UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 11-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the Fiscal Year Ended December 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the transition period from            to
 Commission file number 1-31556
 A.
    
    Full title of the plan and the address of the plan, if different from that of
the issuer named below:ZENITH NATIONAL INSURANCE CORP. 401(k) PLAN
21255 Califa Street
Woodland Hills, CA 91367-5021
 B.
    
    Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
 Fairfax Financial Holdings Limited
95 Wellington Street West
Suite 800
Toronto, Ontario
Canada M5J 2N7




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Zenith National Insurance
Corp. 401(k) Plan
 Report on Audited Financial Statements
and Supplemental Schedules
December 31, 2010 and 2009




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Zenith National Insurance Corp. 401(k) Plan
Table of Contents
  
 Page(s)Report of Independent Registered Public Accounting Firm
    
    
    1Financial StatementsStatements of Net Assets Available for Benefits
as of December 31, 2010 and 2009
    
    
    2Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2010
    
    
    3Notes to Financial Statements
    
    
    413Supplemental SchedulesSchedule H, Line 4i  Schedule of Assets (Held at End of Year)
as of December 31, 2010
    
    
    14Schedule H, Line 4j  Schedule of Reportable Transactions
for the Year Ended December 31, 2010
    
    
    15All other schedules required by Section 2520.103-10 of the Department of Labors Rules
and Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, as amended, have been omitted because they are not applicable.
 Exhibit
Index




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Report of Independent Registered Public Accounting Firm
 
   /s/ PricewaterhouseCoopers LLPLos Angeles, CaliforniaJune 23, 2011




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Zenith National Insurance Corp. 401(k) Plan
 
 Statements of Net Assets Available for Benefits
 As of December 31,
    
    2010
    
    
    2009Assets:Cash
    
    $
    413,833
    
    
    $
    574,482Investments
    
    
    111,395,539
    
    
    
    97,628,972Receivables:Contributions:Employer
    
    
    89,869
    
    
    
    82,880Participant
    
    
    9,214
    
    
    
    494Participant notes
    
    
    2,248,297
    
    
    
    1,985,340Investment trades and other
    
    
    1,504
    
    
    
    23,109Total receivables
    
    
    2,348,884
    
    
    
    2,091,823Total assets
    
    $
    114,158,256
    
    
    $
    100,295,277Liabilities:Securities purchased
    
    $
    400,195
    
    
    $
    546,836Total liabilities
    
    
    400,195
    
    
    
    546,836Net assets available for benefits, at fair value
    
    
    113,758,061
    
    
    
    99,748,441Adjustment from fair value to contract value
for fully benefit-responsive investment contracts
    
    
    (579,184
    )
    
    
    (56,093
    )Net assets available for benefits
    
    $
    113,178,877
    
    
    $
    99,692,348
  2




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Zenith National Insurance Corp. 401(k) Plan
 
 Statement of Changes in Net Assets Available for Benefits
 For the year ended December 31,
    
    2010Additions to net assets attributed to:Dividends
    
    $
    1,269,593Interest
    
    
    751,272Net appreciation in the fair value of investments
    
    
    12,067,019Total investment Income
    
    
    14,087,884Interest income from participant notes receivable
    
    
    99,781Contributions:Employer
    
    
    2,448,398Participant
    
    
    7,976,337Rollovers
    
    
    521,816Total contributions
    
    
    10,946,551Total additions
    
    
    25,134,216Deductions in net assets attributed to:Benefits paid to participants
    
    
    (11,455,313
    )Plan expenses
    
    
    (192,374
    )Total deductions
    
    
    (11,647,687
    )Net increase in net assets available for benefits
    
    
    13,486,529Net assets available for benefits:Beginning of year
    
    
    99,692,348End of year
    
    $
    113,178,877
  3




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Zenith National Insurance Corp. 401(k) Plan
 
 Notes to Financial Statements
 1.
    
