Zenith Sees 3Q Drop on Investment Losses

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Zenith National Insurance Corp. on Monday said its net income dropped 74 percent in the third quarter due to charges taken for losses from bonds it held in failed investment bank Lehman Bros. Holdings Inc. and common stock in troubled insurer American International Group Inc.

The Woodland Hills workers’ comp insurance company reported third quarter net income of $16.6 million (44 cents per share), compared with $64.5 million ($1.73) in the same period a year ago. Net income included after-tax net losses on investments of $5.8 million, compared with investment gains of $3 million a year ago.

“We are obviously in an unprecedented environment with significant volatility, but with a strong capital base the fluctuations in securities values do not impact our business but ,,, stockholders’ equity per share is reduced,” Chairman Stanley Zax said in a statement.

Total revenues fell 22 percent to $167 million. Underwriting income from the workers’ compensation segment was $15.3 million in the quarter compared with $74.7 million a year ago.

Zenith reported earnings before the market close. Shares closed up $1.98, or 6.5 percent, to $32.48 on the New York Stock Exchange.

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