WOODLAND HILLS, Calif.--(BUSINESS WIRE)--July 31, 2003--Zenith
National Insurance Corp. (NYSE: ZNT) reported net income of $18.4
million, or $0.97 per share, for the second quarter of 2003 compared
to net income of $6.5 million, or $0.34 per share, for the second
quarter of 2002. Net income for the six months ended June 30, 2003 was
$30.1 million, or $1.60 per share, compared to net income for the six
months ended June 30, 2002 of $9.3 million, or $0.49 per share.
Gross workers' compensation premiums written increased about 50%
and 54% in the three and six months ended June 30, 2003, respectively,
compared to the corresponding periods of 2002. In California, gross
workers' compensation premiums written increased about 73% and 81% in
the three and six months ended June 30, 2003, respectively, compared
to the corresponding periods of 2002.
The combined ratio for the property-casualty insurance operations
was 96.5% for the six months ended June 30, 2003 compared to 103.1%
for the six months ended June 30, 2002 and 106.5% for the year ended
December 31, 2002. The combined ratio for the workers' compensation
operations for the six months ended June 30, 2003 was 97.5% compared
to 105.2% for the six months ended June 30, 2002 and 108.7% for the
year ended December 31, 2002.
Book values per share at June 30, 2003 and December 31, 2002 were
$19.10 and $16.89, respectively.
Commenting on the results, Stanley R. Zax, Chairman & President,
said, "Underwriting income and cash flow continued to improve
primarily due to rate increases in our workers' compensation business
and an absence of catastrophes in our reinsurance business. Net income
increased due to realized capital gains in our investment portfolio
and the improved underwriting results. Book value per share increased
due to the growth in net income and the increase in the market value
of our investment portfolio.
"We are encouraged about future workers' compensation underwriting
results as rate increases already implemented will continue to flow
through our quarterly financials in increasing amounts that outpace
estimated loss cost trends.
"We support meaningful legislative solutions to the workers'
compensation affordability crisis in California. Unfortunately this
issue is being deferred until the budget impasse is resolved, and even
then it is not predictable what action, if any, will result. In
Florida, our second largest state, meaningful workers' compensation
reform was recently enacted, effective October 1, 2003."

The Private Securities Litigation Reform Act of 1995 provides a
safe harbor 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 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)
competition; (2) adverse state and federal legislation and regulation;
(3) changes in interest rates causing fluctuations of investment
income and fair values of investments; (4) changes in the frequency
and severity of claims and catastrophes; (5) adequacy of loss
reserves; (6) changing environment for controlling medical, legal and
rehabilitation costs, as well as fraud and abuse; (7) losses
associated with terrorist attacks such as the attack on the World
Trade Center on September 11, 2001, and (8) other risks detailed
herein and from time to time in Zenith's other reports and filings
with the Securities and Exchange Commission.



ZENITH NATIONAL INSURANCE CORP.
Selected Financial Data (Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2003 2002 2003 2002
(In thousands, except per share)

TOTAL REVENUES (1) $211,030 $140,312 $397,717 $273,420

SELECTED INCOME DATA:
Net Investment Income after
Tax 9,825 8,543 18,188 16,982


Income from Continuing
Operations after Tax (1) 18,400 5,477 30,100 7,388
Income from Discontinued
Operations after Tax (1) 1,023 1,912
-------- -------- -------- --------
Net Income 18,400 6,500 30,100 9,300
======== ======== ======== ========

INCOME FROM CONTINUING OPERATIONS
PER COMMON SHARE (1):
Basic $ 0.98 $ 0.29 $ 1.60 $ 0.40
Diluted 0.97 0.29 1.60 0.39

NET INCOME PER COMMON SHARE:
Basic 0.98 0.35 1.60 0.50
Diluted (2) 0.97 0.34 1.60 0.49

STOCKHOLDERS' EQUITY (3):

Stockholders' Equity $358,793 $308,871

Stockholders' Equity per
Share: 19.10 16.48


Number of Common Shares:

Outstanding 18,786 18,747
Weighted Average for the
Period - Basic 18,778 18,695 18,773 18,647
Weighted Average for the
Period - Diluted 18,905 18,979 18,842 18,913

(1) On October 8, 2002, Zenith completed the sale of its home-building
business and related real estate assets in Las Vegas, Nevada which
was operated by Perma-Bilt. The results of the real estate business
for the three and six months ended June 30, 2002 are presented as
discontinued operations.

