Zenith Announces First Quarter Results

Woodland Hills, Calif.-based Zenith National Insurance Corp. reported net income of $39.3 million, or $1.65 per share, for the first quarter of 2005 compared to net income of $25.1 million, or $1.09 per share, for the first quarter of 2004. Net income includes realized gains on investments after tax of $1.9 million, or $0.08 per share, in the first quarter of 2005 compared to $2.5 million, or $0.10 per share, in the first quarter of 2004.

Income from the workers’ compensation segment before tax for the three months ended March 31, 2005 was $41.2 million compared to $19.8 million for the three months ended March 31, 2004. Income before tax from the reinsurance segment for the three months ended March 31, 2005 was $2.4 million compared to $2.0 million for the three months ended March 31, 2004. Income from the workers’ compensation and reinsurance segments do not include any investment income, as described in the supplemental financial information contained in this press release.

Workers’ compensation net premiums earned increased approximately 28 percent in the first quarter of 2005, compared to the corresponding period of 2004. In California, workers’ compensation net premiums earned increased approximately 29 percent in the first quarter of 2005, compared to the corresponding period of 2004.

The combined ratio for the workers’ compensation segment for the quarter ended March 31, 2005 was 84.9 percent compared to 90.7 percent for the quarter ended March 31, 2004. The combined ratio for the reinsurance segment for the quarter ended March 31, 2005 was 80.3 percent compared to 82.3 percent for the quarter ended March 31, 2004.

Consolidated net cash flow from operating activities was $135.2 million for the quarter ended March 31, 2005 compared to $102.5 million for the quarter ended March 31, 2004. Consolidated stockholders’ equity per share at March 31, 2005, Dec. 31, 2004 and March 31, 2004 was $26.55, $25.92 and $22.05, respectively. Return on average equity in the quarter ended March 31, 2005 was 30.7 percent compared to 24.9 percent in the corresponding period of 2004 and 27.2 percent in the year ended Dec. 31, 2004.

Commenting on the results, Stanley R. Zax, Chairman & President, said: “Our net income improved due to continued favorable trends in our workers’ compensation segment. Continuing favorable net cash flow from operations added to our investment portfolio and investment income in the first quarter.”