Zenith Announces First Quarter Results

Zenith National Insurance Corp. (NYSE: ZNT) 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 our investment portfolio for the first quarter 2010 was 3.8% compared to 5.3% for the first quarter 2009. The average maturity of the fixed maturity portfolio, including short-term investments, was approximately 3.0 years at March 31, 2010 compared to 4.5 years at March 31, 2009.

The fair value of our available-for-sale investment portfolio includes net unrealized gains before tax of $62.5 million at March 31, 2010 compared to $56.1 million at December 31, 2009, an improvement of $6.4 million during the first quarter 2010, or $0.11 per share after tax.

Workers’ compensation underwriting loss before tax was $23.2 million for both the first quarter 2010 and 2009.

Workers’ compensation net premiums earned for the first quarter 2010 decreased 15% compared to the first quarter 2009. We continue to experience a highly competitive environment as reflected in 13% 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% 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. The reduction in net premiums earned also reflects the continuing impact of premium refunds on expiring policies due to lower payrolls for some of our insureds than what was estimated as the premiums were earned. Although premium rates in California have started to increase modestly as compared to 2009, Florida rates have continued to decline.