Printer Friendly
The Free Library
23,416,916 articles and books


Zenith Announces Third Quarter Results.

WOODLAND HILLS, Calif. -- Zenith National Insurance Corp. (NYSE NYSE

See: New York Stock Exchange
: ZNT ZNT Zenith National Insurance Corp
ZNT Zinc Transporter
ZNT Zeitschrift für Neues Testament (German)
ZNT Zentrum Neue Technologien (German)
ZNT Journal Library for Natural Sciences and Technology
) reported net income for the third quarter 2009 of $19.2 million, or $0.51 per share, compared to net income for the third quarter 2008 of $16.6 million, or $0.44 per share. Net income for the nine months ended September 30, 2009 was $23.6 million, or $0.62 per share, compared to net income for the nine months ended September 30, 2008 of $86.9 million, or $2.32 per share.

Net income includes net realized gains Realized Gain

A gain resulting from selling an asset at a price higher than the original purchase price.

Notes:
There may be tax consequences for a realized profit.
 on investments after tax of $13.4 million and $17.0 million ($0.35 per share and $0.45 per share) for the three and nine months ended September 30, 2009, respectively, compared to net realized losses Realized Loss

A loss recognized when assets are sold for a price lower than the original purchase price.

Notes:
A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes.
 on investments after tax of $5.8 million and $4.4 million ($0.15 per share and $0.12 per share) for the corresponding periods of 2008.

Net investment income before tax was $20.5 million and $68.1 million for the three and nine months ended September 30, 2009, respectively, compared to $22.9 million and $68.4 million for the corresponding periods of 2008. The annualized annualized

Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared.
 pre-tax yield on our investment portfolio for the three and nine months ended September 30, 2009 was 4.3% and 4.8%, respectively, compared to approximately 4.5% for both the corresponding periods of 2008.

The market value of our available-for-sale investment portfolio improved 2% during the third quarter 2009 to an unrealized gain Unrealized Gain

A profit that results from holding on to an asset rather than cashing it in and using the funds.

Notes:
Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain.
 before tax of $55.6 million at September 30, 2009, compared to an unrealized gain of $10.2 million at June 30, 2009 and an unrealized loss Unrealized Loss

A loss that results from holding onto an asset rather than cashing it in and officially taking the loss.

Notes:
Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss.
 before tax of $77.3 million at December 31, 2008.

Workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work.  underwriting loss before tax was $8.5 million and $49.4 million for the three and nine months ended September 30, 2009, respectively, compared to underwriting income Underwriting income

For an insurance company, the difference between the premiums earned and the costs of settling claims.
 before tax of $15.3 million and $81.8 million for the corresponding periods of 2008. The workers' compensation combined ratio improved to 107.4% in the third quarter 2009 compared to 115.1% in the second quarter 2009, primarily as a result of a net reduction in policyholders' dividends for prior years.

Stockholders' equity Stockholders' Equity

The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets.
 per share at September 30, 2009, June 30, 2009, March 31, 2009 and December 31, 2008 was $28.93, $28.11, $26.82 and $27.42, respectively. Stockholders' equity per share before stockholder dividends increased by 11% from December 31, 2008 to September 30, 2009. The reduction in our stockholders' equity per share from its all time high of $29.58 as of March 31, 2008 to $28.93 at September 30, 2009 is less than the $3.40 dividends paid to stockholders during this period.

Commenting on the results, Stanley R. Zax zax  
n.
A tool similar to a hatchet, used for cutting and dressing roofing slates.



[Variant of sax, from Middle English, knife, from Old English seax; see sek-
, Chairman and President, said: "Book value per share plus stockholder dividends increased approximately 5% in the third quarter 2009 primarily because of the improvement in the market value of our investments. When the economy improves, we are optimistic op·ti·mist  
n.
1. One who usually expects a favorable outcome.

2. A believer in philosophical optimism.



op
 that our excellent financial condition will provide the basis upon which we can find opportunities to grow our business."

The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and  of 1995 provides a safe harbor Safe Harbor

1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated.

2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive.
 for forward-looking statements if accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed. Forward-looking statements include those related to the plans and objectives of management for future operations, future economic performance, or projections of revenues, income, earnings per share, capital expenditures, dividends, capital structure, or other financial items. Statements containing words such as expect, anticipate, believe, estimate, likely or similar words that are used in this release or in other written or oral information conveyed by or on behalf of Zenith are intended to identify forward-looking statements. Zenith undertakes no obligation to update such forward-looking statements, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to the following: 1) volatility in the financial markets, including the duration of the recent crisis and the effectiveness of governmental solutions; 2) economic recession; 3) competition; 4) decreased payroll levels of our customers; 5) medical cost trends; 6) regulatory restrictions on investments; 7) changes in state and federal legislation and regulation; 8) changes in interest rates causing fluctuations of investment income and fair values of investments; 9) changes in the frequency and severity of claims and catastrophes; 10) adequacy of loss reserves; 11) changing environment for controlling medical, legal and rehabilitation rehabilitation: see physical therapy.  costs, as well as fraud and abuse; 12) losses associated with any terrorist attacks that impact our workers' compensation business for amounts not covered not covered Health care adjective Referring to a procedure, test or other health service to which a policy holder or insurance beneficiary is not entitled under the terms of the policy or payment system–eg, Medicare. Cf Covered.  by our reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract.  protection; 13) losses caused by nuclear, biological, chemical or radiological events whether or not there is any applicable reinsurance protection; and 14) other risks detailed herein and from time to time in Zenith's reports and filings with the Securities and Exchange Commission.

