Zenith National Gets ‘Negative’ Outlook

Shares of Woodland Hills-based Zenith National Insurance Corp. fell Wednesday after Standard & Poor’s revised its credit-rating outlook on the firm to “negative” from “stable,” which followed the company’s announcement Tuesday of a fourth-quarter loss.

Shares of Zenith, which writes workers’ compensation insurance and property catastrophe reinsurance, slid 42 cents, or nearly 2%, to $21 on the New York Stock Exchange. The stock is down 11% year to date after dropping 16% last year.

Zenith said it lost $7.8 million, or 42 cents a share, in the fourth quarter, though its net income for the full year was $10.2 million, or 54 cents. The company had warned in late January that it would record red ink for the quarter after taking a charge to raise its policy loss reserves.

Zenith said it saw “unprecedented” demand for its policies last year and that it is raising prices in 2003. But S&P; credit analyst Charles Titterton said “there is concern that despite the strong premium increases Zenith has achieved and expects to achieve, loss costs in California could keep rising rapidly.”

In addition, Titterton said, “The organization, which has a market share of less than 3% in California, must contend with a tough competitive situation in the state.”

Other insurance companies in recent days have upset Wall Street with announcements of higher-than-expected loss reserves, raising questions about the industry’s financial health and its profit prospects.