Moody's affirms Zenith

Moody's Investors Service said it affirmed the ratings of Zenith National Insurance Corp., including its Ba1 subordinated debentures, following the announcement of the planned acquisition of 100% of Zenith by Fairfax Financial Holdings Ltd.

The outlook on Zenith' remains stable.

The agency said the affirmation reflects its expectation that, following the acquisition, Zenith will continue to operate its California workers' compensation-focused underwriting business on a standalone basis. Zenith's financial flexibility will reflect Fairfax's more aggressive financial leverage profile, Moody's said, but this is mitigated by the agency's expectation that Zenith will benefit from being part of the larger and more diversified operating group.

Zenith's ratings reflect the company's track record of underwriting discipline in its chosen niche and a historically conservative financial profile, particularly strong asset quality and low financial leverage, the agency said.

Tempering these credit strengths are Zenith's concentration in a single, historically volatile line of business, workers' compensation primarily in California and Florida, Moody's said.

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