Exhibit 10.39



CREDIT AGREEMENT
Dated as of February 16, 2007
between
ZENITH NATIONAL INSURANCE CORP.,
and
BANK OF AMERICA, N.A.



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TABLE OF CONTENTS

|Section                                            |  |                                                    |  | Page
|-------------------------------------------------- |  | -------------------------------------------------- |  | ----
|ARTICLE I DEFINITIONS                              |  | 1                                                 
|1.1                                                |  | Certain Defined Terms                              |  | 1   
|1.2                                                |  | Other Interpretive Provisions                      |  | 12  
|1.3                                                |  | Accounting Principles                              |  | 12  
|ARTICLE II THE CREDITS                             |  | 12                                                
|2.1                                                |  | Amount and Terms of Commitment                     |  | 12  
|2.2                                                |  | Note                                               |  | 13  
|2.3                                                |  | Procedure for Borrowing                            |  | 13  
|2.4                                                |  | Conversion and Continuation Elections              |  | 13  
|2.5                                                |  | Voluntary Termination or Reduction of Commitment   |  | 14  
|2.6                                                |  | Optional Prepayments                               |  | 14  
|2.7                                                |  | Repayment                                          |  | 14  
|2.8                                                |  | Interest                                           |  | 15  
|2.9                                                |  | Commitment Fee                                     |  | 15  
|2.10                                               |  | Computation of Fees and Interest                   |  | 16  
|2.11                                               |  | Payments by the Company                            |  | 16  
|ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY |  | 17                                                
|3.1                                                |  | Taxes                                              |  | 17  
|3.2                                                |  | Illegality                                         |  | 17  
|3.3                                                |  | Increased Costs and Reduction of Return            |  | 18  
|3.4                                                |  | Funding Losses                                     |  | 18  
|3.5                                                |  | Inability to Determine Rates                       |  | 19  
|3.6                                                |  | Certificates of Bank                               |  | 19  
|3.7                                                |  | Survival                                           |  | 19  
|ARTICLE IV CONDITIONS PRECEDENT                    |  | 19                                                
|4.1                                                |  | Conditions of Effectiveness                        |  | 19  
|4.2                                                |  | Conditions to All Borrowings                       |  | 21  
|ARTICLE V REPRESENTATIONS AND WARRANTIES           |  | 21                                                
|5.1                                                |  | Corporate Existence and Power                      |  | 21  
|5.2                                                |  | Corporate Authorization; No Contravention          |  | 21  
|5.3                                                |  | Governmental Authorization                         |  | 22  
|5.4                                                |  | Binding Effect                                     |  | 22  
|5.5                                                |  | Litigation                                         |  | 22  
|5.6                                                |  | No Default                                         |  | 22  
|5.7                                                |  | ERISA Compliance                                   |  | 22  
|5.8                                                |  | Use of Proceeds                                    |  | 22  
|5.9                                                |  | Title to Properties                                |  | 22  
|5.10                                               |  | Taxes                                              |  | 23  
|5.11                                               |  | Financial Condition                                |  | 23  
|5.12                                               |  | Environmental Matters                              |  | 23  
|5.13                                               |  | Regulated Entities                                 |  | 23  
|5.14                                               |  | No Burdensome Restrictions                         |  | 23  
|5.15                                               |  | Copyrights, Patents, Trademarks and Licenses, Etc. |  | 23  
|5.16                                               |  | Subsidiaries                                       |  | 24  
|5.17                                               |  | Insurance                                          |  | 24  
|5.18                                               |  | Full Disclosure                                    |  | 24  
|                                                   |  |                                                    |  |     

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|ARTICLE VI AFFIRMATIVE COVENANTS |  | 24                                              
|-------------------------------- |  | ------------------------------------------------
|6.1                              |  | Financial Statements                            
|6.2                              |  | Certificates; Other Information                 
|6.3                              |  | Notices                                         
|6.4                              |  | Preservation of Corporate Existence Etc.        
|6.5                              |  | Maintenance of Property                         
|6.6                              |  | Insurance                                       
|6.7                              |  | Payment of Obligations                          
|6.8                              |  | Compliance with Laws                            
|6.9                              |  | Inspection of Property and Books and Records    
|6.10                             |  | Use of Proceeds                                 
|6.11                             |  | Further Assurances                              
|ARTICLE VII NEGATIVE COVENANTS   |  | 28                                              
|7.1                              |  | Limitation on Liens                             
|7.2                              |  | Disposition of Assets                           
|7.3                              |  | Consolidations and Mergers                      
|7.4                              |  | [Intentionally Omitted]                         
|7.5                              |  | Limitation on Indebtedness                      
|7.6                              |  | Transactions with Affiliates                    
|7.7                              |  | Use of Proceeds                                 
|7.8                              |  | Change in Business                              
|7.9                              |  | Accounting Changes                              
|7.10                             |  | Minimum Surplus                                 
|7.11                             |  | Debt to Total Capitalization                    
|7.12                             |  | Risk-Based Capital                              
|7.13                             |  | Interest Coverage Ratio                         
|ARTICLE VIII EVENTS OF DEFAULT   |  | 30                                              
|8.1                              |  | Event of Default                                
|8.2                              |  | Remedies                                        
|8.3                              |  | Rights Not Exclusive                            
|ARTCLE IX MISCELLANEOUS          |  | 32                                              
|9.1                              |  | Amendments and Waivers                          
|9.2                              |  | Notices; Effectiveness; Electronic Communication
|9.3                              |  | No Waiver; Cumulative Remedies                  
|9.4                              |  | Costs and Expenses                              
|9.5                              |  | Company Indemnification                         
|9.6                              |  | Marshalling; Payments Set Aside                 
|9.7                              |  | Successors and Assigns                          
|9.8                              |  | Survival of Representations and Warranties      
|9.9                              |  | Set-off                                         
|9.10                             |  | Counterparts                                    
|9.11                             |  | Severability                                    
|9.12                             |  | No Third Parties Benefited                      
|9.13                             |  | Governing Law and Jurisdiction                  
|9.14                             |  | Waiver of Jury Trial                            
|9.15                             |  | No Advisory or Fiduciary Responsibility         
|9.16                             |  | USA Patriot Act Notice                          
|9.17                             |  | Entire Agreement                                
|9.18                             |  | Execution and Delivery                          

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SCHEDULES

|Schedule 5.5  |  | Litigation                            
|------------- |  | --------------------------------------
|Schedule 5.7  |  | ERISA                                 
|Schedule 5.12 |  | Environmental Matters                 
|Schedule 5.16 |  | Subsidiaries                          
|Schedule 5.17 |  | Insurance Matters                     
|Schedule 9.2  |  | Lending Offices; Addresses for Notices

EXHIBITS

|Exhibit A |  | Form of Notice of Borrowing               
|--------- |  | ------------------------------------------
|Exhibit B |  | Form of Notice of Conversion/Continuation 
|Exhibit C |  | Form of Compliance Certificate            
|Exhibit D |  | Form of Legal Opinion of Company's Counsel
|Exhibit E |  | Form of Note                              

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CREDIT AGREEMENT

This CREDIT AGREEMENT is entered into as of February 16, 2007, between ZENITH NATIONAL INSURANCE CORP., a Delaware corporation (the
"Company") and Bank of America, N.A. (together with its successors and assigns, the "Bank"). The parties
hereto agree as follows:

ARTICLE I  DEFINITIONS

1.1Certain Defined Terms.The following terms have the following meanings:

"Adjusted Capital" shall mean, as to any Insurance Subsidiary, as of any date, the total adjusted surplus to policyholders shown on line
27, page 18, column 1 of the Annual Statement of such Insurance Subsidiary (adjusted, if applicable, to conform with SAP), or an amount determined in a consistent manner for any date other than one as
of which an Annual Statement is prepared.

"Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise.

"Agreement" means this credit agreement.

