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Microcap & Penny Stocks : RISC 1/2 mill traded (96' worst ipo) -- Ignore unavailable to you. Want to Upgrade?

To: Robert Floyd who wrote (284)	6/16/1998 3:12:00 PM
From: Robert Floyd	Read Replies (2) \| Respond to of 294

Moody's cuts Zenith National Insurance (Press release provided by Moody's Investors Service) NEW YORK, June 12 - Moody's Investors Service has lowered the rating of Zenith National Insurance Corp.'s senior debt, to Baa2 from Baa1, concluding a review that was initiated following the company's decision to acquire the insurance business of RISCORP, Inc. Zenith has, since, completed the acquisition, through which RISCORP's existing in-force business and renewal rights were obtained. Although the acquisition closed on April 1, 1998, the final price has yet to be determined but is expected to be finalized within the third quarter of 1998. In view of the still material uncertainties associated with the profitability of ongoing operations of RISCORP and the adequacy of its reserves, Moody's outlook remains negative. According to Moody's, this rating action reflects the challenges Zenith will have in the short term to sustain strong profitability levels, given the fiercely competitive pricing environment along with the historical operating difficulties at RISCORP. Furthermore, RISCORP's operations had experienced high growth rates over the past five years primarily in workers' compensation. The adequacy of the long tail reserves acquired following such an increase in writings is an important risk factor. Although Zenith has mitigated some of this risk by providing for potential future adjustments to the purchase price, Moody's stated that this exposure remains a concern. The rating agency notes that this purchase price adjustment, which will soon be determined, will not protect Zenith from possible future adverse development beyond that reflected in the upcoming reserve assessment. The current rating also reflects Zenith's disciplined underwriting approach, good position in the California workers' compensation market, product diversification through its affiliated company (CalFarm Insurance Company), and improved geographic diversification within its core workers' compensation line of business. The RISCORP acquisition will also allow Zenith to focus on the growing health care segment and utilize RISCORP's developed managed care operations. These positive factors are tempered by the Zenith's declining operating performance in its core line of business, increasingly competitive market conditions and concentration of California risk within its property business that leaves the company susceptible to property catastrophe losses. In addition, despite the geographic diversification that RISCORP provides, improving the operations of RISCORP will be challenging and, at least in the near term, heightens Zenith's business risk. Zenith National Insurance Corp., based in Woodland Hills, California, USA, specializes in providing workers' compensation insurance and related services in 33 states, primarily California and Florida. As of March 31, 1998, Zenith National reported total assets of $1.2 billion and shareholders' equity of $345 million.