ANALYSTS PREDICT LOWER ZENITH NATIONAL EARNINGS.
With their acquisition of a Florida insurance company still a drain on its revenues, Zenith National Insurance Corp. is expected today to report third-quarter earnings 32 cents lower than the year-ago period.
A poll of three analysts by First Call predicts the Woodland Hills-based workers' compensation insurer will report a loss of 20 cents for the 1999 third-quarter compared to a profit of 12 cents a share for the same period a year ago.
Zenith National attributed the loss to a $32.5 million cut in third-quarter net income reserves that were needed to cover claims on policies sold by Sarasota-based insurer Riscorp, which the company purchased in April 1998.
``Riscorp wasn't as good of a deal as Zenith originally thought,'' said Gary Ransom, an analyst with Conning & Co. in Hartford, Conn.
``There will be a gradual turnaround, but it will be difficult and won't happen for the next couple of quarters,'' Ransom said.
Zenith National warned nearly three weeks ago of a third-quarter loss due to continued softness in workers' compensation insurance market where competition has led to price cuts.
``It's a difficult market in California,'' said Ransom. ``Premiums have declined, squeezing the margins.'' Seventy-eight percent of Zenith's workers' compensation policies are written in California.
The third-quarter charge, which amounts to $1.89 a share, will be offset in the next four years as the company recognizes $16.5 million a year from reinsurance, the company said in a statement.
Shares of Zenith closed down 18.75 cents Wednesday at $22.25.