(2) The computation of fully diluted earnings per share does not
include any common shares that would be issued in connection with
Zenith National's 5.75% Convertible Senior Notes due March 30, 2023.

(3) 2002 has been restated to reflect the change in accounting to
the equity method for our investment in Advent Capital.


ZENITH NATIONAL INSURANCE CORP.
Selected Financial Data (Unaudited)

Six Months Ended
June 30,
------------------
2003 2002
(In thousands)

REVENUES (1):

Net Premiums Earned (2) $358,861 $248,804
Net Investment Income 26,933 25,470
Realized Gains (Losses) on Investments (3) 11,923 (854)
-------- --------
Total Revenues $397,717 $273,420
======== ========

COMPONENTS OF NET INCOME:

Property-Casualty:
Underwriting Income (Loss) $ 12,424 $ (7,695)
Net Investment Income 26,933 25,470
Realized Gains (Losses) on Investments (3) 11,923 (854)
-------- --------
Property-Casualty Income 51,280 16,921

Interest Expense (5,446) (3,185)
Parent Expenses (2,939) (2,317)
-------- --------
Income from Continuing Operations before Tax and
before Equity in Earnings of Investee 42,895 11,419
Income Tax Expense 14,941 4,031
-------- --------
Income from Continuing Operations after Tax and
before Equity in Earnings of Investee 27,954 7,388
Equity in Earnings of Investee after Tax 2,146
-------- --------
Income from Continuing Operations after Tax (1) 30,100 7,388
Income from Discontinued Operations after Tax (1) 1,912
-------- --------
NET INCOME $ 30,100 $ 9,300
======== ========

(1) On October 8, 2002, Zenith completed the sale of its home-building
business and related real estate assets in Las Vegas, Nevada which
was operated by Perma-Bilt. The results of the real estate business
for the six months ended June 30, 2002 are presented as discontinued
operations.

(2) Net premiums earned in the six months ended June 30, 2003 and
2002 are net of $36.0 million and $10.0 million, respectively, of
ceded premiums earned in connection with a 10% ceded quota share
reinsurance agreement effective January 1, 2002 for policies effective
on or after January 1, 2002.

(3) Realized gains in the six months ended June 30, 2003 are
principally comprised of realized gains on sale of available-for-sale
debt securities. Net realized losses in the six months ended June 30,
2002 are comprised of realized gains from sales of investments offset
by $4.3 million before tax ($2.8 million after tax, or $0.15 per
share) write down of Zenith's investment in debt securities of
WorldCom, Inc.


ZENITH NATIONAL INSURANCE CORP.
Selected Financial Data (Unaudited)

(Dollars in thousands) Six Months Ended June 30,
2003 2002
PROPERTY-CASUALTY UNDERWRITING:
Gross Premiums Written:
Workers' Compensation:
California $247,108 57.7% $136,586 48.3%
Outside California 146,218 34.2% 118,835 42.0%
-------- ------ -------- ------
Total Workers' Compensation 393,326 91.9% 255,421 90.3%
Reinsurance 34,832 8.1% 27,289 9.7%
-------- ------ -------- ------
428,158 100.0% 282,710 100.0%
Net Premiums Written:
Workers' Compensation:
California 214,466 57.1% 124,117 48.0%
Outside California 126,390 33.6% 107,503 41.5%
-------- ------ -------- ------
Total Workers' Compensation (1) 340,856 90.7% 231,620 89.5%
Reinsurance 34,850 9.3% 27,169 10.5%
-------- ------ -------- ------
375,706 100.0% 258,789 100.0%
Net Premiums Earned:
Workers' Compensation:
California 202,342 56.4% 117,501 47.2%
Outside California 124,544 34.7% 106,909 43.0%
-------- ------ -------- ------
Total Workers' Compensation (1) 326,886 91.1% 224,410 90.2%
Reinsurance 31,975 8.9% 24,394 9.8%
-------- ------ -------- ------
358,861 100.0% 248,804 100.0%

