<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------- ----------------
Commission file number 1-9627
ZENITH NATIONAL INSURANCE CORP.
[Exact name of registrant as specified in its charter]
DELAWARE 95-2702776
[State or other jurisdiction [I.R.S. Employer
incorporation or organization identification No.]
21255 Califa Street, Woodland Hills, California 91367-5021
[Address of principal executive offices] [Zip Code]
[818] 713-1000
[Registrant's telephone number, including area code]
Not Applicable
[Former name, former address and former fiscal year, if changed
since last report.]
Indicate by check mark whether the registrant [1] has filed all reports
required to be filed by Section 13 or 15[d] of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and [2] has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. At April 30, 1996,
17,524,000 shares of common stock were outstanding, net of 6,813,000 shares
of treasury stock.
Page 1
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
Dollars and Shares in Thousands
<TABLE>
<CAPTION>
MAR. 31, 1996 DEC. 31, 1995
<S> <C> <C>
ASSETS
Investments
Fixed maturities:
At amortized cost (fair value $58,154 & $57,816) $ 58,503 $ 56,674
At fair value (cost $442,398 & $555,922) 437,543 566,826
Floating rate preferred stocks, at fair value (cost $14,614 & $14,614) 13,955 13,588
Convertible and non redeemable preferred stocks, at fair value
(cost $250 & $250) 283 281
Common stocks, at fair value (cost $16,269 & $18,937) 20,790 22,656
Short-term investments (at cost, which approximates fair value) 246,225 137,083
Other investments 39,022 38,106
---------- ----------
TOTAL INVESTMENTS 816,321 835,214
Cash 1,515 6,919
Accrued investment income 7,992 8,810
Premiums receivable 79,352 70,155
Receivable from reinsurers and prepaid reinsurance premiums 64,579 64,781
Federal income taxes 15,271 14,609
Deferred policy acquisition costs 20,587 20,339
Properties and equipment, less accumulated depreciation 48,567 48,702
Excess of cost over net assets acquired and purchased intangibles and other assets 7,880 7,983
Other assets 38,706 37,921
---------- ----------
TOTAL ASSETS $1,100,770 $1,115,433
---------- ----------
---------- ----------
LIABILITIES
Policy liabilities and accruals
Unpaid losses and loss expenses $ 506,934 $ 517,552
Unearned premiums 122,772 119,591
Policyholders' dividends accrued 10,796 12,100
Other policyholder funds 13,965 15,491
Reserves on loss portfolio transfers 8,885 9,073
Payable to banks 9,225 8,903
Senior notes payable, less unamortized issue costs of $738 & $768 74,262 74,232
Other liabilities 28,776 28,059
---------- ----------
TOTAL LIABILITIES 775,615 785,001
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, $1 par - shares authorized 1,000; issued and outstanding,
none in 1996 and 1995
Common stock, $1 par - shares authorized 50,000; issued 24,332,
outstanding 17,628, 1996; issued 24,310, outstanding 17,784, 1995 24,332 24,310
Additional paid-in capital 256,431 256,083
Retained earnings 163,615 155,634
Net unrealized appreciation (depreciation) on investments, net of deferred
tax (benefit) expense of ($323) & $4,752 (599) 8,825
---------- ----------
443,779 444,852
Less treasury stock at cost (6,704 shares 1996 & 6,526 shares 1995) (118,624) (114,420)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 325,155 330,432
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,100,770 $1,115,433
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of this statement.
Page 2
<PAGE>
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
1996 1995
(Dollars in Thousands,
except per share data)
<S> <C> <C>
CONSOLIDATED REVENUES:
Premium earned $112,237 $107,059
Net investment income 12,054 11,291
Realized gains on investments 4,272 166
Real estate sales 5,985 8,820
-------- --------
Total revenues 134,548 127,336
EXPENSES:
Losses and loss expenses incurred 73,415 78,360
Policy acquisition costs 22,364 19,480
Other underwriting and operating expenses 12,126 11,134
Policyholders' dividends 559 2,378
Real estate construction and operating costs 5,750 8,053
Interest expense 1,420 1,559
-------- --------
Total expenses 115,634 120,964
-------- --------
Income from continuing operations before federal income tax 18,914 6,372
Federal income tax expense 6,514 2,014
-------- --------
Income from continuing operations 12,400 4,358
DISCONTINUED OPERATIONS:
Income from discontinued operations 2,542
-------- --------
NET INCOME $ 12,400 $ 6,900
-------- --------
-------- --------
EARNINGS PER SHARE:
Income from continuing operations $ 0.70 $ 0.23
Income from discontinued operations 0.13
-------- --------
Net Income per common share $ 0.70 $ 0.36
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of this statement.
