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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-K/A
(Amendment No. 1)

ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2009          Commission file number 1-9627ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934For the transition period
from                           to


ZENITH NATIONAL INSURANCE CORP.

Incorporated in Delaware
21255 Califa Street, Woodland Hills, California 91367-5021
(818) 713-1000

I.R.S. Employer Identification No.
95-2702776


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

Title of Each Class

Name of Each Exchange on
Which RegisteredCommon Stock, $1.00 Par Value

New York Stock Exchange


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

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act:     YesX  No

Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Act:     Yes  No X

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.     YesX  No

Indicate
by checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).
     Yes  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.    ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a small reporting company.
See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer X

Accelerated filer

Non-accelerated filer

Smaller reporting company(Do not check if a smaller reporting company)


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):     
Yes  No X

The
aggregate market value of the voting and non-voting common equity of the registrant held by non-affiliates was $794,234,000 (based on the closing price for
such common equity reported by the New York Stock Exchange for June 30, 2009, the last business day of the registrant's most recently completed second quarter).

At
January 31, 2010, there were 37,880,463 shares of Zenith National Insurance Corp. common stock outstanding.



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EXPLANATORY NOTE

Pursuant to General Instruction G to Form 10-K, this Amendment No. 1 on
Form 10-K/A ("Amendment No. 1") to Zenith National Insurance Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, which
was filed with the Securities and Exchange Commission ("SEC") on February 10, 2010 ("Original Filing"), is being filed for the sole purpose of including information in Part III,
Items 10 through 14, because the definitive proxy statement for our 2010 Annual Meeting of Stockholders will not be filed with the SEC within 120 days after the end of our 2009 fiscal
year. The reference on the cover of the Original Filing to the incorporation by reference of portions of our definitive proxy statement into Part III of the Original Filing is hereby deleted.

In
accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended ("Exchange Act"), Part III, Items 10 through 14 of the Original
Filing have been amended and restated in their entirety and Part IV, Item 15, Paragraph (a) 3 of the Original Filing has been amended and restated solely to include as exhibits
the new certifications required by Rule 13a-14(a) under the Exchange Act. This Amendment No. 1 does not amend or otherwise update any other information in the Original
Filing. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Filing and with Zenith National Insurance Corp.'s filings with the SEC subsequent to the Original
Filing.

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TABLE OF CONTENTS



PART IIIItem 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

1Directors

1Section 16(a) Beneficial Ownership Reporting Compliance

4Audit Committee

4Compensation Committee

5Nominating and Corporate Governance Committee

6Healthcare Committee

6Executive Officers

7Code of Ethics for Senior Financial Officers

8Code of Business Conduct

8Item 11.    EXECUTIVE COMPENSATION

8Compensation Discussion and Analysis for 2009 ("CD&A")

8Compensation Committee Report

18Summary Compensation Table

19Grants of Plan-Based Awards in 2009

24Outstanding Equity Awards at 2009 Year-End

25Option Exercises and Stock Vested in 2009

26Early Termination of Employment and Change in Control Arrangements

26Compensation Committee Interlocks and Insider Participation

34Director Compensation

342009 Director Compensation Table

36Item 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS

39Security Ownership of Certain Beneficial Owners and Management

39Change in Control

42Equity Compensation Plan Information

42Item 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

43Independence of Directors

43Related Person Transactions Approval Policy and Procedures

44Item 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

44PART IVItem 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

45(a) 3. Exhibits

45SIGNATURES

46EXHIBIT INDEX

47Exhibit 31.3 Certification of Chief Executive Officer pursuant to Exchange Act
                    Rule 13a-14(a) or Rule 15d-14(a)

50Exhibit 31.4 Certification of Chief Financial Officer pursuant to Exchange Act
                    Rule 13a-14(a) or Rule 15d-14(a)

51


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PART III

Item 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors

The current serving directors ("Directors") of Zenith National Insurance Corp. ("Zenith") are set forth below. Each of the Directors
also serves as a director of Zenith Insurance Company ("Zenith Insurance"), Zenith's principal operating subsidiary. Once elected, a Director serves until the next Annual Meeting of Stockholders and
until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. Pursuant to an Agreement and Plan of Merger dated February 17, 2010 by and among
Zenith, Fairfax Financial Holdings Limited and Fairfax Investments II USA Corp., upon satisfaction of customary closing conditions and consummation of the transaction, each of the Directors will
resign from the boards of directors of Zenith and Zenith Insurance. See "Change in Control" in Item 12.

Each
Director has been determined by the Nominating and Corporate Governance Committee and the Board of Directors (the "Board") to meet the minimum qualifications for service as a
Director, namely an ability, as demonstrated by recognized success in his or her field, to make meaningful contributions to the Board's oversight of the business and affairs of Zenith and an
impeccable reputation of integrity and competence in his or her personal and professional activities. Criteria utilized by the Nominating and Corporate Governance Committee in evaluating Directors
include the possession of such knowledge, skills, expertise and diversity of experience so as to enhance the Board's ability to manage and direct the business and affairs of Zenith, including when
applicable, to enhance the ability of committees of the Board to fulfill their duties and/or satisfy any independence requirements imposed by law, regulation or New York Stock Exchange ("NYSE")
listing requirements. In making this assessment, the Nominating and Corporate Governance Committee and the Board have also identified the experience, qualifications, attributes or skills of each
Director, further qualifying him or her to serve as a Director. These further qualifications are set forth in the following table, along with other information on each Director that was supplied or
confirmed by such Director.

Name

Age

Served as
Director
Since

Positions and
Offices
held with Zenith

Principal Occupations and
Employment during the
Past Five Years

Also served as Director of
the following Public
Companies during the
Past Five YearsJerome L. Coben


65

February
2009

Director of Zenith and Zenith Insurance; Member of Audit Committee and Healthcare Committee

Attorney; Partner, Zeughauser Group since January 2009; Partner from March 1983 through December 2008 (including a period of time as Managing Partner of the Los Angeles Office), Skadden, Arps, Slate, Meagher &
Flom LLP

NoneAdditional Qualifications:Mr. Coben, an attorney, who was formerly a managing partner of a significant office of a major law firm, has legal experience in securities and
corporate transactions, corporate finance, corporate law and corporate governance, as well as extensive involvement in business and charitable endeavors. As such, he possesses extensive expertise in these areas, as well as leadership and managerial
skills, which together with the understanding of Zenith and its industry that he acquired as Zenith's outside corporate counsel for twenty years, qualify him to serve as a Director.


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Name

Age

Served as
Director
Since

Positions and
Offices
held with Zenith

Principal Occupations and
Employment during the
Past Five Years

Also served as Director of
the following Public
Companies during the
Past Five YearsMax M. Kampelman


89

February
1989

Director of Zenith and Zenith Insurance; Chairman of Nominating and Corporate Governance Committee

Attorney; Of Counsel, since 1991, and Partner, 1989 to 1991, Fried, Frank, Harris, Shriver & Jacobson LLP; Counselor of the Department of State and Head of the U. S. Delegation to Negotiations on Nuclear
and Space Arms with the Soviet Union, 1985 to 1989

NoneAdditional Qualifications:Mr. Kampelman, an attorney, educator and diplomat, has been involved in academic and public affairs and has been honored by President Reagan with
a Presidential Citizens Medal and by President Clinton with the Presidential Medal of Freedom. As Ambassador and Head of the United States Delegation to the Negotiations with the Soviet Union on Nuclear and Space Arms, he played a leading role in
negotiations with the Soviet Union on nuclear and space arms. In addition to his achievements in public life, Mr. Kampelman was also successful in business, as chairman of a bank, a founder of a law firm and one of the founding investors in the
National Football League. Holding both a law degree and a PhD, Mr. Kampelman possesses legal expertise, significant experience in corporate governance, business acumen, a world and academic perspective, as well as negotiating skills in achieving
consensus, that qualify him to serve as a Director.Robert J. Miller


64

February
1999

Director of Zenith and Zenith Insurance; Chairman of Compensation Committee; Member of Nominating and Corporate Governance Committee

Attorney; Political and Business Consultant, Dutko Worldwide (a part of Huntsworth plc) since 2000; Senior Partner, Jones Vargas, January 1999 to July 2005; Governor of Nevada for the ten years prior to
1999

American West Holdings Corporation; International Game Technology; Newmont Mining Corporation; Wynn Resorts, LimitedAdditional Qualifications:Mr. Miller, an attorney and political and business consultant, was formerly the Governor of Nevada (with the distinction of being the longest
serving governor of the state) and has held several public offices. Subsequent to his term as Governor, he has been serving on the boards of several public companies. Because of his experience in public life and service on the boards of public
companies, he has leadership skills, including the ability to facilitate discussions, consensus and achievement of goals, as well as a perspective on political, business, public company and social issues, that qualify him to serve as a
Director.Fabian Nuñez


43

December
2008

Director of Zenith and Zenith Insurance; Chairman of Healthcare Committee; Member of Nominating and Corporate Governance Committee

Partner and Co-Chair, Mercury Public Affairs LLC since December 2008; California State Assemblyman from December 2002 to November 2008 (served as Speaker from February 2004 to May 2008)

NoneAdditional Qualifications:Mr. Nuñez, a political and business consultant, formerly served as Speaker of the California State Assembly and has a background in labor
management. As a legislator, he was successful in finding bipartisan solutions to public policy challenges and was the Assembly's lead negotiator for the California state budget which ranged as high as $103 billion. With this legislative
experience and his labor management background, Mr. Nuñez has acquired expertise and a perspective on political, budgetary, social, workers' compensation and labor issues, in addition to leadership, consensus-building and management
skills, that qualify him to serve as a Director.


