THE ZENITH

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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934

/X/
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2001


OR

/ /
TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934For the transition period from....... to .......Commission file number 1-9627


ZENITH NATIONAL INSURANCE CORP.

(Exact Name of Registrant as Specified in Its Charter)

|DELAWARE(State or Other Jurisdiction of Incorporation
or Organization) | 95-2702776(I.R.S. Employer Identification No.)
|---------------------------------------------------------------------- | ----------------------------------------------

|21255 Califa Street, Woodland Hills, California(Address of Principal Executive Offices) | 91367-5021(Zip Code)
|--------------------------------------------------------------------------------------- | --------------------

Registrant's telephone number, including area code: (818) 713-1000

Securities registered pursuant to Section 12(b) of the Act:

|Title of Each Class           | Name of Each Exchange on
Which Registered
|----------------------------- | -----------------------------------------
|Common Stock, $1.00 Par Value | New York Stock Exchange                  

Securities registered pursuant to Section 12(g) of the Act:None

Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.        Yes X No

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.    / /

The
aggregate market value of the voting stock of the registrant held by non-affiliates of Zenith National Insurance Corp. on March 21, 2002 was $288,328,000 (based on
the closing sale price of such stock on such date).

At
March 21, 2002, there were 18,634,000 shares of Zenith National Insurance Corp. common stock outstanding, net of 7,018,000 shares of treasury stock.

DOCUMENTS
INCORPORATED BY REFERENCE

(1)  Portions
of the Annual Report to Stockholders for fiscal year ended December 31, 2001  Part I and Part II.

(2)  Portions
of the Proxy Statement in connection with the 2002 Annual Meeting of Stockholders  Part III.

Total
number of pages 39

Exhibit
index located on pages 19-25

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PART I

Item 1. Business.  General

Zenith National Insurance Corp. ("Zenith National"), a Delaware corporation incorporated in 1971, is a holding company engaged through its wholly-owned insurance
subsidiaries, Zenith Insurance Company ("Zenith Insurance"), ZNAT Insurance Company ("ZNAT Insurance") and Zenith Star Insurance Company ("Zenith Star") (collectively, the "P&C Operations"), in the
property-casualty insurance business. Zenith National and its subsidiaries (collectively, "Zenith") also conducts Real Estate operations through a wholly-owned subsidiary which develops land and
constructs private residences for sale in Las Vegas, Nevada. On April 1, 1998, Zenith Insurance acquired substantially all of the assets and certain liabilities of RISCORP, Inc. and
certain of its subsidiaries (collectively, "RISCORP") related to RISCORP's workers' compensation business (the "RISCORP Acquisition"). Effective March 31, 1999, Zenith Insurance completed the
sale of all of the issued and outstanding capital stock of its wholly-owned subsidiary, CalFarm Insurance Company ("CalFarm"), for $273.0 million in cash to Nationwide Mutual Insurance Company.

The
2001 edition of Best's Key Rating Guide ("Best's") assigns the P&C Operations ratings of A- (Excellent). Moody's Investors Service ("Moody's") has assigned insurance
financial strength ratings of Baa1 (Adequate) to the P&C Operations. Standard & Poor's ("S&P") has assigned an insurer financial strength rating to the P&C Operations of A-
(Strong). Fitch Ratings ("Fitch") has assigned an insurer financial strength rating to the P&C Operations of A- (Strong). These Best's, Moody's, S&P and Fitch ratings are based upon
factors of concern to policyholders and insurance agents and are not directed toward the protection of investors.

At
December 31, 2001, Zenith had approximately 1,200 full-time employees. The principal executive offices of Zenith are located at 21255 Califa Street, Woodland Hills,
California 91367-5021, telephone (818) 713-1000.

Glossary of Selected Insurance Terms

The following terms when used herein have the following meanings:

|Assume         |  | To receive from a ceding company all or a portion of a risk in consideration of receipt of a premium.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Cede           |  | To transfer to a reinsurer all or a portion of a risk in consideration of payment of a premium.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Combined ratio |  | The sum of net incurred losses, loss adjustment expenses, underwriting expenses and policyholders' dividends, expressed as a percentage of net premiums earned. The combined ratio is the key measure of underwriting
profitability used in the property-casualty insurance business.                                                                                                                                                                                                                                                             
|Development    |  | The amount by which estimated losses, measured subsequently by reference to payments and additional estimates, differ from those originally reported for a period. Development is favorable when losses ultimately settle for
less than levels at which they were reserved or subsequent estimates indicate a basis for reserve decreases on open claims. Development is unfavorable when losses ultimately settle for more than levels at which they were reserved or subsequent
estimates indicate a basis for reserve increases on open claims.

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|Excess of loss reinsurance       |  | A form of reinsurance in which the reinsurer pays all or a specified percentage of a loss caused by a particular occurrence or event in excess of a fixed amount and up to a stipulated limit.                                                                                                        
|-------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Incurred but not reported claims |  | Claims relating to insured events that have occurred but have not yet been reported to the insurer or reinsurer.                                                                                                                                                                                      
|Loss adjustment expenses         |  | The expenses of investigating and settling claims, including legal and other fees, and general expenses of administering the claims adjustment process.                                                                                                                                               
|Loss ratio                       |  | Net losses incurred expressed as a percentage of net premiums earned.                                                                                                                                                                                                                                 
|Net premiums earned              |  | The portion of net premiums written applicable to the expired period of policies.                                                                                                                                                                                                                     
|Participating policy             |  | A policy upon which dividends may be paid after expiration.                                                                                                                                                                                                                                           
|Policyholders' surplus           |  | The amount remaining after all liabilities are subtracted from all admitted assets, as determined in accordance with statutory accounting practices. This amount is regarded as financial protection to policyholders in the
event an insurance company suffers unexpected or catastrophic losses.    
|Reinstatement premium            |  | An additional premium paid after a claim on a catastrophe reinsurance contract to renew the contract for the unexpired term.                                                                                                                                                                          
|Reinsurance                      |  | A transaction in which an original insurer, or cedant, remits a portion of the premium to a reinsurer, or assuming company, as payment for the reinsurer's assumption of a portion of the risk.                                                                                                       
|Reserves or loss reserves        |  | The balance sheet liability representing estimates of amounts needed to pay reported and unreported claims and related loss adjustment expenses.                                                                                                                                                      
|Retrocession                     |  | A reinsurance of reinsurance assumed.                                                                                                                                                                                                                                                                 
|Retrospectively-rated policy     |  | A policy containing a provision for determining the insurance premium for a specified policy period on the basis of the loss experience for the same period.                                                                                                                                          
|Statutory accounting practices   |  | Accounting practices prescribed or permitted by the states' departments of insurance. In general, statutory accounting practices address policyholder protection and solvency and are more conservative in presentation of
earnings, surplus and assets than generally accepted accounting principles.
|Treaty                           |  | A contract of reinsurance.                                                                                                                                                                                                                                                                            
|Underwriting                     |  | The process whereby an insurer reviews applications submitted for insurance coverage and determines whether it will accept all or part, and at what premium, of the coverage being requested.                                                                                                         

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|Underwriting expenses |  | The aggregate of policy acquisition costs and the portion of administrative, general and other expenses attributable to the underwriting process as they are accrued and expensed.
|--------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Description of the Business

Zenith is in the business of managing insurance risk and investment risk. Zenith's main business activity is its workers' compensation insurance business. In
addition, Zenith maintains a portfolio of investments, principally in fixed maturities, funded by the cash flows from its insurance operations and capital. Investment income from the portfolio is
impacted by current and historical interest rates and the amount of funds generated annually from (or used by) operations. Results of insurance operations, excluding investment income, fluctuate based
upon the combined ratios including the possibility of material and unpredictable catastrophe losses in Zenith's reinsurance business.

Zenith
classifies its business into the following segments: Workers' Compensation, Reinsurance, Other Property-Casualty (through March 31, 1999, the date of the sale of CalFarm),
Real Estate, Investment and Parent. Segments are designated based on the types of products and services provided. The P&C Operations are composed of the Workers' Compensation, Reinsurance and Other
Property-Casualty (through March 31, 1999) segments. Zenith's business segments are also described in Notes to Consolidated Financial Statements  Note 20 
"Segment Information" in Zenith's 2001 Annual Report to Stockholders, which note is hereby incorporated by reference.



Workers' compensation insurance provides coverage for the statutorily prescribed benefits that employers are required to pay to their employees injured in the
course of employment. The standard policy issued by Zenith's Workers' Compensation operations provides payments for, among other things, temporary or permanent disability benefits, death benefits,
medical and hospital expenses and expenses of vocational rehabilitation. The benefits payable and the duration of such benefits are set by statute, and vary by state and with the nature and severity
of the injury or disease and the wages, occupation and age of the employee.

Generally,
premiums for workers' compensation insurance policies are a function of: the applicable premium rate, which varies with the nature of the employees' duties and the business of
the employer; the insured employer's experience modification factor (where applicable); and the amount of the insured employer's payroll. Payrolls may be affected significantly by changes in
employment and wage levels. A deposit premium is paid at the beginning of the policy period, periodic installments are paid during the policy period and the final amount of the premium is generally
determined as of the end of the policy period after the policyholder's payroll records are audited. Except in Florida, where rates for workers' compensation insurance are set by the Department of
Insurance, Zenith's rates for workers' compensation are actuarially determined in each state in which it does business. Rates are continually reviewed for adequacy using actuarial analysis of current
and anticipated trends in costs. Competition, based on price, in the national workers' compensation insurance industry is intense, even in Florida where dividend plans and retrospectively rated
policies form the basis for competition.

In
addition to seeking adequate pricing, Zenith's long-term strategy in the national workers' compensation industry is to provide value-added services that, over the long
run, reduce its policyholders' net workers' compensation costs. Loss prevention services focus on work place safety and accident and illness prevention. Claims management services include return to
work programs, case management by nurses for serious injuries and management of medical provider services and billings. Investigation and legal services help policyholders to prevent fraud and assist
them to favorably resolve litigated claims.

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During
2001, Zenith wrote workers' compensation insurance in 45 states. Prior to 1992, Zenith's Workers' Compensation operations were concentrated principally in California.
Zenith's Workers' Compensation operations expanded to Texas in 1992 with other states following shortly thereafter. Florida operations commenced with the acquisition of the Associated General Commerce
Self-Insurers' Trust Fund on December 31, 1996. On April 1, 1998, the RISCORP Acquisition added workers' compensation business in Florida and other states in the Southeast,
principally in North Carolina and Alabama. Net premiums earned for the year ended December 31, 2001 by state are set forth in the table below:

(Dollars in thousands)

2001

%California

205,835

49.5
%Florida

92,728

22.3Texas

20,578

4.9North Carolina

20,366

4.9Illinois

14,353

3.5Pennsylvania

8,304

2.0Iowa

6,161

1.5South Carolina

5,589

1.3Arizona

5,413

1.3Other

36,521

8.8Net Premiums Earned

415,848

100.0
%


For the past several years, national workers' compensation industry results have been extremely unprofitable as intense competition resulted in
inadequate levels of premium rates at the same time as the industry experienced a general trend of declining frequency and of increasing claim severity. In addition, there are reports by certain
industry organizations of significant under-reserving in the industry's reported results. Zenith's in-force Workers' Compensation premiums decreased consistently in the several years prior
to 2000 as a result of Zenith's endeavors to maintain rate adequacy in the face of intense competition in the national workers' compensation insurance industry. Competitive pricing conditions began to
improve in California and certain other states in 2000 and continued in 2001. As a result of this improvement and in conjunction with the rate increases described below, Zenith increased its
in-force premiums in California from $98.1 million at December 31, 1999 to $146.7 million at December 31, 2000 and to $210.4 million at
December 31, 2001. Outside of California, where competition and pricing are improving only in certain states, Zenith's in-force premiums increased from $145.8 million at
December 31, 1999 to $162.4 million at December 31, 2000 and to $209.7 million at December 31, 2001.

Zenith
continually monitors loss development trends and data to establish adequate premium rates and loss reserves. In 2000 and 2001, Zenith increased its Workers' Compensation premium
rates in California as follows: effective January 1, 2000 by about 8%; effective September 1, 2000 by about 9%; effective January 1, 2001 by about 8%; and effective
August 1, 2001 by about 5%. At the beginning of 2002, Zenith further increased its rates in California by about 26%, including 5% for terrorism. Rate increases in most of the other states in
which it does business were implemented at January 1, 2001 and 2002. However, in Florida, rates are set by the Department of Insurance, and were unchanged in 2000 and 2001.

