S&P affirms Zenith

Standard & Poor's said it affirmed its BBB- counterparty credit rating on Zenith National Insurance Corp. following the announcement that the company will be acquired by Fairfax Financial Holdings Ltd.

The outlook remains stable.

The agency said Zenith's ratings are not affected by the proposed acquisition, which will be financed through a combination of holding-company cash, subsidiary dividends and equity, and S&P does not expect any significant changes to Zenith's management or to the organization's strategic focus.

Zenith has shown very strong underwriting discipline over the past 30 years, S&P said, and its strong earnings and strong competitive position in the California workers' compensation market support this belief. The agency said that in addition to the company's conservative and disciplined pricing and underwriting, strong capital adequacy, low financial leverage at the holding company and strong liquidity play a significant role in the stability of the company's financial strength.

Offsetting these strengths are Zenith's concentration in the volatile workers' compensation segment and high geographic concentration in California, S&P said.

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