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Name

Age

Served as
Director
Since

Positions and
Offices
held with Zenith

Principal Occupations and
Employment during the
Past Five Years

Also served as Director of
the following Public
Companies during the
Past Five YearsCatherine B. Reynolds


52

May
2004

Director of Zenith and Zenith Insurance; Member of Audit Committee and Compensation Committee

Chairman and CEO, The Catherine B. Reynolds Foundation since 2000; Chairman and CEO, EduCap Inc. since 1994

CoStar Group, Inc.Additional Qualifications:Ms. Reynolds, CEO of a foundation and financial services company, was licensed as a certified public accountant. She created new and affordable
ways to finance a college education by developing an innovative private-funded supplement to the government student loan program that revolutionized student lending. After the sale of the financial services company that she founded, she established a
foundation that is devoted to philanthropic pursuits, particularly education of the young. With this background, Ms. Reynolds brings accounting, business and financial expertise, innovative thinking, managerial experience and a strong social
conscience perspective that qualify her to serve as a Director.Alan I. Rothenberg


70

September
2002

Director of Zenith and Zenith Insurance; Member of Audit Committee, Compensation Committee and Healthcare Committee

Attorney; Chairman and CEO, 1st Century Bancshares, Inc.; Chairman (since 2002) and CEO (2006 to January 2008), 1st Century Bank, N. A.; Chairman, Premier Partnerships since 2003;
Partner, Latham & Watkins LLP, 1990 to 2000

Arden Realty, Inc.; First Wave Technologies, Inc.; California Pizza Kitchens, Inc.; 1st Century Bank, N. A..; 1st Century Bancshares, Inc.Additional Qualifications:Mr. Rothenberg, founder and CEO of a bank, is also an attorney and founded a national law firm and represented financial institutions and
businesses on various issues such as lender liability, securities violations, shareholder and antitrust claims. He is a past President of the State Bar of California. Mr. Rothenberg also served as a commercial arbitrator and mediator and was and
is still involved in numerous sports-related businesses and activities. He is Chairman of Premier Partnerships, a sports and entertainment marketing and consulting firm, that serves clients such as the National Basketball Association. He served as
Chairman and CEO of the 1994 World Cup Organizing Committee, President of the United States Soccer Federation, a member of the Board of Governors of the National Basketball Association and a member of the Board of Governors of Major League Soccer,
which he founded. Mr. Rothenberg possesses legal, managerial, business and financial expertise, in addition to leadership and organizational skills, that qualify him to serve as a Director.William S. Sessions


79

September
1993

Director of Zenith and Zenith Insurance; Member of Nominating and Corporate Governance Committee

Attorney, Holland & Knight LLP since 2000 and Sessions & Sessions, L. C., 1995 to 2000; Security Consultant since 1993; Director, Federal Bureau of Investigation, 1987 to 1993; U.S. District
Court Judge, 1974 to 1987

NoneAdditional Qualifications:Mr. Sessions, an attorney, has served as Chief of the Government Operations Section of the Criminal Division of the U. S. Department of Justice,
U. S. Attorney for the Western District of Texas, U. S. District Judge for the Western District of Texas (later also serving as Chief Judge for the district) and Director of the Federal Bureau of Investigation, in addition to being in private
practice, security consulting, arbitration and mediation. With Mr. Sessions' background and experience both in public service and the private sector, he provides expertise in legal matters, dispute resolution and security concerns, as well as a
perspective on, and knowledge about, the federal political environment and social issues, that qualify him to serve as a Director.


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Name

Age

Served as
Director
Since

Positions and
Offices
held with Zenith

Principal Occupations and
Employment during the
Past Five Years

Also served as Director of
the following Public
Companies during the
Past Five YearsMichael Wm. Zavis


72

September
1998

Director of Zenith and Zenith Insurance; Lead Independent Director of Zenith; Chairman of Audit Committee; Member of Compensation Committee

Attorney; Retired Founding Partner since 2001, and for more than five years prior thereto, Co-Managing Partner, Katten Muchin Rosenman LLP

NoneAdditional Qualifications:Mr. Zavis, an attorney, founded a national law firm, and specialized in financing, banking and corporate matters. He is also involved with
numerous philanthropic and community activities and is a past Chairman of the Illinois Development Finance Authority. With his experience, Mr. Zavis provides expertise and guidance on legal, finance, tax and accounting matters, as well as an
understanding of risk management, that qualify him to serve as a Director.Stanley R. Zax


72

July
1977

Chairman of the Board and President of Zenith and Chairman of the Board of Zenith Insurance for more than the past thirty years; President of Zenith Insurance, 1978 to 2005.

Wynn Resorts, Limited; Sequa CorporationQualifications:Mr. Zax has been associated with Zenith as its CEO for more than thirty years and possesses the unique knowledge and expertise about Zenith and its industry
that qualify him to serve as a Director.


Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act and the regulations of the SEC thereunder require Zenith's Executive Officers and Directors,
and persons who own more than ten percent of a registered class of Zenith's equity securities, to file reports of ownership and changes in ownership with the SEC and the NYSE and to furnish Zenith
with copies of all such forms they file.

Based
solely on its review of the copies of such forms received by it and written representations from certain reporting persons, Zenith believes that, during the year ended
December 31, 2009, its Executive Officers, Directors and 10% stockholders complied with all applicable filing requirements with respect to Zenith's only registered class of equity securities,
its common stock, $1.00 par value per share ("Common Stock").

Audit Committee

The Audit Committee, which was established in accordance with Section 3(a)(58)(A) of the Exchange Act, consists of
Messrs. Zavis (Chairman), Coben and Rothenberg and Ms. Reynolds. The primary purpose of this committee is to assist the Board's oversight of: (1) the integrity of Zenith's
financial statements; (2) Zenith's compliance with legal and regulatory requirements; (3) the qualifications and independence of Zenith's independent auditors; and (4) the
performance of Zenith's independent auditors and Zenith's internal audit function. The Audit Committee is directly responsible, in its sole discretion, for the selection, evaluation and compensation
of Zenith's independent auditors. In connection with the oversight of the integrity of Zenith's financial statements, among other responsibilities, the Audit Committee: (i) reviews with
management and the independent auditors and, if appropriate, the officer responsible for Zenith's internal audit department, Zenith's audited annual financial statements and quarterly financial
statements including reviewing Zenith's specific disclosures under "Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations," Zenith's critical and other
accounting policies, and any major financial reporting issues that have arisen in connection with the preparation of the financial statements; (ii) attempts to resolve disagreements, if any,
between Zenith's independent auditors and management regarding financial reporting; (iii) reviews on a regular basis any problems or difficulties encountered by the independent

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auditors
in the course of any audit work; and (iv) regularly reviews the adequacy and effectiveness of Zenith's internal control policies, including the responsibilities, budget and staffing of
Zenith's internal audit function. During 2009, the Audit Committee communicated frequently with personnel from
Zenith's financial and accounting department, internal audit department, actuarial department, corporate legal staff and independent auditors, including at seven meetings.

The
Charter for the Audit Committee was last revised and readopted by the Board on December 7, 2006. A copy of the current Charter is posted on Zenith's website, www.thezenith.com.

Each
member of the Audit Committee is an independent director under the NYSE listing standards and other applicable laws, rules and regulations.

All
members of the Audit Committee are financially literate. The Board has determined that each of Ms. Reynolds and Mr. Rothenberg, both of whom are independent, qualify as
audit committee financial experts and that each of them has accounting or related financial management expertise.