Zenith
expects that the future operating profitability of its Workers' Compensation operations will be dependent upon the following: 1) general levels of competition;
2) industry pricing; 3) legislative and regulatory actions; 4) the frequency and severity of terrorist acts, if any, similar to the World Trade Center attack or anthrax events;
and 5) management's ability to estimate the impact of any continuing adverse claim severity trends, including increases in the cost of healthcare, on the adequacy of loss reserves and premium
rates. Also, claim frequency trends continue to decline, but the reasons therefor are not clear and management is unable to predict whether these trends will continue. Effective January 1,
2002, consistent with industry practice,

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losses arising from acts of terrorism in the United States were excluded from the coverage provided by many of the reinsurance companies from which Zenith purchases its workers' compensation
reinsurance (see under Reinsurance Ceded for further discussion). Zenith is unable to predict when its Workers' Compensation operations will return to underwriting profitability, although it
anticipates continuing improvement in the combined ratio and profitability in the short-run with increases in volume and prices and investable cash flow from operations.



The Reinsurance operations principally consist of world-wide, assumed reinsurance of property losses from catastrophes and large property risks.
Treaties come in a variety of forms, but the principal arrangements in which Zenith participates are either proportional in nature, in which the assuming company shares pro-rata in the
premiums and losses of the cedant (quota share reinsurance), or arrangements under which the assuming company pays losses in excess of a certain limit in return for a premium, usually determined as a
percentage of the cedant's primary insurance premiums (excess of loss reinsurance). The Reinsurance operations participate in treaties in which, typically, the reinsurance coverage is syndicated to a
number of assuming companies. Depending upon market conditions and other factors, the volume of premiums written fluctuates from year to year. By diversifying its geographical spread of risk, Zenith's
assumed reinsurance business is written so as to limit expected losses from any one event in a worst-case scenario to a maximum probable loss of approximately 5% of consolidated
stockholders' equity.

Results
of the Reinsurance operations may be adversely impacted in years when large catastrophes occur. However, since its inception in 1985, the combined ratio of the Reinsurance
operations through December 31, 2001 was 103.0%. In the three years ended December 31, 2001, the Reinsurance operations were adversely impacted by catastrophe losses. Catastrophe losses
were $41.7 million, $22.6 million and $18.9 million before tax in 2001, 2000 and 1999, respectively. Catastrophe losses in 2001 included $37.6 million attributable to the
terrorist attack on the World Trade Center on September 11, 2001. Catastrophe losses in 2000 were attributable to additional estimates of the impact of the events in 1999. There were frequent
catastrophes of a moderate size culminating in severe storms in Europe at the end of 1999. Estimates of the impact of catastrophes on the Reinsurance operations are based on the information that is
currently available and such estimates could change based on new information that becomes available or based upon reinterpretation of existing information.

Effective
January 1, 2002, consistent with industry practice in the aftermath of the events of September 11, 2001, losses arising from acts of terrorism were excluded from
the coverage provided in Zenith's assumed reinsurance contracts.



The Other Property-Casualty operations offered automobile, farmowners, commercial coverages, group health and homeowners coverage, primarily in California, and
were operated by CalFarm through March 31, 1999, the effective date of its sale. For the 14 years that Zenith owned CalFarm, the average combined ratio of the Other Property-Casualty
operations was 100.1%. The gain on the sale of CalFarm after tax was $104.3 million.



The Real Estate operations develop land and primarily construct single-family residences in Las Vegas, Nevada. For the years ended December 31, 2001, 2000
and 1999, total revenues recognized in the Real Estate operations were $84.8 million, $84.5 million and $58.7 million, respectively, and pre-tax income was
$5.8 million, $5.5 million and $3.6 million, respectively. Land presently owned at a cost of $30.0 million will support the construction of an estimated 1,300 homes over
the next several years. Changes in interest rates and other factors could affect future

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home sales, but Zenith believes the land it has acquired is strategically located and will have long term value.



The Investment operations provide income and realized gains on investments, primarily from investments in debt securities. Investment policies of Zenith are
established by the Board of Directors of each company making the investment, taking into consideration state regulatory restrictions with respect to investments as well as the nature and amount of
various kinds of investments. Zenith's principal investment goals are to maintain safety and liquidity, enhance principal values and achieve increased rates of return consistent with regulatory
constraints. The allocation among various types of securities is adjusted from time to time based on market conditions, credit conditions, tax policy, fluctuations in interest rates and other factors.

At
December 31, 2001, Zenith's consolidated investment portfolio emphasized high quality, taxable bonds and short-term investments, supplemented by smaller portfolios
of redeemable and other preferred and common stocks. Bonds constituted 74% and short-term investments constituted 13%
of the carrying value of Zenith's consolidated investment portfolio at December 31, 2001. Bonds with an investment grade rating represented 95% of the consolidated carrying values of bonds at
December 31, 2001. The average life of the consolidated portfolio was 5.6 years at December 31, 2001.

Zenith
has identified certain securities, amounting to 97% of the investments in debt securities at December 31, 2001, as "available-for-sale."
Stockholders' equity increased by $8.8 million after deferred tax from December 31, 2000 to December 31, 2001 as a result of changes in the fair values of such investments.
Stockholders' equity will fluctuate with any changes in the fair values of "available-for-sale" securities.



The Parent operations represent Zenith National, a holding company which owns, directly or indirectly, all of the capital stock of the P&C Operations,
non-insurance companies and other investment securities.

Loss and Loss Expense Reserves and Claims, and Loss Developments

Loss reserve adequacy is an inherent risk of the property and casualty insurance business, which Zenith endeavors to minimize through professional claims handling
and estimation techniques. Loss reserves, as related to reported claims, are based upon periodic case-by-case evaluation and judgment by Zenith's claims departments. Actuarial
techniques and methods are utilized to establish the most reasonably accurate estimate of loss and loss adjustment expense reserves at a point in time including an estimate of the probable amount for
unreported claims arising from accidents which have not yet been reported to the P&C Operations, commonly known in the industry as "incurred but not reported". Zenith continually monitors loss
development trends and data to establish adequate premium rates and loss reserves. Reserves are based on estimates, and no assurance can be given that the ultimate liability will not be more or less
than such estimates.

Reference
is made to the table under Property-Casualty Loss Development in Zenith's 2001 Annual Report to Stockholders, which is hereby incorporated by reference, and the table setting
forth the reconciliation of changes in the liabilities for loss and loss adjustment expenses included in Notes to Consolidated Financial Statements  Note 6  "Liability
for Unpaid Loss and Loss Adjustment Expenses" in Zenith's 2001 Annual Report to Stockholders, which is hereby incorporated by reference. These tables show the development of loss and loss adjustment
expense liabilities as originally estimated under generally accepted accounting principles ("GAAP")

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at December 31 of each year presented. The accounting methods used to estimate these liabilities are described in Notes to Consolidated Financial Statements  Note 1
 "Summary of Accounting Policies, Operations and Principles of Consolidation" in Zenith's 2001 Annual Report to Stockholders, which note is hereby incorporated by reference. The one year
loss and loss adjustment expense reserve development for the P&C Operations is set forth in a table in the Management's Discussion and Analysis of Consolidated Financial Condition and Results of
Operations in Zenith's 2001 Annual Report to Stockholders, which table is hereby incorporated by reference.



Workers' compensation loss reserves constitute about 81% of the liabilities for unpaid losses and loss adjustment expenses in Zenith's Consolidated Balance Sheet
at December 31, 2001. The amount and timing of payments for benefits for workers' compensation claims varies considerably with the nature and severity of the injury and the timeliness of
reporting the claim. Payments may take place many years after the initial injury and the establishment of a loss reserve. Zenith regards the timely settlement of its Workers' Compensation claims as
important to its profitability and makes use of compromises and releases, where possible, for claim settlements to expedite this process.

Zenith
maintains four regional offices in California and offices in Florida, Texas, Arkansas, Pennsylvania, Utah, Illinois, North Carolina and Alabama, each of which is fully staffed to
conduct all workers' compensation claims operations, including review of initial reports of work injury, assignment of appropriate field investigation and determination of whether subrogation should
be pursued. Workers' Compensation claims operations are supported by computer systems that provide immediate access to policy coverage verification and claims records and enable Zenith to detail
claims payment histories and policy loss experience reports.

The
trend of increasing claims severity in the Workers' Compensation operation has caused some development in prior year reserves. In 2000, Zenith increased it estimate of unpaid
Workers' Compensation losses for principally the 1999 accident year by about $8.0 million. In 2001, Zenith's estimates of its prior year Workers' Compensation loss reserves were estimated to be
adequate based on the current interpretation of the data, however, estimating the impact of any continuing severity trends is a major risk factor for estimating Zenith's Workers' Compensation loss
reserves and for establishing appropriate rates.

Workers'
Compensation reserve strengthening in 1999 is attributable to Zenith's re-estimate of the reserves acquired from RISCORP in 1998 (see Note 14 to the
Consolidated Financial Statements in Zenith's 2001 Annual Report to Stockholders, which note is hereby incorporated by reference). The increase in the acquired reserves was recorded as adverse
development in 1999 but should be distinguished from adverse development that represents re-estimates of liabilities that originated with Zenith because the re-estimate was needed due to
an adjustment to a purchase price arbitration formula.

In
Florida, the Special Disability Trust Fund (the "Fund") assesses workers' compensation insurers to pay for what are commonly referred to as "Second Injuries." Historic assessments
have been inadequate to completely fund obligations of the Fund. In late 1997, the Florida statute was amended so that the Fund will not be liable for, and will not reimburse employers or carriers
for, Second Injuries occurring on or after January 1, 1998. Zenith Insurance has recorded its receivable from the Fund for Second Injuries based on specific claims and historical experience
prior to January 1, 1998. At December 31, 2001, the receivable from the Fund was $18.1 million related to the pre-January 1, 1998 claims.

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Reinsurance loss reserves constitute about 19% of the liabilities for unpaid losses and loss adjustment expenses in Zenith's Consolidated Balance Sheet at
December 31, 2001. For the past several years, Zenith has written predominantly property reinsurance for which loss reserves are paid within a few years. Zenith also maintains loss reserves
related to assumed reinsurance liability business written all the way back as far as 1985, the year of inception of its Reinsurance operation. Liability reserves in the reinsurance business may take
many years to be paid. In addition to information supplied by ceding companies, Zenith makes use of industry experience as well as its own data and opinions in arriving at estimates of ultimate losses
for certain reinsurance assumed arrangements. Estimating catastrophe losses in the Reinsurance business is highly dependent upon the nature and timing of the event and Zenith's ability to obtain
timely and accurate information with which to estimate its liability to pay losses. Loss reserve estimates for catastrophe losses in recent years have developed unfavorably as discussed below.

In
2001, Zenith incurred a very significant loss in connection with the attack on the World Trade Center on September 11. There is considerable uncertainty as to the nature and
amount of monetary losses associated with the attack on the World Trade Center. Zenith has estimated its share of the loss to be approximately $48.0 million, both gross and net of reinsurance
recoverable, by estimating the probable impact to each of its reinsurance contracts based on currently available information. Approximately 70% of the loss is attributable to the contractual maximum
loss payable by Zenith under its excess of loss reinsurance contracts; the remainder of the estimated loss is an estimate of its expected loss incurred on assumed quota share reinsurance contracts.
Customarily, after a claim, catastrophe reinsurance contracts are renewed for the unexpired term of the original contract and an additional premium, called a reinstatement premium, is due in
consideration of the renewal. Zenith has also estimated such reinstatement premiums in connection with its estimate of the World Trade Center loss. The ultimate impact of the World Trade Center loss,
after deducting original and reinstatement premium income on Zenith's assumed reinsurance contracts for 2001, is estimated to be $20.0 million before tax, or $13.0 million after tax.
Zenith has written its assumed reinsurance business so that its exposure to reinsurance losses from any one event in a worst-case scenario is not expected to be more than approximately 5%
of Zenith's stockholders' equity; the
expected ultimate loss from the World Trade Center of $13.0 million after tax is within that 5% maximum.

In
2001, the Reinsurance operations were adversely impacted by $41.7 million of catastrophe losses before tax, including $37.6 million for the World Trade Center loss,
after deducting additional premium income earned in the year attributable to original and reinstatement premiums. Catastrophe losses were $22.6 million and $18.9 million before tax in
2000 and 1999, respectively. Catastrophe losses in 2000 were attributable to additional estimates of the events in 1999. There were frequent catastrophes of a moderate size, culminating in severe
storms in Europe at the end of 1999. Catastrophe losses in 1999 include additional estimated losses for Hurricane Georges, the principal catastrophe loss in 1998.

Estimates
of the impact of the World Trade Center loss and other catastrophes is based on the information that is currently available and such estimates could change based on any new
information that becomes available or based upon reinterpretation of existing information.



Zenith's Other Property-Casualty business was operated primarily by CalFarm, which was sold effective March 31, 1999. Zenith retained no liabilities with
respect to the unpaid loss and loss adjustment expenses of CalFarm.

