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Exhibit 10.4

AMENDMENT NO. 3
TO
COST ALLOCATION AGREEMENT

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

WHEREAS, Zenith Insurance Company has recently formed and owns 100% of the
outstanding common stock of Zenith Insurance Company of Florida; and

WHEREAS, Zenith Insurance Company of Florida desires to become a party to the
aforementioned Cost Allocation Agreement;

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

1.Effective January 1,1998, Zenith Insurance Company of Florida shall become a
party to the inter-company Cost Allocation Agreement, subject to all of the
terms, conditions and obligations thereunder.

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

IN WITNESS WHEREOF, each of the undersigned parties has caused this Amendment
No. 3 to be executed on its behalf, this 7th day of January, 1998.

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

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  By:   /s/  JOHN J. TICKNER      

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

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  By:   /s/  JOHN J. TICKNER      

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

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  By:   /s/  JOHN J. TICKNER      

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AMENDMENT NO. 3 TO COST ALLOCATION AGREEMENT