Zenith Reports Q1 Numbers

California-based Zenith National Insurance Corp. reported net income of $25.1 million for the first quarter of 2004 compared to net income of $11.7 million for the first quarter of 2003.

Diluted net income per share was $1.09 for the first quarter of 2004 compared to $0.62 per share for the first quarter of 2003. Diluted net income per share for the first quarter of 2004 reflects the impact of additional shares issuable as a result of the convertibility of Zenith’s 5.75% Convertible Senior Notes (“Convertible Notes”). If the Convertible Notes were convertible in the first quarter of 2003, diluted net income per share would have been $0.50.

Property-casualty underwriting income before tax for the first quarter of 2004 was $21.8 million compared to $6.2 million for the first quarter of 2003.

Gross workers’ compensation premiums written increased about 44% in the first quarter of 2004 compared to the first quarter of the prior year. In California, gross workers’ comp premiums written increased about 60% in the first quarter of 2004 compared to the first quarter of the prior year. The combined ratio for the property-casualty insurance operations was 90.3% for the three months ended March 31, 2004 compared to 96.4% for the three months ended March 31, 2003 and 95.0% for the year ended Dec. 31, 2003. The combined ratio for the workers’ comp operations for the three months ended March 31, 2004 was 90.7% compared to 97.5% for the three months ended March 31, 2003 and 95.9% for the year ended Dec. 31, 2003.

Book values per share at March 31, 2004 and Dec. 31, 2003 were $22.05 and $20.27, respectively.

Cash flow from insurance operations was $109.2 million in the first quarter of 2004 compared to $54.9 million in the first quarter of 2003 and $291.5 million in the year ended Dec. 31, 2003.

Commenting on the results, Stanley Zax, chairman and president, said, “Our revenues and underwriting income in the first quarter of 2004 reflect the continuing improvement in the results of our workers’ compensation business. We continue to focus on achieving a favorable combined ratio in our workers’ compensation business, particularly in view of the very low level of interest rates.

“We are pleased that the second round of workers’ compensation reform legislation became effective in California on April 19. We believe that these reforms will make the system fairer to all concerned and will cause the trend of cost increases to change and trend lower over time. We are studying the legislation and available data to quantify the impact. The ultimate impact of all of the provisions in the legislation will take many years to assess. We will constantly monitor appropriate data, information and estimates and adjust our rates as the facts suggest.”