A.M. Best Affirms Ratings of Zenith National Insurance Group.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit ratings (ICR) of "a-" of Zenith National Insurance Group (Zenith) (Woodland Hills, CA). The ratings apply to both intercompany pool members and are based on the consolidated operating performance and financial condition of the two insurers. A.M. Best has also affirmed the ICR of "bbb-" of Zenith National Insurance Corp. (Zenith National) (Delaware) (NYSE: ZNT).

Concurrently, A.M. Best has affirmed the senior debt rating of "bbb-" on existing convertible notes issued by Zenith National and the subordinated debt rating of "bb" on existing capital securities issued by Zenith National Insurance Capital Trust I, a subsidiary of Zenith National. The outlook for all ratings is stable.

These ratings reflect Zenith's strong capitalization, improved operating performance and disciplined approach to pricing and underwriting, which has consistently produced an accident year loss ratio advantage for the group in its primary line, workers' compensation. The group also benefits from the financial flexibility of its publicly traded parent, Zenith National.

Partially offsetting these positive rating factors is the ongoing prior year reserve development through 2002, partially attributable to increased losses within Zenith's assumed reinsurance business and the adverse industry pricing environment of the late 1990's, and related impact on its workers' compensation business. Despite these concerns, the outlook reflects the strong operating performance and financial flexibility of Zenith National to access capital to support operations.

While Zenith's decision to discontinue its assumed reinsurance business in September 2005 should eliminate some volatility in operating results, A.M. Best anticipates that management will maintain its commitment to appropriately capitalize the insurance subsidiaries commensurate with the FSR.

The FSR of A- (Excellent) and ICRs of "a-" have been affirmed for Zenith National Insurance Group and its following intercompany pool members:

--Zenith Insurance Company

--ZNAT Insurance Company

The ICR of "bbb-" has been affirmed for Zenith National Insurance Corporation.

The following debt ratings have been affirmed:

Zenith National Insurance Corporation--

-- "bbb-" on the $1.124 million 5.75% convertible senior notes, due 2023

Zenith National Insurance Capital Trust I--

-- "bb" on the $59 million 8.55% capital securities, due 2028

For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com.