Zenith National Insurance Corp. based in Woodland Hils, Calif., has reported a net loss for the first quarter 2010 of $0.8 million, or $0.02 per share, compared to net income for the first quarter 2009 of $2.6 million, or $0.07 per share.
Net realized gains on investments after tax were $6.2 million, or $0.16 per share, for the first quarter 2010 compared to $4.1 million, or $0.11 per share, for the first quarter 2009.
Net investment income before tax was $17.4 million for the first quarter 2010 compared to $24.3 million for the first quarter 2009. The annualized pre-tax yield on its investment portfolio for the first quarter 2010 was 3.8 percent compared to 5.3 percent for the first quarter 2009. The average maturity of the fixed maturity portfolio, including short-term investments, was approximately years at March 31, 2010 compared to 4.5 years at March 31, 2009.
Workers’ compensation underwriting loss before tax was $23.2 million for both the first quarter 2010 and 2009. The company said workers’ compensation net premiums earned for the first quarter 2010 decreased 15 percent compared to the first quarter 2009.
“We continue to experience a highly competitive environment as reflected in 13 percent fewer policies in-force compared to March 31, 2009, as a result of our risk management practices which emphasize pricing and underwriting discipline to maintain long-term profitability. Insured payroll in-force, our best indicator of exposure, decreased 9 percent compared to March 31, 2009 reflecting the impact of increased unemployment and declining payroll levels of our insureds, as well as the impact of competition as shown in the reduction in policies in-force. … Although premium rates in California have started to increase modestly as compared to 2009, Florida rates have continued to decline,” the company said.
Workers’ compensation combined ratio for the first quarter 2010 was 123.1 percent compared to 119.7 percent for the first quarter 2009. The 2010 accident year loss ratio estimate, excluding loss adjustment expenses, increased modestly to 51.2 percent compared to 50.3 percent recorded in 2009 for the 2009 accident year loss ratio. There was no net development recognized on prior accident year loss and loss adjustment expense reserve estimates for both the first quarter of 2010 and 2009. Loss adjustment and underwriting expenses for the first quarter 2010 reflect the benefit of the cost reductions taken during 2009; however, the expense ratios increased due to the decline in premiums.
Commenting on the results, Stanley R. Zax, chairman and president, said, “Our operating results continue to be adversely impacted by declining premium and lower investment income. Book value is lower than at Dec. 31, 2009 primarily due to the stockholder dividend of $0.50 per share. Our customers continue to be adversely impacted by the recession and it will be a slow process at best before job creation and increased payrolls occur.”
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