Page 3
<PAGE>
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
1996 1995
Dollars in thousands
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Premiums collected $ 110,594 $ 114,303
Investment income received 13,243 11,769
Proceeds from sales of real estate 5,985 8,820
Losses & loss expenses paid (83,767) (84,919)
Underwriting & other operating expenses paid (33,351) (30,410)
Real estate construction costs paid (7,869) (9,472)
Reinsurance premiums paid (5,764) (5,912)
Dividends paid to policyholders (1,086) (2,756)
Interest paid (38) (244)
Income taxes paid (2,100) (124)
--------- ---------
Net cash flows from continuing operating activities, excluding cash from
trading portfolio (4,153) 1,055
Net cash from sales (purchases) of trading portfolio investments 750 (677)
--------- ---------
Net cash flows from operating activities, including cash from trading portfolio (3,403) 378
Net cash from discontinued operating activities 4,368
--------- ---------
Net cash flows from operating activities (3,403) 4,746
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments:
Debt securities Held-to-Maturity (5,342) (28,531)
Debt and equity securities Available-for-Sale (143,980) (61,368)
Other investments (1,139) (10,169)
Proceeds from maturities and exchanges of investments:
Debt securities Held-to-Maturity 3,408
Debt and equity securities Available-for-Sale 5,404 573
Other investments 1,337
Proceeds from sales of investments:
Debt and equity securities Available-for-Sale 257,621 100,573
Other investments 496 2,187
Capital and other expenditures (1,261) (1,093)
Net change in short-term investments (109,070) 2,732
Other (188) (58)
Net cash used in investing activities of discontinued operations (8,271)
--------- ---------
Net cash flows from investing activities 5,949 (2,088)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash advanced from bank line of credit 6,500
Cash repaid on bank line of credit (6,500)
Cash advanced from bank construction loans 7,827 7,338
Cash repaid on bank construction loans (7,505) (5,959)
Cash dividends paid to common stockholders (4,438) (4,737)
Proceeds from exercise of stock options 370 273
Purchase of treasury shares (4,204) (2,625)
Net cash provided by financing activities of discontinued operations 3,745
--------- ---------
Net cash flows from financing activities (7,950) (1,965)
--------- ---------
Net increase (decrease) in cash (5,404) 693
Cash at beginning of period 6,919 5,358
--------- ---------
Cash at March 31, $ 1,515 $ 6,051
--------- ---------
--------- ---------
</TABLE>
(continued)
Page 4
<PAGE>
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(continued)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
1996 1995
(Dollars in Thousands)
<S> <C> <C>
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS TO NET
CASH FLOWS FROM OPERATING ACTIVITIES:
Income From Continuing Operations $ 12,400 $ 4,358
Adjustments to reconcile income from continuing operations
to net cash flows from operating activities:
Depreciation and amortization 1,865 666
Realized gains on investments (4,272) (166)
Net cash from trading portfolio 750 (677)
Decrease (increase) in:
Accrued investment income 818 981
Premiums receivable (9,197) (5,380)
Receivable from reinsurers 202 (2,813)
Deferred policy acquisition costs (248) (1,043)
Federal income taxes 4,411 1,891
Increase (decrease) in:
Unpaid losses and loss expenses (10,618) (3,114)
Policy and contract claims (556)
Unearned premiums 3,181 6,467
Policyholders' dividends accrued (1,304) (316)
Other policyholder funds (1,526) 46
Other 135 34
Net cash from discontinued operating activities 4,368
-------- -------
Net cash flows from operating activities $ (3,403) $ 4,746
-------- -------
-------- -------
</TABLE>
The accompanying notes are an integral part of this statement.
Page 5
<PAGE>
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
1996 1995
Note 1. Computation of Earnings per Share:
<S> <C> <C>
(A) Net income $ 12,400,000 $ 6,900,000
------------ -----------
------------ -----------
(B) Number of shares used in calculating
primary earnings per share:
Weighted average outstanding shares
during the period 17,705,000 18,884,000
Additional common shares issuable under
employee stock options using the
treasury stock method (1) 83,000 101,000
------------ -----------
17,788,000 18,985,000
------------ -----------
------------ -----------
Net income per share (A)/(B) $ 0.70 $ 0.36
------------ -----------
------------ -----------
(C) Number of fully diluted shares:
Weighted average outstanding shares
during the period 17,705,000 18,884,000
Additional common shares issuable under
employee stock options using the
treasury stock method (2) 106,000 101,000
------------ ------------
17,811,000 18,985,000
------------ ------------
------------ ------------
Net income per share (A)/(C) $ 0.70 $ 0.36
------------ ------------
------------ ------------
</TABLE>
(1) Based on the average market price during the period.