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Zenith
has exposure to asbestos losses in its Workers' Compensation operations for medical, indemnity and loss adjustment expenses associated with covered workers' long-term
exposure to asbestos or asbestos-contained materials. Most of these claims date back to the 1970's and early 1980's and Zenith's exposure is generally limited to a pro rata share of the workers'
compensation-related loss for the period of time coverage was provided. Zenith also has potential exposure to environmental and asbestos losses and loss adjustment expenses beginning in 1985 through
its
Reinsurance operations but the business reinsured by Zenith in its Reinsurance operations contains exclusion clauses for environmental and asbestos losses. CalFarm (through March 31, 1999)
wrote liability coverage under farmowners' and small commercial policies, however, any such liabilities associated with CalFarm were retained by CalFarm when it was sold in 1999 and Zenith retains no
exposure to any such liabilities. Environmental and asbestos losses have not been material and Zenith believes that its reserves for environmental and asbestos losses are appropriately established.
However, due to the long-term nature of these claims, the ultimate exposure from these claims may vary from the amounts currently reserved.

Reinsurance Ceded

In accordance with general industry practices, the P&C Operations annually purchase, principally from large United States reinsurance companies, excess of loss
reinsurance to protect Zenith against the impact of large, irregularly occurring losses. Such reinsurance reduces the magnitude of sudden and unpredictable changes in net income and the capitalization
of the P&C Operations. Reinsurance makes the assuming reinsurer liable to the ceding company to the extent of the reinsurance. It does not, however, discharge the ceding company from its primary
liability to its policyholders in the event the reinsurer is unable to meet its obligations under such reinsurance treaty. Zenith monitors the financial condition of its reinsurers and does not
believe that it is exposed to any material credit risk through its ceded reinsurance arrangements other than in connection with Reliance Insurance Company ("Reliance"). Historically, no material
amounts due from reinsurers have been written off as uncollectible. However, on October 3, 2001, the Commonwealth Court of Pennsylvania issued an Order of Liquidation for Reliance in response
to a petition from the Pennsylvania Department of Insurance. At December 31, 2001, Reliance owed Zenith Insurance $6.0 million of reinsurance recoverable on paid and unpaid losses in
connection with reinsurance arrangements assumed by Zenith Insurance in its 1996 acquisition of the Associated General Commerce Self-Insurers' Trust Fund. As of December 31, 2001,
Zenith recorded a $3.0 million provision for impairment of the reinsurance recoverable from Reliance. Zenith cannot currently predict the ultimate outcome of this matter; but it is possible
that if the Pennsylvania Department of Insurance increases its estimates of Reliance's unpaid liabilities or uncollectible reinsurance recoverables without considering additional investment income,
Zenith may not recover any of its reinsurance recoverable from Reliance.

During
2001, in the Workers' Compensation operations, reinsurance covered all claims between $0.6 million ($0.8 million in 2002) and $100.0 million per occurrence.
The coverage from $0.6 million ($0.8 million in 2002) to $5.0 million is placed with General Reinsurance Corporation, the coverage from $5.0 million to $10.0 million
with Employers Reinsurance Corporation and the remaining three layers from $10.0 million to $60.0 million primarily with NAC Reinsurance Corporation, AXA Reinsurance Company,
Transatlantic Reinsurance Company, GE Reinsurance Corporation, St. Paul Fire and Marine Insurance Company, and the London reinsurance market (primarily Lloyd's syndicates and certain United
Kingdom reinsurance companies). Catastrophe reinsurance covered an additional $40.0 million in excess of $60.0 million and was placed with Transatlantic Reinsurance Company, American
National Insurance Company, American United Life Insurance Company and ReliaStar Life Insurance Company (only 50% of this coverage was placed in 2002).

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Effective
January 1, 2002, consistent with industry practice in the aftermath of the events of September 11, 2001, losses arising from acts of terrorism were excluded from
the coverage by many of the reinsurers participating in Zenith's ceded reinsurance arrangements. However, Zenith purchased protection covering up to $9.0 million, per occurrence or in the
aggregate and in excess of $1.0 million, of losses arising out of terrorist acts for 2002. The coverage up to $5.0 million was provided by General Reinsurance Corporation and from $5.0
to $10.0 million by Employers Reinsurance Corporation.

In
connection with the RISCORP Acquisition, Zenith Insurance entered into an aggregate excess of loss reinsurance agreement with Inter-Ocean Reinsurance Company, Ltd., which
provides ceded reinsurance for unpaid loss and allocated loss adjustment expenses assumed by Zenith from RISCORP at April 1, 1998 up to $50.0 million in excess of $182.0 million.
Reinsurance recoverable from Inter-Ocean Reinsurance Company is secured by a trust account.

Zenith
Insurance and a reinsurance subsidiary of Odyssey Re Holdings Corp., a subsidiary of Fairfax Financial Holdings Limited ("Fairfax"), entered into a 10% quota share ceded
reinsurance agreement with respect to all new and renewal workers' compensation business written by Zenith Insurance in the three years commencing January 1, 2002. At December 31, 2001,
Fairfax owned approximately 42% of the outstanding common stock of Zenith National.

Insurance
premiums ceded by the P&C Operations amounted to $14.4 million, $10.6 million and $16.3 million in 2001, 2000 and 1999, respectively, or 2.9%, 3.0% and
4.2% of gross earned premiums in the years ended December 31, 2001, 2000 and 1999, respectively. Receivable from reinsurers on unpaid losses amounted to $221.5 million and
$264.6 million at December 31, 2001 and 2000, respectively, of which approximately $142.6 million and $185.4 million, respectively, were reinsurance recoverables relating
to reinsurance arrangements entered into by RISCORP. The principal reinsurers from which such RISCORP-related amounts are recoverable are: American Re-Insurance Company, Chartwell
Reinsurance Company, Continental Casualty Co., Swiss Re-Insurance Company and Trenwick Reinsurance Company.

In
its Reinsurance business, Zenith's targeted maximum exposure to losses from assumed reinsurance is expected to be limited to a maximum probable loss from any one event of
approximately 5% of Zenith's consolidated stockholders' equity.

The
companies in the P&C Operations are parties to an intercompany pooling agreement. Under such agreement, the results of underwriting operations are ceded (the risks are transferred)
to Zenith Insurance and are then reapportioned, or retro-ceded (the risks are transferred back), to the companies party to the agreement. At December 31, 2001, the proportions of the pooling
were as follows: Zenith Insurance, 97.5%; ZNAT Insurance, 2.0%; and Zenith Star, 0.5%. Transactions pursuant to the pooling agreement are eliminated on consolidation and have no impact on Zenith's
consolidated financial statements.

Marketing and Staff

The business in the Workers' Compensation operations is produced by approximately 2,300 independent licensed insurance agents and brokers throughout California,
Florida, Texas and other states in which Zenith conducts its business. Zenith Insurance's assumed reinsurance premiums are generated nationally by brokers and reinsurance intermediaries.

Applications
for insurance and reinsurance submitted by all agents and brokers are evaluated by professional underwriters based upon numerous factors, including underwriting criteria and
standards, geographic areas of underwriting concentration, actuarial judgments of rate adequacy, economic considerations, and review of known data on the particular risk. The P&C Operations, not their
agents and brokers, retain authority over underwriting, claims processing, safety engineering and auditing.

10

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Competition

Competition in the insurance business is based upon price, product design and quality of service. The insurance industry is highly competitive, and competition is
particularly intense in the national workers' compensation industry. The P&C Operations compete not only with other stock companies, but with mutual companies and other underwriting organizations such
as the State Compensation Insurance Fund in California. Competition also exists with self-insurance and captive insurers. Many companies in competition with the P&C Operations have been in
business for a much longer time, have a larger volume of business, are more widely known, and/or possess substantially greater financial resources.

Regulation

The insurance business is subject to state-by-state regulation and legislation focused on solvency, pricing, market conduct, claims practices, underwriting,
accounting, investment criteria and other areas. Such regulation and legislation is subject to continual change; and compliance is an inherent risk of the business.



Insurance companies are primarily subject to regulation and supervision by the department of insurance in the state in which they are domiciled and, to a lesser
extent, other states in which they conduct business. The P&C Operations are primarily subject to regulation and supervision by the California Department of Insurance, except for Zenith Star, which is
primarily subject to regulation and supervision by the Texas Department of Insurance. These states have broad regulatory, supervisory and administrative powers. Such powers relate to, among other
things, the grant and revocation of licenses to transact business; the licensing of agents; the standards of solvency to be met and maintained; the nature of and limitations on investments; approval
of policy forms and rates; periodic examination of the affairs of insurance companies; and the form and content of required financial statements.

Detailed
annual and quarterly reports are required to be filed by the P&C Operations with the Departments of Insurance in which they are licensed to transact business, and their
businesses and accounts are subject to periodic examination by such agencies, usually at three year intervals. The California Department of Insurance is currently conducting an examination of Zenith
Insurance and ZNAT Insurance as of December 31, 2000. Zenith Insurance and ZNAT Insurance were examined by the California Department of Insurance as of December 31, 1996 and the Report
of Examination contained no material findings. Zenith Star was examined by the Texas Department of Insurance as of December 31, 1996, and the Report of Examination contained no material
findings. The Texas Department of Insurance has informed Zenith that it will conduct an examination of Zenith Star as of December 31, 2001.

In
California, Zenith Insurance and ZNAT Insurance are required to maintain on deposit investments meeting specified standards that have an aggregate market value equal to the companies'
workers' compensation loss reserves. For this purpose, loss reserves are defined as the current estimate of reported and unreported claims net of reinsurance, plus a statutory formula reserve based on
a minimum of 65% of workers' compensation earned premiums for the latest three years. Zenith Insurance and ZNAT Insurance are subject to similar deposit requirements in certain other states based on
those states' retaliatory statutes.



The National Association of Insurance Commissioners ("NAIC") is a group formed by state Insurance Commissioners to discuss issues and formulate policy with
respect to regulation, reporting and accounting of insurance companies. Although the NAIC has no legislative authority

11

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and insurance companies are at all times subject to the laws of their respective domiciliary states and, to a lesser extent, other states in which they conduct business, the NAIC is influential in
determining the form in which such laws are enacted. Model Insurance Laws, Regulations and Guidelines (the "Model Laws") have been promulgated by the NAIC as a minimum standard by which state
regulatory systems and regulations are measured. Adoption of state laws which provide for substantially similar regulations to those described in the Model Laws is a requirement for accreditation by
the NAIC.

In
1998, the NAIC adopted the Codification of Statutory Accounting Principles guidance (the "Codification"), which, effective January 2001, replaced the previous Accounting
Practices and Procedures manual as the NAIC's primary guidance on statutory accounting. (Statutory accounting is a comprehensive basis of accounting for insurance companies based on the Codification
and state laws, regulations and general administrative rules.) The Codification provides guidance for the areas where statutory accounting had been silent and changed previous statutory accounting in
some areas. The California and Texas Departments of Insurance have adopted the Codification. The Codification did not have a material impact on the statutory capital and surplus of the P&C Operations
when it was adopted.

Under
NAIC Model Laws, insurers are required to maintain minimum levels of capital based on their investments and operations, known as "risk based capital" ("RBC") requirements. At
December 31, 2001, adjusted capital under the RBC regulations for Zenith Insurance was 215% of the required level of capital under the regulations.

The
NAIC Insurance Regulatory Information System ("IRIS") key financial ratios, developed to assist insurance departments in overseeing the financial condition of insurance companies,
are reviewed by experienced financial examiners of the NAIC and State Insurance Departments to select those companies that merit highest priority in the allocation of the regulators' resources. The
2001 IRIS results for Zenith Insurance showed three results outside the "normal" range for such ratios, as such range is determined by the NAIC. These three results were attributable to the growth in
Workers' Compensation premiums in 2001 compared to 2000 and underwriting losses, including the catastrophe losses, in 2000 and 2001.



The P&C Operations are subject to the California and Texas Insurance Holding Company System Regulatory Acts ("Holding Company Acts"), which contain certain
reporting requirements, including the requirement that such subsidiaries file information relating to capital structure, ownership, financial condition and general business operation. The Holding
Company Acts also limit dividend payments and material transactions by the P&C Operations. See Item 5. for a discussion of dividend restrictions related to the Holding Company Acts.

Item 2. Properties.

Zenith Insurance owns a 130,000 square foot office facility in Woodland Hills, California which is the corporate home office of Zenith National, Zenith Insurance
and ZNAT Insurance. Zenith Insurance also owns a 120,000 square foot branch office facility in Sarasota, Florida and a 2 acre vacant parcel in the vicinity. In the regular conduct of business,
Zenith Insurance leases offices in various cities. See Notes to Consolidated Financial Statements  Note 15  "Commitments and Contingent Liabilities" in
Zenith's 2001 Annual Report to Stockholders, which note is hereby incorporated by reference. Zenith considers its owned and leased facilities to be adequate for the needs of the organization.

