QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.3

AMENDMENT NO. 2
TO
COST ALLOCATION AGREEMENT

WHEREAS, Zenith National Insurance Corp., Zenith Insurance Company, ZNAT
Insurance Company, CalFarm Insurance Company, CalFarm Life Insurance Company,
and CalFarm Insurance Agency have previously entered into a Cost Allocation
Agreement; and

WHEREAS, Zenith National Insurance Corp. has entered into an agreement to sell
100% of the common stock of CalFarm Life Insurance Company to Anchor National
Life Insurance Company ("Anchor") or an affiliate designated by it; and

WHEREAS, it is necessary to amend the Cost Allocation Agreement accordingly;

IN CONSIDERATION OF THE PREMISES, the parties agree as follows:

1.Effective as of the close of business of the closing date of the sale of
CalFarm Life Insurance Company to Anchor, CalFarm Life Insurance Company shall
be deleted as a party to the inter-company Cost Allocation Agreement.

2.In all other respects the Cost Allocation Agreement remains unchanged.

IN WITNESS WHEREOF, each of the undersigned parties has caused this Amendment
No. 2 to be executed on its behalf, this 28th day of December, 1995.

              ZENITH NATIONAL INSURANCE CORP.   ZENITH INSURANCE COMPANY        
      By:   /s/  JOHN J. TICKNER      

--------------------------------------------------------------------------------

  By:   /s/  JOHN J. TICKNER      

--------------------------------------------------------------------------------

              ZENITH STAR INSURANCE COMPANY   CALFARM INSURANCE COMPANY        
      By:   /s/  JOHN J. TICKNER      

--------------------------------------------------------------------------------

  By:   /s/  JOHN J. TICKNER      

--------------------------------------------------------------------------------

              CALFARM LIFE INSURANCE COMPANY   CALFARM INSURANCE AGENCY        
      By:   /s/  JOHN J. TICKNER      

--------------------------------------------------------------------------------

  By:   /s/  JOHN J. TICKNER      

--------------------------------------------------------------------------------

              ZNAT INSURANCE COMPANY                       By:   /s/  JOHN J.
TICKNER      

--------------------------------------------------------------------------------

       

--------------------------------------------------------------------------------

QuickLinks

AMENDMENT NO. 2 TO COST ALLOCATION AGREEMENT