    The PlanGeneralThe Zenith National Insurance Corp. 401(k) Plan (Plan) is a qualified plan under Sections
401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (Code) and is subject to
the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
The Plan gives participants the opportunity to manage the investment of assets allocated to
their respective individual accounts and is designed to comply with Section 404(c) of ERISA.Participation in the Plan is offered to all employees of Zenith National Insurance Corp.
subsidiaries (collectively, the Company) that elect to become participating employers.
Participants should refer to the Plan documents for additional information relating to the
Plan.AdministrationThe Plan Administrative Committee is appointed by the Board of Directors of Zenith National
Insurance Corp. (Zenith National) and has responsibility for administration of the Plan,
including selection and monitoring of investment options, supervision of the collection of
contributions, delivery of such contributions to the trustee of the Plan and maintenance of
necessary records. The Charles Schwab Trust Company serves as trustee (Trustee) of the
Plan. Schwab Retirement Plan Services Company (Schwab) acts as an agent of the Trustee and
provides recordkeeping services for the Plan.The Trustee holds all assets of the Plan in a trust (Trust) created under an agreement
dated as of December 30, 1996. The Trustees responsibilities include receipt of Plan
contributions, investment and maintenance of Trust assets in the available funds, and
distributions under the Plan in addition to such amounts the Administrative Committee shall
direct from time to time.EligibilityEach newly hired employee of the Company is eligible to participate in the Plan as of his or
her date of employment, with enrollment generally taking effect as of the first or sixteenth
of the month coinciding with, or next following, his or her date of hire. There are no age
restrictions.ContributionsParticipants may elect to contribute between 1% and 50% of their compensation up to a maximum
of $16,500 for each of the years 2010 and 2009 (Salary Reduction Contributions). The
maximum contribution may be adjusted each year for increases in the cost of living, as
provided in applicable regulations of the Code. This annual amount is an aggregate
limitation that applies to all of an individuals Salary Reduction Contributions and similar
contributions under other plans. The Company contributes an amount equal to 50% of the
participants contribution amount (Matching Contributions) subject to a maximum Matching
Contribution of 3% of a participants annual compensation. Participants who are expected to
reach or are over the age of 50 during the Plan year and are eligible to make additional
catch-up contributions after reaching the maximum contribution limit. Under the Code, the
maximum allowable catch-up contribution was $5,500 for each of the years 2010 and 2009 (also
included as Salary Reduction Contributions where applicable).
 4




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Zenith National Insurance Corp. 401(k) Plan
Notes to Financial Statements
 Eligible compensation includes wages, bonuses, commissions, overtime pay and elective
deferrals. Participants may allocate their Salary Reduction Contributions among investment
options in such percentages as they determine. The Matching Contributions for a participant
are directed to the same investment options and in the same proportion as that participant
directs Salary Reduction Contributions. One of the investment options was the Zenith
Company Stock Fund, which invested solely in the common stock, $1.00 par value per share, of
Zenith National and participants could direct no more than 20% of each contribution to the
Zenith Company Stock Fund. On May 20, 2010, Fairfax Financial Holdings Limited (Fairfax)
through it affiliates acquired all of the outstanding shares of Zenith National common stock
that it did not already own for $38.00 per share in cash pursuant to a merger transaction
(Merger) as provided for in an Agreement and Plan of Merger dated as of February 17, 2010.
As a result of the Merger, the Zenith Company Stock Fund was liquidated and proceeds of
$13,472,372 were transferred into the Federated Government Obligations Fund (the Plans money
market fund) and the remaining $1,785,844 was transferred to the Target Maturity Models on
file at the time of liquidation for participants participating in the models. The Target
Maturity Models allocate a participants investments among the investment options offered in
the Plan pursuant to one of a number of pre-set mixes (each mix being tied to a retirement
date, or target maturity date). As of September 15, 2010, the Plan offers a unitized fund
called the Fairfax Shares Fund (Note 2) whereby participants can invest in Subordinate Voting
Shares of Fairfax Financial Holdings Limited (the Fairfax Shares). Prior to January 1,
2011, participants were only permitted to invest up to 20% of new contributions in the
Fairfax Shares Fund. Effective January 1, 2011, the Plan allows participants to allocate up
to 20% of new contributions into the Fairfax Shares Fund or implement exchange requests to
the extent that an exchange request does not cause the Fairfax Shares Fund balance to be
greater than 20% of a participants overall account balance at the time of request.
Participants may purchase or sell units of the Fairfax Shares Fund daily.The value of each fund is determined daily and participants are able to transfer amounts
between funds on any business day.Participant AccountsEach participants account is credited with: (1) Salary Reduction Contributions, (2)
participant rollover contributions from non-Company plans, (3) Matching Contributions, and
(4) fund earnings (losses) net of Plan expenses. Allocations of earnings are based on
account balances, as defined in the Plan documents.VestingEach participant has an immediate, fully vested right to receive all Salary Reduction
Contributions and earnings thereon upon termination from the Company or upon separation
caused by death of the participant. All Matching Contributions vest based upon the
participants total eligible years of service. The vested percentage increases 20% per each
year of eligible service such that at five years of eligible service, all Matching
Contributions are fully vested. However, irrespective of the vesting schedule, a participant
is fully vested in all Matching Contributions upon his or her death, disability or attainment
of age 65.ForfeituresUpon termination of service, a participant forfeits any nonvested Matching Contributions.
Such forfeitures are used first to reinstate participant account balances previously
forfeited, if any, which are subject to reinstatement under the terms of the Plan. Any
remaining unused forfeitures are used to reduce current or future Matching Contributions to
the Plan on a quarterly basis.
 5