(2) Based on the higher of the average market price or price at the end of each
period.
Note 2. New Accounting Standard
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"). The provisions of SFAS No. 123 must be applied
to fiscal years beginning after December 15, 1995. SFAS No. 123 encourages a
fair value-based method of accounting for an employee stock option or similar
equity instrument, but allows continued use of the intrinsic value-method of
accounting prescribed by Accounting Principles Board No. 25 "Accounting for
Stock Issued to Employees" ("APB No. 25"). Companies electing to continue to
use APB No. 25 must make pro forma disclosures of net income and earnings per
share as if the fair value-based method of accounting were applied. The
company has elected to follow the provision of APB No. 25 and, accordingly,
will make the pro forma disclosures required by SFAS No. 123 in its financial
statements for the year ending December 31, 1996.
Note 3. Subsequent Event
On May 6, 1996, Zenith announced that its wholly-owned subsidiary, Zenith
Insurance Company ("ZIC"), entered into a Letter of Intent to acquire
Associated General Contractors' Self-Insurer's Fund ("AGC-SIF"), a Florida
workers' compensation self-insurer's fund. Under the terms of the Letter of
Intent, ZIC will acquire AGC-SIF's assets and assume its liabilities,
including the liabilities of the insured members of AGC-SIF for future
assessments. After the closing date balances are verified, ZIC will
distribute to the members of AGC-SIF an amount equal to the net book value of
the fund.
The acquisition is subject to a number of conditions, including a due
diligence investigation, the negotiation and execution of definitive
documentation, the approval by the members of AGC-SIF and ZIC's Board of
Directors, and regulatory approvals, including approvals under the
Hart-Scott-Rodino Antitrust Improvements Act. AGC-SIF had 1995 premium
written of approximately $40 million.
Page 6
<PAGE>
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES
PART I FINANCIAL INFORMATION
In the opinion of management, all adjustments necessary for a fair presentation
of the results of operations for the periods presented (consisting only of
normal recurring adjustments) have been included. The results of operations for
an interim period are not necessarily indicative of the results for an entire
year.
On March 7, 1996, the Board of Directors declared a regular quarterly cash
dividend of $.25 per share on the outstanding shares, payable May 15, 1996 to
stockholders of record at the close of business on April 30, 1996.
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Zenith's principal source of consolidated earnings is the income, including
investment income, from operations of its property and casualty insurance
businesses. The comparative results of operations are set forth in the table
below, followed by a discussion of significant changes.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Three months ended March 31,
Dollars in thousands 1996 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Investment income, after tax $ 8,016 $7,544
Realized gains on investments, after tax 2,777 108
- -------------------------------------------------------------------------------------------
Sub-total 10,793 7,652
- -------------------------------------------------------------------------------------------
Property and Casualty, after tax:
Underwriting income 2,776 1,594
Catastrophe losses (3,835)
- -------------------------------------------------------------------------------------------
Property and casualty underwriting income (loss) 2,776 (2,241)
- -------------------------------------------------------------------------------------------
Income from real estate operations, after tax 163 499
Interest expense, after tax (923) (1,013)
Parent expenses, after tax (409) (539)
Income from discontinued operations 2,542
- -------------------------------------------------------------------------------------------
Net income $12,400 $6,900
- -------------------------------------------------------------------------------------------
</TABLE>
In December 1995, Zenith sold its wholly-owned life insurance subsidiary,
retaining the health insurance business previously written by such
subsidiary. In 1995, the results of life and annuity operations have been
included as discontinued operations and the results of health insurance
operations have been reclassified and included in Other Property and Casualty
operations.
