Zenith National Reports Q4 Numbers

California-based Zenith National Insurance Corp. reported net income of $20.8 million for the fourth quarter of 2003 compared to a net loss of $7.8 million for the fourth quarter of 2002. Net income for the year ended Dec. 31, 2003 was $67.0 million compared to net income for the year ended Dec. 31, 2002 of $10.2 million.

Diluted net income per share was $0.92 for the fourth quarter of 2003 compared to a net loss of $0.42 per share for the fourth quarter of 2002. For the year ended Dec. 31, 2003, diluted net income per share was $3.38 per share compared to $0.54 per share for the year ended Dec. 31, 2002. Diluted net income per share for the fourth quarter and year ended Dec. 31, 2003 reflect the impact of additional shares issuable as a result of the convertibility of Zenith’s 5.75 percent Convertible Senior Notes. If the convertibility of the 5.75 percent Convertible Senior Notes had been included for the entire year in 2003, diluted net income per share would have been $2.96 for the year ended Dec. 31, 2003.

Property-casualty underwriting income before tax for the fourth quarter of 2003 was $15.5 million compared to an underwriting loss before tax of $28.9 million for the fourth quarter of 2002. Property-casualty underwriting income before tax for the year ended Dec. 31, 2003 was $38.8 million compared to an underwriting loss before tax of $36.2 million for the year ended Dec. 31, 2002.

Gross workers’ compensation premiums written increased about 40 percent and 46 percent in the three months and year ended Dec. 31, 2003, respectively, compared to the corresponding periods of 2002. In California, gross workers’ comp premiums written increased about 65 percent and 71 percent in the three months and year ended Dec. 31, 2003, respectively, compared to the corresponding periods of 2002.

The combined ratio for the property/casualty operations was 95.0 percent for the year ended Dec. 31, 2003 compared to 106.5 percent for the year ended Dec. 31, 2002. The combined ratio for the workers’ comp operations for the year ended Dec. 31, 2003 was 95.9 percent compared to 108.7 percent for the year ended Dec. 31, 2002. Accident year combined ratios for the workers’ comp operations were 93.9 percent and 102.7 percent for 2003 and 2002, respectively.

Book values per share at Dec. 31, 2003 and Dec. 31, 2002 were $20.27 and $16.89, respectively. Return on average equity in 2003 was 18.8 percent compared to 3.3 percent in 2002.

Cash flow from insurance operations was $291.5 million in the year ended Dec. 31, 2003 compared to $144.9 million for the year ended Dec. 31, 2002.

Stanley Zax, chairman and president said, “We are pleased to report record net income and underwriting income in 2003. Our balance sheet was also strengthened this year by the issuance of $125.0 million of Convertible Senior Notes presently convertible into 5.0 million shares of our common stock.

“We are well positioned to pursue opportunities due to continuing favorable trends and market conditions.”