(Selected financial data attached)
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]


Workers' compensation calendar year combined ratios, along with a reconciliation to the accident year combined ratios, were as follows (1):
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]


Workers' compensation calendar year combined ratios, along with a reconciliation to the accident year combined ratios, were as follows (1):
[TABLE OMITTED]
[TABLE OMITTED]


ZENITH NATIONAL INSURANCE CORP. Supplemental Financial Information (Unaudited)

HOW WE REPORT OUR RESULTS Our business is comprised of the following segments: investments, workers' compensation and reinsurance. In September 2005, we exited the assumed reinsurance business. Results of the investments segment include net investment income and net realized gains or losses on investments. We do not allocate investment income to other segments. Income or loss before tax from the workers' compensation and reinsurance segments is determined by deducting losses and loss adjustment expenses incurred and underwriting and other operating expenses Operating expenses

The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted.
 from net premiums earned (this result is also known as underwriting income or loss). The parent loss includes interest expense and the general operating expenses of our parent company, Zenith National Insurance Corp.

NON-GAAP MEASURES In addition to the financial measures presented in the consolidated financial statements Consolidated Financial Statements

The combined financial statements of a parent company and its subsidiaries.

Notes:
Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge
 prepared in accordance with accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire,  ("GAAP GAAP

See: Generally Accepted Accounting Principles


GAAP

See generally accepted accounting principles (GAAP).
"), we also use certain non-GAAP financial measures to analyze and report our financial results. Management believes that these non-GAAP measures, when used in conjunction with the consolidated financial statements, can aid in understanding our financial condition and results of operations. These non-GAAP measures are not a substitute for GAAP measures, and where these measures are described we provide information that reconciles the non-GAAP measures to the most comparable GAAP measures reported in our consolidated financial statements.

Combined Ratio The combined ratio, expressed as a percentage, is a key measurement of profitability traditionally used in the property-casualty insurance business. The combined ratio, also referred to as the "calendar year combined ratio," is the sum of the losses and loss adjustment expense ratio and the underwriting and other operating expense Operating Expense

The essential things that a company must purchase in order to maintain business.

Notes:
For example, the payment of employees wages are an operating expense.

Also known as OPEX.
 ratio. The losses and loss adjustment expense ratio is the percentage of net losses and loss adjustment expenses incurred to net premiums earned. The underwriting and other operating expense ratio is the percentage of underwriting and other operating expenses to net premiums earned. When the calendar year combined ratio is adjusted to exclude prior period items, such as loss reserve development and policyholders' dividends, it becomes the "accident year combined ratio," a non-GAAP financial measure.

Net Cash Flow from Insurance Operations Net cash flow from our workers' compensation and assumed reinsurance operations are non-GAAP financial measures that represent the following on a pre-tax basis: premiums collected less losses, loss adjustment expenses, underwriting and other operating expenses paid. The net cash flows from the insurance operations, in addition to investment income received, interest and other expenses paid by our parent company, and income taxes refunded (paid) are included in net cash provided by operating activities, the most comparable GAAP financial measure. The following table provides a reconciliation of the net cash flow from our workers' compensation and assumed reinsurance operations to the net cash provided by operating activities shown in the consolidated financial statements:
[TABLE OMITTED]


In periods in which net cash flow from operating activities is negative, such cash flow is offset by cash flow from investing activities Cash Flow From Investing Activities

An item on the cash flow statement that reports the aggregate change in a company's cash position resulting from any gains (or losses) from investments in the financial markets and operating subsidiaries, and changes resulting from amounts spent
, principally from short-term investments and maturities of longer-term investments. We maintain a portfolio of invested assets with varying maturities and a substantial amount of short-term investments to provide adequate liquidity.

ZENITH NATIONAL INSURANCE CORP. Supplemental Financial Information (Unaudited)

Premiums Written Gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written.  is a non-GAAP financial measure representing the amount of premiums we have billed to our policyholders in the applicable period. It is indicative of the amount of cash premium, before commission expense, that we expect to receive from our policies. Net premiums written are premiums we have billed to our policyholders less any reinsurance premiums ceded. Net premiums earned, a GAAP measure, represent the portion of premiums written that is recognized as earned in the consolidated financial statements for the periods presented. Premiums are earned on a pro-rata basis over the term of the policies. The following table provides a reconciliation of workers' compensation gross and net premiums written to net premiums earned:
[TABLE OMITTED]
COPYRIGHT 2009 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2009 Gale, Cengage Learning. All rights reserved.

 Reader Opinion

Title:

Comment:



 

Article Details
Printer friendly Cite/link Email Feedback
Publication:Business Wire
Article Type:Financial report
Date:Oct 20, 2009
Words:1548
Previous Article:IMS Health Exploring Strategic Alternatives.
Next Article:Georgia Transmission Corp. Completes Thomson-to-Warthen 500-kV Transmission Line.
Topics:



Related Articles
ZENITH'S LOSSES FROM SEPT. 11 CLAIMS HIT $35.5 MILLION.
ANALYSTS PREDICT LOWER ZENITH NATIONAL EARNINGS.
BRIEFCASE.
MONEY BRIEFS.

Terms of use | Copyright © 2014 Farlex, Inc. | Feedback | For webmasters