Page 7
<PAGE>
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES
PART I FINANCIAL INFORMATION
Management's Discussion and Analysis of Consolidated Financial
Condition and Results of Operations (continued)
PROPERTY AND CASUALTY OPERATIONS:
Premiums earned, underwriting results and combined ratios before tax for the
three months ended March 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Three Months Ended March 31, Increase
Dollars in Thousands 1996 1995 (Decrease)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Premium Earned
Workers' Compensation
California $ 37,721 $ 41,815 (10%)
Outside California 13,805 8,886 55%
-------- --------
Total Workers' Compensation 51,526 50,701 2%
Other Property & Casualty 50,169 47,419 6%
Reinsurance 10,542 8,939 18%
-------- --------
Total $112,237 $107,059 5%
-------- --------
-------- --------
Underwriting Income (Loss) Before Taxes
Workers' Compensation ($1,310) ($1,294)
Other Property & Casualty 2,209 (5,926)
Reinsurance 3,503 3,755
-------- --------
Total $ 4,402 ($3,465)
-------- --------
-------- --------
Combined Loss and Loss Expense Ratios
Workers' Compensation
Losses 46.4% 41.4%
Loss Expenses 22.6% 29.9%
Underwriting Expenses 32.4% 26.6%
Dividends to Policyholders 1.1% 4.7%
-------- --------
Combined Ratio 102.5% 102.6%
Other Property & Casualty
Losses and Loss Expenses 65.4% 81.7%
Underwriting Expenses 30.2% 30.8%
-------- --------
Combined Ratio 95.6% 112.5%
Reinsurance
Losses and Loss Expenses 47.9% 39.0%
Underwritng Expenses 18.9% 19.0%
-------- --------
Combined Ratio 66.8% 58.0%
Total Property & Casualty
Losses and Loss Expenses 65.4% 73.2%
Underwriting Expenses 30.2% 27.8%
Dividends to Policyholders 0.5% 2.2%
-------- --------
Combined Ratio 96.1% 103.2%
- -----------------------------------------------------------------------------------
</TABLE>
Page 8
<PAGE>
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES
PART I FINANCIAL INFORMATION
Management's Discussion and Analysis of Consolidated Financial
Condition and Results of Operations (continued)
Underwriting results improved in the first quarter of 1996 compared to the
corresponding period in 1995 principally because of the absence of
catastrophe losses in 1996.
During the first quarter of 1996, Zenith continued the expansion of its
Workers' Compensation operation outside of California. The competition in
the Workers' Compensation market continues to be intense, particularly in
California. However, Zenith is continuing its managed care initiatives,
return to work strategies, safety and health programs, fraud investigation
and litigation efforts with loss ratios for Zenith's Workers' Compensation
insurance operations during the first quarter of 1996 continuing to be
favorable relative to both Zenith's long-term historical experience and the
actuarial assumptions used in its Workers' Compensation premium rates.
Expenses in Zenith's Workers' Compensation claims adjustment process
decreased in the first quarter of 1996 compared to the first quarter of 1995
due to progress made in bringing recurring operating costs into line with
reduced premium income. In addition, following the sale of Zenith's life
insurance subsidiary, Zenith re-evaluated the allocation of its corporate and
administrative costs relative to re-focusing its business in property and
casualty insurance operations, including investing activities. Partly as a
result of this process and partly because of certain non-recurring expenses,
underwriting expenses and expenses of the investment operations increased in
the first quarter of 1996.
The Other Property and Casualty operations improved in the first quarter of
1996, benefiting from overall reduced frequency of losses as well as the
absence of losses from severe weather damage in California, which amounted to
$5.7 million in the first quarter of 1995.
INVESTMENTS:
Fluctuations in interest rates continue to impact stockholders' equity due to
changes in the market value of fixed maturity securities classified as
Available-for-Sale. At March 31, 1996, the unrealized loss on such fixed
maturities was $4.7 million, before deferred taxes, compared to an unrealized
gain of $11.0 million, before deferred taxes, at December 31, 1995. This
change resulted in a decrease in stockholders' equity of $10.2 million, after
deferred taxes, between December 31, 1995 and March 31, 1996. Stockholders'
equity will continue to be affected by volatility in the fixed maturity
securities markets.
Investment income increased in the quarter ended March 31, 1996 compared to
the same period in 1995 principally due to an increase in invested assets of the
Parent.
Page 9
<PAGE>
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES
PART I FINANCIAL INFORMATION
Management's Discussion and Analysis of Consolidated Financial
Condition and Results of Operations (continued)
The yields on invested assets, which vary with the general level of interest
rates, were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Investment Yields Three Months Ended March 31,
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Pre-tax 5.8% 6.0%
Post-tax 3.9% 4.0%
- --------------------------------------------------------------------------------
</TABLE>
Bonds with investment grade ratings represented 95% and 96% of the
consolidated carrying values of investments in bonds at March 31, 1996 and
December 31, 1995, respectively. At March 31, 1996, the average maturity of
the investment portfolio was 4.2 years, compared to 3.9 years at December 31,
1995.