12

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Item 3. Legal Proceedings.

On April 1, 1998, pursuant to an Asset Purchase Agreement dated June 17, 1997 (as amended from time to time, the "Asset Purchase Agreement") between
Zenith Insurance and RISCORP, Zenith Insurance acquired substantially all of the assets and certain liabilities of RISCORP related to RISCORP's workers' compensation business (the "RISCORP
Acquisition"). The total purchase price for such acquired assets and liabilities was determined by a three-step process in which RISCORP and its external accounting and actuarial
consultants and Zenith Insurance and its external accounting and actuarial consultants made and presented their estimates of the GAAP values of the assets and liabilities acquired by Zenith Insurance
to an independent third party, acting as a Neutral Auditor and Neutral Actuary. Such estimates varied considerably, particularly with respect to the value of premiums receivable and the liability for
unpaid losses and loss adjustment expenses. On March 19, 1999, the Neutral Auditor and Neutral Actuary issued its report determining the disputes between the parties. That report indicated that
the value of the assets transferred to Zenith Insurance exceeded the value of the liabilities assumed by Zenith Insurance by $92.3 million.

Zenith
Insurance and RISCORP entered into a settlement agreement dated July 7, 1999 (the "Settlement Agreement") providing for the resolution of certain claims arising out of the
RISCORP Acquisition. Pursuant to the Settlement Agreement, Zenith Insurance and RISCORP agreed, among other things, that RISCORP may request that the Neutral Auditor and Neutral Actuary
(a) review an alleged error concerning the proper treatment of certain reinsurance treaties in its determinations with respect to the purchase price for the RISCORP Acquisition, without waiving
whatever rights RISCORP may have to litigation of such issue, (b) determine whether the issue was properly in dispute before the Neutral Auditor and Neutral Actuary and (c) if so, determine the
merits of the issue and whether a correction is appropriate. Zenith Insurance and RISCORP also agreed that Zenith Insurance would receive $6.0 million from an escrow account established
pursuant to the Asset Purchase Agreement, and RISCORP would receive the balance of the escrow account. In a submission made to the Neutral Auditor and Neutral Actuary, RISCORP claimed that the
purchase price for the RISCORP Acquisition should be adjusted by either $5.9 million or $23.4 million as a result of alleged errors in the original determination of the Neutral Auditor
and Neutral Actuary with
respect to the purchase price. On October 7, 1999, the Neutral Auditor and Neutral Actuary informed Zenith Insurance and RISCORP that it would not consider the issue raised by RISCORP because
the issue had not previously been raised as a dispute pursuant to the procedures set forth in the engagement letter. On January 13, 2000, RISCORP filed a complaint against Zenith Insurance and
the Neutral Auditor and Neutral Actuary in the Superior Court of Fulton County in the State of Georgia. On October 9, 2000, RISCORP filed a First Amended Complaint in the Superior Court of
Fulton County. RISCORP's First Amended Complaint alleges causes of action for breach of contract against the Neutral Auditor and Neutral Actuary and, in conjunction, seeks a declaration that would
have the effect of requiring Zenith to pay either $18.1 million (and related charges) or $5.9 million. RISCORP also has asserted causes of action for professional negligence solely
against the Neutral Auditor and Neutral Actuary in which it seeks damages of either $18.1 million (and related charges) or $5.9 million. On May 1, 2001, the Superior Court granted
in their entirety motions for judgment on the pleadings filed by Zenith Insurance and the Neutral Auditor and Neutral Actuary. The Georgia Court of Appeals rejected RISCORP's petition for expedited
review of the Superior Court's decision pending a determination of counterclaims filed by Zenith Insurance and the Neutral Auditor and Neutral Actuary before the Superior Court. Zenith is unable to
predict the outcome of this litigation.

Zenith
National and its subsidiaries are defendants in various other litigation. In the opinion of management, after consultation with legal counsel, such litigation is either without
merit or the ultimate liability, if any, will not have a material adverse effect on the consolidated financial condition, results of operations or cash flows of Zenith.

Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable.

13

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PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

Zenith National's common stock, par value $1.00 per share, is traded on the New York Stock Exchange under the symbol ZNT. The table below sets forth the high and
low sales prices of the common stock for each quarterly period during the last two fiscal years.

Quarter

2001

2000First:High

$
30.70

$
22.19Low


22.80


18.75Second:High


27.92


24.94Low


23.41


20.50Third:High


30.15


23.88Low


23.78


20.81Fourth:High


29.30


29.75Low


24.40


20.00


As
of March 21, 2002, there were 247 registered holders of record of Zenith National common stock.

The
table below sets forth information with respect to the amount and frequency of dividends declared on Zenith National common stock. Based upon Zenith's financial condition, it is
currently expected that cash dividends will continue to be paid in the future.

|Date of Declaration
by Zenith Board |  | Type and Amount of
Dividend |  | Record Date For
Payment |  | Payment Date     
|----------------------------------- |  | --------------------------- |  | ----------------------- |  | -----------------
|                                    |  |                             |  |                         |  |                  
|February 12, 2002                   |  | $0.25 cash per share        |  | April 30, 2002          |  | May 15, 2002     
|December 11, 2001                   |  | $0.25 cash per share        |  | January 31, 2002        |  | February 14, 2002
|September 6, 2001                   |  | $0.25 cash per share        |  | October 31, 2001        |  | November 14, 2001
|May 24, 2001                        |  | $0.25 cash per share        |  | July 31, 2001           |  | August 14, 2001  
|February 13, 2001                   |  | $0.25 cash per share        |  | April 30, 2001          |  | May 15, 2001     
|December 11, 2000                   |  | $0.25 cash per share        |  | January 31, 2001        |  | February 14, 2001
|September 7, 2000                   |  | $0.25 cash per share        |  | October 31, 2000        |  | November 14, 2000
|May 18, 2000                        |  | $0.25 cash per share        |  | July 31, 2000           |  | August 14, 2000  
|February 24, 2000                   |  | $0.25 cash per share        |  | April 28, 2000          |  | May 12, 2000     

The
Holding Company Acts limit the ability of Zenith Insurance to pay dividends to Zenith National, and of ZNAT Insurance and Zenith Star to pay dividends to Zenith Insurance, by
providing that the appropriate insurance regulatory authorities in the states of California and Texas must approve any dividend that, together with all other such dividends paid during the preceding
twelve months, exceeds the greater of: (a) 10% of the paying company's statutory surplus as regards policyholders at the preceding December 31; or (b) 100% of the net income for
the preceding year. In addition, any such dividend must be paid from policyholders' surplus attributable to accumulated earnings. In each of the years ended December 31, 2001 and 2000, Zenith
Insurance paid $10.0 million in dividends to Zenith National. During 2002, Zenith Insurance will be able to pay $22.8 million in dividends to Zenith National without prior approval.

On
December 5, 2001 Zenith National sold one million shares of its common stock, par value $1.00 per share, to Odyssey Reinsurance Corporation, an indirect subsidiary of Fairfax,
in a private

14

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placement for an aggregate purchase price of $25.0 million. This transaction was exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), under Rule 506 of
Regulation D of the Securities Act. No underwriting discounts or commissions were payable by Zenith National in connection with the transaction.

Item 6. Selected Financial Data.

The 5-Year Summary of Selected Financial Information, included in Zenith's 2001 Annual Report to Stockholders, is hereby incorporated by reference.

Item 7. Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations.

Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations, included in Zenith's 2001 Annual Report to Stockholders, is
hereby incorporated by reference.

Item 7a. Quantitative and Qualitative Disclosures about Market Risk.

The "Market Risk of Financial Instruments" section of the Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations
included in Zenith's 2001 Annual Report to Stockholders, is hereby incorporated by reference.

Item 8. Financial Statements and Supplementary Data.

Reference is made to the Property-Casualty Loss Development data in Zenith's 2001 Annual Report to Stockholders for information setting forth the loss and loss
adjustment expense liability development for 1991 through 2001 and to the Consolidated Financial Statements and Notes thereto in Zenith's 2001 Annual Report to Stockholders, which are hereby
incorporated by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

15

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PART III

Item 10. Directors and Executive Officers of the Registrant.

The information set forth under the captions "Section 16(a) Beneficial Ownership Reporting Compliance" and "Election of Directors" in the Proxy Statement
distributed to stockholders in connection with Zenith's 2002 Annual Meeting of Stockholders (the "Proxy Statement"), which is to be filed by Zenith after the date this Report on
Form 10-K is filed, is hereby incorporated by reference.

Executive Officers of the Registrant

|Name            |  | Age |  | Position                                                                          |  | Term   |  | Executive
Officer
Since
|--------------- |  | --- |  | --------------------------------------------------------------------------------- |  | ------ |  | -----------------------
|Stanley R. Zax  |  | 64  |  | Chairman of the Board and President                                               |  | Annual |  | 1977                   
|Jack D. Miller  |  | 56  |  | Executive Vice President                                                          |  | Annual |  | 1998                   
|Robert E. Meyer |  | 53  |  | Senior Vice President and Actuary                                                 |  | Annual |  | 2000                   
|William J. Owen |  | 44  |  | Senior Vice President, Chief Financial
Officer, Treasurer and Assistant
Secretary |  | Annual |  | 2000                   
|John J. Tickner |  | 63  |  | Senior Vice President and Secretary                                               |  | Annual |  | 1985                   

Each
of the executive officers is an officer of Zenith National and certain of its subsidiaries and each has occupied an executive position with Zenith National or a subsidiary of Zenith
National for more than five years, except for:

Jack
D. Miller - Served as the President and Chief Executive Officer of Industrial Indemnity Company, a property-casualty insurance company, from 1995 to 1997; as acting
President and Chief Executive Officer from 1994 to 1995; and in various other positions from 1987 to 1994 culminating in Executive Vice President and Chief Executive Officer.

Robert
E. Meyer - Served as Senior Vice President and Actuary of Industrial Indemnity Company, a property-casualty insurance company, from 1992 to 1997, prior to that
served as Senior Vice President and Actuary of the Workers' Compensation Insurance Rating Bureau of California.

William
J. Owen - Served as Vice President of Finance for Zenith Insurance from 1997 to 1999, previously served as Vice President of Finance from 1996 to 1997 with Blue
Cross of California, a subsidiary of WellPoint Health Networks, Inc., and prior to that held various positions in Zenith Insurance culminating in Vice President of Finance.

There
are no family relationships between any of the executive officers, and there are no arrangements or understandings pursuant to which any of them were selected as officers.

Item 11. Executive Compensation.

The information set forth under the headings "Directors' Compensation," "Executive Compensation," "Summary Compensation Table," "Option/SAR Grants in Last Fiscal
Year," "Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values," "Employment Agreements and Termination of Employment and Change in Control
Arrangements," "Compensation Committee Interlocks and Insider Participation" and "Board of Directors' Report on
Executive Compensation; Performance Bonus Committee Report on Performance-Based Compensation Plans for Executive Officers" in the Proxy Statement is hereby incorporated by reference.

16

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Item 12. Security Ownership of Certain Beneficial Owners and Management.

The information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" in the Proxy Statement is hereby incorporated by
reference.

Item 13. Certain Relationships and Related Transactions.

The information set forth in footnotes 1, 2 and 3 to the table set forth under the caption "Election of Directors" and under the caption "Certain Transactions
with Fairfax Financial" in the Proxy Statement is hereby incorporated by reference.