Underwriting Income (Loss) before
Tax/Combined Ratio
Workers' Compensation 8,036 97.5% (11,646) 105.2%
Reinsurance 4,388 86.3% 3,951 83.8%
-------- --------
12,424 96.5% (7,695) 103.1%
COMBINED LOSS AND EXPENSE RATIOS:
Workers' Compensation:
Losses and Loss Adjustment
Expenses (2) 71.0% 70.8%
Underwriting and Other Expenses (2) 26.5% 34.4%
------ ------
Combined Ratio 97.5% 105.2%

Reinsurance:
Loss and Loss Adjustment Expenses 68.7% 63.4%
Underwriting and Other Expenses 17.6% 20.4%
------ ------
Combined Ratio 86.3% 83.8%

Total:
Loss and Loss Adjustment Expenses (2) 70.8% 70.0%
Underwriting and Other Expenses (2) 25.7% 33.1%
------ ------
Combined Ratio 96.5% 103.1%


(1) Premiums in 2003 and 2002 are net of $37.5 million and $14.7
million, respectively, of ceded premiums written and $36.0 million and
$10.0 million, respectively, of ceded premiums earned in connection
with a 10% ceded quota share reinsurance agreement effective January
1, 2002 for policies effective on or after January 1, 2002.

(2) Certain workers' compensation operating expenses have been
reclassified in prior periods to conform to the current presentation
(see below).


ZENITH NATIONAL INSURANCE CORP.
Selected Financial Data (Unaudited)

Three Months Ended
June 30,
------------------
2003 2002
(In thousands)

REVENUES (1):

Net Premiums Earned (2) $185,457 $127,530
Net Investment Income 14,366 12,808
Realized Gains (Losses) on Investments (3) 11,207 (26)
-------- --------
Total Revenues $211,030 $140,312
======== ========

COMPONENTS OF NET INCOME:

Property-Casualty:
Underwriting Income (Loss) $ 6,195 $ (2,263)
Net Investment Income 14,366 12,808
Realized Gains (Losses) on Investments (3) 11,207 (26)
-------- --------
Property-Casualty Income 31,768 10,519

Interest Expense (3,465) (1,086)
Parent Expenses (1,420) (1,065)
-------- --------
Income from Continuing Operations before Tax and before
Equity in Earnings of Investee 26,883 8,368
Income Tax Expense 9,271 2,891
-------- --------
Income from Continuing Operations after Tax and
before Equity in Earnings of Investee 17,612 5,477
Equity in Earnings of Investee after Tax 788
-------- --------
Income from Continuing Operations after Tax (1) 18,400 5,477
Income from Discontinued Operations after Tax (1) 1,023
-------- --------
NET INCOME $ 18,400 $ 6,500
======== ========

(1) On October 8, 2002, Zenith completed the sale of its home-building
business and related real estate assets in Las Vegas, Nevada which
was operated by Perma-Bilt. The results of the real estate business
for the three months ended June 30, 2002 are presented as discontinued
operations.

(2) Net premiums earned in the quarters ended June 30, 2003 and
2002 are net of $18.8 million and $6.5 million, respectively, of ceded
premiums earned in connection with a 10% ceded quota share reinsurance
agreement effective January 1, 2002 for policies effective on or after
January 1, 2002.

(3) Realized gains in the second quarter of 2003 are principally
comprised of realized gains on sale of available-for-sale debt
securities. Net realized losses in the second quarter of 2002 are
comprised of realized gains from sales of investments offset by $4.3
million before tax ($2.8 million after tax, or $0.15 per share) write
down of Zenith's investment in debt securities of WorldCom, Inc.


