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| | Zenith Compensates for its California Anchor
By Robert Warne - January 22, 2003Zenith National Insurance’s out of state operations helped pull the corporation out of the California work comp doldrums in 2002.
As for the year, Zenith estimates that its net income rose from a red $27 million loss in 2001 to a solid black $10.5 million gain in 2002. Also the company was able to drop its combined ratio from 118 percent to 106 percent in 2002.
Even though it’s fourth quarter net loss was $7.2 million it was an improvement from 2001’s $10.5 for the same reporting period.
But because of California’s health care and indemnity cost inflation, Zenith needed to beef up its reserves by about $30 million, which will be charged against its earnings for 2002’s fourth quarter.
Dulling the pain of California’s losses has been its workers’ compensation premium rate increases, which were 27 percent higher than in 2001 and are expected to be bumped up another 30 percent in 2003.
Zenith Chairman and President, Stanley R. Zax said, “Our reserves reflect a conservative view of the trends and our estimate of the ultimate cost of our liabilities. The reserve increase is primarily attributable to California incurred losses where our trends are consistent with the recent industry data.”
Judging from January’s pace of business, Zax foresees another year of growth ahead.
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