17

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PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)  Documents
filed as part of the report:



18

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|    |  |                                                                                                                                                                                                                                                                                                                                               
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                                                                                                                                                                                                                                                                                                                                               
|2.1 |  | Stock Acquisition Agreement, dated as of September 19, 1995, between Anchor National Life Insurance Company and Zenith National Insurance Corp. (Incorporated herein by reference to Exhibit 2.1 to Zenith's Report on Form
8-K dated October 6, 1995.)                                                                                       
|2.2 |  | Amendment No. 1 to Stock Acquisition Agreement dated as of December 27, 1995, by and among Anchor National Life Insurance Company, SunAmerica Life Insurance Company and Zenith National Insurance Corp. (Incorporated herein
by reference to Exhibit 2.1 to Zenith's Report on Form 8-K dated January 9, 1996.)                              
|3.1 |  | Certificate of Incorporation of Zenith National Insurance Corp., dated May 28, 1971. (Incorporated herein by reference to Exhibit 3.1 to Zenith's Quarterly Report on Form 10-Q for the quarter ended June 30,
2000.)                                                                                                                         
|3.2 |  | Certificate of Amendment of Certificate of Incorporation of Zenith National Insurance Corp., dated September 12, 1977. (Incorporated herein by reference to Exhibit 3.2 to Zenith's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000.)                                                                                       
|3.3 |  | Certificate of Amendment of Certificate of Incorporation of Zenith National Insurance Corp., dated May 31, 1979. (Incorporated herein by reference to Exhibit 3.3 to Zenith's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000.)                                                                                             
|3.4 |  | Certificate of Amendment of Certificate of Incorporation of Zenith National Insurance Corp., dated September 6, 1983. (Incorporated herein by reference to Exhibit 3.4 to Zenith's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000.)                                                                                        
|3.5 |  | Certificate of Designation of Zenith National Insurance Corp., dated September 10, 1985. (Incorporated herein by reference to Exhibit 3.5 to Zenith's Quarterly Report on Form 10-Q for the quarter ended June 30,
2000.)                                                                                                                     
|3.6 |  | Certificate of Amendment of Certificate of Incorporation of Zenith National Insurance Corp., dated November 22, 1985. (Incorporated herein by reference to Exhibit 3.6 to Zenith's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000.)                                                                                        
|3.7 |  | Certificate of Amendment of Certificate of Incorporation of Zenith National Insurance Corp., dated May 19, 1987. (Incorporated herein by reference to Exhibit 3.7 to Zenith's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000.)                                                                                             
|3.8 |  | Certificate of Change of Address of Registered Office and of Registered Agent of Zenith National Insurance Corp., dated October 10, 1989. (Incorporated herein by reference to Exhibit 3.8 to Zenith's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2000.)                                                                    
|3.9 |  | By-laws of Zenith National Insurance Corp., as currently in effect (Incorporated herein by reference to Exhibit 3.3 to Zenith National Insurance Corp.'s Annual Report on Form 10-K for the year ended December 31,
1999.)                                                                                                                    
|4.1 |  | Indenture, dated as of May 1, 1992, between Zenith National Insurance Corp. and Norwest Bank Minnesota, National Association, as trustee, pursuant to which Zenith issued its 9% Senior Notes due May 1, 2002. (Incorporated
herein by reference to Exhibit 4 to Zenith's Quarterly Report on Form 10-Q for the quarter ended March 31, 1992.)

19

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|4.2  |  | Indenture, dated July 30, 1998, between Zenith National Insurance Corp. and Norwest Bank Minnesota, National Association as trustee, pursuant to which Zenith issued its 8.55% Subordinated Deferrable Interest Debentures.
(Incorporated herein by reference to Exhibit 10.6 to Zenith's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.3  |  | Amended and Restated Declaration of Trust of Zenith National Insurance Capital Trust I, dated July 30, 1998, between Zenith National Insurance Corp., the trustees and the holders. (Incorporated herein by reference to
Exhibit 10.8 to Zenith's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.4  |  | Certificate of Amendment to Certificate of Trust of Zenith National Insurance Capital Trust I, dated March 1, 2000. (Incorporated herein by reference to Exhibit 10.1 to Zenith's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.1 |  | Purchase Agreement, dated February 4, 1981, among Reliance Insurance Company, Zenith National Insurance Corp., the Selling Stockholders referred to therein, and Eugene V. Klein, Daniel Schwartz and Harvey L. Silbert as
agents for the Selling Stockholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.2 |  | Asset Purchase Agreement, dated June 17, 1997, by and among Zenith Insurance Company and RISCORP, Inc., RISCORP Management Services, Inc., RISCORP of Illinois, Inc., Independent Association Administrators Incorporated,
RISCORP Insurance Services, Inc., RISCORP Managed Care Services, Inc., CompSource, Inc., RISCORP Real Estate Holdings, Inc., RISCORP Acquisition, Inc., RISCORP West, Inc., RISCORP of Florida, Inc., RISCORP Insurance Company, RISCORP Property &
Casualty Insurance Company, RISCORP National Insurance Company, RISCORP Services, Inc., RISCORP Staffing Solutions Holding, Inc., RISCORP Staffing Solutions, Inc. I and RISCORP Staffing Solutions, Inc. II. (Incorporated herein by reference to Exhibit
10.1 to Zenith's Current Report on Form 8-K/A, dated June 17, 1997.)                                                  
|10.3 |  | First Amendment, entered into June 26, 1997, to the Asset Purchase Agreement, dated June 17, 1997, by and among Zenith Insurance Company and RISCORP, Inc., RISCORP Management Services, Inc., RISCORP of Illinois, Inc.,
Independent Association Administrators Incorporated, RiSCORP Insurance Services, Inc., RISCORP Managed Care Services, Inc., CompSource, Inc., RISCORP Real Estate Holdings, Inc., RISCORP Acquisition, Inc., RISCORP West, Inc., RISCORP of Florida, Inc.,
RISCORP Insurance Company, RISCORP Property & Casualty Insurance Company, RISCORP National Insurance Company, RISCORP Services, Inc., RISCORP Staffing Solutions Holding, Inc., RISCORP Staffing Solutions, Inc. I and RISCORP Staffing Solutions,
Inc. II. (Incorporated herein by reference to Exhibit 10.2 to Zenith's Current Report on Form 8-K, dated April 1, 1998.)
|10.4 |  | Second Amendment, entered into July 11, 1997, to the Asset Purchase Agreement dated June 17, 1997, by and among Zenith Insurance Company and RISCORP, Inc., RISCORP Management Services, Inc., RISCORP of Illinois, Inc.,
Independent Association Administrators Incorporated, RISCORP Insurance Services, Inc., RISCORP Managed Care Services, Inc., CompSource, Inc., RISCORP Real Estate Holdings, Inc., RISCORP Acquisition, Inc., RISCORP West, Inc., RISCORP of Florida, Inc.,
RISCORP Insurance Company, RISCORP Property & Casualty Insurance Company, RISCORP National Insurance Company, RISCORP Services, Inc., RISCORP Staffing Solutions Holding, Inc., RISCORP Staffing Solutions, Inc. I and RISCORP Staffing Solutions,
Inc. II. (Incorporated herein by reference to Exhibit 10.3 to Zenith's Current Report on Form 8-K, dated April 1, 1998.)

20

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|10.5   |  | Amendment No. 3 entered into March 30, 1998, to the Asset Purchase Agreement dated June 17, 1997, by and among Zenith Insurance Company and RISCORP, Inc., RISCORP Management Services, Inc., 1390 Main Street Services, Inc.,
 RISCORP of Illinois, Inc., Independent Association Administrators Incorporated, RISCORP Insurance Services, Inc., RISCORP Managed Care Services, Inc., CompSource, Inc., RISCORP Real Estate Holdings, Inc., RISCORP Acquisition, Inc., RISCORP West,
Inc., RISCORP of Florida, Inc., RISCORP Insurance Company, RISCORP Property & Casualty Insurance Company, RISCORP National Insurance Company, RISCORP Services, Inc., RISCORP Staffing Solutions Holding Company, RISCORP Staffing Solutions, Inc. I
and RISCORP Staffing Solutions, Inc. II. (Incorporated herein by reference to Exhibit 10.4 to Zenith's Current Report on Form 8-K, dated April 1, 1998.)
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.6   |  | Settlement Agreement, dated July 7, 1999, between Zenith Insurance Company, RISCORP, Inc., RISCORP Management Services, Inc., 1390 Main Street Services, Inc., RISCORP of Illinois, Inc., Independent Association
Administrators Incorporated, RISCORP Insurance Services, Inc., RISCORP Managed Care Services, Inc., CompSource, Inc., RISCORP Real Estate Holdings, Inc., RISCORP Acquisition, Inc., RISCORP West, Inc., RISCORP of Florida, Inc., RISCORP Insurance
Company, RISCORP Property & Casualty Insurance Company, RISCORP National Insurance Company, RISCORP Services, Inc., RISCORP Staffing Solutions Holding Company, RISCORP Staffing Solutions, Inc., I and RISCORP Staffing Solutions, Inc., II.
(Incorporated herein by reference to Exhibit 10.4 to Zenith's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.)                                             
|10.7   |  | Assumption and Indemnity Reinsurance Agreement, dated April 1, 1998, by and between Zenith Insurance Company and RISCORP National Insurance Company. (Incorporated herein by reference to Exhibit 10.5 to Zenith's Current
Report on Form 8-K, date of report April 1, 1998.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.8   |  | Assumption and Indemnity Reinsurance Agreement, dated April 1, 1998, by and between Zenith Insurance Company and RISCORP Insurance Company. (Incorporated herein by reference to Exhibit 10.6 to Zenith's Current Report on
Form 8-K, dated April 1, 1998.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.9   |  | Assumption and Indemnity Reinsurance Agreement, dated April 1, 1998, by and between Zenith Insurance Company and RISCORP Property & Casualty Insurance Company. (Incorporated herein by reference to Exhibit 10.7 to
Zenith's Current Report on Form 8-K, dated April 1, 1998.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.10  |  | Stock Purchase Agreement, dated February 22, 1999, between Zenith Insurance Company and Nationwide Mutual Insurance Company. (Incorporated herein by reference to Zenith's Current Report on Form 8-K, dated March 9,
1999.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.11  |  | Stock Purchase Agreement, dated as of November 21, 2001, between Zenith National Insurance Corp. and Odyssey Reinsurance Corporation. (Incorporated herein by reference to Zenith's Current Report on Form 8-K, filed
December 6, 2001.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|*10.12 |  | Zenith National Insurance Corp. 1996 Employee Stock Option Plan, approved by the Stockholders on May 22, 1996. (Incorporated herein by reference to Exhibit 10.5 to Zenith's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|*10.13 |  | Amendment No. 1, dated December 8, 1998, to Zenith National Insurance Corp. 1996 Employee Stock Option Plan. (Incorporated herein by reference to Exhibit 10.1 to Zenith's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

21

---

|*10.14 |  | Amendment No. 2, dated May 24, 2001, to Zenith National Insurance Corp. 1996 Employee Stock Option Plan.                                                                                                                                                                                                                                                                                                             
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*10.15 |  | Employment Agreement, dated December 11, 1997, between Zenith National Insurance Corp. and Fredricka Taubitz. (Incorporated herein by reference to Exhibit 10.8 to Zenith's Annual Report on Form 10-K for the year ended
December 31, 1997.)                                                                                                                                                                        
|*10.16 |  | Employment Agreement, dated January 5, 1998, between Zenith National Insurance Corp. and John J. Tickner. (Incorporated herein by reference to Exhibit 10.9 to Zenith's Annual Report on Form 10-K for the year ended
December 31, 1997.)                                                                                                                                                                            
|*10.17 |  | Amendment to Employment Agreement, dated March 1, 2000, between Zenith National Insurance Corp. and John J. Tickner. (Incorporated herein by reference to Exhibit 10.17 to Zenith's Annual Report on Form 10-K for the year
ended December 31, 1999.)                                                                                                                                                                
|*10.18 |  | Restated and Amended Employment Agreement, executed March 13, 2001, between Zenith National Insurance Corp. and Stanley R. Zax. (Incorporated herein by reference to Exhibit 10.18 to Zenith's Annual Report on Form 10-K for
the year ended December 31, 2000.)                                                                                                                                                     
|*10.19 |  | Employment Agreement, dated October 20, 1997, between Zenith Insurance Company and Jack D. Miller. (Incorporated herein by reference to Exhibit 10.1 to Zenith Quarterly Report on Form 10-Q for the quarter ended June 30,
1998.)                                                                                                                                                                                   
|*10.20 |  | Amendment to Employment Agreement, dated March 1, 2000, between Zenith Insurance Company and Jack D. Miller. (Incorporated herein by reference to Exhibit 10.20 to Zenith's Annual Report on Form 10-K for the year ended
December 31, 1999.)                                                                                                                                                                        
|*10.21 |  | Employment Agreement, dated October 20, 1997, between Zenith Insurance Company and Robert E. Meyer. (Incorporated herein by reference to Exhibit 10.21 to Zenith's Annual Report on Form 10-K for the year ended December 31,
1999.)                                                                                                                                                                                 
|*10.22 |  | Amendment to Employment Agreement, dated March 1, 2000, between Zenith Insurance Company and Robert E. Meyer. (Incorporated herein by reference to Exhibit 10.22 to Zenith's Annual Report on Form 10-K for the year ended
December 31, 1999.)                                                                                                                                                                       
|*10.23 |  | Stock Option Agreement, dated March 15, 1996, between Zenith and Stanley R. Zax. (Incorporated herein by reference to Exhibit 10.3 to Zenith's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996.)                                                                                                                                                                                                   
|*10.24 |  | Zenith National Insurance Corp. Executive Officer Bonus Plan, dated March 21, 1994. (Incorporated herein by reference to Exhibit 10.12 to Zenith's Annual Report on Form 10-K for the year ended December 31, 1996.)                                                                                                                                                                                                 
|10.25  |  | Aggregate Excess of Loss Reinsurance Agreement between Associated General Contractors Self Insurers Trust Fund (now part of Zenith Insurance Company) and Reliance Insurance Company effective December 31, 1991.
(Incorporated herein by reference to Exhibit 10.24 to Zenith's Annual Report on Form 10-K for the year ended December 31, 1996.)                                                                   
|10.26  |  | Specific Excess Workers' Compensation and Employers' Liability Policy between Planet Insurance Company (now Reliance National Indemnity Company) and Associated General Contractors of Florida Self Insurance Fund (now part
of Zenith Insurance Company) effective January 1, 1993. (Incorporated herein by reference to Exhibit 10.25 to Zenith's Annual Report on Form 10-K for the year ended December 31, 1996.)