Compensation Committee

The Compensation Committee consists of Messrs. Miller (Chairman), Rothenberg and Zavis and Ms. Reynolds. This committee
discharges the Board's responsibilities relating to compensation, including: (1) establishing, implementing and reviewing policies relating to, and the goals and objectives of, compensation
plans and practices for Zenith's executive officers as identified under "Executive Officers" in this Item 10 ("Executive Officers"); (2) evaluating the performance of Zenith's Executive
Officers in light of established compensation goals and practices and setting appropriate compensation levels based on this evaluation; (3) providing for the administration of Executive Officer
compensation plans and practices (and discharging any duties or responsibilities imposed on the Compensation Committee thereby); (4) reviewing Zenith's general compensation, equity
compensation, and incentive compensation plans and their goals and objectives; (5) amending Zenith's general compensation, equity compensation and incentive compensation plans;
(6) performing any duties assigned to the Compensation Committee under Zenith's general compensation, equity compensation and incentive compensation plans; (7) evaluating compensation
levels for non-employee members of the Board; (8) reviewing and discussing with management Zenith's Compensation Discussion and Analysis for inclusion in Zenith's Annual Report on
Form 10-K or proxy statement; and (9) preparing the Compensation Committee Report as required by the rules of the SEC. As part of its duties, the Compensation Committee
administers the Executive Officer Bonus Plan ("Bonus Plan"), a performance-based compensation plan approved by stockholders, and the Zenith National Insurance Corp. Third Amended and Restated 2004
Restricted Stock Plan ("Restricted Stock Plan"). The Compensation Committee held four meetings in 2009. The Compensation Committee has not delegated any of its authority to others.

The
Charter for the Compensation Committee was last revised and readopted by the Board on December 6, 2007. A copy of the current Charter is posted on Zenith's website, www.thezenith.com.

Each
member of the Compensation Committee is a "non-employee director" as defined under Rule 16b-3 of the Exchange Act and is also an "outside" director as
defined under Section 162(m) of the Internal Revenue Code of 1986, as amended ("Code"), as well as an independent director under the NYSE listing standards and other applicable laws, rules and
regulations.

Compensation Committee Process and Procedures

The Compensation Committee determines the compensation (specifically, fees and awards of restricted stock) to be paid to
non-employee Directors for service on the Board, on Board committees and as committee chairs. In most instances, the Compensation Committee receives suggestions on the level of
compensation for non-employee Directors from Mr. Zax, the Chief Executive Officer, or from

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other
members of the Board. These suggestions are then considered by the Compensation Committee as part of establishing any changes to the compensation for non-employee Directors.

In
establishing the compensation for Zenith's Executive Officers, other than Mr. Zax (who is the Chief Executive Officer), the Compensation Committee receives and considers
recommendations from Mr. Zax, together with an explanation of his recommendations. The Compensation Committee evaluates Mr. Zax's recommendations in light of Zenith's performance and its
goals, as well as the Executive Officer's performance, and either accepts, modifies or rejects Mr. Zax's recommendations. In establishing the compensation for Mr. Zax, the Compensation
Committee usually meets with Mr. Zax and discusses his performance, as reflected in Zenith's performance, stockholder value, significant undertakings, posture in the industry and positioning
for the future. Mr. Zax's compensation is evaluated based on the foregoing, after which the Compensation Committee arrives at an appropriate level of compensation for him. (See "Compensation
Discussion and Analysis for 2009" in Item 11 for more information.)

In
establishing the compensation for non-employee Directors, the Compensation Committee usually relies on the experience and knowledge of its members and may consider surveys
or studies. It does not engage the services of any compensation consultants. Similarly, in determining the appropriate level of compensation for Mr. Zax and the other Executive Officers, the
Compensation Committee does not utilize benchmarking or surveys or the services of compensation consultants, but relies on the experience and knowledge of its members. The Compensation Committee
consists of four members. Three are attorneys, one of whom served as Governor of Nevada, another was a founding partner of a national business law firm and the third was a senior partner in a major
firm and is involved in a number of business and sports-related ventures. The fourth member was the founder and chief executive officer of a successful national lender to students pursuing higher
education. Further, with respect to any action the Compensation Committee is authorized to take, the Compensation
Committee may, in its discretion, elect to recommend action to the Board, rather than take action itself, to the extent permitted by applicable law or stock exchange regulations.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee consists of Messrs. Kampelman (Chairman), Miller, Nuñez and
Sessions. The primary purpose of this committee is to assist the Board in identifying, and recommending to the Board for nomination, qualified individuals to serve as members of the Board and
committees of the Board. The committee is also responsible for: (1) developing and recommending to the Board a set of corporate governance guidelines applicable to Zenith; (2) reviewing
those guidelines adopted by the Board at least annually to assure that they are appropriate for Zenith and consistent with applicable laws, rules and regulations; and (3) overseeing the
evaluation of the Board as a whole and the management of Zenith, including the Chief Executive Officer of Zenith. The Nominating and Corporate Governance Committee held four meetings in 2009.

The
Charter for the Nominating and Corporate Governance Committee was last revised and readopted by the Board on February 10, 2005. A copy of the current Charter is posted on
Zenith's website,www.thezenith.com.

Each
member of the Nominating and Corporate Governance Committee is an independent director under the NYSE listing standards and other applicable laws, rules and regulations.

Healthcare Committee

On February 5, 2009, the Board formed the Healthcare Committee and appointed Messrs. Nuñez (Chairman),
Coben and Rothenberg as members of the committee. The purpose of the Healthcare Committee is to oversee all healthcare-related matters involving Zenith's workers' compensation insurance subsidiaries
("Insurance Companies"). "Healthcare" for this purpose means all activities associated with the provision of workers' compensation medical care to injured workers, including, but

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not
limited to, the provider networks, utilization review and medical management activities and related administrative and operational capacities of the Insurance Companies. This oversight is
conducted by (1) providing general supervision and oversight of all healthcare-related matters involving the Insurance
Companies; (2) periodically reviewing the personnel and organizational structure of all healthcare-related functions and areas of the Insurance Companies; (3) periodically reviewing
audit reports, regulatory findings and other reports and materials related to the Insurance Companies' provider networks, utilization review and medical management activities, and related
administrative and operational capabilities; (4) periodically reviewing the Insurance Companies' policies and procedures (or parts thereof) to make timely and appropriate medical care available
to injured workers; and (5) making such recommendations and providing such guidance related to the foregoing as the Healthcare Committee determines to be appropriate.

The
Charter for the Healthcare Committee was adopted by the Board on February 5, 2009. A copy of the current Charter is posted on Zenith's website, www.thezenith.com. The Healthcare Committee held four
meetings in 2009.

Executive Officers

The Executive Officers are elected each year at the Board meeting immediately following the Annual Meeting of Stockholders, and at
other Board meetings, as appropriate. Each of the Executive Officers is an officer of Zenith and certain of its subsidiaries. Except as noted in the pertinent notes, each Executive Officer has been
employed by Zenith or Zenith Insurance in executive positions for more than the past five years.

At
February 25, 2010 (except for Janet Frank), the Executive Officers of Zenith are:

Name

Age

Position

Term

Executive Officer SinceStanley R. Zax


72

Chairman of the Board and President of Zenith; Chairman of the Board of Zenith Insurance (Chief Executive Officer of Zenith and Zenith Insurance)

Annual


1977Janet Frank(1)


58

Executive Vice President of Zenith and President of Zenith Insurance

Annual


2010Michael E. Jansen(2)


43

Executive Vice President and General Counsel of Zenith and Zenith Insurance

Annual


2006Robert E. Meyer


60

Senior Vice President of Zenith; Executive Vice President and Chief Actuary of Zenith Insurance

Annual


2000Jack D. Miller(3)


64

Executive Vice President of Zenith; Vice Chairman of Zenith Insurance

Annual


1998Davidson M. Pattiz(4)


42

Executive Vice President of Zenith and Zenith Insurance

Annual


2006Keith E. Trotman


72

Executive Vice President of Zenith and Zenith Insurance

Annual


2005Kari L. Van Gundy(5)


52

Executive Vice President, Chief Financial Officer and Treasurer of Zenith and Zenith Insurance

Annual


2006


(1)Ms. Frank
will become an Executive Vice President of Zenith and President of Zenith Insurance on March 15, 2010 and, at that time, she will
also become an Executive Officer. Ms. Frank was President and Chief Executive Officer of the California


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State
Compensation Insurance Fund ("SCIF") from October 2007 to October 2009. Prior to joining SCIF, she was Executive Vice President of North American Field Operations for CNA Financial, where she
was employed since 2001. (2)Mr. Jansen
was designated an Executive Officer in January 2006. From 2003 until January 2006, Mr. Jansen was Senior Vice President and Deputy
General Counsel of PacifiCare Health Systems, Inc. From 1992 to 2003, Mr. Jansen held various positions including Vice President and Assistant General Counsel of Health Net, Inc.
and its predecessor companies. Prior thereto, Mr. Jansen was an attorney with the law firm of Skadden, Arps, Slate, Meagher & Flom LLP.(3)Although
Mr. Miller is currently the President of Zenith Insurance, he will become Vice Chairman of Zenith Insurance on March 15, 2010.(4)Mr. Pattiz
was designated an Executive Officer in February 2006 and has been an employee of Zenith Insurance since September 2005. For more than five
years prior to his employment with Zenith Insurance, Mr. Pattiz was an attorney with the law firm of Skadden, Arps, Slate, Meagher & Flom LLP.(5)Ms. Van
Gundy was designated an Executive Officer in July 2006 when she rejoined Zenith as Senior Vice President, Finance. In August 2006, she was
named Chief Financial Officer. From October 2002 to July 2006, she was Vice President and Treasurer for GenCorp Inc. From May 1988 to September 2002, Ms. Van Gundy was employed by Zenith
and its subsidiaries in various executive positions.