"Amounts Available for Dividends" shall mean, without duplication, the amount that is paid or may be paid by ZIC as a dividend at any time
during the then current calendar year without being an "extraordinary dividend" under Section 1215.5(g) of the California Insurance Code.

"Annual Statement" shall mean, as to any Insurance Subsidiary, the annual financial statement of such Insurance Subsidiary as required to
be filed with the applicable Department, together with all exhibits or schedules filed therewith, prepared in conformity with SAP. References to amounts on particular exhibits, schedules, lines, pages
and columns of the Annual Statement are based on the format promulgated by the NAIC for 2005 Property and Casualty Company Annual Statements. If such format is changed in future years so that
different information is contained in such items or they no longer exist, it is understood that the reference is to information consistent with that reported in the referenced item in the 2005 Annual
Statement of such Insurance Subsidiary.

"Applicable Insurance Code" shall mean, as to any Insurance Subsidiary, the insurance code of any state where such Insurance Subsidiary is
domiciled or doing insurance business and any successor statute of similar import, together with the regulations thereunder, as amended or otherwise modified and in effect from time to time.
References to sections of the Applicable Insurance Code shall be construed to also refer to successor sections.

"Applicable Margin" means (a) as to Base Rate Loans, 0% per annum; and (b) as to Eurodollar Rate Loans, the applicable
margin per annum set forth in the table below based on the Company's implied counterparty credit rating by S&P and/or the implied rating of the Company's non-credit-enhanced, senior
unsecured long-term debt by Moody's:

Rating

Applicable MarginBBB+/Baa1 or higher

.60
%BBB/Baa2

.70
%BBB-/Baa3

.80
%BB+/Ba1 or lower

.975
%


Any
adjustment in the Applicable Margin as a result of a change in the Company's implied counterparty credit rating by S&P and/or the implied rating of the Company's
non-credit-enhanced,

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senior
unsecured long-term debt by Moody's shall be effective as of the effective date of the change in such rating. In the event the rating by S&P and Moody's do not fall in the same
category provided above, the Applicable Margin shall be determined by adding one level to the lower of the two rating levels. In the event S&P does not provide an implied counterparty credit rating
for the Company and Moody's does not provide an implied rating of the Company's non-credit-enhanced, senior unsecured long-term debt, the Applicable Margin shall remain
unchanged for a period of 90 days thereafter, during which period the Bank and the Company shall negotiate in good faith to agree upon a substitute means for determining the Applicable Margin.
In the event such agreement is not reached in such 90-day period, the Applicable Margin shall, after such 90th day, be .975% for Eurodollar Rate Loans.

"Approved Fund" has the meaning specified inSection 9.7(f).

"Attorney Costs" means and includes all fees and disbursements of any law firm or other external counsel and without duplication, the
allocated cost of internal legal services and all disbursements of internal counsel.

"Bank" has the meaning specified in the introductory clause hereto.

"Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy," as now or hereafter in effect, or any successor statute.

"Base Rate" means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus
1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by the Bank as its "prime rate." The "prime rate" is a rate set by the Bank
based upon various factors including the Bank's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced
at, above, or below such announced rate. Any change in such rate announced by the Bank shall take effect at the opening of business on the day specified in the public announcement of such change.

"Base Rate Loan" means a Loan that bears interest based on the Base Rate.

"Borrowing" means a borrowing hereunder consisting of Loans of the same Type made to the Company on the same day by the Bank under Article II, and, other than in
the case of Base Rate Loans, having the same Interest Period.

"Borrowing Date" means any date on which a Borrowing occurs underSection 2.3.

"Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in Dallas, Texas are authorized or
required by law to close and, if the applicable Business Day relates to any Eurodollar Rate Loan, means such a day on which dealings are carried on in the applicable offshore dollar interbank market.

"Capital Adequacy Regulation" means any guideline, request or directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank.

"Capital and Surplus" shall mean, as to any Insurance Subsidiary, as of the date of the Annual Statement, the total amount shown on line
35, page 3, column 1 of the Annual Statement of such Insurance Subsidiary, or an amount determined in a manner consistent with the Annual Statement for any fiscal quarter which does not end on the
date of the Annual Statement.

"Capital Securities" shall have the meaning provided therefor in the Capital Trust Offering Memorandum.

"Capital Trust" shall mean the Zenith National Insurance Capital Trust I, a statutory business trust fund formed under the laws of the
State of Delaware.

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"Capital Trust Offering Memorandum" shall mean the Confidential Offering Circular dated July 27, 1998, related to the Capital Trust
and the securities being issued thereby.

"Change of Control" means (a) any Person, or two or more Persons acting in concert, directly or indirectly acquire after the
Closing Date beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended) of 51% or more
of the outstanding shares of voting stock of the Company or
(b) individuals who as of the Closing Date constituted the Company's Board of Directors (together with any new director whose election by the Company's Board of Directors or whose nomination
for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved), for any reason, cease to constitute a majority of the directors at any time then in office or (c) the Company ceases to
own 100% of the capital stock of ZIC on a fully-diluted basis.

"Closing Date" means the date on which this Agreement is effective, which shall be the date on which all the conditions in Section 4.1are satisfied.

"Code" means the Internal Revenue Code of 1986, and regulations promulgated thereunder.

"Commitment" has the meaning specified inSection 2.1.

"Common Securities" shall have the meaning provided therefor in the Capital Trust Offering Memorandum.

"Company" has the meaning specified in the introductory clause hereto.

"Compliance Certificate" means a certificate substantially in the form of Exhibit C.

"Contingent Obligation" shall mean any agreement, undertaking or arrangement (other than insurance and reinsurance obligations and surety
bonds, in each case entered into in the ordinary course of business) by which any Person guarantees, endorses or otherwise becomes or is contingently liable for (by direct or indirect agreement,
contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the debt, obligation or other liability
of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. The
amount of any Person's obligation under any Contingent Obligation shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount of the debt, obligation or other
liability guaranteed thereby. The Company's obligations under the Guarantee, the Subordinated Debentures, the Indenture, and the Declaration (which taken together is a full and unconditional guaranty
by the Company of the Capital Trust's obligations under the Capital Security) shall not constitute Contingent Obligations for purposes of this Agreement, except for purposes of Section 8.1(e).

"Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound other than insurance and
reinsurance obligations and surety bonds, in each case entered into in the ordinary course of business.

"Conversion/Continuation Date" means any date on which, underSection 2.4, the
Company (a) converts Loans of one Type to another Type, or (b) continues as Loans of the same Type, but with a new Interest Period, Loans having Interest Periods expiring on such date.

"Debt to Total Capitalization Ratio" means, as of any date of determination, the ratio of (i) the principal balance of all
Indebtedness of the Company described in clauses (a), (b), (e), (f) or (g) of the definition thereof for which the Company is directly liable or which is a Contingent Obligation of the

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Company
to (ii) Total Capitalization (provided, that for purposes of determining the amount of the principal balance of such Indebtedness, such principal balance shall be reduced by an amount
equal to 25% of that portion of the principal balance of the Company's Senior Convertible Notes due 2023 then outstanding).

"Declaration" shall have the meaning provided therefor in the Capital Trust Offering Memorandum.

"Default" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.

"Department" means, as to any insurance company, the state department of insurance of the state of domicile of such insurance company.

"Disposition" means (a) the sale, lease, assignment, conveyance or other disposition or transfer of property, and (b) the
sale or transfer by the Company or any Subsidiary of the Company of any equity securities issued by any Subsidiary of the Company and held by such transferor Person.

"Distribution" shall have the meaning provided therefor in the Capital Trust Offering Memorandum.

"Dollars", "dollars" and "$" each mean
lawful money of the United States.

"Eligible Assignee" has the meaning specified inSection 9.7(f).

"Environmental Claims" means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury to the environment.

"Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental,
health, safety and land use matters.

"Environmental Permits" has the meaning specified inSection 5.12(b).