22

---

|10.27 |  | Aggregate Excess of Loss Reinsurance Agreement, dated August 1, 1998, between Zenith National Insurance Group and Inter-Ocean Reinsurance Company LTD. (Incorporated herein by reference to Exhibit 10.32 to Zenith's Annual
Report on Form 10-K for the year ended December 31, 1998.)                                                                                                                                
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.28 |  | Special Endorsement to Retrocessional Agreement, dated August 1, 1998, between American Re-Insurance Company, Inter-Ocean Reinsurance Company LTD., and Zenith Insurance Company, CalFarm Insurance Company, ZNAT Insurance
Company and Zenith Star Insurance Company. (Incorporated herein by reference to Exhibit 10.28 to Zenith's Annual Report on Form 10-K for the year ended December 31, 1999.)                
|10.29 |  | Termination Endorsement Number 1 to Retrocessional Agreement, dated December 22, 1999, between American Re-Insurance Company, Inter-Ocean Reinsurance Company, LTD, and Zenith Insurance Company, CalFarm Insurance Company,
ZNAT Insurance Company and Zenith Star Insurance Company. (Incorporated herein by reference to Exhibit 10.29 to Zenith's Annual Report on Form 10-K for the year ended December 31, 1999.)
|10.30 |  | Endorsement Number 1 to Aggregate Excess of Loss Reinsurance Agreement, dated December 22, 1999, between Zenith National Insurance Group, CalFarm Insurance Company, ZNAT Insurance Company and Zenith Star Insurance Company
and Inter-Ocean Reinsurance Company LTD. (Incorporated herein by reference to Exhibit 10.30 to Zenith's Annual Report on Form 10-K for the year ended December 31, 1999.)                
|10.31 |  | Trust Agreement, dated December 18, 1998, between Inter-Ocean Reinsurance Company, LTD and Zenith Insurance Company, CalFarm Insurance Company, ZNAT Insurance Company and Zenith Star Insurance Company. (Incorporated
herein by reference to Exhibit 10.34 to Zenith's Annual Report on Form 10-K for the year ended December 31, 1998.)                                                                             
|10.32 |  | Trust Agreement, dated October 5, 2001, among American Re-Insurance Company (as Grantor), Zenith Insurance Company, ZNAT Insurance Company and Zenith Star Insurance Company (collectively, as Beneficiary), and State
Street Bank and Trust Company (as Trustee).                                                                                                                                                     
|10.33 |  | Agreement of Reinsurance #8051 between General Reinsurance Corporation and Zenith Insurance Company, ZNAT Insurance Company, Zenith Star Insurance Company and CalFarm Insurance Company, dated May 22, 1995. (Incorporated
herein by reference to Exhibit 10.13 to Zenith's Annual Report on Form 10-K for the year ended December 31, 1995.)                                                                         
|10.34 |  | Endorsement No. 11, effective January 1, 2002, to Agreement of Reinsurance # 8051 between General Reinsurance Corporation and Zenith Insurance Company, ZNAT Insurance Company, Zenith Star Insurance Company and
CalFarm Insurance Company, et. al., dated as of May 22, 1995. (Incorporated herein by reference to Exhibit 10.2 to Zenith's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.) 
|10.35 |  | Workers' Compensation and Employers' Liability Reinsurance Agreement between Zenith Insurance Company and Employers Reinsurance Corporation, effective January 1, 1986. (Incorporated herein by reference to Exhibit 10.14 to
Zenith's Annual Report on Form 10-K for the year ended December 31, 1991.)                                                                                                               

23

---

|10.36 |  | Worker's Compensation Quota Share Reinsurance Agreement between Zenith Insurance Company, ZNAT Insurance Company, Zenith Star Insurance Company (collectively, as cedant) and Odyssey America Reinsurance Corporation (as
Reinsurer) dated December 28, 2001.                                                                                          
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.37 |  | Promissory Note, dated July 5, 2000, from Zenith National Insurance Corp. to City National Bank. (Incorporated herein by reference to Exhibit 10.2 to Zenith's Quarterly Report on Form 10-Q for the quarter ended June 30,
2000.)                                                                                                                     
|10.38 |  | Change in Terms Agreement, dated July 1, 2001 (relating to the Promissory Note dated July 5, 2000), from Zenith National Insurance Corp. to City National Bank, N. A. (Incorporated herein by reference to Exhibit 10.2 to
Zenith's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001.)                                                
|10.39 |  | Credit Agreement, dated July 24, 1997, between Zenith National Insurance Corp. and Bank of America National Trust and Savings Association, together with Tranche A and Tranche B Promissory Notes referenced therein.
(Incorporated herein by reference to Exhibit 10.3 to Zenith's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.)
|10.40 |  | Restated Tranche A Note, dated July 22, 1999 between Zenith National Insurance Corp. and Bank of America National Trust and Savings Association. (Incorporated herein by reference to Exhibit 10.3 to Zenith's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1999.)                                                                
|10.41 |  | Amendment No. 1, dated January 21, 1998, to the Credit Agreement, dated July 24, 1997, between Zenith National Insurance Corp. and Bank of America National Trust and Savings Association. (Incorporated herein by
reference to Exhibit 10.31 to Zenith's Annual Report on Form 10-K for the year ended December 31, 1997.)                            
|10.42 |  | Third Amendment, dated August 21, 1998, to the Credit Agreement, dated July 24, 1997, between Zenith National Insurance Corp. and Bank of America National Trust and Savings Association. (Incorporated herein by reference
to Exhibit 10.4 to Zenith's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.)                       
|10.43 |  | Seventh Amendment, dated September 19, 2000, to Credit Agreement, dated July 24, 1997, between Zenith National Insurance Corp. and Bank of America, N. A. (Incorporated herein by reference to Exhibit 10.1 to
Zenith's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.)                                                       
|10.44 |  | Eighth Amendment, dated September 18, 2001, to Credit Agreement, dated July 24, 1997, between Zenith National Insurance Corp. and Bank of America, N. A. (Incorporated herein by reference to Exhibit 10.1 to
Zenith's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.)                                                        
|10.45 |  | Master Revolving Line of Credit Construction Loan Agreement, dated as of April 18, 2001, between Perma-Bilt, a Nevada Corporation and Bank of America, N. A. (Incorporated herein by reference to Exhibit 10.1 to
Zenith's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001.)                                                         
|10.46 |  | Promissory Note dated April 18, 2001, Secured by Deeds of Trust, in the principal amount of $50,000,000 from Perma-Bilt, a Nevada Corporation, to Bank of America, N. A.                                                                                                                                                                               
|10.47 |  | Modification Agreement by Perma-Bilt, a Nevada Corporation, and Bank of America, N. A., dated as of July 18, 2001, modifying Master Revolving Line of Credit Construction Loan Agreement dated as of April 18,
2001.                                                                                                                                   

24

---

|10.48 |  | Modification Agreement by Perma-Bilt, a Nevada Corporation, and Bank of America, N. A., dated as of August 13, 2001, modifying Master Revolving Line of Credit Construction Loan Agreement, dated as of April 18,
2001.                                                                                                                                                                                                                                                               
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.49 |  | Modification Agreement (3rd) by Perma-Bilt, a Nevada Corporation, and Bank of America, N. A., dated as of January 8, 2002, modifying Master Revolving Line of Credit Construction Loan Agreement, dated as of April 18,
2001.                                                                                                                                                                                                                                                         
|10.50 |  | Modification Agreement (4th) by Perma-Bilt, a Nevada Corporation, and Bank of America, N. A., dated as of January 24, 2002, modifying Master Revolving Line of Credit Construction Loan Agreement, dated as of April 18,
2001.                                                                                                                                                                                                                                                        
|10.51 |  | Capital Securities Guarantee Agreement, dated July 30, 1998, between Zenith National Insurance Corp. and Norwest Bank Minnesota, National Association. (Incorporated herein by reference to Exhibit 10.7 to Zenith's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.)                                                                                                                                                                                         
|10.52 |  | Purchase Agreement between Zenith National Insurance Corp., Zenith National Insurance Capital Trust I, Credit Suisse First Boston Corporation, BancAmerica Robertson Stephens and Donaldson, Lufkin & Jenrette Securities
Corporation, dated July 27, 1998, for $75,000,000 Zenith National Insurance Capital Trust I 8.55% Capital Securities. (Incorporated herein by reference to Exhibit 10.9 to Zenith's Quarterly Report on Form 10-Q for the quarter ended September 30,
1998.)
|10.53 |  | Standstill Agreement, dated June 30, 1999, between Zenith National Corp. and Fairfax Financial Holdings Limited. (Incorporated herein by reference to Exhibit 10.3 to Zenith's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999.)                                                                                                                                                                                                                                    
|11    |  | Statements re computation of per share earnings. (Incorporated herein by reference to Notes to Consolidated Financial Statements  Note 19  "Earnings and Dividends Per Share" in Zenith's 2001 Annual Report to
Stockholders.)                                                                                                                                                                                                                                                      
|13    |  | Zenith's Annual Report to Stockholders for the year ended December 31, 2001, but only to the extent such report is expressly incorporated by reference herein, and such report is not otherwise to be deemed "filed" as a
part of this Annual Report on Form 10-K.                                                                                                                                                                                                                    
|23    |  | Consent of PricewaterhouseCoopers LLP, dated March 27, 2002. (Incorporated herein by reference to page F-1 of this Annual Report on Form 10-K.)                                                                                                                                                                                                                                                                                                                                       

---

*Management contract or compensatory plan or arrangement





25

---





SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 27, 2002.

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

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities
indicated, on March 27, 2002.

|/s/STANLEY R. ZAXStanley R. Zax           |  | Chairman of the Board, President and Director (Principal Executive Officer)                   
|----------------------------------------- |  | ----------------------------------------------------------------------------------------------
|/s/MAX M. KAMPELMANMax M. Kampelman       |  | Director                                                                                      
|/s/ROBERT J. MILLERRobert J. Miller       |  | Director                                                                                      
|/s/LEON E. PANETTALeon E. Panetta         |  | Director                                                                                      
|/s/WILLIAM S. SESSIONSWilliam S. Sessions |  | Director                                                                                      
|/s/HARVEY L. SILBERTHarvey L. Silbert     |  | Director                                                                                      
|/s/GERALD TSAI, JR.Gerald Tsai, Jr.       |  | Director                                                                                      
|/s/MICHAEL WM. ZAVISMichael Wm. Zavis     |  | Director                                                                                      
|/s/WILLIAM J. OWENWilliam J. Owen         |  | Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

26

---



CONSENT OF INDEPENDENT ACCOUNTANTS

We
hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File Numbers 33-8948, 33-22219,
333-04399, 333-79199 and 333-62798) of our report dated February 6, 2002 relating to the consolidated financial statements as of December 31, 2001 and
2000, and for each of the three years in the period ended December 31, 2001, which appears in the 2001 Annual Report to Stockholders of Zenith National Insurance Corp. (the "Company"), which is
included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. We also consent to the incorporation by reference of our report dated
February 6, 2002 relating to the financial statement schedules, which appears in such Annual Report on Form 10-K.



Los
Angeles, California
March 27, 2002

F-1

---



REPORT OF INDEPENDENT ACCOUNTANTS ON  FINANCIAL STATEMENT SCHEDULES

To
the Board of Directors of
    Zenith National Insurance Corp.:

Our
audits of the consolidated financial statements referred to in our report dated February 6, 2002 appearing in the 2001 Annual Report to Stockholders of Zenith National Insurance Corp.
(which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedules
listed in Item 14(a)(2) of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read
in conjunction with the related consolidated financial statements.



