mobile Attic, Inc. at September 30, 2003 were $13,376,000, which includes $12,765,000 book value of portable storage containers.

Under the terms of the guarantee agreement, The Company will receive compensation from Mobile Attic of 150 basis points on the average outstanding monthly balance of the credit line. Mobile Attic will pay interest to the lender quarterly and convert the credit line to a term note at the end of the two-year draw down period. As of September 30, 2003 the guarantee agreement fee totals $81,900.

Note 7-Reclassifications of Held-To-Maturity Securities to Available-For-Sale Securities

During the first quarter of 2003 the Company transferred certain corporate bonds from the SFAS 115 classification of held-to-maturity to available-for-sale. This decision was made due to circumstances considered by the Company to be both unusual and nonrecurring, which could not have been reasonably anticipated. With interest rates at four decade lows and corporate bond spreads extremely tight relative to Treasuries, the Company elected to sell certain (primarily corporate) bonds, which were previously held in the SFAS 115 classification of held-to-maturity. The proceeds of these bonds were reinvested primarily in agency securities and in the process raised the overall credit quality of the portfolio.

The net carrying amount of the securities transferred was $9,833,295 and unrealized gains (net of tax) on these securities totaled $466,759 at March 31, 2003.

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INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

To the Board of Directors and Shareholders
The National Security Group, Inc.

We have reviewed the accompanying consolidated balance sheet of The National Security Group, Inc. and subsidiaries as of September 30, 2003, the related consolidated statements of income for the nine months and three months ended September 30, 2003 and 2002, the related consolidated statement of shareholders’ equity for the nine months ended September 30, 2003 and the related consolidated statements of cash flows for the nine months ended September 30, 2003 and 2002. These consolidated financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepting auditing standards, the objective of which is an expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of The National Security Group, Inc. and subsidiaries as of December 31, 2002, and the related consolidated statements of income, shareholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated February 26, 2003, we expressed an unqualified opinion on those consolidated statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2002, is fairly stated in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/Barfield, Murphy, Shank, & Smith, P.C.


Birmingham, Alabama
November 14, 2003

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Item 2.

MANAGEMENTS’ DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

The following discussion addresses the financial condition of The National Security Group, Inc. as of September 30, 2003, compared with December 31, 2002 and its results of operations and cash flows for the quarter ending September 30, 2003, compared with the same period last year.

The reader is assumed to have access to the Company’s 2002 Annual Report. This discussion should be read in conjunction with the Annual Report and with consolidated financial statements on pages 3 through 6 of this form 10-Q.

Information is presented in whole dollars.

CONSOLIDATED RESULTS OF OPERATIONS

Premium revenues:

Premium revenue of the Company is generated by three wholly owned subsidiaries, National Security Insurance Company (NSIC), National Security Fire & Casualty Company (NSFC), and Omega One Insurance Company (Omega). NSIC is a life, accident and health insurance company. NSFC and Omega write property and casualty lines of insurance, primarily dwelling fire, homeowners, and private passenger auto.

The following table sets forth premium revenue by major line of business for the nine months ended September 30, 2003 compared to the same period last year:

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The Company posted the highest premium revenue in the quarter and first nine months in Company history. Premium revenue for the nine-month period ended September 30, 2003 was $34.3 million compared to $23.6 million for the same period last year, an increase of 45.6%. A 54% increase in property and casualty premium revenue is the primary factor contributing to the increase in premium growth.

Premium revenue in the life insurance subsidiary, NSIC accounts for 13% of total premium income of the Company. NSIC has two primary methods of distribution of insurance products, employee agents and independent agents. Employee agents primarily consist of home service agents that sell policies and collect premium primarily in the insured’s home. Premium production from home service agents is down 6% compared to last year. Changing demographics has necessitated a need to diversify to alternative means of distribution. In an effort to increase production of new business and penetrate markets in states outside of Alabama, NSIC began appointing independent agents in 1998. Independent agents now account for over 90% of all new business production in NSIC. Gross premium revenue produced by independent agents was up 32.9% in the first nine months of 2003 compared to the same period last year.

Premium revenue in NSIC consists of traditional life insurance products and supplemental accident and health products. As set forth in the preceding table, traditional life insurance premium revenue increased nearly 3% in the first nine months of 2003 compared to the same period last year. Accident and health insurance premium revenue increased 12.84%. Increased sales of lump sum cancer and critical illness health products through independent agents are the primary factors contributing to the increase in NSIC premium revenue.