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Zenith National Insurance Corp. 401(k) Plan
Notes to Financial Statements
 In 2010, Matching Contributions were reduced by $136,280 from forfeited nonvested
accounts. At December 31, 2010 and 2009, forfeited nonvested accounts totaled less than
$5,000.Withdrawals Prior to Termination of EmploymentExcept in limited circumstances, participants may not make withdrawals from their accounts
while employed by the Company. Hardship withdrawals of a participants Salary Reduction
Contributions are permitted only if a participant has an immediate and extraordinary
financial need (as determined under Section 401(k)(2)(B)(IV) of the Code) and that need
cannot be satisfied from other resources of the participant. Amounts rolled over into a
Participants Plan account are fully vested and may be withdrawn pursuant to the terms and
conditions of the Plan. In addition, participants who reach 59-1/2 years of age may take an
in-service withdrawal of the vested portion of the individual accounts.Notes Receivable from ParticipantsParticipants may borrow from their Salary Reduction Contributions accounts and rollover
accounts. The minimum amount that may be borrowed is $1,000. The maximum amount that may be
borrowed is the lesser of (a) 50% of the combined balances of their Salary Reduction
Contributions accounts and rollover accounts or (b) $50,000, in either case reduced by the
highest outstanding note balance during the last 12 months. Participants may not borrow
against their Matching Contributions. Note terms range from 1 to 5 years or up to 30 years
for the purchase of a principal residence. The notes are secured by the balance in the
participants account. Interest charged on notes is generally equal to the applicable U.S.
Treasury note rate plus 1% determined as of the close of the last Monday of the calendar
month preceding the calendar month in which the note was made. Principal and interest are
paid ratably through payroll deductions. Upon termination of employment, participants are
required to pay the outstanding note principal plus accrued interest in full.Payment of BenefitsPrior to May 21,2010, if a distribution was made upon termination of employment,
retirement, permanent disability or death, a participant or his/her beneficiary received (1)
cash with respect to the portion of the individual account not invested in the Zenith Company
Stock Fund, and (2) at the participants or the beneficiarys election, cash or shares of
Zenith National common stock, plus cash in lieu of any fractional shares, with respect to the
portion of the individual account that was invested in the Zenith Company Stock Fund.
Subsequent to May 21, 2010, all distributions are made in cash. Payments are generally
processed twice each month.ExpensesIn 2010, recordkeeper and trustee fees were initially set at an annual rate of $150 per
participant and then reduced to $125 per participant effective September 1, 2010. Quarterly,
these fees are reduced by certain revenues received by Schwab (revenue sharing) and then
increased by certain
postage and printing expenses, and then these total fees are prorated to each individual
participants account based on each participants balance. Fees for certain transactions
initiated by participants are allocated to individual participant accounts. The Company pays
all other expenses of the Plan (including legal, accounting, investment advisory, and certain
educational, brokerage and other administrative costs). Individual participant balances are
also charged fees for certain transactions initiated by participants.TerminationWhile the Company has not expressed an intent to terminate the Plan, it may do so at any
time. Upon such termination, each participant would be 100% vested in his or her Matching
Contributions.
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Zenith National Insurance Corp. 401(k) Plan
Notes to Financial Statements
 2.
    
