Zenith National Insurance Corp. said Wednesday third-quarter losses due to Hurricane Katrina will likely reach $21 million, or 85 cents a share, after taxes.

The Woodland Hills-based property and casualty insurer made the preliminary estimate after reviewing reinsurance contracts it sold to other insurers.

In a statement, Zenith also said it decided to exit the reinsurance business to try to reduce the volatility of the company’s net income. Zenith’s largest business is workers’ compensation insurance. It said no workers’ compensation claims directly related to the storm have yet been reported.

Reinsurers may pay about 40 percent of total claims stemming from Katrina, and the hurricane could cost the insurance industry as much as $35 billion, Bloomberg News reported.

Zenith also declared a 3-for-2 stock split, payable Oct. 11 to shareholders of record Sept. 19. Zenith said the split was based on its decision to exit reinsurance and on financial success of its workers’ compensation business.

Zenith also announced a quarterly dividend of 25 cents a share, which would be equal to 37.5 cents after the stock split. Its most recent dividend was 33 cents, paid on Aug. 12. The new dividend will be paid Nov. 15 to shareholders of record on Oct. 31.