Premium revenue in the property/casualty insurance subsidiaries continued to grow with an increase of 54.31% in the first nine months of 2003 compared to the same period last year. Dwelling fire insurance premium, which accounts for 46.0% of total property/casualty premium revenue, increased 53.08%. Homeowners insurance premium increased 109.62%. Increased marketing efforts, modernization of product lines including increases in policy limits, decreased competition in several markets, and rate increases implemented in several states are the primary contributing factors to the increase in dwelling property premium revenue. The remaining primary lines of insurance contributing to the increased growth in property/casualty premium revenue are automobile liability and physical damage. In the year 2000 the property/casualty subsidiaries began a non-standard auto program in Alabama with a monthly premium payment option. The program was expanded into Mississippi in the fourth quarter of 2001. This program was acquired through the acquisition on Liberty Southern Insurance Company of Mobile, Alabama. This non-standard auto program is the primary contributor to the increase in automobile premium revenue.

Due to adverse underwriting results in 2002, the Company has aggressively monitored rates on several insurance programs in several states. In an effort to improve underwriting results, the Company increased homeowners rates by an average of 18% in Alabama, 15% in Georgia, and 14% in Mississippi in the first nine months of 2003. In addition to rate increases in the homeowners line of business, the Company increased mobile homeowners rates 13% in Alabama, and 8.7% in Mississippi during the third quarter of 2003. The company has filed rate adjustments in Alabama and Mississippi private passenger auto programs with rate adjustments slated to take affect during the fourth quarter of 2003 and first quarter of 2004.

Net investment income:

Net investment income is down slightly for the year to date compared to last year. Reinvestment rates on current maturities are at multi-decade lows, which is the primary cause for the marginal decline in investment income. The Company is primarily investing in lower duration/shorter maturity (typically evenly distributed over seven years or less) bonds in order to limit price volatility in the event of a rising interest rate environment. The Company will also be able to react more quickly to rising interest rates by generating steady cash flow from maturities for reinvestment. This strategy is not expected to materially effect overall investment income and will continue to produce returns greater than those assumed in the pricing of currently issued insurance products.

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Realized capital gains and losses:

The Company’s investment committee will sell positions in the portfolio when market conditions warrant, producing realized capital gains and/or losses. This periodic selling of securities can produce significant fluctuations in realized capital gains from period to period.

In previous year’s results, realized capital gains have been generated primarily from the sale of common stock investments from the insurance subsidiaries investment portfolio. However, with market interest rates at multi-decade lows and corporate bond spreads narrowing relative to Treasury bonds, the Company’s investment committee has elected to sell certain, primarily corporate, bonds from the investment portfolio. The sale of these bonds generated realized capital gains of over $482,000 in the first nine months of 2003. The proceeds of the sale of these securities were primarily reinvested in government agency bonds with average maturities of less than seven years.

Other income:

Other income is up $240,000 compared to last year. Other income primarily consists of billing fees from the non-standard monthly pay automobile programs in Alabama and Mississippi.

Policyholder benefits and settlement expenses:

Policyholder benefits and settlement expenses increased $4,118,000, but as a percent of earned premium decreased compared to last year, 59.8% versus 69.6%. These percentages are commonly referred to as the loss ratio. Property and casualty underwriting results were much improved even though catastrophe related windstorm and tornado losses incurred in May of 2003 increased incurred losses by $1,028,000.

A primary improvement in the loss ratio was due to a decline in the percentage of individually significant, primarily fire, losses on policies in force less than one year. Company management commonly refers to these claims as “quick claims”. In 2002 the Company incurred over $2.4 million in “quick claims” in the largest property/casualty subsidiary, National Security Fire & Casualty (NSFC). These claims represented over 23% of all losses incurred by NSFC and added 16 percentage points to NSFC’s loss ratio. In 2003, NSFC incurred $2.1 million in “quick claims”, but due to significant premium growth, the claims only represented 14.5% of all losses incurred and only added eight percentage points to NSFC’s loss ratio. The Company expects these types of claims to become less significant as management continues to improve underwriting procedures, adjusts rates and most importantly, builds a larger base of renewal premium, which is typically more profitable than new business produced.

Policy acquisition costs:

Policy acquisition costs are up $2,001,000 compared to last year, an increase of 37.1%. However, as a percentage of premium earned, policy acquisition costs are virtually unchanged from last year. Policy acquisition costs consist primarily of insurance sales commissions paid to independent agents and are directly associated with premium growth.

General insurance expenses:

General expenses as a percent of earned premium were 15.2% through the third quarter of 2003 compared to 19.1% through the third quarter of 2002. The Company is realizing greater efficiencies through economies of scale with the increase in premium revenue. This trend is expected to continue throughout the fourth quarter of 2003.