    Summary of Significant Accounting PoliciesBasis of AccountingThe financial statements of the Plan are prepared on the accrual basis of accounting in
conformity with accounting principles generally accepted in the United States of America
(GAAP).Use of EstimatesThe preparation of the financial statements in conformity with GAAP requires the Plans
management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of additions to, and deductions from, net assets during
the reporting period. Actual results could differ from those estimates.Investment Valuation and Income RecognitionAs described in the Financial Accounting Standards Board (FASB) guidance, Reporting of
Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to
the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension
Plans, investment contracts held by a defined-contribution plan are required to be reported
at fair value. However, contract value is the relevant measurement attribute for that
portion of the net assets available for benefits of a defined-contribution plan attributable
to fully benefit-responsive investment contracts because contract value is the amount
participants would receive if they were to initiate permitted transactions under the terms of
the plan. As required by the guidance, the Statement of Net Assets Available for Benefits
presents the fair value of the investment contracts as well as the adjustment of the fully
benefit-responsive investment contracts from fair value to contract value. The Statement of
Changes in Net Assets Available for Benefits is prepared on a contract value basis.Prior to May 21, 2010, the Plans investment in the Zenith Company Stock Fund contained the
common stock of Zenith National, which was accounted for on a per share basis. As of
September 15, 2010, the Fairfax Shares Fund was created to provide participants an investment
opportunity in the Fairfax Shares. The Fairfax Shares Fund is accounted for on a unitized
basis, and a small percentage of the fund is invested in a cash investment in order to
maintain enough liquidity to operate on a daily basis. The total value of the Fairfax Shares
Fund fluctuates depending upon the amount of interest earned on cash held in the fund,
dividends paid on the Fairfax Shares held in
the Fund, realized gains and losses on the sale of such Fairfax Shares, and unrealized
appreciation or depreciation in the value of such Fairfax Shares. The value of the Fairfax
Shares Fund is determined using the daily closing price of Fairfax Shares on the Toronto
Stock Exchange and the exchange rate (from Canadian dollars to U.S. dollars) based upon the
World Market rate for the London market close plus cash. Dividend income is recorded on the
ex-dividend date.Investments in shares of registered investment companies (mutual funds) are valued at quoted
market prices, which represent the net asset value of shares held by the Plan. The
investments in the common collective trusts are valued at the net asset value of the account,
fund or trusts shares held by the Plan using the trusts audited financial statement as of
December 31, 2010 and 2009. The administrator of the Wells Fargo Stable Value Fund, a common
collective trust fund, reserves the right to require a twelve-month notice for withdrawal of
assets from the fund when initiated by the Plan sponsor and/or Trustee. To date, this fund
trades daily, and settles three days after the trade date. There are no unfunded commitments
to this fund, and there are no other restrictions.
 7




