S&P affirms Zenith, view up to positive

Standard & Poor's said it affirmed its BB+ counterparty credit rating and B+ preferred stock rating on Zenith National Insurance Corp.

The agency also said it affirmed its BBB+ counterparty credit and financial strength ratings on Zenith's rated operating companies Zenith Insurance Co. and ZNAT Insurance Co.

At the same time, S&P said it revised its outlook on all the ratings to positive from stable.

The positive outlook is driven by two recent favorable developments and the company's exceeding S&P's expectations for earnings and capitalization, the agency said. The main development is the emerging benefits from California workers' compensation reforms.

S&P said Zenith's strengths include its very strong earnings, favorable conditions in its core markets, strong and improved capitalization, decreased financial leverage, strong competitive position in California workers' compensation and record of outperforming the California workers' compensation industry throughout the cycle.

Partially offsetting weaknesses are the company's geographic and line of business concentrations and its exposure to property/catastrophe volatility from the smaller assumed reinsurance segment, S&P added.

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