Insurance taxes, licenses, and fees:

Insurance taxes, licenses and fees have increased with premium revenue in 2003, but as a percent of premium revenue are virtually unchanged compared to 2002. Equity in (loss) income of Affiliate:

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Equity in (loss) income of Affiliate

Equity in the income of a 50% owned affiliate, The Mobile Attic, Inc., had a net loss of $11,400 in the first nine-months of 2003, compared to net income of $63,000 in the first nine-months of 2002. The Mobile Attic, through a network of independent dealers, is in the business of leasing portable storage units to construction companies, retail establishments, and household customers. Earnings of Mobile Attic are seasonal with over 50% of 2003 projected revenues coming in the last four months of the year. Revenues are lowest in the first and second quarters. Third quarter of 2002 results was higher than 2003 due to increased dealer-licensing fees.

In addition to the 50% ownership of Mobile Attic, the Company also guarantees $11 million on lines of credit with local banks. The total capacity on the lines of credit, along with internally generated cash flow, and pending changes in the method of business expansion is expected to fund operating and expansion plans for the foreseeable future. Pending changes in method of expansion are discussed in the paragraphs that follow.

The Company plans to convert existing credit lines to long term financing in the first quarter of 2004. Details of the plan are yet to be finalized, but it is expected that in the process, the Company will assume a larger ownership percentage of Mobile Attic (currently projected to be an 80% ownership interest).

In addition to the possibility of the Company assuming a larger ownership percentage of Mobile Attic, the Company is currently exploring the opportunities of establishing a franchise system within Mobile Attic, whereby offering franchisees the opportunity to purchase franchise locations of the business. The franchise system would reduce the capital requirements placed on growing the business through Mobile Attic’s current structure and would offer Mobile Attic the opportunity to grow its operations and expand services throughout the continental United States at a more rapid pace. The franchise system is still in the development stage, but the Company hopes to have the final details of the franchise system completed and begin offering franchises by late fourth quarter 2003, early first quarter 2004.

Summary:

The Company has a year to date net income of $3,008,000 versus net income of $616,000 in 2002. Growth in premium revenue, the previously discussed improvement in the loss ratio and a reduction in overall general expenses as a percent of premium revenue are the primary factors contributing to the improved operating results.

Investments:

Investments at September 30, 2003 increased $7.2 million compared to December 31, 2002, an increase of more than 8%. Net cash flow from insurance operations increased $8.5 million in the first nine months of 2003, of which $6.2 million was placed in investments. This increase in cash flow from insurance operations is a major contributing factor to the increase in invested assets. The other major factor contributing to the increase in invested assets was an increase in market value of equity securities of over $2.0 million, which occurred during the second quarter.

The Company considers any fixed income investment with a Standard & Poor’s rating of BB+ or lower to be below investment grade (Commonly referred to as “Junk Bonds”). At September 30, 2003 less than 1% of the Company’s investment portfolio was invested in fixed income investments rated below investment grade. The Company currently has no bonds in the investment portfolio in default.

The Company monitors its level of investments in debt and equity securities held in issuers of below investment grade debt securities. Management believes the level of such investments is not significant to the Company’s financial condition.

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Income taxes:

The effective tax rate in the first nine months of 2003 was 36.1% compared to 24.6% for the first nine months of 2002. Generally the property/casualty subsidiaries pay a higher effective tax rate due to several factors, including, but not limited to, a tax on 20% of unearned premiums, the discounting of loss reserves for federal income tax purposes, and tax on a portion of income from otherwise “tax-free” bonds. A higher percentage of earnings from property/casualty operations compared to life insurance operations generally lead to a higher effective tax rate.

Liquidity and capital resources:

At September 30, 2003, the Company had aggregate equity capital, unrealized investment gains (net of income taxes) and retained earnings of $45.1 million, up $2.9 million compared to December 31, 2002. The increase reflects net income of $3,008,000, an increase in accumulated unrealized investment gains of $1,460,000, and dividends paid of $1,517,000.

The Company has $3.1 million in notes from local banks which management intends to repay over the next five years.

The Company had $803,000 in cash and cash equivalents at September 30, 2003. Net cash provided by operating activities was $8,591,000 for the current period, compared to net cash provided of $729,000 for the period ended September 30, 2002. Cash used in investing activities was $6,240,000. Cash dividends paid to stockholders’ of $1,517,000 and the change in checks outstanding in excess of bank balances of $635,000 were the primary changes in cash used in financing activities.