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Zenith National Insurance Corp. 401(k) Plan
Notes to Financial Statements
 Generally, interest, dividends and capital gain distributions to the Plan are allocated
to a participants account in a mutual fund based on the number of units the participant
holds in that mutual fund compared to total units outstanding for that mutual fund.Purchases and sales of securities are reflected on a trade-date basis. Gains or losses on
sales of securities are computed on an average-cost basis. Net appreciation (depreciation)
in the fair value of investments disclosed in the Statement of Changes in Net Assets
Available for Benefits consists of net realized gains and losses and net unrealized
appreciation (depreciation) on investments.Notes Receivable from ParticipantsParticipant notes receivable are valued at their outstanding principal balances plus any
accrued but unpaid interest.ContributionsSalary Reduction Contributions and Matching Contributions are recorded in the period that a
participants payroll deduction is made.BenefitsBenefits are recorded when paid.Recent Accounting GuidanceIn January 2010, the FASB issued guidance on Fair Value Measurements and Disclosures which
requires additional disclosures in regards to fair value measurements. This guidance
requires entities to disclose separately the amounts of significant transfers in and out of
Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. The
guidance also clarifies existing disclosures as to the level of disaggregation by each class
of assets and valuation and inputs used to measure fair value that fall in either Level 2 or
Level 3. For Level 3 fair value measurements, the entities should present separately
information about purchases, sales, issuances, and settlements. This guidance was effective
for interim and annual reporting periods beginning after December 15, 2009, except for the
disclosures regarding Level 3 fair value
measurements which are effective for fiscal years beginning after December 15, 2010. The
adoption of this guidance did not have an impact on the accompanying financial statements.In September 2010, the FASB issued guidance on the classification of participant loans which
stipulates that participant loans should be classified as notes receivable and measured at
their unpaid principal balance plus any accrued but unpaid interest. This guidance is
effective for fiscal years ending after December 15, 2010. This guidance is required to be
applied retrospectively. Accordingly, participant loans previously included in investments of
the Plan at December 31, 2009 have been reclassified in the Statements of Net Assets
Available for Benefits to conform to the current year presentation.Subsequent eventsManagement has evaluated the events and transactions that have occurred through the date the
financial statements were issued, and noted no items requiring adjustment of the financial
statements or additional disclosures.
 3.
    
    Fair Value MeasurementsFair value is the price that would be received to sell an asset or would be paid to transfer
a liability (i.e., the ''exit price) in an orderly transaction between market participants
at the measurement date. In determining fair value, the Plan primarily uses prices and other
relevant information
 8




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Zenith National Insurance Corp. 401(k) Plan
Notes to Financial Statements
 generated by market transactions involving identical or comparable assets (''market
approach). Management also considers the impact of a significant decrease in volume and
level of activity for an asset when compared with normal activity to identify transactions
that are not orderly.Fair value measurements are determined under a three-level hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value, distinguishing between market
participant assumptions developed based on market data obtained from sources independent of
the reporting entity (''observable inputs) and the reporting entitys own assumptions about
market participant assumptions developed based on the best information available in the
circumstances (''unobservable inputs). The hierarchy level assigned to each investment is
based on our assessment of the transparency and reliability of the inputs used in the
valuation of each instrument at the measurement date. The highest priority is given to
unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements). Securities are classified
in their entirety based on the lowest level of input that is significant to the fair value
measurement. There were no transfers between levels during the current plan year. The three
hierarchy levels are defined as follows:
 Level 1:
    
    Valuations based on unadjusted quoted market prices in active markets for
identical securities. The fair values of investments included in the Level 1 category
were based on quoted prices that are readily and regularly available in an active
market. The Level 1 category includes money market funds, mutual funds and as of
December 31, 2009, the Zenith Company Stock Fund.Level 2:
    
    Valuations based on observable inputs (other than Level 1 prices), such as
quoted prices for similar assets at the measurement date; quoted prices in markets that
are not active; or other inputs that are observable, either directly or indirectly. The
fair value of certain investments included in the Level 2 category were based on audited
financial statements of individual common collective trust funds as of the measurement
date. The Level 2 category includes the Fairfax Shares Fund, the Stable Value Fund and
the S&P 500 Index Fund which is invested in common collective trust funds, which are
redeemable daily by participants. The fair value of the Fairfax Shares Fund is
determined using the daily closing price of Fairfax Shares on the Toronto Stock Exchange
and the exchange rate (from Canadian dollars to U.S. dollars) based upon the World
Market rate for the London market close plus cash.Level 3:
    
    Valuations based on inputs that are unobservable and significant to the
overall fair value measurement and involve management judgment. The Plan does not hold
any investments in the Level 3 category as of December 31, 2010 and 2009.
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Zenith National Insurance Corp. 401(k) Plan
Notes to Financial Statements
 Investments measured at fair value on a recurring basis consisted of the following types
of instruments (Level 1, 2 and 3 inputs are defined above):
 Fair Value Measurement Using Input TypeLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAt December 31, 2010Mutual Funds:Small Cap
    
    $
    13,994,431
    
    
    
    
    
    
    
    
    
    
    $
    13,994,431Large Cap
    
    
    24,861,037
    
    
    
    
    
    
    
    
    
