Zenith Notes 1stQ Results

California-based Zenith National Insurance Corp. reported operating income after tax of $3.3 million, or $0.18 per share, for the first quarter of 2002 compared to an operating loss after tax of $0.2 million, or $0.01 per share, for the first quarter of 2001. The operating loss in the first quarter of 2001 includes catastrophe losses after tax of $1.0 million, or $0.06 per share.

Gross workers’ compensation premiums written increased about 16 percent in the first quarter of 2002 compared to the first quarter of the prior year. In California, gross workers’ compensation premiums written increased about 27 percent in the first quarter of 2002 compared to the first quarter of the prior year.

“We are encouraged by the trends of increasing premium volume and improvement in our operating results,” Stanley R. Zax, Chairman & President, said. “In our core workers’ compensation business, rate increases continue to be substantial, except in Florida, where industry rate increases have not been approved.”

Net income for the first quarter of 2002 was $2.8 million, or $0.15 per share, compared to a net loss for the first quarter of 2001 of $0.1 million, or $0.01 per share. The combined ratio for the property-casualty insurance operations was 104.5 percent for the three months ended March 31, 2002, compared to 111.3 percent for the three months ended March 31, 2001, and 118.9 percent for the year ended Dec. 31, 2001. The combined ratio for the workers’ compensation operations for the three months ended March 31, 2002, was 106.8 percent compared to 113.6 percent for the three months ended March 31, 2001, and 114.0 percent for the year ended Dec. 31, 2001.

Book values per share at March 31, 2002, and Dec. 31, 2001, were $16.11 and $16.31, respectively. Excluding the effect of unrealized gains and losses on available-for-sale, fixed maturity investments, book values per share were $16.39 and $16.36 at March 31, 2002, and Dec. 31, 2001, respectively.

“We expect to see further improvement in the workers’ compensation combined ratio as our earned premiums reflect these rate increases and as more customers are attracted to our specialist services,” Zak added. “As of year-end, we have become the fourth largest writer in California, up from 11th the prior year, after many years of declining volume due to unfavorable industry conditions.”