The change in the carrying value of Zenith's consolidated investment
portfolio during the three months ended March 31, 1996 was as follows:
<TABLE>
<CAPTION>
Dollars in thousands
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Carrying Value at December 31, 1995 $835,214
Purchases at cost 150,461
Maturities and exchanges of investments (9,562)
Proceeds from sales of fixed maturity investments:
Available-for-sale (257,621)
Proceeds from sales of other investments (496)
--------
Total proceeds from disposals of investments (258,117)
Realized gains from maturities and exchanges of investments:
Available-for-sale 25
Realized gains from sales of investments:
Available-for-sale 3,894
Other investments 353
--------
Total realized gains on investments 4,272
Unrealized loss on investments (14,499)
Increase in short-term investments 109,070
Net accretion of bonds and preferred stocks and other changes (518)
- ---------------------------------------------------------------------------------------
Carrying Value at March 31, 1996 $816,321
- ---------------------------------------------------------------------------------------
</TABLE>
Page 10
<PAGE>
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES
PART I FINANCIAL INFORMATION
Management's Discussion and Analysis of Consolidated Financial
Condition and Results of Operations (continued)
LIQUIDITY:
Zenith is principally dependent upon its portfolio of marketable securities
and the investment yields thereon; dividends from its insurance subsidiaries,
whose operations are supported by their own cash flows; and available lines
of credit ($50,000,000 at March 31, 1996) to pay its expenses, service debt
and pay any cash dividends which may be declared to its stockholders.
After adjusting for the effects of the cash flows from the trading portfolio
in both periods, net cash flow from continuing operations was negative in the
three months ended March 31, 1996, and decreased by approximately $5.2
million from the corresponding period in 1995. The decline was primarily due
to non-recurring payments in the first quarter of 1996 relating to Zenith's
assumed reinsurance operation. Such non-recurring payments were principally
associated with the commutation of certain treaties and payments for
catastrophe losses.
Page 11
<PAGE>
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES
PART II OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
[a] Exhibits
[3.1] Certificate of Incorporation of Zenith as in effect immediately prior to
November 22, 1985. (Incorporated herein by reference to Exhibit 3 to
Zenith's Amendment on Form 8. date of amendment October 10, 1985, to
Zenith's Current Report on Form 8-K, date of report July 26, 1985).
Certificate of Amendment to Certificate of Incorporation of Zenith,
effective November 22, 1985. (Incorporated herein by reference to
Zenith's Current Report on Form 8-K, date of report November 22, 1985.)
[3.2] By-Laws of Zenith, as currently in effect. (Incorporated herein by
reference to Exhibit 3.2 to Zenith's Annual Report on Form 10-K for the
year ended December 31, 1988.)
[11] Statement re: computation of per share earnings Part I, Item 1, Note 1
of the consolidated financial statements is incorporated herein by
reference
[27] Financial Data Schedule
[b] Reports on Form 8-K
The registrant filed a Current Report on Form 8-K dated January 9, 1996
in connection with the sale of CalFarm Life Insurance Company.
Page 12
<PAGE>
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ZENITH NATIONAL INSURANCE CORP.
Registrant
Date: May 14, 1996 Stanley R. Zax
-----------------------------------------
Stanley R. Zax, Chairman of the Board
& President (Principal Executive Officer)
Date: May 14, 1996 Fredricka Taubitz
-----------------------------------------
Fredricka Taubitz, Executive Vice President
& Chief Financial Officer (Principal
Accounting Officer)
Page 13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<DEBT-HELD-FOR-SALE> 674,651
<DEBT-CARRYING-VALUE> 58,503
<DEBT-MARKET-VALUE> 58,154
<EQUITIES> 35,028
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 816,321
<CASH> 1,515
<RECOVER-REINSURE> 64,579
<DEFERRED-ACQUISITION> 20,587
<TOTAL-ASSETS> 1,100,770
<POLICY-LOSSES> 506,934
<UNEARNED-PREMIUMS> 122,772
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 13,965
<NOTES-PAYABLE> 83,487
0
0
<COMMON> 24,332
<OTHER-SE> 300,823
<TOTAL-LIABILITY-AND-EQUITY> 1,100,770
112,237
<INVESTMENT-INCOME> 12,054
<INVESTMENT-GAINS> 4,272
<OTHER-INCOME> 5,985
<BENEFITS> 73,415
<UNDERWRITING-AMORTIZATION> 22,364
<UNDERWRITING-OTHER> 12,126
<INCOME-PRETAX> 18,914
<INCOME-TAX> 6,514
<INCOME-CONTINUING> 12,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,400
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