Code of Ethics for Senior Financial Officers

A "Code of Ethics for Senior Financial Officers" was revised and readopted by the Board on February 11, 2004. This code applies
to Zenith's principal executive officer, its principal financial officer and its principal accounting officer. A copy of the current code is posted on Zenith's website, www.thezenith.com.

Code of Business Conduct

A "Code of Business Conduct" was revised and readopted by the Board on December 7, 2006. This code, which governs business
conduct and ethics, applies to Zenith's directors, officers and employees. A copy of the current code is posted on Zenith's website,www.thezenith.com.

Item 11.  EXECUTIVE COMPENSATION

Compensation Discussion and Analysis for 2009 ("CD&A")

Introduction

Total executive compensation is designed to attract and retain our Executive Officers, including the named executive officers
identified in the Summary Compensation Table in this Item 11 ("Named Executive Officers"), as well as to reward them for above average performance over a sustained period of time. The guiding
philosophies for the design of our Executive Officer compensation are to be fair, simple and transparent, easily quantifiable and related to the performance of Zenith. Total Executive Officer
compensation includes base salary, cash bonuses, restricted stock awards and certain perquisites, which are discussed below under "Elements of Executive Officer Compensation" in this CD&A. It is our
belief that if our Executive Officers have substantial long-term incentives and are partners with our stockholders, the rewards to all will be maximized. We initially established these
general objectives for Executive Officer compensation over thirty years ago and the objectives continue to withstand the test of time.

Our
Executive Officers also receive certain other benefits which are available to all other full-time Zenith employees, including group health insurance, group life
insurance, 401(k) Plan benefits, paid vacation time off and employee stock purchase plan benefits. In addition, Executive Officers are eligible, along with all other senior officers of Zenith and its
subsidiaries, to an enhanced life insurance program, except for Mr. Zax, who is entitled to a specific level of life insurance coverage under his employment agreement. (See the description of
the enhanced life insurance program and Mr. Zax's life insurance benefits that is set forth below under "Perquisites and Other Personal Benefits" in this CD&A.)

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Refer to the discussion under "Compensation Committee" in Item 10 for a general description of the Compensation Committee and its membership and activities
in 2009. In establishing the appropriate level of compensation for our Executive Officers, the Compensation Committee relies on the experience and knowledge of its members, as well as input from the
Chief Executive Officer for all Executive Officers other than himself. Zenith does not utilize benchmarking, surveys, the services of outside compensation consultants or tally sheets in making its
compensation decisions.

The
following provides details on (1) the objectives of Zenith's compensation program, (2) what the program is designed to reward, (3) the specific elements of
compensation, (4) why Zenith has chosen to pay each element, (5) how Zenith determines amounts to be allocated to each element and (6) how these elements fit within, and are
consistent with, Zenith's overall compensation objectives.

Objective and Design of Zenith's Executive Officer Compensation

We believe our Executive Officers are critical to continuing our long history of success as a specialist workers' compensation
insurance company with a quality service strategy. We therefore attempt to primarily align compensatory rewards of our Executive Officers with the success of Zenith's workers' compensation business
operations over a sustained period of time.
Executive Officers receive compensatory rewards above their existing base salary when Zenith has successful performance relative to the workers' compensation industry and the amount of the rewards to
a given Executive Officer takes into consideration the Executive Officer's contribution to the successful performance of Zenith. We evaluate Zenith's performance by its overall profitability, increase
in stockholders' equity plus dividends to stockholders over the long term, workers' compensation combined ratio as compared to the combined ratio of the industry and the performance of its investment
portfolio, including realized gains and losses.

In
determining each Executive Officer's contribution to the success of Zenith, we not only consider the manner in which the Executive Officer favorably affects Zenith's combined ratio
and profitability or otherwise performs his or her operational or administrative duties, but also the ability of each Executive Officer to appropriately assess "risk versus reward" and the manner in
which the Executive Officer performs in Zenith's environment, which cultivates an entrepreneurial spirit, innovation, efficiency, compliance with ethical operating standards, customer service,
teamwork, an understanding and use of technology and a commitment to education.

We
believe an entrepreneurial spirit fosters above-average results, promotes sound execution of good business fundamentals and helps Zenith attract, develop and retain talented
employees. Compliance with strong ethical operating standards is essential to assure a disciplined business approach and to preserve Zenith's reputation. An orientation towards customer service
promotes Zenith's focused workers' compensation strategy. Adherence to teamwork is crucial to the effective and efficient implementation of Zenith's goals. Understanding, adopting and using technology
are necessary for Zenith to continually improve the delivery of quality services in a disciplined and efficient manner. A commitment to education means a dedication to lifelong learning and training
for oneself, developing future leaders of Zenith and creating conditions so that the workforce is similarly dedicated. This dedication to continuous improvement in our aggregate knowledge and
curiosity is critical to Zenith's ability to address changes in market conditions and to use such changes to its competitive advantage. In such an environment, proactive approaches that are
innovative, yet controlled and well considered, are strongly encouraged and rewarded. On the operational side, activities that demonstrate an opportunistic outlook, anticipate changing business
conditions, an ability to assess risk versus reward, and take advantage of opportunities to increase short-term and long-term profits are rewarded. On the administrative side,
efficiency, competence, strong compliance and risk management efforts, anticipation and avoidance of problems, as well as innovation, are rewarded.

We
believe Zenith benefits when its Executive Officers have a long-term commitment to Zenith coupled with the expectation to consistently deliver superior leadership and
performance over time. As

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a
result, we granted restricted stock to our Executive Officers (other than to Mr. Zax as described below) and have employment agreements with all Executive Officers other than Keith E.
Trotman. Mr. Trotman had been employed by Zenith for more than 16 years prior to being named an Executive Officer in 2005; therefore, an employment agreement was not considered necessary
to ensure his long-term commitment to Zenith. All employment agreements (other than the employment agreement for Mr. Zax, our Chief Executive Officer) have similar terms and
conditions.
These agreements define the specific elements of compensation provided to the Executive Officers (which are also provided to Mr. Trotman), and also contain provisions providing for the payment
of post-termination benefits as described in more detail below. The term of all of the agreements ends on December 31, 2012.

Mr. Zax
has the same compensation elements as the other Executive Officers, except for restricted stock (which he has not been granted due to his existing significant personal
ownership interest in Zenith). In addition, Mr. Zax is provided with certain perquisites pursuant to his employment agreement initially entered into in 1981, as amended from time to time
thereafter.

Elements of Executive Officer Compensation

Within the context of these overarching principles, Executive Officer compensation includes the following elements, which apply
generally to all Executive Officers, except as noted above for Mr. Zax:

Increases
to the level of an Executive Officer's base salary are generally based on a combination of (1) the performance of Zenith, (2) the performance of the business segment, if any,
to which the Executive Officer is principally assigned, (3) a subjective and qualitative evaluation of the personal contribution made by the Executive Officer over time, (4) the length
of time since the last increase in base salary for the Executive Officer and (5) the total compensation provided to the Executive Officer, including cash bonuses and stock awards. These factors
do not translate mechanically into compensation levels and compensation is not based on any formulaic weighting. Each Executive Officer's performance and compensation, including base salary, are
reviewed by the Compensation Committee each December, as well as other times determined to be appropriate by the Compensation Committee. Mr. Zax provides input to the Compensation Committee on
the amount and timing of base salary increases for Executive Officers, except for himself, based on the above, and subject to the discretionary approval of or modification by the Compensation
Committee. Base salary increases for Mr. Zax are determined and approved by the Compensation Committee at its discretion based on the overall performance of Zenith, including the performance of
the investment portfolio and increases in stockholder value attributable to his efforts. In making compensation decisions, the Compensation Committee members have the further benefits of interacting
with the Executive Officers frequently with the opportunity to continually evaluate them, as well as having been on the Board for an extended
period of time and gaining familiarity with Zenith's operations and executives. (The length of service as a Director for members of the Compensation Committee range from about six years to about
twelve years.)