ZENITH NATIONAL INSURANCE CORP.
Selected Financial Data (Unaudited)

(Dollars in thousands) Three Months Ended June 30,
2003 2002
PROPERTY-CASUALTY UNDERWRITING:
Gross Premiums Written:
Workers' Compensation:
California $128,558 60.3% $ 74,408 51.5%
Outside California 73,160 34.4% 60,490 41.9%
-------- ------ -------- ------
Total Workers' Compensation 201,718 94.7% 134,898 93.4%
Reinsurance 11,365 5.3% 9,588 6.6%
-------- ------ -------- ------
213,083 100.0% 144,486 100.0%
Net Premiums Written:
Workers' Compensation:
California 111,524 59.9% 66,900 51.1%
Outside California 63,262 34.0% 54,457 41.6%
-------- ------ -------- ------
Total Workers' Compensation (1) 174,786 93.9% 121,357 92.7%
Reinsurance 11,350 6.1% 9,537 7.3%
-------- ------ -------- ------
186,136 100.0% 130,894 100.0%
Net Premiums Earned:
Workers' Compensation:
California 107,162 57.8% 61,839 48.5%
Outside California 63,700 34.3% 55,273 43.3%
-------- ------ -------- ------
Total Workers' Compensation (1) 170,862 92.1% 117,112 91.8%
Reinsurance 14,595 7.9% 10,418 8.2%
-------- ------ -------- ------
185,457 100.0% 127,530 100.0%

Underwriting Income (Loss) before
Tax/Combined Ratio
Workers' Compensation 4,203 97.5% (4,312) 103.7%
Reinsurance 1,992 86.4% 2,049 80.3%
-------- --------
6,195 96.7% (2,263) 101.8%
COMBINED LOSS AND EXPENSE RATIOS:
Workers' Compensation:
Losses and Loss Adjustment
Expenses (2) 71.6% 70.9%
Underwriting and Other Expenses (2) 25.9% 32.8%
------ ------
Combined Ratio 97.5% 103.7%

Reinsurance:
Loss and Loss Adjustment Expenses 68.3% 54.7%
Underwriting and Other Expenses 18.1% 25.6%
------ ------
Combined Ratio 86.4% 80.3%

Total:
Loss and Loss Adjustment Expenses (2) 71.3% 69.6%
Underwriting and Other Expenses (2) 25.4% 32.2%
------ ------
Combined Ratio 96.7% 101.8%


(1) Premiums in 2003 and 2002 are net of $19.2 million and $8.9
million, respectively, of ceded premiums written and $18.8 million and
$6.5 million, respectively, of ceded premiums earned in connection
with a 10% ceded quota share reinsurance agreement effective January
1, 2002 for policies effective on or after January 1, 2002.

(2) Certain workers' compensation operating expenses have been
reclassified in prior periods to conform to the current presentation
(see below).


ZENITH NATIONAL INSURANCE CORP.
Selected Financial Data (Unaudited)

PROPERTY-CASUALTY UNDERWRITING:

In the second quarter of 2003, we re-assessed the allocation of
certain of our general operating expenses to determine whether or not
these expenses should be classified as relating to claims and loss
adjustment or whether they should be classified as other operating
expenses. As a result, certain expenses that we would previously have
classified as related to claims and loss adjustment in our workers'
compensation business are now classified as other operating expenses.
We have reclassified expenses in the prior periods presented to
conform to this revised classification. The reclassification of these
expenses had no effect on net income for any of the periods presented
herein. The effect on prior periods presented herein is as follows:


Three Months Six Months
Ended Ended June 30,
--------- ----------------
(Dollars in thousands) June 30, 2002 2003 2002

Effect on Workers' Compensation:
Decrease in loss and loss adjustment
expense incurred $ (4,595) $(5,225) $(9,434)
Increase in underwriting and other
operating expenses 4,595 5,225 9,434
-------- ------- -------
Net effect $ 0 $ 0 $ 0
======== ======= =======

Effect on Workers' Compensation ratios:
Decrease in loss and loss adjustment
expense incurred -3.9% -1.6% -4.2%
Increase in underwriting and other
operating expenses 3.9% 1.6% 4.2%
-------- ------- -------
Net effect 0% 0% 0%
======== ======= =======

Effect on Total Company ratios:
Decrease in loss and loss adjustment
expense incurred -3.6% -1.5% -3.8%
Increase in underwriting and other
operating expenses 3.6% 1.5% 3.8%
-------- ------- -------
Net effect 0% 0% 0%
======== ======= =======