    
    
    24,861,037International
    
    
    16,976,678
    
    
    
    
    
    
    
    
    
    
    
    16,976,678Balanced Moderate Allocation
    
    
    3,812,951
    
    
    
    
    
    
    
    
    
    
    
    3,812,951Fixed Income
    
    
    8,891,269
    
    
    
    
    
    
    
    
    
    
    
    8,891,269Money Market Funds
    
    
    10,440,317
    
    
    
    
    
    
    
    
    
    
    
    10,440,317Fairfax Shares Fund
    
    
    
    
    
    $
    52,686
    
    
    
    
    
    
    
    52,686Common Collective Trusts:Stable Value Fund
    
    
    
    
    
    
    26,887,466
    
    
    
    
    
    
    
    26,887,466S&P 500 Index Fund
    
    
    
    
    
    
    5,478,704
    
    
    
    
    
    
    
    5,478,704Total investments, at fair value
    
    $
    78,976,683
    
    
    $
    32,418,856
    
    
    
    
    
    
    $
    111,395,539
 Fair Value Measurement Using Input TypeLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAt December 31, 2009Mutual Funds:Small Cap
    
    $
    10,289,068
    
    
    
    
    
    
    
    
    
    
    $
    10,289,068Large Cap
    
    
    19,192,884
    
    
    
    
    
    
    
    
    
    
    
    19,192,884International
    
    
    14,732,391
    
    
    
    
    
    
    
    
    
    
    
    14,732,391Balanced Moderate Allocation
    
    
    3,415,546
    
    
    
    
    
    
    
    
    
    
    
    3,415,546Fixed Income
    
    
    5,861,659
    
    
    
    
    
    
    
    
    
    
    
    5,861,659Money Market Funds
    
    
    184,267
    
    
    
    
    
    
    
    
    
    
    
    184,267Zenith Company Stock Fund
    
    
    11,945,485
    
    
    
    
    
    
    
    
    
    
    
    11,945,485Common Collective Trusts:Stable Value Fund
    
    
    
    
    
    $
    27,457,668
    
    
    
    
    
    
    
    27,457,668S&P 500 Index Fund
    
    
    
    
    
    
    4,550,004
    
    
    
    
    
    
    
    4,550,004Total investments, at fair value
    
    $
    65,621,300
    
    
    $
    32,007,672
    
    
    
    
    
    
    $
    97,628,972
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Zenith National Insurance Corp. 401(k) Plan
Notes to Financial Statements
 4.
    
    InvestmentsThe following are the individual investments, at fair value, that represent 5% or more of net
assets available for Plan benefits:
 As of December 31,2010
    
    
    2009Wells Fargo Stable Value Return Fund (*)
    
    $
    26,887,466
    
    
    $
    27,457,668American Funds EuroPacific Growth Fund R5
    
    
    14,558,054
    
    
    
    13,617,642American Funds Growth Fund of America
    
    
    12,299,758
    
    
    
    9,535,225Federal Government Obligations Fund (**)
    
    
    10,440,317Hotchkis & Wiley Large Cap Value I
    
    
    9,953,752
    
    
    
    8,183,651RS Partners Fund of America
    
    
    7,351,338
    
    
    
    5,183,295Vanguard Explorer Admiral
    
    
    6,643,093
    
    
    
    5,105,773Zenith Company Stock Fund (***)
    
    
    
    
    
    
    11,945,485
 
 (*)
    
    The contract value for the Wells Fargo Stable Value Return Fund was $26,308,282 at December 31, 2010
and $27,401,575 at December 31, 2009.(**)
    
    The December 31, 2009 fair value of the Federal Government Obligations Fund did not equal or exceed 5% of
net assets available for Plan benefits.(***)
    
    The Zenith Company Stock Fund was no longer an investment option after May 20, 2010. The Plans investments (including gains and losses on investments bought and sold, as
well as held during the year) appreciated in value in the year ended December 31, 2010 as
follows:
 Mutual funds
    
    $
    8,003,522Zenith Company Stock Fund
    
    
    3,362,000Common collective trust funds
    
    
    700,932Fairfax Shares Fund
    
    
    565Total net appreciation in the fair value of investments
    
    $
    12,067,019
 5.
    
