Zenith Loses $5 Million in Third Quarter 2000

November 7, 2000

Zenith National Insurance Corp. has reported an operating loss after tax of $5.1 million, or $0.30 per share, for the third quarter of 2000, compared to an operating loss after tax of $38.8 million, or $2.26 per share, for the third quarter of 1999.

Operating results for the nine months ended September 30, 2000 were a loss after tax of $30.5 million, or $1.77 per share, compared to a loss after tax of $44.8 million, or $2.61 per share, for the nine months ended September 30, 1999. The preceding operating results exclude realized gains and losses and the extraordinary item recorded in the first quarter of 2000, and include catastrophe losses and other charges as follows.

Operating results include catastrophe losses after tax of $1.3 million, or $0.08 per share, for the third quarter of 2000 and $13.3 million, or $0.77 per share, for the nine months ended September 30, 2000. That compares to catastrophe losses after tax of $3.1 million, or $0.18 per share, for the third quarter of 1999 and $7.1 million, or $0.41 per share, for the nine months ended September 30, 1999.

Operating results in the third quarter and nine months ended September 30, 1999 also include $32.5 million, or $1.89 per share, of net charges after tax associated with an increase in the loss reserves acquired from RISCORP.

Net loss for the third quarter of 2000 was $12.2 million, or $0.71 per share, including a security valuation reserve for the decline in prices of certain securities of $7.2 million after tax, or $0.42 per share, compared to a net loss for the third quarter of 1999 of $37.3 million, or $2.17 per share. Net loss for the nine months ended September 30, 2000 was $36.2 million, or $2.10 per share, compared to net income for the nine months ended September 30, 1999 of $63.7 million, or $3.71 per share. That includes realized gains on investments after tax of $4.2 million, or $0.24 per share, and realized gain after tax on the sale of CalFarm Insurance Company of $104.3 million, or $6.08 per share.

The combined ratio for the property-casualty insurance operations was 122.2% for the quarter ended September 30, 2000 compared to 126.8% for the comparable period in 1999 and 150.5% for the second quarter of 2000. Excluding catastrophe losses, the combined ratio for the quarter ended September 30, 2000 was 119.9% compared to 120.9% for the comparable period in 1999 and 133.9% for the second quarter of 2000. The combined ratio for the Workers’ Compensation operations for the quarter ended September 30, 2000 was 125.2%, compared to 128.8% for the comparable period in 1999 and 140.8% for the second quarter of 2000.

The preceding combined ratios for the quarter ended September 30, 1999 exclude the impact of the RISCORP-Related Adjustment. Book values per share at September 30, 2000 and June 30, 2000 were $17.98 and $18.30, respectively, compared to $20.67 at December 31, 1999. Excluding the effect of unrealized losses on available-for-sale, fixed maturity investments, book values per share were $18.91, $19.73 and $21.80 at September 30, 2000, June 30, 2000 and December 31, 1999, respectively.

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