Best Affirms Zenith, Subs ‘A’ Ratings

April 13, 2009

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a” of Zenith National Insurance Group and its members, Zenith Insurance Company (Zenith) and ZNAT Insurance Company (ZNAT), a wholly owned subsidiary of Zenith. Best also affirmed the ICR of “bbb” of the group’s parent, Zenith National Insurance Corp. of Wilmington Delaware.

In addition Best affirmed the debt rating of “bb+” on $58.36 million 8.55 percent capital securities, due 2028 of Zenith National Insurance Capital Trust I. All companies are domiciled in Woodland Hills, CA, except where specified. The outlook for all ratings is stable.

“The ratings reflect Zenith’s superior capitalization, strong operating performance despite competitive market conditions and commitment to maintain underwriting discipline through market cycles,” said Best.

“Zenith has demonstrated a significant loss ratio advantage within the workers’ compensation line over the long term, reflective of management’s established commitment to adequate risk pricing across market cycles. The group also benefits from the financial flexibility of Zenith National, which provides the group access to capital as needed.”

However, Best pointed out that “reduction in operating profitability, reflective of the competitive market conditions existing in California, as well as the state mandated rate reductions occurring in Florida in recent years,” should be considered as offsetting factors.

In addition Best noted that the “concentration of written premiums within these two states potentially exposes Zenith to changes within both the regulatory and competitive market environment.

“Despite these concerns, the outlook reflects the historically strong underwriting performance and demonstrated experience in underwriting the workers’ compensation line over the long term.”

Source: A.M. Best –

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