    Risks and UncertaintiesThe Plan provides for various investment options in any combination of mutual funds, cash
equivalents, stock, and other investment securities. Investment securities are exposed to
various risks, such as interest rate, market and credit risk. Due to the level of risk
associated with certain investment securities and the level of uncertainty related to changes
in the value of investment securities, it is at least reasonably possible that changes in
risks in the near term could materially affect participants account balances and the amounts
reported in the Statements of Net Assets Available for Benefits and the Statement of Changes
in Net Assets Available for Benefits. If the Plan terminates the stable value investment
option without providing requisite notice, the amount received by the Plan could be less than
the participants stated value (contract value) under relevant provisions of the agreement.
 11




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Zenith National Insurance Corp. 401(k) Plan
Notes to Financial Statements
 6.
    
    Tax StatusThe Plan received a determination letter from the Internal Revenue Service (IRS), dated
April 17, 2008, which states that the Plan qualifies under the Code and the Trust is exempt
from federal income taxes under Section 501(a) of the Code. There are no material Plan
amendments subsequent to the effective date of the IRS determination letter that are not
covered by the letter.At December 31, 2010 and 2009, there were no uncertain tax positions taken that would require
recognition of a liability (or asset) or disclosure in the financial statements. The Plan is
subject to routine audits by taxing jurisdictions; however, there are currently no audits for
any tax periods in progress. The Plan is no longer subject to income tax examinations for
years prior to 2007.7.
    
    Party-in-InterestIn 2010 and 2009, Schwab acted as an agent for the Trustee and provided recordkeeping
services to the Plan and, therefore, is a party-in-interest to the Plan. Payments for these
services are statutorily exempt from the prohibited transaction rules of ERISA and the Code.Investment transactions in Zenith National common stock (no longer an investment option after
May 20, 2010) and the Fairfax Shares Fund are party-in-interest transactions. However, as
company stock investment options such transactions are statutorily exempt from the prohibited
transaction rules of ERISA and the Code. For the year ended December 31, 2010, the Plan
purchased $659,077 of Zenith National common stock and sold $906,281 of such stock. In
addition, as a result of the Merger, on May 21, 2010 there was a final disposition of
$15,258,216 of Zenith National common stock which generated a realized gain of $5,591,957.
For the year ended December 31, 2010, the Plan purchased $52,175 of Fairfax Shares.
Participant notes receivable are party-in-interest transactions, for which a statutory
exemption from the prohibited transaction rules of ERISA and the Code exists.8.
    
    Reconciliation of Financial Statements to the Form 5500The following is a reconciliation of net assets available for benefits as of December 31,
2010 and 2009 as shown in the accompanying financial statements to those shown in the Form
5500:
 2010
    
    
    2009Net assets available for benefits per the accompanying
financial statements
    
    $
    113,178,877
    
    
    $
    99,692,348Less: Adjustment from contract value to fair value for fully
benefit-responsive investment contracts
    
    
    579,184
    
    
    
    56,093Net assets available for benefits per Form 5500
    
    $
    113,758,061
    
    
    $
    99,748,441
 12




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##### 



Zenith National Insurance Corp. 401(k) Plan
Notes to Financial Statements
 The following is a reconciliation of changes in net assets available for benefits for the
year ended December 31, 2010 as shown in the accompanying financial statements to those shown
in the Form 5500
 Net increase in net assets available for benefits per the accompanying
financial statements
    
    $
    13,486,529Adjustment from contract value to fair value for fully
benefit-responsive investment contracts at beginning of year
    
    
    (56,093
    )Adjustment from contract value to fair value for fully
benefit-responsive investment contracts at end of year
    
    
    579,184Total net gain per Form 5500
    
    $
    14,009,620
 13




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##### 



Zenith National Insurance Corp. 401(k) Plan
Schedule H, Line 4i  Schedule of Assets (Held at End of Year)
As of December 31, 2010
Employer Identification Number (EIN): 95-2702776
Plan Number (PN): 001
(See Report of Independent Registered Public Accounting Firm)
 (b) Identity of Issue, Borrower,
    
