Zenith Nat’l Ratings Fall

S&P lowered its counterparty credit rating on Zenith National Insurance Corp. (ZNT) to “BB+” from “BBB-” and its ratings on ZNT’s affiliates, Zenith Insurance Co. and ZNAT Insurance Co. (Zenith), to “BBB+” from “A-” due to poor but improving operating results in workers’ comp and large losses in 2000 and 2001 in assumed reinsurance. The outlook is stable.

Bad conditions in its primary workers’ comp market have adversely affected Zenith, according to an S&P analyst. Its assumed reinsurance has suffered heavy losses from weather-related events and from the Sept. 11 attacks.

By consistently adhering to its strategy, Zenith has positioned itself to take advantage of good conditions in the California market for the next year or two, despite the activities of the State Fund. If profitability in assumed reinsurance is at roughly the average of what Zenith has produced in this line over the years, ZNT and Zenith should record satisfactory earnings through at least 2002.