Zenith (ZNT) National Insurance stock was halted in the middle of the trading day today, when they reported earnings that missed even the lowest of all eight sell side analyst estimates who follow the company.

In unusual form, Zenith reports their earnings in the middle of the day.  The company, which does the majority of its workers' compensation insurance business in California, reported an earnings loss of .04, before accounting for realized gains on investments.  Analysts were looking for a gain of .46.  Zenith had earlier warned of severance costs related to its headcount reduction of 100 employees in February and said it would have an effect on their earnings, but that only accounted for .09 of the earnings miss.

The company has seen its insurance premiums fall dramatically mainly due to job losses in California, reducing the need for workers' compensation insurance.  On top of that, there is uncertainty on whether or not premium pricings will increase in California, as they have in Florida, despite the economic downturn.

Investors are worried that lower revenue from premiums may spell lower growth as the company relies more heavily on interest investment income and gains on investments.  In in the first quarter of 2008, investments represented 15% of overall revenue, while today they represent over 20%.  Without the benefit of investment income and gains in the first quarter of 2008, the company earned 14.2 million.  Today they are losing 27.9 million as the workers' compensation segment goes from a gain to a loss, and the company looks for a way to get back toward profitability in their most important segment.

Investors have not necessarily hammered the stock after the news, considering…