Should You Buy It? Zenith's Zing

Zenith National Insurance(ZNT Quote - Cramer on ZNT - Stock Picks) is trading closer to its nadir these days. Shares of the workers' compensation insurer are down 20% from their June highs, closing Wednesday at $41.19.

That said, two company insiders have stepped in to purchase a total of 5,000 shares over the past week. While their timing is not always perfect, I view insider buying when a stock is down as a sign that a company's fortunes could recover soon.

With that in mind, I'm here to answer readers' questions: Should you buy it? Does Zenith provide value at current levels, or can the stock move even lower in the coming quarters?

Zenith primarily sells to small and medium-sized businesses with lower risk profiles. The company deals with a lot of retail and restaurant locations and does a majority of its business in California and Florida. California Gov. Arnold Schwarzenegger vetoed two bills in California last September, where premiums are among the highest in the country, that effectively reduced claims costs for the insurers and premiums for businesses.

Zenith posted solid second-quarter results June 24, earning $1.75 a share, up 20% year over year and12 cents ahead of the consensus analyst estimate. The gains came even though revenue fell 18% from the previous year to $219.1 million, as the company's accident-loss ratio fell 140 basis points year over year, to 49.9% of revenue.

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