Los
Angeles, California

February 6,
2002

F-2

---



SCHEDULE I  SUMMARY OF INVESTMENTS         OTHER THAN INVESTMENTS IN RELATED PARTIES        ZENITH NATIONAL INSURANCE CORP. AND
SUBSIDIARIES        December 31, 2001

|Column A                                                         |  | Column B |         | Column C |   | Column D
|---------------------------------------------------------------- |  | -------- | ------- | -------- | - | --------
|
|
|Fixed maturities:                                                |  |          |         |          |   |         
|Bonds:                                                           |  |          |         |          |   |         
|United States Government and government agencies and authorities |  | $        | 153,092 |          | $ | 152,580 
|Public utilities                                                 |  |          | 52,777  |          |   | 54,030  
|Industrial and miscellaneous                                     |  |          | 495,668 |          |   | 494,634 
|Redeemable preferred stocks                                      |  |          | 27,023  |          |   | 26,706  
|                                                                 |  |          |         |          |   |         
|Total fixed maturities                                           |  |          | 728,560 |          |   | 727,950 
|Equity securities:                                               |  |          |         |          |   |         
|Floating rate preferred stocks                                   |  |          | 6,799   |          |   | 6,093   
|Convertible and nonredeemable preferred stocks                   |  |          | 5,488   |          |   | 5,795   
|Common stocks, industrial                                        |  |          | 29,411  |          |   | 28,394  
|                                                                 |  |          |         |          |   |         
|Total equity securities                                          |  |          | 41,698  |          |   | 40,282  
|Short-term investments                                           |  |          | 119,066 |          |   | 119,066 
|Other investments                                                |  |          | 58,090  |          |   | 58,090  
|                                                                 |  |          |         |          |   |         
|Total investments                                                |  | $        | 947,414 |          | $ | 945,388 
|                                                                 |  |          |         |          |   |         

---

F-3

---



SCHEDULE II  CONDENSED FINANCIAL INFORMATION OF REGISTRANT    ZENITH NATIONAL INSURANCE CORP.    BALANCE SHEETASSETS

|                                                                                                                                                |  | December 31, |         
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | --------
|
|Investments:                                                                                                                                    |  |              |         
|Fixed maturities, at fair value (cost $480 in 2000)                                                                                             |  |              |         
|Common stocks, at fair value (cost $1,678 in 2001 and $1,214 in 2000)                                                                           |  | $            | 1,578   
|Short-term investments (at cost, which approximates fair value)                                                                                 |  |              | 77,817  
|                                                                                                                                                |  |              |         
|Total investments                                                                                                                               |  |              | 79,395  
|Cash                                                                                                                                            |  |              | 608     
|Investment in subsidiaries (Note A)                                                                                                             |  |              | 311,194 
|Receivable from subsidiaries (Note A)                                                                                                           |  |              | 43,998  
|Other assets                                                                                                                                    |  |              | 17,644  
|                                                                                                                                                |  |              |         
|Total assets                                                                                                                                    |  | $            | 452,839 
|                                                                                                                                                |  |              |         
|LIABILITIES                                                                                                                                     | 
|Senior notes payable, less unamortized issue cost of $32 in 2001 and $126 in 2000 (Notes B and C)                                               |  | $            | 57,203  
|8.55% Subordinated Deferrable Interest Debentures, less unamortized issue cost of $250 in 2001 and $259 in 2000 (Note D)                        |  |              | 77,070  
|Dividend payable to stockholders                                                                                                                |  |              | 4,638   
|Federal income tax (Note A)                                                                                                                     |  |              | 5,647   
|Other liabilities                                                                                                                               |  |              | 5,670   
|                                                                                                                                                |  |              |         
|Total liabilities                                                                                                                               |  |              | 150,228 
|                                                                                                                                                |  |              |         
|STOCKHOLDERS' EQUITY                                                                                                                            | 
|Preferred stock, $1 parshares authorized 1,000; issued and outstanding, none in 2001 and 2000                                                  |  |              |         
|Common stock, $1 parshares authorized 50,000; issued 25,571, outstanding 18,553 in 2001; issued 25,452, outstanding 17,443 in 2000             |  |              | 25,571  
|Additional paid-in capital                                                                                                                      |  |              | 291,348 
|Retained earnings                                                                                                                               |  |              | 119,600 
|Accumulated other comprehensive lossnet unrealized depreciation on investments, net of deferred tax benefit of $951 in 2001 and $4,419 in 2000 |  |              | (1,766  
|                                                                                                                                                |  |              |         
|                                                                                                                                                |  |              | 434,753 
|Treasury stock, at cost (7,018 shares in 2001 and 8,009 shares in 2000) (Note E)                                                                |  |              | (132,142
|                                                                                                                                                |  |              |         
|Total stockholders' equity                                                                                                                      |  |              | 302,611 
|                                                                                                                                                |  |              |         
|Total liabilities and stockholders' equity                                                                                                      |  | $            | 452,839 
|                                                                                                                                                |  |              |         

See
notes to condensed financial information.

F-4

---



SCHEDULE II  CONDENSED FINANCIAL INFORMATION OF REGISTRANT    ZENITH NATIONAL INSURANCE CORP.    STATEMENT OF OPERATIONS

|                                                                                                          |  | Years Ended December 31, |        
|--------------------------------------------------------------------------------------------------------- |  | ------------------------ | -------
|
|Net investment income                                                                                     |  | $                        | 2,100  
|Realized gains (losses) on investments                                                                    |  |                          | 419    
|                                                                                                          |  |                          |        
|Total revenues                                                                                            |  |                          | 2,519  
|Operating expenses                                                                                        |  |                          | 3,827  
|Interest expense                                                                                          |  |                          | 7,774  
|                                                                                                          |  |                          |        
|Total expenses                                                                                            |  |                          | 11,601 
|Loss before federal income tax benefit and equity in (loss) income of subsidiaries and extraordinary item |  |                          | (9,082 
|Federal income tax benefit                                                                                |  |                          | 992    
|                                                                                                          |  |                          |        
|Loss before equity in (loss) income of subsidiaries and
extraordinary item                                |  |                          | (8,090 
|Equity in (loss) income of subsidiaries (Note A)                                                          |  |                          | (15,710
|                                                                                                          |  |                          |        
|(Loss) income before extraordinary item                                                                   |  |                          | (23,800
|Extraordinary item  gain on extinguishment of debt, net of federal income tax expense of $534 (Note C)   |  |                          |        
|                                                                                                          |  |                          |        
|Net (loss) income                                                                                         |  | $                        | (23,800
|                                                                                                          |  |                          |        

See
notes to condensed financial information.

F-5

---



SCHEDULE II  CONDENSED FINANCIAL INFORMATION OF REGISTRANT    ZENITH NATIONAL INSURANCE CORP.    STATEMENT OF CASH FLOWS

|                                                                                 |  | Years Ended December 31, |        
|-------------------------------------------------------------------------------- |  | ------------------------ | -------
|
|Cash flows from operating activities:                                            |  |                          |        
|Investment income received                                                       |  | $                        | 477    
|Operating expenses paid                                                          |  |                          | (4,111 
|Interest paid                                                                    |  |                          | (7,648 
|Income tax recovered (paid)                                                      |  |                          | (2,657 
|                                                                                 |  |                          |        
|Net cash used in operating activities                                            |  |                          | (13,939
|Cash flows from investing activities:                                            |  |                          |        
|Purchases of investments:                                                        |  |                          |        
|Equity securities available-for-sale                                             |  |                          | (3,069 
|Proceeds from sales of investments:                                              |  |                          |        
|Fixed maturity securities available for sale                                     |  |                          | 768    
|Equity securities available-for-sale                                             |  |                          | 2,731  
|Other investments                                                                |  |                          |        
|Net (increase) decrease in short-term investments                                |  |                          | (17,873
|Other, net                                                                       |  |                          | (233   
|                                                                                 |  |                          |        
|Net cash (used in) provided by investing activities                              |  |                          | (17,676
|Cash flows from financing activities:                                            |  |                          |        
|Repurchase of redeemable securities (Notes B and C)                              |  |                          |        
|Repurchase of 9% Notes (Notes B and C)                                           |  |                          | (1,265 
|Cash advanced from bank lines of credit                                          |  |                          |        
|Cash repaid on bank lines of credit                                              |  |                          |        
|Cash dividends paid to common stockholders                                       |  |                          | (17,502
|Proceeds from exercise of stock options                                          |  |                          | 3,022  
|Sale of treasury shares (Note E)                                                 |  |                          | 25,000 
|Purchase of treasury shares                                                      |  |                          | (207   
|Dividends received from subsidiaries (Note A)                                    |  |                          | 10,000 
|Capital contribution to Zenith Insurance (Notes A and D)                         |  |                          |        
|Net cash from (to) subsidiary (Note A)                                           |  |                          | 12,099 
|                                                                                 |  |                          |        
|Net cash provided by (used in) financing activities                              |  |                          | 31,147 
|Net (decrease) increase in cash                                                  |  |                          | (468   
|Cash at beginning of year                                                        |  |                          | 1,076  
|                                                                                 |  |                          |        
|Cash at end of year                                                              |  | $                        | 608    
|                                                                                 |  |                          |        
|Reconciliation of net (loss) income to net cash flows from operating activities: |  |                          |        
|Net (loss) income                                                                |  | $                        | (23,800
|Loss (income) from subsidiaries (Note A)                                         |  |                          | 15,710 
|Gain on extinguishment of debt (Notes B and C)                                   |  |                          |        
|Federal income tax                                                               |  |                          | (3,649 
|Other                                                                            |  |                          | (2,200 
|                                                                                 |  |                          |        
|Net cash used in operating activities                                            |  | $                        | (13,939
|                                                                                 |  |                          |        

See
notes to condensed financial information.

F-6

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SCHEDULE IICONDENSED FINANCIAL INFORMATION OF REGISTRANT    ZENITH NATIONAL INSURANCE CORP.    NOTES TO CONDENSED FINANCIAL INFORMATION

The accompanying condensed financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes thereto
of Zenith National Insurance Corp. ("Zenith National") and subsidiaries. Certain prior year numbers have been reclassified to conform to the current year presentation.

A.    Investment
In Subsidiaries

Zenith
National owns, directly or indirectly, 100% of the outstanding stock of Zenith Insurance Company ("Zenith Insurance"); ZNAT Insurance Company; Zenith Star Insurance Company;
Perma-Bilt, a Nevada Corporation ("Perma-Bilt"); Zenith Development Corp. ("ZDC"); and Zenith National Insurance Capital Trust I (the "Trust"). These investments are
included in the financial statements on the equity basis of accounting. Included in investment in subsidiaries at December 31, 2001 and 2000 was $2.0 million of the unamortized
excess of cost over underlying net tangible assets of companies acquired prior to 1970, which is considered to have continuing value.

Zenith
National funds the land acquisitions of its Real Estate operations through intercompany loans. The receivable from subsidiaries mainly comprises principal and interest on
loans to Perma-Bilt and ZDC of $43.7 million and $55.4 million at December 31, 2001 and 2000, respectively, for which interest is charged at the rate of prime
plus 2% (6.75% at December 31, 2001 and 11.5% at December 31, 2000).

Zenith
National files a consolidated federal income tax return. The equity in (loss) income of subsidiaries is net of a provision for federal income tax benefit of
$8.8 million in 2001 and $21.9 million in 2000 and a federal income tax expense of $32.2 million in 1999. Zenith National has tax allocation procedures with its subsidiaries
and the 2001, 2000 and 1999 condensed financial information reflect Zenith National's portion of the consolidated tax.

Zenith
Insurance paid dividends to Zenith National of $10.0 million in 2001, $10.0 million in 2000 and $130.0 million in 1999 including a dividend of
$100.0 million for which prior approval was obtained from the California Department of Insurance in 1999. Zenith National made a contribution of $25.0 million in cash in 2000 to the
capital and surplus of Zenith Insurance. In 2001, Zenith National contributed all of the outstanding capital stock of Perma-Bilt, a Nevada Corporation, to Zenith Insurance at an
equity basis value of $14.2 million.

B.    Senior
Notes Payable

Zenith
National had $57.2 million and $58.5 million outstanding of the $75.0 million issued of its 9% Senior Notes due 2002 (the "9% Notes") at
December 31, 2001 and 2000, respectively. Interest on the 9% Notes is payable semi-annually. The 9% Notes are general unsecured obligations of Zenith National. Issue costs of
$1.2 million are being amortized over the term of the 9% Notes. In the years ended December 31, 2001, 2000 and 1999, $5.3 million, $5.8 million and
$6.9 million, respectively, of interest and issue costs were expended.

C.    Extraordinary
Item  Gain on Extinguishment of Debt

In
2000, Zenith National paid $22.8 million to repurchase $16.5 million aggregate principal amount of its outstanding 9% Senior Notes and $8.0 million aggregate
liquidation amount of the outstanding 8.55% Capital Securities (the "Redeemable Securities") of the Trust, a Delaware statutory business trust, all of the voting securities of which are owned by
Zenith National. The repurchases in 2000 resulted in an extraordinary gain before tax of $1.5 million. In 2001, Zenith National paid $1.3 million to repurchase $1.3 million
aggregate principal

F-7

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amount of the outstanding 9% Notes. Zenith National used its available cash balances to fund these purchases.