    (c) Description of Investments, Including Maturity Date,
    
    (e) Current(a)
    
    Lessor, or Similar Party
    
    Rate of Interest, Collateral, Par or Maturity Value
    
    ValueWells Fargo
    
    Wells Fargo Stable Value Return Fund Q/Collective Trust
    
    $
    26,887,466American Funds
    
    EuroPacific Growth Fund R5/ Mutual Fund
    
    
    14,558,054American Funds
    
    Growth Fund of America R5/ Mutual Fund
    
    
    12,299,758Federated Government Obligations Fund
    
    Money Market Fund
    
    
    10,440,317Hotchkis & Wiley
    
    Hotchkis & Wiley Large Cap Value I/ Mutual Fund
    
    
    9,953,752RS Partners
    
    RS Partners Fund Class Y/ Mutual Fund
    
    
    7,351,338Vanguard
    
    Vanguard Explorer Admiral/ Mutual Fund
    
    
    6,643,093State Street
    
    State Street S&P 500 Flagship Series C/ Collective Trust
    
    
    5,478,704American Funds
    
    Bond Fund of America R5/ Mutual Fund
    
    
    5,089,427MFS
    
    MFS Total Return R4/ Mutual Fund
    
    
    3,812,951Vanguard
    
    Vanguard Total Bond Market Index
    
    
    3,801,842T. Rowe Price Value
    
    T. Rowe Price Value Mutual Fund
    
    
    2,607,527Morgan Stanley Instl Emerging
    
    Morgan Stanley Instl Emerging Mkts I Mutual Fund
    
    
    2,418,624(1)
    
    Participant Notes Receivable
    
    Various Maturity Dates  annual interest rate ranges from 1.22%  9.50%
    
    
    2,248,297(1)
    
    Fairfax Financial Holdings, Limited
    
    Fairfax Shares Fund
    
    
    52,686Total
    
    
    
    $
    113,643,836
 
 (1)
    
    Indicates a party-in-interest to the PlanNote:
    
    Cost information has not been included above since all investments are participant directed. 14




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##### 



Zenith National Insurance Corp. 401(k) Plan
Schedule H, Line 4j  Schedule of Reportable Transactions (1)
For the Year Ended December 31, 2010
Employer Identification Number (EIN): 95-2702776
Plan Number (PN): 001
(See Report of Independent Registered Public Accounting Firm)
 (h) Current Value of(b) Description of Asset (Including
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Asset on(a) Identity of Party
    
    Interest Rate and Maturity in
    
    
    (c) Purchase
    
    
    (d) Selling
    
    
    (g) Cost of
    
    
    Transaction
    
    
    (i) NetInvolved
    
    Case of a Loan)
    
    
    Price
    
    
    Price
    
    
    Asset
    
    
    Date
    
    
    GainZenith National Insurance Corp.(2)
    
    Common Stock  disposition of 401,532 shares on May 21, 2010
    
    
    
    
    
    $
    15,258,216
    
    
    $
    9,666,259
    
    
    $
    15,258,216
    
    
    $
    5,591,957Federated Government Obligations Fund (3)
    
    Money Market Fund  purchase upon disposition of Zenith National Insurance Corp. common stock on May 21, 2010
    
    $
    13,472,372
    
    
    
    
    
    
    
    
    
    
    
    13,472,372
 
 (1)
    
    Under ERISA, a reportable transaction is a transaction or a series of transactions during
the Plan year that involves more than 5% of the fair value of the Plan assets at the beginning
of the Plan year, with certain exceptions.(2)
    
    Sponsor and employer and, therefore, a party-in-interest for which a statutory exemption
exists. Transactions other than the Zenith National Insurance Corp. common stock disposition
on May 21, 2010 were participant-directed and therefore not included.(3)
    
    Transactions other than the purchase of the Federated Government Obligations Money Market
Fund on May 21, 2010 were participant-directed and therefore not included. 15




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##### 



Signature
  ZENITH NATIONAL INSURANCE CORP. 401(k) PLANDate:  June 23, 2011
    By:
    /s/ Kari L. Van GundyKari L. Van GundyChairperson of the Zenith National Insurance Corp. 401(k) Plan
Administrative Committee