AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” (Excellent) of Zenith Insurance Company and ZNAT Insurance Company. The outlook of these Credit Ratings (ratings) is stable. These companies comprise Zenith National Insurance Group (Zenith National) and are domiciled in Woodland Hills, CA.

The ratings reflect Zenith National’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The ratings also consider Zenith National’s position as a member of the Fairfax Financial Holdings Limited (Fairfax) [TSE: FFH], which includes the implicit support available from its affiliation with Fairfax. As part of the Fairfax group, the insurance operations benefit from the favorable financial flexibility and significant levels of cash and marketable securities held at the ultimate holding company level. In addition, Zenith National benefits from shared resources, including ERM, reinsurance, actuarial, talent and investment portfolio management services among other less-quantifiable benefits such as best practices and capital management. Despite a recent increase in dividends payout, Zenith’s risk-adjusted capitalization is assessed as strongest, as measured by Best’s Capital Adequacy Ratio (BCAR).

Zenith National continues to record solid operating profitability in the workers’ compensation market despite this segment’s challenging trends such as lower rates and higher loss costs driven by the rising cost of health care, which in turn is offsetting favorable frequency trends. Zenith National’s very strong balance sheet strength assessment is supported by its strongest risk-adjusted capitalization, as well as its long, steady track record of favorable loss reserve development, which has benefited its underwriting income materially, albeit at a reduced level in recent years. Zenith National’s niche expertise and presence in the agricultural workers’ compensation market has provided inroads toward developing its ancillary property/casualty offerings to clients in these lines of business. These products have been profitable, and despite a recent increase in volatility, they have helped to mitigate the impact of softening market conditions in the workers’ compensation market over the past several years.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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