"ERISA" means the Employee Retirement Income Security Act of 1974, and regulations promulgated thereunder.

"ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Company within the meaning of
Section 414 (b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

"ERISA Event" means (a) a Reportable Event with respect to a Plan; (b) a withdrawal by the Company or any ERISA Affiliate
from a Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Plan or Multiemployer Plan; (e) an event or condition which would reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate.

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"Eurodollar Rate" means, for any Interest Period, with respect to any Eurodollar Rate Loan, a rate per annum determined by the Bank
pursuant to the following formula:

| |  |                   |  |                                                          |  | 
| |  | ----------------- |  | -------------------------------------------------------- |  | 
| |  | Eurodollar Rate = |  | Eurodollar Base Rate1.00 - Eurodollar Reserve Percentage |  | 

Where,

"Eurodollar Base Rate" means, for such Interest Period:



"Eurodollar Reserve Percentage" means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out
to five decimal places) in effect on such day, whether or not applicable to the Bank, under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities"). The Eurodollar Rate for each outstanding
Eurodollar Rate Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

"Eurodollar Rate Loan" means a Loan that bears interest based on the Eurodollar Rate.

"Event of Default" means any of the events or circumstances specified in Section 8.1.

"Exchange Act" means the Securities and Exchange Act of 1934, and regulations promulgated thereunder.

"Existing Agreement" means that certain Amended and Restated Credit Agreement dated as of September 30, 2002, as amended, between
the Company and the Bank.

"FDIC" means the Federal Deposit Insurance Corporation, and any Governmental Authority succeeding to any of its principal functions.

"Federal Funds Rate" means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by

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Federal
funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day;provided that(a) if
such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of
1/100 of 1%) charged to the Bank on such day on such transactions as determined by the Bank.

"Fixed Interest Charges" shall mean interest paid by the Company or, without duplication, accrued but unpaid on the Loans or any other
Indebtedness described in clauses (a), (b), (d), (e) or (f) of the definition thereof, which shall be determined at the end of each fiscal quarter for the four consecutive fiscal
quarters then ended;provided,thatinterest on the Subordinated Debentures, but not Distributions on
the Capital Securities, shall in any event be included as interest on Indebtedness described in clauses (a) or (d) of the definition thereof for purposes of the calculation; and provided further, that interest on the Subordinated Debentures shall be reduced by the amount of Distributions (whether characterized as interest or
dividends) that is received by the Company on the Common Securities or Capital Securities issued by the Capital Trust that the Company holds, but only to the extent such Distributions are not included
as part of clause (a) of the definition of Interest Coverage Ratio.

"FRB" means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal
functions.

"Fund" has the meaning specified inSection 9.7(f).

"GAAP" means generally accepted accounting principles in the United States that are applicable to the circumstances as of the date of
determination.

"Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other
entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

"Guarantee" shall have the meaning provided therefor in the Capital Trust Offering Memorandum.

"Guaranty Obligation" means to assure or hold harmless the holder of any such primary obligation against loss in respect thereof.

"Hazardous Materials" means all those substances that are regulated by, or which may form the basis of liability under, any Environmental
Law, including all substances identified under any Environmental Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special waste, hazardous substance, hazardous material, or
toxic substance, or petroleum or petroleum derived substance or waste.

"Indebtedness" of any Person means, without duplication, (a) all indebtedness for borrowed money; (b) all obligations
issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business on ordinary terms); (c) all
non-contingent reimbursement or payment obligations with respect to Surety Instruments; (d) all obligations evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of property, assets or businesses; (e) all indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to property acquired by the Person (even though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property); (f) all obligations with respect to capital leases; (g) all net

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obligations
with respect to Swap Contracts; (h) all indebtedness referred to in clauses (a) through (g) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and contracts rights) owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness; and (i) all Guaranty Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (a) through
(g) above. The Company's obligations under the Guarantee, the Subordinated Debentures, the Indenture, the Declaration and the Capital Securities, whether or not taken together, shall not
constitute Indebtedness for purposes of this Agreement, except for purposes ofSection 8.1(e).

"Indemnified Liabilities" has the meaning specified inSection 9.5.

"Indemnified Person" has the meaning specified inSection 9.5.

"Indenture" shall have the meaning provided therefor in the Capital Trust Offering Memorandum.

"Independent Auditor" has the meaning specified inSection 6.1(a).

"Insolvency Proceeding" means (a) any case, action or proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors; undertaken under U.S. Federal, state
or foreign law, including the Bankruptcy Code.

"Insurance Subsidiary" shall mean any Subsidiary of the Company (other than Zenith Insurance Management Services and any Subsidiary that
does not issue or underwrite insurance or reinsurance)
that is authorized or admitted to carry on or transact one or more aspects of the business of selling, issuing or underwriting insurance or reinsurance.

"Interest Coverage Ratio" shall mean the ratio of (a) (i) Amounts Available for Dividends, plus (ii) pre-tax
income from the Non-Insurance Subsidiaries as of the end of each fiscal quarter for the four quarters then ended, plus (iii) without duplication, pre-tax,
pre-interest income of the Company as of the end of each fiscal quarter for the four quarters then ended to (b) Fixed Interest Charges.

"Interest Payment Date" means, as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan
and, as to any Base Rate Loan, the last Business Day of each calendar quarter and each date such Loan is converted into another Type of Loan;provided, however, that if any Interest Period for an Eurodollar Rate Loan exceeds three months the date that falls three months after the beginning of such
Interest Period and after each Interest Payment Date thereafter is also an Interest Payment Date.

"Interest Period" means, as to any Eurodollar Rate Loan, the period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or continued as an Eurodollar Rate Loan, and ending on the date one, two, three or six months thereafter as selected by the Company in
its Notice of Borrowing or Notice of Conversion/Continuation;provided,that:



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"IRS" means the Internal Revenue Service, and any Governmental Authority succeeding to any of its principal functions under the Code.

"Lending Office" means the office or offices of the Bank specified as its "Lending Office" or "Domestic Lending Office" or "Offshore
Lending Office", as the case may be, onSchedule 9.2, or such other office or offices as the Bank may from time to time notify the Company.

"Lien" means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, or lien (statutory or other) in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of
a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing, or the filing of any financing statement naming the owner of the asset to
which such lien relates as debtor, under the Uniform Commercial Code or any comparable law) and any contingent or other agreement to provide any of the foregoing, but not including the interest of a
lessor under an operating lease.

"Loan" means an extension of credit by the Bank to the Company underArticle II,
and may be a Base Rate Loan or an Eurodollar Rate Loan (each, a "Type" of Loan).

"Loan Documents" means this Agreement, the Note and all other documents delivered to the Bank in connection herewith.

"Margin Stock" means "margin stock" as such term is defined in Regulation T or U of the FRB.

"Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, the operations, business,
properties or financial condition of the Company or the Company and its Subsidiaries taken as a whole; (b) a material impairment of the ability of the Company to perform under any Loan Document
and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Company of any Loan Document.

"Moody's" shall mean Moody's Investors Service, Inc. and any successor thereto.

"Multiemployer Plan" means a "multiemployer plan", within the meaning of Section 4001(a)(3) of ERISA, to which the Company or any
ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions.

"NAIC" shall mean the National Association of Insurance Commissioners, or any successor organization.

"Non-Insurance Subsidiary" means any Subsidiary which is not an Insurance Subsidiary.

"Note" means a promissory note executed by the Company in favor of the Bank pursuant to Section 2.2, in substantially the form ofExhibit E.

"Notice of Borrowing" means a notice in substantially the form ofExhibit A.

"Notice of Conversion/Continuation" means a notice in substantially the form of Exhibit B.

"Obligations" means all advances, debts, liabilities, obligations, covenants and duties arising under any Loan Document owing by the
Company to the Bank or any Indemnified Person, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising.