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Also,
under his employment agreement, Mr. Zax is entitled to receive life insurance coverage with an aggregate face amount of at least $6,125,000. The aggregate face amount of life insurance
Zenith currently maintains for Mr. Zax is $5,250,000 (which is $875,000 less than the coverage to which he is entitled under his employment agreement) and Mr. Zax has consented to
receive this lesser coverage amount.

No
other Executive Officers are entitled to a specific level of life insurance under their employment agreements. Executive Officers are entitled, as are all employees, to group life insurance in an
amount equal to three times their annual base salary, with a ceiling of $750,000 (or a lower amount based on age). In addition, all senior officers, including the Executive Officers (other than
Mr. Zax), are provided with additional life insurance benefits in order to receive total company-paid coverage equal to four times their respective annual base salary (subject to
certain underwriting requirements based on age and amount of coverage). Under the program, senior officers may also elect to participate in a variable universal life feature, allowing them to purchase
additional coverage and make payments into a cash accumulation account. The options to purchase additional coverage and to make deposits to the cash accumulation account are entirely between the
insurance company and the employee and are at the personal cost of the employee.

Each
senior officer (including all Executive Officers) is also paid an additional amount necessary to reimburse him or her for federal and state income taxes payable on the imputed income that he or
she receives on the cost of any additional life insurance coverage in excess of the group life insurance coverage.

Perquisites
are provided to Executive Officers irrespective of any actions taken on any other element of compensation. The Compensation Committee has full discretion in determining when and to what
extent to reduce or expand the perquisites available to Executive Officers. Perquisites are factored into the Compensation Committee's evaluation of what constitutes a fair salary and are considered
in establishing total compensation.

Other
than standard employee benefits and the specific benefits described above, Zenith does not provide additional perquisites to its Executive Officers. The Compensation Committee believes that its
total compensation package is reasonable and Zenith has demonstrated that it is able to hire and retain talented executives without offering additional perquisites.

Determination of Elements of Named Executive Officer Compensation

The Named Executive Officers, as identified for the Summary Compensation Table in this Item 11, are Mr. Zax, the Chief
Executive Officer, Ms. Van Gundy, the Chief Financial Officer, and

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Messrs. Trotman,
Miller and Jansen, Zenith's three other most highly compensated Executive Officers serving as of December 31, 2009. Following is a description of the manner in which
each element of their compensation was determined.

Mr. Zax's
compensation is determined under his employment agreement, which was amended by the Compensation Committee in September 2008. Mr. Zax's current annual base salary
of $2,500,000 in effect since January 1, 2008 was established in 2007 and is subject to such increases as the Board or Compensation Committee may determine from time to time. Because
Mr. Zax has accumulated a substantial personal ownership position in Zenith over his 30 years of leading Zenith (including stock he initially purchased in 1977), he was not granted any
restricted stock awards.

The
Compensation Committee reviewed Mr. Zax's current base salary, as well as the amount of past increases. In considering whether there should be an increase in Mr. Zax's
base salary or an award of a discretionary cash bonus to him, the Compensation Committee recognized that Mr. Zax continued to provide exceptional leadership in maintaining financial strength
and achieving excellent returns to stockholders during a historically challenging economic environment, where Zenith was faced with continued volatility in the financial markets and an economic
recession combined with intense competition in the workers' compensation industry.

The
Compensation Committee recognizes that the long-term success of Zenith is attributable to its successful management of risk (both insurance and investment) and that under
Mr. Zax's leadership, the long-term strategy of effective risk management served Zenith and its stockholders well, particularly in 2009. In this regard, the Compensation Committee
recognized the following factors attributable to Mr. Zax's leadership:



The
Compensation Committee believed that Mr. Zax should be rewarded for his exceptional performance in 2009. However, in light of the workers' compensation underwriting loss in
2009 and the continuing economic uncertainties, the Compensation Committee decided that it was appropriate to

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continue
to be conservative. Therefore, the Compensation Committee determined that Mr. Zax's annual base salary would not be changed and that no discretionary cash bonus would be awarded to
Mr. Zax for 2009. The Compensation Committee concluded, based on its own judgment and experience, that Mr. Zax's annual base salary and all other elements of his total compensation are
fair and appropriate at this time.

The
base salaries of Ms. Van Gundy and Messrs. Miller and Jansen are established under their employment agreements, which were amended in 2009. Except for Ms. Van
Gundy whose amended employment agreement provides for an annual increase of $50,000 in June of 2009 and 2010, the base salaries of these three Named Executive Officers were not changed by the
amendment. Further increases in base salary under the employment agreements are awarded at the discretion of the Compensation Committee, with input from Mr. Zax. Although Mr. Trotman
does not have an employment agreement, any increases to his base salary are also awarded at the discretion of the Compensation Committee, with input from Mr. Zax. Mr. Miller's base
salary is higher than the other three officers because of his service as President of Zenith Insurance with broad operational responsibilities for Zenith's principal operating subsidiary, and his base
salary also reflects his tenure with Zenith as well as his years of experience in the workers' compensation industry. Ms. Van Gundy's compensation reflects the mutually agreed upon base salary
between her and Zenith when she
re-joined Zenith in July 2006 and the scheduled increases are in recognition of her contribution and leadership not only in the financial and accounting areas, but in certain operational
areas, as well. Mr. Jansen's salary reflects the mutually agreed upon base salary between him and Zenith when he joined Zenith in 2006.

The
Compensation Committee, with input from Mr. Zax, reviewed the performance of each of these Named Executive Officers in 2009 based on all of the factors discussed above. It
determined that each officer made significant contributions to the success of Zenith based on their specific roles and responsibilities. As it did in considering Mr. Zax's 2009 bonus and his
annual base salary, the Compensation Committee decided that in considering the bonuses and annual base salaries of the Named Executive Officers, it was appropriate to be conservative in the face of
the current economic challenges and uncertainties. The Compensation Committee determined that, except for the previously approved increase for Ms. Van Gundy, their annual base salaries would
not be changed, but each officer would be awarded restricted stock awards as individually determined.

As
noted earlier, the performance goal under the Bonus Plan was not met for 2009 and no bonuses were payable under it. In determining whether discretionary cash bonuses should be awarded
to Ms. Van Gundy and Messrs. Trotman, Miller and Jansen, the Compensation Committee first received input from Mr. Zax on the performance of each of these Named Executive Officers.
The Compensation Committee determined that these Named Executive Officers made significant contributions to the success of Zenith based on their specific roles and responsibilities. The Compensation
Committee then considered all other elements of compensation, including, in particular, the amount of annual restricted stock awards that had been granted to each of the Named Executive Officers in
2009 based on his or her individual contributions, tenure with Zenith, the length of time since the last award was granted and the number of shares previously awarded. Finally, the Compensation
Committee applied its analysis of the same external factors that it had in determining whether a discretionary cash award should be awarded to Mr. Zax.

After
this process, the Compensation Committee decided that it was appropriate to award a discretionary cash bonus to Mr. Trotman because of his exceptional efforts and results
during 2009 relative to managing the investment portfolio as discussed above. Mr. Trotman has day-to-day operational oversight over Zenith's investment portfolio and is
not involved in the operations of the workers' compensation segment. The Compensation Committee awarded Mr. Trotman a discretionary cash bonus of $1 million in recognition of his
extraordinary achievement in implementing Zenith's investment philosophy in 2009. The Compensation Committee decided that no other Executive Officer would be awarded a discretionary cash bonus for the
reasons discussed above.

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The
Compensation Committee, with input from Mr. Zax, also concluded that each of these four Named Executive Officers' base salary plus all other elements of his or her total
compensation was fair and appropriate. This determination recognized these Named Executive Officers' tenure and responsibilities in their current roles with Zenith, their past and continued
outstanding performance and their stature in the workers' compensation industry.

Amendment to the Executive Officers' Employment Agreements

In 2009, the employment agreement of each of the Executive Officers (except Mr. Zax, whose agreement had been amended in 2008
and Mr. Trotman, who does not have an agreement) were amended. The provisions of the amended and restated employment agreements are identical to one another, except with respect to the
compensation and duties of the Executive Officers. In amending the employment agreements of the Executive Officers, the Compensation Committee extended the term of their employment to
December 31, 2012 from October 31, 2009, but made no changes to their duties or compensation arrangement (except for two scheduled increases to Ms. Van Gundy's annual salary). The
Compensation Committee authorized the entry into the amendments in an effort to retain availability of the Executive Officer's services for another three years.

The
amended and restated employment agreements of the Executive Officers were patterned after Mr. Zax's recently amended and restated employment agreement. In particular, the
Compensation Committee took into consideration a concern raised by RiskMetrics Group's ISS Governance Service in its report and recommendations issued in connection with Zenith's 2008 Annual Meeting
of Stockholders. The report indicated that Mr. Zax's employment agreement contained a "modified single trigger change in control arrangement" permitting him to terminate his employment for any
reason following a change in control and receive severance benefits. In 2008, that provision was eliminated when Mr. Zax's employment agreement was amended and a similar provision in the
employment agreements of the Executive Officers was eliminated as well when they were amended in 2009. Under the amended and restated employment agreements of all Executive Officers (including
Mr. Zax), the only benefits they would have due strictly to a change in control would be the automatic vesting of any shares of restricted stock held by them and the payment by Zenith of an
amount necessary to reimburse him or her for the excise tax that may be due for severance payments under Section 280G of the Code.

As
amended, an Executive Officer's ability to terminate his or her employment, whether before, after or unrelated to a change in control, and receive a severance payment will always
require the existence of "Good Reason." Good Reason is defined as (a) material diminution in annual base salary; (b) material diminution in authority, duties, responsibilities or
reporting relationship; (c) material diminution in the budget over which he or she has authority; (d) material change in geographic work location; or (e) any other material breach
of the employment agreement by Zenith.

The
new key financial provisions of the amended and restated employment agreements are:

Upon Death

One year's compensation and one year's bonusUpon Disability

One year's compensation (less disability payments) and one year's bonusWithout cause by Zenith

Two years' compensation and two years' bonusBy the Executive Officer for Good Reason

Two years' compensation and two years' bonus


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The
Compensation Committee believes the amended employment agreement is simple, transparent and fair to each of the Named Executive Officers, Zenith and its stockholders, in that the
level of reward to each of them is commensurate with the benefit that Zenith and its stockholders will gain from the continuing employment of the Named Executive Officer.

Post-Employment Compensation

The various post-employment compensation arrangements in the Executive Officers' employment agreements are identical except
for the amounts and are
included in order to attract and retain them. These arrangements also help provide our Executive Officers with financial security that permits them to professionally and consistently manage our
insurance and investment segments with a long-term view of business opportunities and economic cycles.

As
currently structured, under the most economically favorable scenario to any one of the Executive Officers (including Mr. Zax), he or she would be entitled to receive no more
than two years of severance payments. The Compensation Committee concluded that these severance amounts were reasonable.

Mr. Zax's
employment agreement provides that upon his retirement a five-year post-termination consulting arrangement will be entered into with Zenith to
allow Zenith to continue to benefit from Mr. Zax's experience and unique knowledge of Zenith and the workers' compensation industry for an appropriate transition period. (See "Salary and
Employment Agreements" following the Summary Compensation Table in this Item 11 under "Stanley R. Zax" for a description of this arrangement.)

Other Post-Retirement Benefits

Executive Officers are not provided pension or other post-retirement benefits (other than Zenith's 401(k) Plan benefits
which are available to all full-time employees); however, the overall level of compensation anticipates that each Executive Officer will be able to plan for his or her individual
retirement needs. This approach is consistent with Zenith's philosophy of fair, simple and transparent compensation that is easily quantifiable and related to the performance of Zenith as further
detailed above.

Tax and Accounting Policies

Zenith applies the accounting guidance related to stock compensation in determining the value of the restricted stock awards described
above.

Section 162(m)
of the Code generally limits the federal income tax deduction that a public corporation may claim for annual compensation paid to certain executive officers. The
limitation with respect to each affected Executive Officer is $1 million per year. However, the limitation does not apply to compensation which is performance-based, earned under a plan
approved by the corporation's stockholders and which satisfies certain other conditions set forth in Section 162(m) and the regulations thereunder. Bonuses payable under the Bonus Plan are
intended to comply with Section 162(m). Accordingly, the amount of any bonus payment made to Executive Officers under the Bonus Plan should not be subject to the $1 million limit on
deductibility. However, discretionary bonuses paid outside of the Bonus Plan and any income recognized upon the vesting of shares of restricted stock are subject to such limit on deductibility. The
Board has determined that Zenith will pay annual salary (including Mr. Zax's annual salary over $1 million), pay potential discretionary bonuses outside of the Bonus Plan, and award
shares of restricted stock to Executive Officers, even though some or all of an

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Executive
Officer's income over $1 million may not be deductible by Zenith. In awarding the discretionary cash bonus in 2009 to Mr. Trotman, the Compensation Committee was aware that a
large portion of the bonus would not be tax deductible and took this fact into consideration in making the award.

As
discussed above under "Perquisites and Other Personal Benefits" in this CD&A, all Executive Officers are paid additional amounts necessary to reimburse them for federal and state
income taxes payable on the imputed income that they receive on the cost of any additional life insurance coverage in excess of the coverage provided under the group life insurance. In addition, as
described under "Early Termination of Employment and Change in Control Arrangements" in this Item 11, pursuant to the current employment agreements with the Executive Officers (except
Mr. Trotman, who does not have an employment agreement), if one of the specified termination events occurs, an Executive Officer is entitled to the continuation of certain benefits beyond the
termination date at Zenith's cost. In such event, Zenith will also pay the affected Executive Officer such additional amount necessary to reimburse him or her for all payroll taxes payable on the
imputed income received due to such benefit continuation. Finally, these employment agreements provide that if there is a severance payment made in connection with a termination following a change in
control, Zenith will pay any affected Executive Officer such amount as necessary to reimburse him or her for the tax due on "excess golden parachute payments" as defined in Section 280G of the
Code. In general, such excess payments are defined in Section 280G as amounts paid to an individual due to a change in control in excess of three times the average of that individual's income
as reported by the employer on Form W-2 for the prior five years less one dollar.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis for 2009 with Zenith's management.

Based
on this review and their discussions, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis for 2009 be included in
Zenith's Annual Report on Form 10-K and, as applicable, the Proxy Statement for the 2010 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission.



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Summary Compensation Table

The Summary Compensation Table sets forth information regarding the compensation paid during the 2009, 2008 and 2007 fiscal years to
the Named Executive Officers. The Named Executive Officers are Zenith's Chief Executive Officer, its Chief Financial Officer and its three other most highly compensated Executive Officers serving as
of December 31, 2009.

Except
for the elements included under the All Other Compensation column in the table below, there are only three elements of compensation available for all of these
individuals  salary, cash bonus and restricted stock awards. Each of these elements of compensation is described in the sections following the Summary Compensation Table entitled
"Salary and Employment Agreements," "Bonus" and "Restricted Stock Awards." The components of the entries under the All Other Compensation column are set out in footnote (3) to the Summary
Compensation Table.

Name and
Principal Position

Year

Salary(1)

Bonus

Stock Awards(2)

All Other Compensation(3)

TotalStanley R. Zax


2009

$
2,500,000







$
198,292

$
2,698,292Chairman of the Board and


2008


2,500,000

$
1,750,000





233,110


4,483,110President of Zenith; Chairman of the Board of Zenith Insurance (Chief Executive Officer)


2007


2,000,000


3,000,000





76,300


5,076,300Kari L. Van Gundy


2009

$
444,767




$
145,250

$
26,428

$
616,445Executive Vice President,


2008


415,600

$
200,000


314,000


28,000


957,600Chief Financial Officer and Treasurer of Zenith and Zenith Insurance (Chief Financial Officer)


2007


415,600


250,000


613,800


35,750


1,315,150Keith E. Trotman


2009

$
550,000

$
1,000,000

$
145,250

$
28,369

$
1,723,619Executive Vice President of


2008


550,000


400,000


314,000


31,950


1,295,950Zenith and Zenith Insurance


2007


550,000


500,000


491,040


53,500


1,594,540Jack D. Miller


2009

$
716,000




$
145,250

$
37,244

$
898,494Executive Vice President of


2008


716,000

$
300,000


314,000


40,959


1,370,959Zenith; Vice Chairman of Zenith Insurance (Effective March 15, 2010)


2007


716,000


400,000


613,800


44,250


1,774,050Michael E. Jansen


2009

$
515,600




$
145,250

$
54,160

$
715,010Executive Vice President


2008


515,600

$
150,000


314,000


56,454


1,036,054and General Counsel of Zenith and Zenith Insurance


2007


515,600


200,000


613,800


44,750


1,374,150


The
restricted stock will vest upon the achievement of a performance goal. However, the amount shown in the table is the full fair value of the restricted stock and has not been reduced to reflect the
probable outcome of achievement of the performance goal.

Forfeiture
rates are not assumed or factored into the determination of the fair value of the restricted shares for the purposes of the table and the value of future dividends is assumed to be
reflected in the closing price per share of Common Stock and, consequently, in the fair value of each award. Therefore, dividends paid on unvested restricted stock are not shown separately in the
table. (Note that dividends will not be paid on unvested shares of restricted stock that are granted to employees, including all Executive Officers after 2009, but will be accrued and paid only upon
the vesting of such shares.)

The
assumption that the value of future dividends is reflected in the closing price per share of Common Stock and the fair value of each award was made only with respect to regular quarterly dividends
declared and paid by Zenith. That assumption

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The
2009 entries under the All Other Compensation column consist of the following amounts incurred or paid by Zenith in 2009:

Stanley R. Zax

The
amount shown for Mr. Zax consists of: (a) life insurance premiums of $49,329 paid by Zenith and reimbursement of $43,308 for Mr. Zax's income tax liability on Zenith's payment
of these premiums; (b) the cost of the personal use of a company-leased automobile of $22,592; and (c) the incremental cost to Zenith of $83,063 for his personal use of the corporate
aircraft in compliance with Zenith's security policy. The calculation of incremental cost for personal use of the corporate aircraft includes the variable costs incurred as a result of personal flight
activity (including any related empty pick-up or return flights commonly known as "deadhead flights"), such as a portion of ongoing maintenance and repairs, aircraft fuel, navigation and
communications fees and any travel expenses for the flight crew. It excludes non-variable costs, such as aircraft purchase costs and depreciation, flight crew salaries, exterior paint,
interior refurbishment and regularly scheduled inspections, which would have been incurred regardless of whether there was any personal use of the aircraft. Mr. Zax receives
imputed income for income tax purposes on his personal usage of the corporate aircraft using Standard Industry Fare Level rates pursuant to Internal Revenue Service regulations. Mr. Zax is
responsible for all taxes on this imputed income for personal aircraft usage, and he is not reimbursed for the taxes he pays.

Kari L. Van Gundy

The
amount shown for Ms. Van Gundy consists of: (a) Zenith's matching contributions of $7,350 to Zenith's 401(k) Plan; (b) extra $0.40 dividend totaling $9,500 paid on her shares
of unvested restricted stock; (c) life insurance premiums of $4,165 paid by Zenith under the enhanced life insurance program for all senior officers and reimbursement of $2,413 for
Ms. Van Gundy's income tax liability on Zenith's payment of these premiums; and (d) Zenith's matching contribution of $3,000 under Zenith's employee stock purchase plan.

Keith E. Trotman

The
amount shown for Mr. Trotman consists of: (a) Zenith's matching contributions of $7,350 to Zenith's 401(k) Plan; (b) extra $0.40 dividend totaling $8,400 paid on his shares of
unvested restricted stock; and (c) the cost of the personal use of a company-leased automobile of $12,619.

Jack D. Miller

The
amount shown for Mr. Miller consists of: (a) Zenith's matching contributions of $7,350 to Zenith's 401(k) Plan; (b) extra $0.40 dividend totaling $9,000 paid on his shares of
unvested restricted stock; and (c) life insurance premiums of $13,230 paid by Zenith under the enhanced life insurance program for all senior officers and reimbursement of $7,664 for
Mr. Miller's income tax liability on Zenith's payment of these premiums.

Michael E. Jansen

The
amount shown for Mr. Jansen consists of: (a) Zenith's matching contributions of $7,350 to Zenith's 401(k) Plan; (b) extra $0.40 dividend totaling $10,000 paid on his shares of
unvested restricted stock; (c) life insurance premiums of $3,521 paid by Zenith under the enhanced life insurance program for all senior officers and reimbursement of $2,039 for
Mr. Jansen's income tax liability on Zenith's payment of these premiums; and (d) Zenith's matching contribution of $31,250 under Zenith's employee stock purchase plan.

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Salary and bonus constitute a substantial portion of the total compensation received by each Executive Officer. This is pursuant to Zenith's
philosophy that compensation be fair, simple and transparent, easily quantifiable and related to Zenith's performance.

Salary and Employment Agreements

The salary shown in the Summary Compensation Table for each of Ms. Van Gundy and Messrs. Zax, Miller and Jansen is paid
pursuant to employment agreements, which have all been approved by the Compensation Committee. Mr. Zax's employment agreement was amended and restated in 2008; the employment agreements of
Ms. Van Gundy and Messrs. Miller and Jansen were amended and restated in 2009. (See "Amendment to the Executive Officers' Employment Agreements" under the CD&A in this Item 11 for
a discussion of the changes to the employment
agreements.) Mr. Trotman does not have an employment agreement. Pertinent provisions of the employment agreements, including payments due upon early termination and a change in control are set
forth below and under "Early Termination of Employment and Change in Control Arrangements" in this Item 11.

Stanley R. Zax

Stanley R. Zax, who serves as Zenith's Chairman of the Board and President (which office constitutes Zenith's Chief Executive Officer),
is employed under an employment agreement effective as of December 11, 1997, which, after its latest amendment and restatement in September 2008, provides for an employment term ending on
December 31, 2012 (unless further extended or renewed). Under his employment agreement, Mr. Zax is paid an annual base salary, is eligible for discretionary cash bonuses and/or cash
bonuses under the Bonus Plan, is allowed personal use of the corporate aircraft for up to 125 hours per year, and is provided the exclusive use of an automobile of his choice and is entitled to
certain additional benefits that are generally available to all Zenith employees. Pursuant to Mr. Zax's employment agreement, Zenith is to provide life insurance of at least $6,125,000, of
which at least $5,000,000 is to be term life insurance. Currently, however, the aggregate amount of life insurance provided is $5,250,000, and Mr. Zax has consented to this lesser amount.

The
latest amendment in September 2008 to Mr. Zax's employment agreement continued his annual base salary of $2,500,000, subject to such increases as the Board or Compensation
Committee may determine from time to time. Mr. Zax's annual base salary is currently $2,500,000.

Upon
the normal expiration of Mr. Zax's employment agreement or upon his retirement, a five-year consulting agreement would be entered into between Mr. Zax and
Zenith, pursuant to which Zenith would provide an office, secretarial assistance, an automobile allowance, health insurance and a consulting fee in a declining amount for each year of the
five-year term of $750,000, $600,000, $500,000, $400,000 and $300,000, respectively, in return for Mr. Zax's providing consulting hours of no more than 100, 75, 50, 25 and
10 hours per quarter in the first, second, third, fourth and fifth years, respectively. The consulting agreement may be terminated by Mr. Zax for any reason or by Zenith with or without
cause or based on the death or disability of Mr. Zax. In the event of any such termination, consulting fee payments to Mr. Zax would cease; however, if the termination by Zenith is
without cause or is based on Mr. Zax's disability, he would continue to be provided an office, secretarial assistance, an automobile allowance and health insurance for the balance of the
consulting agreement term.

Kari L. Van Gundy

Kari L. Van Gundy, who serves as Executive Vice President, Chief Financial Officer and Treasurer (which office constitutes Zenith's
Chief Financial Officer) of both Zenith and Zenith Insurance is employed under an amended and restated employment agreement executed June 3, 2009. Her employment agreement provides for a term
ending December 31, 2012 (unless further extended or renewed), an annual base salary of $400,000 (with increases of $50,000 on each of June 1, 2009 and 2010) plus such other increases as
the Compensation Committee may establish from time to time,

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eligibility
for discretionary cash bonuses and/or cash bonuses under the Bonus Plan, an automobile allowance and certain additional benefits that are generally available to all Zenith employees.
Ms. Van Gundy's annual base salary is currently $450,000.

Jack D. Miller

Jack D. Miller, who currently serves as Zenith's Executive Vice President and Zenith Insurance's President (until March 15, 2010
when he will become its Vice Chairman), is employed under an amended and restated employment agreement executed June 3, 2009, which was further amended in January 2010, naming him Vice Chairman
of Zenith Insurance effective March 15, 2010. Mr. Miller's employment agreement provides for a term ending December 31, 2012 (unless further extended or renewed), an annual base
salary of $700,400 with such increases as the Compensation Committee may establish from time to time, eligibility for discretionary cash bonuses and/or cash bonuses under the Bonus Plan, an automobile
allowance and certain additional benefits that are generally available to all Zenith employees. Mr. Miller's annual base salary is currently $700,400.

Michael E. Jansen

Michael E. Jansen, who serves as Executive Vice President and General Counsel of both Zenith and Zenith Insurance, is employed under an
amended and restated employment agreement executed June 3, 2009. His employment agreement provides for a term ending December 31, 2012 (unless further extended or renewed), an annual
base salary of $500,000 with such increases as the Compensation Committee may establish from time to time, eligibility for discretionary cash bonuses and/or cash bonuses under the Bonus Plan, an
automobile allowance and certain
additional benefits that are generally available to all Zenith employees. Mr. Jansen's annual base salary is currently $500,000.

Bonus

The amounts shown in the Summary Compensation Table under the Bonus column were all paid under the Bonus Plan, except for the
$1 million discretionary cash bonus paid to Mr. Trotman in 2009.

Under
the Bonus Plan, annual cash bonuses may be paid to Executive Officers based on Zenith's financial performance during the calendar year. The maximum amount of bonus potentially
payable to each Executive Officer for each calendar year is determined as follows:

provided,
however, that, in either instance, the Compensation Committee may, in its sole discretion, on a case by case basis, reduce such bonus by any amount. Thus, although there is a performance
target that establishes compensation under the Bonus Plan, the use of negative discretion results in awards of compensation as if the Bonus Plan were a discretionary plan. In determining the total
amount of annual bonus award for each Executive Officer, the Compensation Committee considers and uses both cash bonuses and awards of restricted stock.

In
2009, on a statutory accounting basis, Zenith's workers' compensation combined ratio was 113.9% and the industry's estimated combined ratio, as reported by A.M. Best Company,
was 109.0%. Hence, the objective performance goal under the Bonus Plan was not met and no bonuses were payable under the Bonus Plan for 2009.

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The
Compensation Committee retains the ability to award cash bonuses from time to time separate from and outside of the Bonus Plan at its discretion, taking into account the factors used
to determine base salary and such other factors it deems to be appropriate. The Compensation Committee awarded Mr. Trotman a discretionary cash bonus of $1 million outside of the Bonus
Plan for 2009.

Restricted Stock Awards

The awards of restricted stock reported in the Summary Compensation Table were made under the Restricted Stock Plan. The Restricted
Stock Plan permits the awarding of restricted stock to our employees and non-employee Directors. Generally, "restricted stock" is Common Stock that may not be transferred or otherwise
disposed of for a specified period of time. The Compensation Committee is responsible for administering the Restricted Stock Plan.

Management
recommends individuals to the Compensation Committee to receive awards, the terms of awards to be granted and the number of shares subject to these awards. The Compensation
Committee then determines whether or not to accept management's recommendation. In making these determinations, a number of factors are taken into account, including the duties and responsibilities of
the individual, the value of the individual's services to Zenith, the individual's past, present and potential contribution to Zenith's success, past awards of restricted stock and other relevant
factors.

The
Compensation Committee prescribes the restrictions and conditions imposed on the restricted stock award. Beginning in 2009, in addition to time-based vesting, the
Compensation Committee added performance-based vesting of restricted stock awards made to employees. The committee may, in its discretion, make an award utilizing time-based vesting or
performance-based vesting or a combination of the two. Also, commencing with awards to employees in 2009, the Compensation Committee changed the manner in which dividends are paid on unvested shares
of restricted stock. Rather than paying dividends on unvested shares when such dividends are declared and paid on the Common Stock, dividends declared while the restricted stock is unvested are now
accrued and paid upon vesting.

Accordingly,
under the Restricted Stock Plan and the form of the restricted stock agreement that is elected to be used by the Compensation Committee in its discretion, awards of
restricted stock granted
to employees in 2009 and after will become vested either on a time basis or a performance basis, as follows:





In
either case, the recipient must be an employee on the applicable vesting date in order to be vested in the shares.

Under
the compensation arrangement for non-employee Directors, each non-employee Director will receive an annual award of 2,500 shares of restricted stock upon
his or her election at the Annual Meeting of Stockholders. The 2,500 shares will vest 833 shares on each of the first two anniversaries of the award date and 834 shares on the third anniversary of the
award date, provided the recipient is

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serving
as a Director on the applicable vesting date. If a Director is appointed at other than an Annual Meeting of Stockholders, the number of shares of restricted stock granted at the time of such
appointment will be adjusted proportionately downward in order to reflect the period of time until the next Annual Meeting of Stockholders, at which time the annual 2,500 shares will be granted.

In
general, the recipient of a restricted stock award has the rights of a holder of Common Stock, including the right to vote the shares and to receive dividends. (Employees granted
awards before 2009 and non-employee Directors receive dividends as they are declared and paid on the Common Stock; employees granted awards in 2009 and later will receive dividends
declared and paid on the Common Stock during the vesting period only if and at the time such shares become vested.)

Under
the terms of the Restricted Stock Plan, an award of restricted stock will automatically become fully vested upon the participant's death or termination of employment or service due
to disability. In addition, vesting will accelerate pursuant to the employment agreements of Ms. Van Gundy and Messrs. Zax, Miller and Jansen upon a change in control as defined in their
employment agreements. (Mr. Zax does not hold any restricted stock.) Pursuant to the Restricted Stock Plan, the Compensation Committee has the right to provide for acceleration of the vesting
of an award in its discretion based upon factors it determines appropriate including, but not limited to, the attainment of certain performance-related goals, the termination of the recipient's
employment or service with Zenith or change in control; provided, however, that the Compensation Committee can only waive restrictions it has established in certain limited circumstances.

In
addition, in the event of a change in control of Zenith, unless an award of restricted stock is assumed by the successor corporation or substituted with an equivalent award, the
restricted stock will become fully vested and free of restrictions. A "change in control" of Zenith is defined in the Restricted Stock Plan and generally includes any of the
following:

Grants of Plan-Based Awards in 2009

The number of shares of restricted stock awarded to the Named Executive Officers under the Restricted Stock Plan in 2009 and the fair
values of such awards were:

Named Executive Officer

Grant Date

Stock Awards:
Number of
Shares of Stock

Grant Date
Fair Value of
Stock Awards(1)Stanley R. Zax








Kari L. Van Gundy


12/2/2009


5,000

$
145,250Keith E. Trotman


12/2/2009


5,000


145,250Jack D. Miller


12/2/2009


5,000


145,250Michael E. Jansen


12/2/2009


5,000


145,250


(1)The
fair value of each award was based on the NYSE closing price of $29.05 per share of Common Stock on December 2, 2009, the date of award, and the
value of future regular quarterly dividends is assumed to be reflected in the closing price of Common Stock. (See "Restricted Stock Awards" following the Summary Compensation Table in this
Item 11 for a description of the Restricted Stock Plan.)


Other than the Restricted Stock Plan, Zenith has no other plans under which equity grants may be made.

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Outstanding Equity Awards at 2009 Year-End

None of the Named Executive Officers holds any outstanding stock options. The only equity awards held by them are shares of restricted
stock. At December 31, 2009, the number of shares of unvested restricted stock and their market value are set out in the following table. Market value is based on the NYSE closing price of
$29.76 per share of Common Stock on December 31, 2009.

Stock AwardsNamed Executive Officer

Number of
Shares of Stock that
Have Not Vested

Market Value of
Shares of Stock that
Have Not VestedStanley R. Zax





Kari L. Van Gundy


28,750

$
855,600Keith E. Trotman


26,000


773,760Jack D. Miller


27,500


818,400Michael E. Jansen


30,000


892,800


The vesting dates for the unvested shares held at December 31, 2009 by Ms. Van Gundy and Messrs. Trotman, Miller and Jansen
are:

Named Executive Officer

Month and Day

2010

2011

2012

2013

Total
Unvested
SharesKari L. Van Gundy

February 15











5,000July 5


5,000December 3


5,000





5,000December 5





7,500December 7


1,25028,750Keith E. Trotman

February 15











5,000December 3


5,000





5,000December 5





6,000December 7


5,00026,000Jack D. Miller

February 15











5,000December 3


5,000





5,000December 5





7,500December 7


5,00027,500Michael E. Jansen

February 7


5,000February 15











5,000December 3


5,000





5,000December 5





7,500December 7


2,50030,000


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Option Exercises and Stock Vested in 2009

None of the Named Executive Officers holds any options to acquire Common Stock. The following table sets out the number of shares that
each Named Executive Officer acquired upon the vesting of restricted stock in 2009 (that is, shares of restricted stock on which the restrictions lapsed) and the value realized upon vesting. The value
realized is based on the average of the high and low NYSE price per share of Common Stock on the dates on which the shares vested or if the vesting date falls on a non-business day, the
average of the high and low NYSE price per share for the business days preceding and following the vesting date.

Stock AwardsNamed Executive Officer

Number of Shares
Acquired on Vesting

Value Realized
on VestingStanley R. Zax





Kari L. Van Gundy


7,500

$
221,625Keith E. Trotman


11,000


325,050Jack D. Miller


12,500


369,375Michael E. Jansen


7,500


221,625


Early Termination of Employment and  Change in Control Arrangements

The employment agreements of Ms. Van Gundy and Messrs. Zax, Miller and Jansen contain identical provisions for payments
upon the early termination of employment. The conditions under which such payments are made and the amounts of such payments are set out below. Mr. Trotman does not have an employment
agreement.

The
employment agreements of Ms. