(5)Includes an extra dividend of $0.40, $0.40 and $1.00 per common share declared and paid in December 2009, 2008 and 2007, respectively.
•Our financial strength continued with approximately no change in stockholders equity over this three year period after dividends paid to stockholders totaling $281.8 million.
•5.3 points attributable to the increase in the underwriting and other operating expense ratio. The major factors contributing to the 19.0 percentage point increase in the calendar year combined ratio in 2008 of 86.0% compared to 2007 of 67.0% are as follows:
•The amount by which the California industry's reported loss reserves are redundant for all accident years was $5 billion. We do not believe that the WCIRB's estimate of reserve redundancy is representative of our situation, and therefore we do not believe this information should be used to estimate redundancies in our loss reserves. We believe there are three key reasons that we have historically produced lower than average loss ratios than the workers' compensation industry:
At December 31, 2009 and 2008, gross unrealized gains and losses in our fixed maturity, including short-term investments, and equity securities were as follows:
Our insurance subsidiaries are subject to insurance regulations, which restrict their ability to distribute dividends. These restrictions are set forth in Note 12 to the Consolidated Financial Statements. In 2010, Zenith Insurance has the ability to pay up to $97.9 million of dividends to Zenith National without prior approval of the California Department of Insurance. Zenith Insurance paid dividends to Zenith National of $110.0 million, $95.0 million and $115.0 million in 2009, 2008, and 2007, respectively. The restrictions on the payment of dividends have not had, and under current regulations are not expected to have, a material adverse impact on the ability of Zenith Insurance to pay dividends.
Stockholders' equity is primarily affected by the level of net income, payment of dividends and any fluctuations in the fair values of our investments. Stockholders' equity was approximately $1 billion at December 31, 2009, 2008 and 2007.
Consolidated Statements of Stockholders' Equity and Consolidated Statements of Comprehensive Income for the years ended December 31, 2009, 2008 and 2007
In June 2009, the FASB issued guidance that established the FASB Accounting Standards Codification as the single source of authoritative accounting principles in the preparation of financial statements in conformity with GAAP. This guidance also explicitly recognized rules and interpretive releases of the Securities and Exchange Commission ("SEC") under federal securities laws as authoritative GAAP for SEC registrants. This guidance was effective for financial statements issued for periods ending after September 15, 2009.
The following table presents changes in our Level 3 fixed maturity and equity securities measured at fair value on a recurring basis for the years ended December 31, 2009 and 2008:
The Trust had invested $77.3 million in Zenith National's 8.55% Subordinated Deferrable Interest Debentures due 2028 ("Subordinated Debentures") at December 31, 2009 and 2008, which constitute the principal asset of the Trust. The semi-annual interest payments on the Subordinated Debentures may be deferred by Zenith National for up to ten consecutive semi-annual periods. The Subordinated Debentures are redeemable at 100% of the principal amount of the Subordinated Debentures plus a "make-whole premium," if any, together with accrued and unpaid interest. The make-whole premium is the excess of the then present value of the remaining scheduled payments of principal and interest over 100% of the principal amount. Payments on the Redeemable Securities, including distributions and redemptions, follow those of the Subordinated Debentures. Zenith National fully and unconditionally guarantees the distributions on, and the liquidation amount generally of, the Redeemable Securities to
Unrecognized compensation expense before tax under the Restricted Stock Plan was $7.1 million and $10.3 million at December 31, 2009 and 2008, respectively. The unrecognized compensation expense of $7.1 million at December 31, 2009 includes $5.1 million related to time-based restricted stock awards and $2.0 million related to performance-based restricted stock awards.
On January 1, 2009, we adopted the accounting guidance on "Participating Securities and the Two-Class Method," which required that unvested restricted stock with a right to receive nonforfeitable dividends be included in the two-class method of computing earnings per share. The weighted average shares outstanding and net income per common share for the year ended December 31, 2009 are presented in accordance with this guidance. Prior period amounts were not restated due to immateriality.
We offer a tax deferred savings plan created under Section 401(k) of the Internal Revenue Code for all eligible employees. We match 50% of employee contributions that are 6% or less of salary on a current basis and we are not liable for any future payments under the plan. For the years ended December 31, 2009, 2008, and 2007, we contributed $2.4 million, $2.5 million, and $2.7 million, respectively.