Zenith National Pleased With Continued Improving Numbers

November 1, 2002

California-based Zenith National Insurance Corp. reported operating income after tax of $7.0 million, or $0.37 per share, for the third quarter of 2002 compared to an operating loss after tax of $22.8 million, or $1.30 per share, for the third quarter of 2001. Operating income after tax for the nine months ended Sept. 30, 2002 was $15.0 million, or $0.79 per share, compared to an operating loss after tax of $23.5 million, or $1.34 per share, for the nine months ended Sept. 30, 2001.

Operating losses in the third quarter of 2001 include $20.1 million, or $1.15 per share, of estimated losses attributable to the World Trade Center events of Sept. 11, 2001.

Net income for the third quarter of 2002 was $8.7 million, or $0.46 per share, compared to a net loss for the third quarter of 2001 of $19.3 million, or $1.10 per share. Net income for the nine months ended Sept. 30, 2002 was $18.0 million, or $0.95 per share, compared to a net loss for the nine months ended Sept. 30, 2001 of $16.5 million, or $0.94 per share.

Gross workers’ compensation premiums written increased about 46.0 percent and 27.3 percent in the three and nine months ended Sept. 30, 2002, respectively, compared to the corresponding periods of 2001. In California, gross workers’ compensation premiums written increased about 68.8 percent and 41.2 percent in the three and nine months ended Sept. 30, 2002 compared to the corresponding periods of 2001.

In the third quarter of 2002, the combined ratio for the property and casualty operations was 99.8 percent compared to 134.3 percent in the third quarter of the prior year. This is the first quarterly combined ratio below 100 percent reported by Zenith in about 6 years.

The combined ratio for the property-casualty insurance operations was 99.8 percent and 101.8 percent for the three months and nine months ended Sept. 30, 2002, respectively. This compares to 134.3 percent and 118.9 percent for the three months and nine months ended Sept. 30, 2001, respectively. The combined ratio for the Workers’ Compensation operations for the nine months ended Sept. 30, 2002 was 103.6 percent compared to 113.4 percent for the nine months ended Sept. 30, 2001 and 114.0 percent for the year ended Dec. 31, 2001.

Book values per share at Sept. 30, 2002 and Dec. 31, 2001 were $17.16 and $16.14, respectively. Excluding the effect of unrealized gains and losses on available-for-sale, fixed maturity investments, book values per share were $16.38 and $16.19 at Sept. 30, 2002 and Dec. 31, 2001, respectively.

“We are pleased that our revenues, operating results and combined ratios continue to improve,” said Stanley Zax, chairman and president. “As previously reported, the sale of our home-building business in Las Vegas will provide additional financial strength as we search for opportunities to expand our workers’ compensation and reinsurance business.”

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