D.    Subordinated
Debentures

Zenith
National had $77.3 million of the 8.55% Subordinated Deferrable Interest Debentures due 2028 (the "Subordinated Debentures") issued to the Trust outstanding at
December 31, 2001
and 2000. The semi-annual interest payments on the Subordinated Debentures may be deferred by Zenith National for up to ten consecutive semi-annual periods. The
Subordinated Debentures are redeemable at any time by Zenith at the then present value of the remaining scheduled payments of principal and interest. The issue cost of the Subordinated Debentures
of $0.3 million is being amortized over the term of the Subordinated Debentures. During each year ended December 31, 2001, 2000 and 1999, $6.7 million of interest and issue
costs were expensed.

The
Subordinated Debentures are subordinated to all other indebtedness of Zenith National.

E.    Common
Stock

On
December 5, 2001, Zenith National sold one million shares of its common stock, par value $1.00 per share, in a private placement for $25.00 per share to Odyssey
Reinsurance Corporation, an indirect subsidiary of Fairfax Financial Holdings Limited ("Fairfax"). Fairfax and its affiliates currently own approximately 42% of Zenith National's outstanding
common stock.

F.    Commitments
and Contingent Liabilities

RISCORP Litigation

On
April 1, 1998, pursuant to an Asset Purchase Agreement dated June 17, 1997 (as amended from time to time, the "Asset Purchase Agreement") between Zenith Insurance
and RISCORP, Inc. and certain of its subsidiaries (collectively, "RISCORP"), Zenith Insurance acquired substantially all of the assets and certain liabilities of RISCORP related to
RISCORP's workers' compensation business (the "RISCORP Acquisition"). The total purchase price for such acquired assets and liabilities was determined by a three-step process in which
RISCORP and its external accounting and actuarial consultants and Zenith Insurance and its external accounting and actuarial consultants made and presented their estimates of the GAAP values of
the assets and liabilities acquired by Zenith Insurance to an independent third party, acting as a Neutral Auditor and Neutral Actuary. Such estimates varied considerably, particularly with
respect to the value of premiums receivable and the liability for unpaid losses and loss adjustment expenses. On March 19, 1999, the Neutral Auditor and Neutral Actuary issued its report
determining the disputes between the parties. That report indicated that the value of the assets transferred to Zenith Insurance exceeded the value of the liabilities assumed by Zenith Insurance
by $92.3 million.

Zenith
Insurance and RISCORP entered into a settlement agreement dated July 7, 1999 (the "Settlement Agreement") providing for the resolution of certain claims arising out of
the RISCORP Acquisition. Pursuant to the Settlement Agreement, Zenith Insurance and RISCORP agreed, among other things, that RISCORP may request that the Neutral Auditor and Neutral Actuary
(a) review an alleged error concerning the proper treatment of certain reinsurance treaties in its determinations with respect to the purchase price for the RISCORP Acquisition, without
waiving whatever rights RISCORP may have to litigation of such issue, (b) determine whether the issue was properly in dispute before the Neutral Auditor and Neutral Actuary and (c) if so,
determine the merits of the issue and whether a correction is appropriate. Zenith Insurance and RISCORP also agreed that Zenith Insurance would receive $6.0 million from an escrow account
established pursuant to the Asset Purchase Agreement, and RISCORP would receive the balance of the escrow account. In a submission made to the Neutral Auditor and

F-8

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Neutral Actuary, RISCORP claimed that the purchase price for the RISCORP Acquisition should be adjusted by either $5.9 million or $23.4 million as a result of alleged errors in the
original determination of the Neutral Auditor and Neutral Actuary with respect to the purchase price. On October 7, 1999, the Neutral Auditor and Neutral Actuary informed Zenith Insurance
and RISCORP that it would not consider the issue raised by RISCORP because the issue had not previously been raised as a dispute pursuant to the procedures set forth in the engagement letter. On
January 13, 2000, RISCORP filed a complaint against Zenith Insurance and the Neutral Auditor and Neutral Actuary in the Superior Court of Fulton County in the State of Georgia. On
October 9, 2000, RISCORP filed a First Amended Complaint in the Superior Court of Fulton County. RISCORP's First Amended Complaint alleges causes of action for breach of contract against
the Neutral Auditor and Neutral Actuary and, in conjunction, seeks a declaration that would have the effect of requiring Zenith to pay either $18.1 million (and related charges) or
$5.9 million. RISCORP also has asserted causes of action for professional negligence solely against the Neutral Auditor and Neutral Actuary in which it seeks damages of either
$18.1 million (and related charges) or $5.9 million. On May 1, 2001, the Superior Court granted in their entirety motions for judgment on the pleadings filed by Zenith
Insurance and the Neutral Auditor and Neutral Actuary. The Georgia Court of Appeals rejected RISCORP's petition for expedited review of the Superior Court's decision pending a determination of
counterclaims filed by Zenith Insurance and the Neutral Auditor and Neutral Actuary before the Superior Court. Zenith is unable to predict the outcome of this litigation.

Other Litigation

Other
than the RISCORP litigation described above, Zenith National and its subsidiaries are defendants in various other litigation. In the opinion of management, after consultation
with legal counsel, such litigation is either without merit or the ultimate liability, if any, is not expected to have a material adverse effect on the consolidated financial condition, results
of operations or cash flows of Zenith.

Contingencies Surrounding the Order of Liquidation of Reliance Insurance Company

On
October 3, 2001, the Commonwealth Court of Pennsylvania issued an Order of Liquidation for Reliance Insurance Company ("Reliance") in response to a petition from the
Pennsylvania Department of Insurance. At December 31, 2001, Reliance owed Zenith Insurance $6.0 million of reinsurance recoverable on paid and unpaid losses in connection with
reinsurance arrangements assumed by Zenith Insurance in its 1996 acquisition of the Associated General Commerce Self-Insurers' Trust Fund. As of December 31, 2001, Zenith
Insurance recorded a $3.0 million provision for impairment of the reinsurance recoverable from Reliance. Zenith Insurance cannot currently predict the ultimate outcome of this matter; but
it is possible that if the Pennsylvania Department of Insurance increases its estimates of Reliance's unpaid liabilities or uncollectible reinsurance recoverables without considering additional
investment income, Zenith Insurance may not recover any of its reinsurance recoverable from Reliance.

State
Guarantee Funds ("Guarantee Funds") exist to ensure that policyholders (holders of direct insurance polices but not of reinsurance policies) receive payment of their claims if
insurance companies become insolvent. The Guarantee Funds are funded primarily by statutorily prescribed assessments they bill to other insurance companies doing business in their states. Various
mechanisms exist in these states for assessed insurance companies to recover these assessments. Upon the Order of Liquidation of Reliance, the Guarantee Funds became primarily liable for the
payment of Reliance's policyholder liabilities. The declaration of an insolvency establishes the presumption that assessments by the Guarantee Funds are probable. Zenith Insurance writes workers'
compensation insurance in many of the states where Reliance has unpaid workers' compensation liabilities and expects to receive Guarantee

F-9

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Fund assessments, some of which may be based on certain of the premiums it has already earned at December 31, 2001. Zenith Insurance is currently unable to determine the ultimate amount
and timing of all such assessments. At December 31, 2001, Zenith Insurance has accrued an estimated liability of $2.7 million, net of expected recoveries of $2.4 million, for
probable future Guarantee Funds assessments. This estimate is based on currently available information and could change based on additional information or reinterpretation of existing information
concerning the Order of Liquidation for Reliance and the actions of the Guarantee Funds. Zenith Insurance also expects that it will receive continuing Guarantee Fund assessments in connection
with the Reliance insolvency in many of the states in which it writes workers' compensation insurance. The ultimate impact of such assessments will depend upon the amount and timing of the
assessments and of any recoveries to which Zenith Insurance is entitled.

Contingency Surrounding Recoverability of Special Disability Trust Fund Receivable

In
Florida, the Special Disability Trust Fund (the "Fund") assesses workers' compensation insurers to pay for what are commonly referred to as "Second Injuries." Historic
assessments
have been inadequate to completely fund obligations of the Fund. In late 1997, the Florida statute was amended so that the Fund will not be liable for and will not reimburse employers or carriers
for Second Injuries occurring on or after January 1, 1998. Zenith Insurance has recorded its receivable from the Fund for Second Injuries based on specific claims and historical experience
prior to January 1, 1998. At December 31, 2001 and 2000, the receivable from the Fund was $18.1 million and $31.1 million, respectively, related to the
pre-January 1, 1998 claims.

F-10

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SCHEDULE III  SUPPLEMENTARY INSURANCE INFORMATION
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES

|Column A                     |  | Column B |        | Column C |   | Column D |  | Column E |        | Column F |  | Column G |   | Column H |  | Column I |        | Column J |   | Column K
|---------------------------- |  | -------- | ------ | -------- | - | -------- |  | -------- | ------ | -------- |  | -------- | - | -------- |  | -------- | ------ | -------- | - | --------
|
|(Dollars in thousands)       |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|Years Ended December 31,2001 |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|Property and Casualty        |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|Workers' Compensation        |  | $        | 10,111 |          | $ | 599,688  |  | $        | 57,843 |          |  |          | $ | 415,848  |  |          |        |          | $ | 348,730 
|Reinsurance                  |  |          | 2,568  |          |   | 142,990  |  |          | 13,419 |          |  |          |   | 61,028   |  |          |        |          |   | 83,560  
|                             |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|                             |  |          | 12,679 |          |   | 742,678  |  |          | 71,262 |          |  |          |   | 476,876  |  |          |        |          |   | 432,290 
|Reinsurance ceded            |  |          |        |          |   | 204,144  |  |          | 51     |          |  |          |   |          |  |          |        |          |   |         
|Investment                   |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  | $        | 51,178 |          |   |         
|Parent                       |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|                             |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|Total                        |  | $        | 12,679 |          | $ | 946,822  |  | $        | 71,313 |          |  |          | $ | 476,876  |  | $        | 51,178 |          | $ | 432,290 
|                             |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|2000                         |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|Property and Casualty        |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|Workers' Compensation        |  | $        | 8,610  |          | $ | 542,173  |  | $        | 49,928 |          |  |          | $ | 300,833  |  |          |        |          | $ | 289,923 
|Reinsurance                  |  |          | 1,700  |          |   | 97,514   |  |          | 8,896  |          |  |          |   | 37,919   |  |          |        |          |   | 47,039  
|                             |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|                             |  |          | 10,310 |          |   | 639,687  |  |          | 58,824 |          |  |          |   | 338,752  |  |          |        |          |   | 336,962 
|Reinsurance ceded            |  |          |        |          |   | 238,196  |  |          | 83     |          |  |          |   |          |  |          |        |          |   |         
|Investment                   |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  | $        | 51,766 |          |   |         
|Parent                       |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|                             |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|Total                        |  | $        | 10,310 |          | $ | 877,883  |  | $        | 58,907 |          |  |          | $ | 338,752  |  | $        | 51,766 |          | $ | 336,962 
|                             |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|1999                         |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|Property and Casualty        |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|Workers' Compensation        |  | $        | 6,633  |          | $ | 516,941  |  | $        | 42,630 |          |  |          | $ | 278,854  |  |          |        |          | $ | 285,864 
|Reinsurance                  |  |          | 1,259  |          |   | 88,309   |  |          | 7,496  |          |  |          |   | 36,441   |  |          |        |          |   | 38,279  
|Other Property-Casualty      |  |          |        |          |   |          |  |          |        |          |  |          |   | 54,108   |  |          |        |          |   | 36,029  
|                             |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|                             |  |          | 7,892  |          |   | 605,250  |  |          | 50,126 |          |  |          |   | 369,403  |  |          |        |          |   | 360,172 
|Reinsurance ceded            |  |          |        |          |   | 275,679  |  |          | 780    |          |  |          |   |          |  |          |        |          |   |         
|Investment                   |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  | $        | 53,662 |          |   |         
|Parent                       |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|                             |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         
|Total                        |  | $        | 7,892  |          | $ | 880,929  |  | $        | 50,906 |          |  |          | $ | 369,403  |  | $        | 53,662 |          | $ | 360,172 
|                             |  |          |        |          |   |          |  |          |        |          |  |          |   |          |  |          |        |          |   |         

F-11

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SCHEDULE IV  REINSURANCE  ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES

|                         |  |   |         |  |   |        |  |   |        | Column F |  
|------------------------ |  | - | ------- |  | - | ------ |  | - | ------ | -------- | -
|
|
|
|
|
|Years Ended December 31, |  |   |         |  |   |        |  |   |        |          |  
|2001                     |  |   |         |  |   |        |  |   |        |          |  
|Premiums earned          |  | $ | 427,331 |  | $ | 14,430 |  | $ | 63,975 |          | $
|2000                     |  |   |         |  |   |        |  |   |        |          |  
|Premiums earned          |  |   | 307,514 |  |   | 10,610 |  |   | 41,848 |          |  
|1999                     |  |   |         |  |   |        |  |   |        |          |  
|Premiums earned          |  |   | 345,085 |  |   | 16,349 |  |   | 40,667 |          |  

F-12

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