The liquidity requirements of the Company are primarily met by funds provided from operations of the life insurance and property/casualty subsidiaries. The Company receives funds from its subsidiaries consisting of dividends, payments for federal income taxes, and reimbursement of expenses incurred at the corporate level for the subsidiaries. These funds are used to pay stockholder dividends, corporate interest, corporate administrative expenses, federal income taxes, and for funding investments in subsidiaries.

The Company’s subsidiaries require cash in order to fund policy acquisition costs, claims, other policy benefits, interest expense, general expenses, and dividends to the Company. Premium and investment income, as well as maturities, calls, and sales of invested assets, provide the primary sources of cash for both subsidiaries. A significant portion of the Company’s investment portfolio consists of readily marketable securities, which can be sold for cash.

The Company’s business is concentrated primarily in the Southeastern United States. Accordingly, unusually severe storms or other disasters in the Southeastern United States might have a more significant effect on the Company than on a more geographically diversified insurance company. Unusually severe storms, other natural disasters and other events could have an adverse impact on the Company’s financial condition and operating results. However, the Company maintains a catastrophe reinsurance program to limit the effect of such catastrophic events on the Company’s financial condition.

Information about Forward-Looking Statements

Any statement contained in this report which is not a historical fact, or which might otherwise be considered an opinion or projection concerning the Company or its business, whether expressed or implied, is meant as and should be considered a forward-looking statement as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on assumptions and opinions concerning a variety of known and unknown risks, including but not limited to changes in market conditions, natural disasters and other catastrophic events, increased competition, changes in availability and cost of reinsurance, changes in governmental regulations, technological changes, political and legal contingencies and general economic conditions, as well as other risks and uncertainties more completely described in the Company’s filings with the Securities and Exchange Commission. If any of these assumptions or opinions prove incorrect, any forward-looking statements made on the basis of such assumptions or opinions may also prove materially incorrect in one or more respects and may cause future results to differ materially from those contemplated, projected, estimated or budgeted in such forward-looking statements.

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Item 3. Market Risk Disclosures

The Company’s objectives in managing its investment portfolio are to maximize investment income and investment returns while minimizing overall credit risk. Investment strategies are developed based on many factors including changes in interest rates, overall market conditions, underwriting results, regulatory requirements, and tax position. Investment decisions are made by management and reviewed and approved by the Board of Directors. Market risk represents the potential for loss due to adverse changes in fair value of securities. The three potential risks related to the Company’s fixed maturity portfolio are interest rate risk, prepayment risk, and default risk. The primary risk related to the Company’s equity portfolio is equity price risk. There have been no material changes to the Company’s market risk for the nine-months ended September 30, 2003. For further information reference is made to the Company’s Form 10-K for the year ended December 31, 2002.

Item 4. Controls and Procedures

The Company has evaluated the effectiveness of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. The evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this quarterly report has been made known to them in a timely fashion.

Subsequent to the date of their evaluation, there were no significant changes in internal controls or other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings

See Note 6 (Contingencies – Litigation) to Consolidated Financial Statements

Item 2. Changes in Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

a.     Exhibits:

b.     Reports on Form 8-K:

Items other than those listed above are omitted because they are not required or are not applicable.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

The National Security Group, Inc.

Dated: November 14, 2003

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Exhibit 31.1

CERTIFICATION

I, William L. Brunson, Jr. certify that:

1.      I have reviewed this quarterly report on Form 10-Q of The National Security Group, Inc.;  

2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Date: November 14, 2003

/s/ W L Brunson Jr.

William L. Brunson, Jr.
Chief Executive Officer

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Exhibit 31.2

CERTIFICATION

I, Brian R. McLeod certify that:  

1.      I have reviewed this quarterly report on Form 10-Q of The National Security Group, Inc.;  

Date: November 14, 2003

/s/ Brian R McLeod

Brian R. McLeod, CPA
Chief Financial Officer

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Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U. S. C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.1 Certification of Chief Executive Officer

Pursuant to 18 U. S. C. Section 1350, the undersigned officer of the National Security Group, Inc. (the “Company”), hereby certifies, to such officer’s knowledge, that the Company’s Annual Report on Form 10-K for the period ended December 31, 2002 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 14, 2003

/s/ W L Brunson Jr

William L. Brunson, Jr.
Chief Executive Officer

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Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U. S. C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.1 Certification of Chief Financial Officer

Pursuant to 18 U. S. C. Section 1350, the undersigned officer of the National Security Group, Inc. (the “Company”), hereby certifies, to such officer’s knowledge, that the Company’s Annual Report on Form 10-K for the period ended December 31, 2002 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 14, 2003

/s/ Brian R McLeod

Brian R. McLeod, CPA
Chief Financial Officer

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