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"Organization Documents" means, for any corporation, partnership or limited liability company, the certificate or articles of
incorporation, partnership agreement, operating agreement, bylaws or similar document, certificate of determination or instrument relating to the rights of preferred shareholders of such corporation,
shareholder rights agreement, and all applicable resolutions of the board of directors (or any committee thereof) or similar body of such entity.

"Other Taxes" means any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to this Agreement or any other Loan Documents.

"Participant" has the meaning specified inSection 9.7(c).

"Payment Office" means Building B, 2001 Clayton Rd., Concord, California 94520 or such other office as may be designated by the Bank to
the Company in writing.

"PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any of its principal functions under
ERISA.

"Permitted Liens" means:



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"Person" means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust,
unincorporated association or Governmental Authority.

"Plan" means a pension plan (as defined in Section 3(2) of ERISA which is subject to Title IV of ERISA) which the Company sponsors
or maintains or to which the Company makes, is making, or is obligated to make contributions or in the case of a multiple employer plan (as described in Section 4064 (a) of ERISA) has
made contributions at any time during the immediately preceding five (5) plan years.

"Reportable Event" means, any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC.

"Requirement of Law" means, as to any Person, any law, treaty, rule or regulation or determination of an arbitrator or of a Governmental
Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject.

"Responsible Officer" means the chief executive officer, the president or the chief financial officer of the Company, or any other officer
having substantially the same authority and responsibility; or, with respect to compliance with financial covenants, the chief executive officer, the president, the chief financial officer or the
treasurer of the Company, or any other officer having substantially the same authority and responsibility.

"Risk-Based Capital" shall mean, with respect to any Insurance Subsidiary as of the end of any fiscal quarter, the ratio of
Adjusted Capital of such Insurance Subsidiary as of the end of such fiscal quarter to the Company Action Level of such Insurance Company as of the end of such fiscal quarter (as determined by the
Company in accordance with the requirements of the NAIC or the applicable Department). In the event that there is a conflict between the Risk-Based Capital formulas adopted by the NAIC and
any applicable Department, the calculation of the Department shall govern.

"S&P" shall mean Standard & Poor's Ratings Group and any successor thereto.

"SAP" shall mean, as to any Insurance Subsidiary, the statutory accounting practices prescribed or permitted by the Department.

"SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

"Significant Subsidiary" means a "significant subsidiary" as such term is defined in Regulation S-X of the Securities
Act of 1933, as amended.

"Solvent" means, as to any Person at any time, that (a) the fair value of the property of such Person is greater than the amount of
such Person's liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(31) of the Bankruptcy
Code and, in the alternative, for purposes of the Uniform Fraudulent Transfer Act; (b) the present fair saleable value of the property of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize upon its property and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute unreasonably small capital.

"Subordinated Debentures" shall have the meaning provided therefor in the Capital Trust Offering Memorandum.

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"Subsidiary" of a Person means any corporation, association, partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the
Person, or one or more of the Subsidiaries of the Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a "Subsidiary" refer to a Subsidiary of the
Company;provided thatthe Capital Trust shall not be considered to be a Subsidiary of the Company.

"Surety Instruments" means all letters of credit (including standby and commercial), banker's acceptances, surety bonds and similar
instruments but excluding insurance and reinsurance obligations and surety obligations, in each case entered into in the ordinary course of business.

"Swap Contract" means any agreement (including any master agreement and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward rate agreement, commodity swap, commodity option, equity or equity index swap or option, bond option, interest rate option,
forward foreign exchange agreement, rate cap, collar or floor agreement, currency swap agreement, cross-currency rate swap agreement, swaption, currency option or any other, similar agreement
(including any option to enter into any of the foregoing).

"Taxes" means any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of the Bank, such taxes (including income taxes or franchise taxes) as are imposed on or measured by each Bank's net income by the jurisdiction (or any political
subdivision thereof) under the laws of which such Bank, as the case may be, is organized or maintains a Lending Office.

"Termination Date" means February 16, 2010.

"Total Capitalization" shall mean (a) principal of all Indebtedness of the Company described in clauses (a), (d) or
(f) of the definition thereof for which the Company is directly liable or which is a Contingent Obligation of the Company related to Indebtedness described in one of such clauses plus
(b) the Total Shareholders' Equity of the Company plus (c) the aggregate liquidation amount of any Capital Securities then outstanding.

"Total Shareholders' Equity" shall mean the total shareholders' equity of a Person as determined in accordance with GAAP (calculated
excluding unrealized gains (losses) of securities as determined in accordance with FASB 115).

"Type" has the meaning specified in the definition of "Loan."

"Unfunded Pension Liability" means the excess of a Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current
value of that Plan's assets, determined in accordance with the assumptions used for funding the Plan pursuant to Section 412 of the Code for the applicable plan year.

"United States" and "U.S." each means the United States of America.

"Wholly-Owned Subsidiary" means any corporation in which (other than directors' qualifying shares required by law) 100% of the capital
stock of each class having ordinary voting power, and 100% of the capital stock of every other class, in each case, at the time as of which any determination is being made, is owned, beneficially and
of record, by the Company, or by one or more of the other Wholly-Owned Subsidiaries, or both.

11

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"ZIC" means Zenith Insurance Company, a California corporation.

1.2Other Interpretive Provisions.



1.3Accounting Principles.



ARTICLE II  THE CREDITS

2.1Amount and Terms of Commitment.The Bank agrees, on the terms and
conditions set
forth herein, to make loans to the Company from time to time on any Business Day during the period from the Closing Date to the Termination Date in an aggregate amount not to exceed at any time

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outstanding
$30,000,000 (such amount as the same may be reduced underSection 2.5, the "Commitment"). Within the limits of the Commitment, and
subject to the other terms and conditions hereof, the Company may borrow under thisSection 2.1, prepay under Section 2.6and reborrow under thisSection 2.1.

2.2Note.The Loans made by the Bank shall be evidenced by the Note. The Bank
shall
record on the schedules annexed to its Note the date, amount and maturity of each Loan made by it and the amount of each payment of principal made by the Company with respect thereto. The Bank is
irrevocably authorized by the Company to record on its Note and the Bank's record shall be conclusive and binding unless the Company objects to such record within 30 days of having notice of
any notation thereon;provided,however, that the failure of the Bank to make, or an error in making, a
notation thereon with respect to any Loan shall not limit or otherwise affect the obligations of the Company hereunder or under the Note to the Bank.

2.3.Procedure for Borrowing.



2.4Conversion and Continuation Elections.



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2.5Voluntary Termination or Reduction of Commitment.The Company may, upon not
less
than one Business Days' prior notice to the Bank, terminate the Commitment, or permanently reduce the Commitment by an aggregate minimum amount of $1,000,000 or any multiple of $100,000 in excess
thereof; unless, after giving effect thereto and to any prepayments of Loans made on the effective date thereof, the then-outstanding principal amount of such Loans would exceed the amount
of the Commitment then in effect. Once reduced in accordance with this Section, the Commitment may not be increased. All accrued commitment fees to, but not including the effective date of any
reduction or termination of the Commitment, shall be paid on the effective date of such reduction or termination.

2.6Optional Prepayments.Subject to Section 3.4, the Company may, at any time or from time to time, upon not less than two (2) Business Days' irrevocable notice to the Bank
in the case of Eurodollar Rate Loans and upon same day irrevocable notice to the Bank in the case of Base Rate Loans, prepay Loans in whole or in part, in minimum amounts of $250,000 or any multiple
of $10,000 in excess thereof (or, if less, the outstanding amount of such Loans). Such notice of prepayment shall specify the date and amount of such prepayment and the Type(s)) of Loans to be
prepaid. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein, together with accrued interest to each such date on the amount prepaid and any amounts required pursuant to Section 3.4.

2.7Repayment.



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2.8Interest.



2.9Commitment Fee.The Company shall pay to the Bank a commitment fee on the
average
daily unused portion of the Commitment, computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based upon the daily utilization for that quarter as calculated by
the Bank, equal to the applicable per annum rate set forth in the table below based on the Company's

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implied
counterparty credit rating by S&P and/or the implied rating of the Company's non-credit-enhanced, senior unsecured long-term debt by Moody's:

Debt Rating

Commitment FeeBBB+/Baa1 or higher

.20
%BBB/Baa2

.25
%BBB-/Baa3

.30
%BB+/Ba1 or lower

.35
%


Any
adjustment to the commitment fee as a result of a change in the implied rating of the Company's implied counterparty credit rating by S&P and/or the Company's
non-credit-enhanced, senior unsecured long-term debt by Moody's shall be effective as of the effective date of the change in such rating. In the event the rating by S&P and
Moody's do not fall in the same category provided above, the commitment fee shall be determined by adding one level to the lower of the two rating levels. In the event S&P does not provide an implied
counterparty credit rating for the Company and Moody's does not provide an implied rating of the Company's non-credit-enhanced, senior unsecured long-term debt, the commitment
fee shall remain unchanged for a period of 90 days thereafter, during which period the Bank and the Company shall negotiate in good faith to agree upon a substitute means for determining the
commitment fee. In the event such agreement is not reached in such 90-day period, the commitment fee shall, after such 90th day, be .35%.

Such
commitment fee shall accrue from the Closing Date to the Termination Date, and shall be due and payable quarterly in arrears on the last Business Day of each fiscal quarter of the
Company commencing on March 30, 2007 through such Termination Date, with the final payment to be made on the Termination Date;provided, thatin
connection with any reduction or termination of the Commitment underSection 2.5, the
accrued commitment fee calculated for the period ending on such date shall also be paid on the date of such reduction or termination, with the following quarterly payment being calculated on the basis
of the period from such reduction or termination date to such quarterly payment date. The commitment fee provided in this subsection shall accrue at all times after the above-mentioned commencement
date, including at any time during which one or more conditions inArticle IVare not met.

2.10Computation of Fees and Interest.



2.11Payments by the Company.



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ARTICLE III  TAXES, YIELD PROTECTION AND ILLEGALITY

3.1Taxes.



3.2Illegality.



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3.3Increased Costs and Reduction of Return.



3.4Funding Losses.The Company shall reimburse the Bank and hold the Bank
harmless from
any loss or expense which the Bank may sustain or incur as a consequence of:



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including
any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Eurodollar Rate Loans or from fees payable to terminate the deposits from which
such funds were obtained (but excluding loss of anticipated profits). For purposes of calculating amounts payable by the Company to the Bank under this Section and under Section 3.3(a), each
Eurodollar Rate Loan made by the Bank (and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the Eurodollar Base Rate used in determining the Eurodollar Rate for such Eurodollar Rate Loan by a matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan is in fact so funded.

3.5Inability to Determine RatesIf the Bank determines that for any reason
adequate and
reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan, or that the Eurodollar Rate for any requested
Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to the Bank of funding such Loan, the Bank will promptly so notify the Company.
Thereafter, the obligation of the Bank to make or maintain Eurodollar Rate Loans, as the case may be, hereunder shall be suspended until the Bank revokes such notice in writing. Upon receipt of such
notice, the Company may revoke any Notice of Borrowing or Notice of Conversion/Continuation then submitted by it. If the Company does not revoke such notice, the Bank shall make, convert or continue
the Loans, as proposed by the Company, in the amount specified in the applicable notice submitted by the Company, but such Loans shall be made, converted or continued as Base Rate Loans instead of
Eurodollar Rate Loans, as the case may be.

3.6Certificates of Bank.In the event of the Bank claiming reimbursement or
compensation under thisArticle III, the Bank shall deliver to the Company a certificate setting forth in reasonable detail the amount payable to
the Bank hereunder and such certificate shall be conclusive and binding on the Company unless objected to by the Company in writing within 30 days of the Company receiving such certificate.

3.7Survival.The agreements and obligations of the Company in this
Article IIIshall survive the payment of all other Obligations.

ARTICLE IV  CONDITIONS PRECEDENT

4.1Conditions of Effectiveness.The effectiveness of this Agreement is subject
to the
condition that the Bank shall have received all of the following, in form and substance and dated a date satisfactory to the Bank:



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4.2Conditions to All Borrowings.The obligation of the Bank to make any Loan
to be made
by it (including its initial Loan) is subject to the satisfaction of the following conditions precedent on the relevant Borrowing Date:



ARTICLE V  REPRESENTATIONS AND WARRANTIES

The Company represents and warrants to the Bank that:

5.1Corporate Existence and Power.The Company and each of its Subsidiaries:



5.2Corporate Authorization; No Contravention.The execution, delivery and
performance
by the Company of this Agreement and each other Loan Document, have been duly authorized by all necessary corporate action, and do not and will not:



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5.3Governmental Authorization.No approval, consent, exemption, authorization,
or other
action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, the Company of the
Agreement or any other Loan Document.

5.4Binding Effect.This Agreement and each other Loan Document to which the
Company is
a party constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability.

5.5Litigation.Except as specifically disclosed in Schedule 5.5, there are no actions, suits, proceedings, claims or disputes pending, or to the best knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental Authority, against the Company, or its Subsidiaries or any of their respective properties that:



5.6No Default.As of the Closing Date, no Default or Event of Default exists
or would
result from the incurring of any Obligations by the Company. As of the Closing Date, neither the Company nor any Subsidiary is in default under or with respect to any Contractual Obligation in any
respect which, individually or together with all such defaults, would reasonably be expected to have a Material Adverse Effect, or that would, if such default had occurred after the Closing Date,
create an Event of Default underSection 8.1(e).

5.7ERISA Compliance.Except as specifically disclosed in Schedule 5.7:



5.8Use of Proceeds.The proceeds of the Loans are to be used solely for the
purposes
set forth in and permitted bySection 6.10andSection 7.7.

5.9Title to Properties.The Company and each Subsidiary have title to, or
valid
leasehold interests in, all real property necessary or used in the ordinary conduct of their respective businesses, except for such defects in title as would not, individually or in the aggregate,
have a Material Adverse Effect. As of the Closing Date, the property of the Company and its Subsidiaries is subject to no Liens, other than Permitted Liens.

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5.10Taxes.The Company and its Subsidiaries have filed all Federal and other
material
tax returns and reports required to be filed, and have paid all Federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those (a) which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance
with GAAP or (b) for which appropriate extensions have been obtained. There is no proposed tax assessment against the Company or any Subsidiary that would reasonably be expected to have a
Material Adverse Effect.

5.11Financial Condition.



5.12Environmental Matters.



5.13Regulated Entities.None of the Company, any Person controlling the
Company, or any
Subsidiary, is an "Investment Company" within the meaning of the Investment Company Act of 1940.

5.14No Burdensome Restrictions.Neither the Company nor any Subsidiary is a
party to or
bound by any Contractual Obligation, or subject to any restriction in any Organization Document, or any Requirement of Law, that would reasonably be expected to have a Material Adverse Effect.

5.15Copyrights, Patents, Trademarks and Licenses, Etc..The Company or its
Subsidiaries
own or are licensed or otherwise have the right to use all of the patents, trademarks, service marks, trade names, copyrights, authorizations and other rights that are reasonably necessary for the
operation of their respective businesses, without conflict with the rights of any other Person. To the best knowledge

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of
the Company, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Company or any Subsidiary
infringes upon any rights held by any other Person. Except as specifically disclosed inSchedule 5.5, no claim or litigation regarding any of the
foregoing is pending or threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of the Company,
proposed, which, in either case, would reasonably be expected to have a Material Adverse Effect.

5.16Subsidiaries.As of the Closing Date, the Company has no Subsidiaries
other than
those specifically disclosed inSchedule 5.16hereto.

5.17Insurance.Except as specifically disclosed in Schedule 5.17, the properties of the Company and its Subsidiaries are insured with financially sound and reputable insurance companies not
Affiliates of the Company, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in
localities where the Company or such Subsidiary operates.

5.18Full Disclosure.None of the representations or warranties made by the
Company or
any Subsidiary in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of the Company or any Subsidiary in connection with the Loan Documents, contains any untrue statement of a material fact or omits any material fact required to be stated
therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered.

ARTICLE VI  AFFIRMATIVE COVENANTS

So long as the Bank shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless the Bank waives compliance in
writing:

6.1Financial Statements.The Company shall deliver to the Bank:



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6.2Certificates; Other Information.The Company shall furnish to the Bank:



25

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Documents
required to be delivered pursuant toSection 6.1(a)or(b)or Section 6.2(b)(to the extent any
such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if
so delivered, shall be deemed to have been delivered on the date (i) on which the Company posts such documents, or provides a link thereto on the Company's website on the Internet at the
website address listed onSchedule 9.2; or (ii) on which such documents are posted on the Company's behalf on an Internet or intranet
website, if any, to which the Bank has access (whether a commercial, third-party website or whether sponsored by the Bank);providedthat: (i) if
the Bank so requests, the Company shall deliver paper copies of such documents to the Bank until a written request to cease delivering paper copies is given by the Bank and (ii) the Company
shall notify (which may be by facsimile or electronic mail) the Bank of the posting of any such documents. Notwithstanding anything contained herein, in every instance the Company shall be required to
provide paper copies of the Compliance Certificates required bySection 6.2(a)to the Bank.

6.3Notices.The Company shall promptly notify the Bank:



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Each
notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein in form and substance
reasonably satisfactory to the Bank.

6.4Preservation of Corporate Existence Etc.The Company shall, and shall cause
each
Significant Subsidiary to:



6.5Maintenance of Property.The Company shall maintain, and shall cause each
Subsidiary
to maintain, and preserve all its property which is used or useful in its business in good working order and condition, ordinary wear and tear excepted and make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so would not reasonably be expected to have a Material Adverse Effect. The Company and each Subsidiary shall use the standard of care
typical in the industry in the operation and maintenance of its facilities except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

6.6Insurance.Except as disclosed on Schedule 5.17, the Company shall maintain, and shall cause each of its Subsidiaries to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in
such amounts as are customarily carried under similar circumstances by such other Persons; including workers' compensation insurance, public liability and property and casualty insurance. Upon request
of the Bank, the Company shall furnish the Bank, at reasonable intervals (but not more than once per calendar year) a certificate of a Responsible Officer of the Company setting forth the nature and
extent of all insurance maintained by the Company and its Subsidiaries in accordance with this Section.

6.7Payment of Obligations.The Company shall, and shall cause each Subsidiary
to, pay
and discharge as the same shall become due and payable, all their respective material obligations and liabilities except where the failure to do so would not reasonably be expected to have a Material
Adverse Effect, including:



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6.8Compliance with Laws.The Company shall comply, and shall cause each
Subsidiary (or,
in the case of ERISA, each ERISA Affiliate in which the Company owns a controlling interest) to comply, in all material respects with all Requirements of Law of any Governmental Authority having
jurisdiction over
it or its business (including the Federal Fair Labor Standards Act, ERISA and the Environmental Laws), except such as may be contested in good faith or as to which a bona fide dispute may exist.

6.9Inspection of Property and Books and Records.The Company shall maintain
and shall
cause each Subsidiary to maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions
and matters involving the assets and business of the Company and such Subsidiary. The Company shall permit, and shall cause each Subsidiary to permit, representatives and independent contractors of
the Bank to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss
their respective affairs, finances and accounts with their respective directors, Responsible Officers, and independent public accountants (at which discussions the Company's representatives may be
present unless a Default has occurred and is continuing), all at the expense of the Bank and at such reasonable times during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Company;provided,however, when a Default exists the Bank may do any
of the foregoing at the expense of the Company at any time during normal business hours and without advance notice.

6.10Use of Proceeds.The Company shall use the proceeds of the Loans for the
capitalization of ZIC, working capital, capital expenditures and other lawful general corporate purposes and acquisitions of companies that are negotiated and consummated with the consent of the
company to be acquired and, in each case that are not in contravention of any Requirement of Law or of any Loan Document.

6.11Further Assurances.The Company shall ensure that all written information,
exhibits
and reports furnished to the Bank do not and will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made, and will promptly disclose to the Bank and correct any material misstatement or omission that may be discovered therein or in any Loan Document
or in the execution or acknowledgement thereof.

ARTICLE VII  NEGATIVE COVENANTS

So long as the Bank shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless the Bank waives compliance in
writing:

7.1Limitation on Liens.The Company shall not directly or indirectly, make,
create,
incur, assume or suffer to exist any Lien upon or with respect to any part of its property, whether now owned or hereafter acquired, other than Permitted Liens.

7.2Disposition of Assets.The Company shall not, and shall not suffer or
permit any
Significant Subsidiary to, make a Disposition of (whether in one or a series of transactions) any property (including accounts and notes receivable, with or without recourse) or enter into any
agreement to do so, except:



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7.3Consolidations and Mergers.The Company shall not, and shall not suffer or
permit
any Significant Subsidiary to, merge, consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all
of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except:



7.4[Intentionally Omitted].

7.5Limitation on Indebtedness.The Company shall not permit its Insurance
Subsidiaries
to create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness defined in clauses (a), (c), (d) or (f) of the
definition thereof exceeding $20,000,000 at any one time outstanding.

7.6Transactions with Affiliates.The Company shall not, and shall not suffer
or permit
any Subsidiary to, enter into any transaction (other than (i) pooling arrangements entered into in the ordinary course of business between Insurance Subsidiaries, (ii) the
tax-sharing agreement between the Company and its Subsidiaries, (iii) the cost-sharing agreement between the Company and its Subsidiaries, and (iv) other
transactions between Subsidiaries, or between the Company and a Subsidiary, in each case in the ordinary course of business) with any Affiliate of the Company, except upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would obtain in a comparable arm's-length transaction with a Person not an Affiliate of the Company or such Subsidiary.

7.7Use of Proceeds.The Company shall not, and shall not suffer or permit any
Subsidiary to, use any portion of the Loan proceeds, directly or indirectly, (a) in a manner that would cause the Bank to violate or not to comply with Regulations T, U or X of the FRB,
(b) to repay or otherwise refinance indebtedness of the Company or others incurred to purchase or carry Margin Stock, (c) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (d) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act, unless such transaction is permitted by Section 6.10and, to the
extent permitted by law, the name of the Bank shall not be made available to the public.

7.8Change in Business.The Company shall not, and shall not suffer or permit
any
Significant Subsidiary to, engage in any material line of business substantially different from those lines of business (and activities related or incidental thereto) carried on by the Company and its
Significant Subsidiaries on the date hereof.

29

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7.9Accounting Changes.The Company shall not, and shall not suffer or permit
any
Subsidiary to, make any significant change in accounting treatment or reporting practices, except as required or permitted by GAAP or SAP, or change the fiscal year of the Company or of any
Subsidiary.

7.10Minimum Surplus.The Company shall not permit the Capital and Surplus of
ZIC as
reported on a combined basis as of the end of any fiscal quarter (commencing with the fiscal quarter ended
December 31, 2006) to be less than 75% of the Capital and Surplus of ZIC as reported on a combined basis as of the end of the fiscal year ended immediately prior to the end of such fiscal
quarter.

7.11Debt to Total Capitalization.The Company shall not permit the Debt to
Total
Capitalization Ratio to exceed .20:1 as of the end of any fiscal quarter (commencing with the fiscal quarter ended December 31, 2006).

7.12Risk-Based Capital.The Company shall not permit the
Risk-Based Capital of ZIC, as reported on a combined basis, to fall below 145% as of the end of any fiscal quarter (commencing with the fiscal quarter ended December 31, 2006).

7.13Interest Coverage Ratio.The Company shall not permit the Interest
Coverage Ratio
to be less than 3.00:1 as of the end of any fiscal quarter (commencing with the fiscal quarter ended December 31, 2006).

ARTICLE VIII  EVENTS OF DEFAULT

7.1Event of Default.Any of the following shall constitute an
"Event of Default":



30

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31

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8.2Remedies.If any Event of Default occurs, the Bank may:



8.3Rights Not Exclusive.The rights provided for in this Agreement and the
other Loan
Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or
hereafter arising.

ARTICLE IX  MISCELLANEOUS

9.1Amendments and Waivers.No amendment or waiver of any provision of this
Agreement or
any other Loan Document, and no consent with respect to any departure by the Company therefrom, shall be effective unless the same shall be in writing and signed by the Bank and the Company, and then
any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

9.2Notices; Effectiveness; Electronic Communication.



32

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9.3No Waiver; Cumulative Remedies.No failure to exercise and no delay in
exercising,
on the part of the Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

9.4Costs and Expenses.The Company shall:



33

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The
agreements in this Section shall survive the termination of the Commitment and repayment of all other Obligations.

9.5Company Indemnification.



9.6Marshalling; Payments Set Aside.The Bank shall not be under any obligation
to
marshal any assets in favor of the Company or any other Person or against or in payment of any or all of the Obligations. To the extent that the Company makes a payment to the Bank, or the Bank
exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the Bank in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any Insolvency
Proceeding or otherwise, then to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred.

34

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9.7Successors and Assigns.



35

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9.8Survival of Representations and Warranties.All representations and
warranties made
hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the Bank, regardless of any investigation made by the Bank or on its behalf, and shall continue in full force and effect as long as
any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.

9.9Set-off.In addition to any rights and remedies of the Bank provided by
law, if an Event of Default exists or the Loans have been accelerated, the Bank is authorized at any time and from time to time, without prior notice to the Company, any such notice being waived by
the Company to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at
any time owing by, the Bank to or for the credit or the account of the Company (excluding any account that is expressly designated as a custodial or trust account on the books and records of the Bank)
against any and all Obligations owing to the Bank, now or hereafter existing, irrespective of whether or not the Bank shall have made demand under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured. The Bank agrees promptly to notify the Company after any such set-off and application made by the Bank; provided,however, that the failure to give such notice shall not affect the validity of such
set-off and application.

9.10Counterparts.This Agreement may be executed in any number of separate
counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument.

9.11Severability.The illegality or unenforceability of any provision of this
Agreement
or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement
required hereunder.

36

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9.12No Third Parties Benefited.This Agreement is made and entered into for
the sole
protection and legal benefit of the Company and the Bank and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents.

9.13Governing Law and Jurisdiction.



9.14Waiver of Jury Trial.THE COMPANY AND THE BANK WAIVE THEIR RESPECTIVE
RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
COMPANY AND THE BANK EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS.

9.15No Advisory or Fiduciary Responsibility.In connection with all aspects of
each
transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Company acknowledges and agrees that: (i)(A) the
services regarding this Agreement provided by the Bank are arm's length commercial transactions between the Company, on the one hand, and the Bank, on the other hand, (B) the Company has
consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Company is capable of evaluating, and understands and accepts, the terms,
risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii)(A) the Bank is and has been acting solely as a principal and, except as expressly agreed in writing
by the relevant

37

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parties,
has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Company or any other person and (B) the Bank does not have any obligation to the Company with
respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Bank and its respective Affiliates may be
engaged in a broad range of transactions that involve interests that differ from those of the Company. To the fullest extent permitted by law, the Company hereby waives and releases any claims that it
may have against the Bank with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transactions contemplated hereby.

9.16USA Patriot Act Notice.The Bank hereby notifies the Company that pursuant
to
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that
identifies the Company, which information includes the name and address of the Company and other information that will allow the Bank to identify the Company in accordance with the Act.

9.17Entire Agreement.This Agreement, together with the other Loan Documents,
embodies
the entire agreement and understanding among the Company and the Bank, and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the
subject matter hereof and thereof.

9.18Execution and Delivery.This Agreement shall be deemed to have been
executed and
delivered immediately following the adoption by the Company's Board of Directors at its meeting held on February 16, 2007 of resolutions authorizing, approving, ratifying and confirming this
Agreement.

[REMAINDER OF PAGE INTENTIONALLY BLANK.  SIGNATURE PAGES FOLLOW.]

38

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above
written.

| |  | BANK OF AMERICA, N.A.
| |  | ---------------------
| |  | By:                  

---



IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above
written.

| |  | ZENITH NATIONAL INSURANCE CORP.
| |  | -------------------------------
| |  | By:                            

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EXHIBIT A

FORM
OF NOTICE OF BORROWING

Bank
of America, N.A.
Building B
2001 Clayton Road
Concord, CA 94520-2405

Attention:
Jennifer Baines

Ladies
and Gentlemen:

This
Notice of Borrowing is delivered to you pursuant toSections 2.3and4.2(a)of the
Credit Agreement dated as of February     , 2007 (as amended or modified, the "Credit Agreement"), between Zenith National Insurance
Corp., a Delaware corporation (the "Company") and Bank of America, N.A. (the "Lender"). Unless otherwise
defined herein, capitalized terms used herein have the meanings provided in the Credit Agreement.

The
Company hereby requests that a Loan be made in the aggregate principal amount of
$                        on            , 200 as a [Base Rate Loan]
[Eurodollar Rate Loan having an Interest Period of            months].

The
Company hereby certifies and warrants that on the date the Borrowing requested hereby is made, after giving effect to the making of such Borrowing, the conditions set forth in Section 4.2of the
Credit Agreement are satisfied.

The
Company agrees that if prior to the time of the Borrowing requested hereby any matter certified to herein by it will not be true and correct at such time as if then made, it will
immediately so notify the Lender. Except to the extent, if any, that prior to the time of the Borrowing requested hereby the Lender shall receive written notice to the contrary from the Company, each
matter certified to herein shall be deemed once again to be certified as true and correct at the date of such Borrowing as if then made.

Please
wire transfer the proceeds of the Borrowing to the accounts of the following persons as set forth onAnnex Iattached
hereto.

The
Company has caused this Notice of Borrowing to be executed and delivered, and the certification and warranties contained herein to be made, by a Responsible Officer this
    day of            , 200.

| |  | ZENITH NATIONAL INSURANCE CORP.
| |  | -------------------------------
| |  | By:                            
| |  |                                
| |  |                                

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ANNEX I

|  |                          | Person to be Paid |             | 
|- | ------------------------ | ----------------- | ----------- | 
|
|
|$ |                          |                   |             | 
| 
|$ |                          |                   |             | 
| 
|  | Balance of such proceeds |                   | The Company | 
| 

2

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EXHIBIT B

FORM
OF NOTICE OF CONVERSION/CONTINUATION

Bank
of America, N.A.
Building B
2001 Clayton Road
Concord, CA 94520-2405

Attention:
Jennifer Baines

Ladies
and Gentlemen:

This
Conversion/Continuation Notice is delivered to you pursuant toSections 2.4(b)and 4.2(a)of the Credit Agreement dated as of
February    , 2007 (as amended or modified, the "Credit
Agreement"), between Zenith National Insurance Corp., a Delaware corporation (the "Company") and Bank of America, N.A. (the
"Lender"). Unless otherwise defined herein, capitalized terms used herein have the meanings provided in the Credit Agreement.

The
Company hereby requests that on            , 200 ,



The
Company hereby represents and warrants that no Default or Event of Default exists.

Except
to the extent, if any, that prior to the time of the continuation or conversion requested hereby the Lender shall receive written notice to the contrary from the Company, each
matter certified to herein shall be deemed to be certified at the date of such continuation or conversion as if then made.

The
Company has caused this Continuation/Conversion Notice to be executed and delivered, and the certification and warranties contained herein to be made, by a Responsible Officer this
    day of            , 200 .

| |  | ZENITH NATIONAL INSURANCE CORP.
| |  | -------------------------------
| |  | By:                            
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                

---

1

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EXHIBIT C

FORM
OF COMPLIANCE CERTIFICATE

Bank
of America, N.A.
901 Main Street, 64th Floor
Dallas, Texas 75202

Attention:
James H. Harper

Ladies
and Gentlemen:

This
certificate (the "Certificate") is delivered to you pursuant toSection 6.2(a)of the Credit Agreement dated as of February    , 2007 (as amended or modified, the "Credit Agreement"), between Zenith National Insurance
Corp., a Delaware corporation (the "Company") and Bank of America, N.A. (the "Lender"). Unless otherwise
defined herein, capitalized terms used herein have the meanings provided in the Credit Agreement.

The
undersigned hereby certifies and warrants to the Lender that he is a Responsible Officer of the Company and that, as such, he is authorized to execute this Certificate on behalf of
the Company and further certifies and warrants to the Lender on behalf of the Company that as at            , 200    (the "Computation
Date") the following is a true and correct computation of the ratios and financial restrictions contained in the Credit Agreement:

|1. | Section 7.10  Minimum Surplus                                                                                                                                                                                                                                   |  |                                                                                                     | 
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------- | 
|   | The Capital and Surplus of ZIC on a combined basis is $                  (cannot be less than 75% of the Capital and Surplus of ZIC as reported on a combined
basis as of the end of the fiscal year ended immediately prior to the end of such fiscal quarter). |  |                                                                                                     | 
|2. | Section 7.11  Debt to Total Capitalization                                                                                                                                                                                                                      |  |                                                                                                     | 
|   | (a)                                                                                                                                                                                                                                                              |  | Debt                                                                                                | 
|   |                                                                                                                                                                                                                                                                  |  |                                                                                                     | 
|   | (b)                                                                                                                                                                                                                                                              |  | Total Capitalization                                                                                | 
|   |                                                                                                                                                                                                                                                                  |  |                                                                                                     | 
|   | (c)                                                                                                                                                                                                                                                              |  | Ratio of (a) to (b) (cannot exceed .20:1)                                                           | 
|3. | Section 7.12  Risk Based Capital                                                                                                                                                                                                                                |  |                                                                                                     | 
|   | The Risk-Based Capital of ZIC on a combined basis is      % (cannot be less than 145%).                                                                                                                                                                          |  |                                                                                                     | 
|4. | Section 7.13  Interest Coverage                                                                                                                                                                                                                                 |  |                                                                                                     | 
|   | (a)                                                                                                                                                                                                                                                              |  | Amounts Available for Dividends                                                                     | 
|   |                                                                                                                                                                                                                                                                  |  |                                                                                                     | 
|   | (b)                                                                                                                                                                                                                                                              |  | Pre-tax income from Non-Insurance Subsidiaries for the four quarters ending on the Computation Date | 
|   |                                                                                                                                                                                                                                                                  |  |                                                                                                     | 
|   | (c)                                                                                                                                                                                                                                                              |  | Pre-tax, pre-interest income of the Company for the four quarters ending on the Computation Date    | 
|   |                                                                                                                                                                                                                                                                  |  |                                                                                                     | 
|   | (d)                                                                                                                                                                                                                                                              |  | Sum of (a) + (b) + (c)                                                                              | 
|   |                                                                                                                                                                                                                                                                  |  |                                                                                                     | 
|   | (e)                                                                                                                                                                                                                                                              |  | Fixed Interest Charges (including interest on Subordinated Debentures)                              | 
|   |                                                                                                                                                                                                                                                                  |  |                                                                                                     | 
|   | (f)                                                                                                                                                                                                                                                              |  | Ratio of (d:e) (cannot be less than 3.00:1)                                                         | 

The
Company further certifies that no Default or Event of Default has occurred and is continuing under the Credit Agreement as of the date hereof.

1

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IN
WITNESS WHEREOF, the Company has caused this Certificate to be executed and delivered and the certifications and warranties contained herein to be made, by a Responsible Officer this
    day of            200  .

| |  | ZENITH NATIONAL INSURANCE CORP.
| |  | -------------------------------
| |  | By:                            
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                

2

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EXHIBIT D

FORM
OF OPINION OF COMPANY'S COUNSEL

February    ,
2007
Bank of America, N.A.
901 Main Street, 64th Floor
Dallas, Texas 75202

Attention:
James H. Harper

Ladies
and Gentlemen:

We
have acted as counsel for Zenith National Insurance Corp., a Delaware corporation (the "Company") in connection with the preparation,
authorization, execution and delivery of, and the consummation of the transactions contemplated by, the Credit Agreement (hereinafter defined). Unless otherwise defined herein, capitalized terms used
herein have the meanings provided in the Credit Agreement. This opinion is delivered to you pursuant toSection 4.1(d)of the Credit Agreement.

In
connection with this opinion, we have examined the following:



The
foregoing documents (a) and (b) are hereinafter collectively referred to as the "Loan Documents".

In
connection with this opinion, we also have been furnished with and have examined the originals, or certified, conformed or reproduction copies, of certificates of public officials and
officers of the Company and such other records, agreements, instruments and documents as we have deemed relevant and necessary as the basis for the opinions hereinafter expressed. In stating our
opinion, we have assumed the genuineness of all signatures, the authenticity of documents submitted to us as originals, the conformity to original or certified copies of all copies submitted to us as
certified or reproduction copies, and the legal capacity of natural persons.

As
to various questions of fact material to our opinions, we have relied upon the representations and warranties in the Loan Documents and upon certificates of the Company's public
officials.

Based
upon the foregoing, and upon such further matters as we have deemed necessary or appropriate, and subject to the qualifications, limitations and assumptions set forth herein, we
are of the opinion that:



1

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[Add
exceptions and qualifications.]

Very
truly yours,

2

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EXHIBIT E

FORM
OF NOTE

February    ,
2007

$30,000,000

On
or before February    , 2010 the undersigned, FOR VALUE RECEIVED, promises to pay to the order of BANK OF AMERICA, N.A. (the
"Lender") at its principal office at 2001 Clayton Rd. in Concord, California, THIRTY MILLION DOLLARS ($30,000,000) or, if less, the aggregate unpaid
principal amount of all Loans (as defined in the Credit Agreement hereinafter referred to) made by the Lender to the undersigned pursuant to the Credit Agreement, as shown in the schedule attached
hereto (and any continuation thereof).

The
undersigned also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or
otherwise) and, after maturity, until paid, at the ratesper annumand on the dates specified in the Credit Agreement.

Payments
of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds.

This
Note is the Note described in, and is subject to the terms and provisions of, the Credit Agreement dated as of February    , 2007 (as the same may at any time be amended
or modified and in effect, the "Credit Agreement"), between the undersigned and the Lender. Reference is hereby made to the Credit Agreement for a
statement of the prepayment rights and obligations of the undersigned and for a statement of the terms and conditions under which the due date of this Note may be accelerated. Upon the occurrence of
any Event of Default as specified in the Credit Agreement, the principal balance
hereof and the interest accrued hereon may be declared to be forthwith due and payable, and any indebtedness of the holder hereof to the undersigned may be appropriated and applied hereon.

In
addition to and not in limitation of the foregoing and the provisions of the Credit Agreement, the undersigned further agrees, subject only to any limitation imposed by applicable
law, to pay all expenses, including reasonable attorneys' fees and legal expenses, incurred by the holder of this Note in endeavoring to collect any amounts payable hereunder which are not paid when
due, whether by acceleration or otherwise.

All
parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor.

THIS
NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.

| |  | ZENITH NATIONAL INSURANCE CORP.
| |  | -------------------------------
| |  | By:                            
| |  |                                
| |  |                                

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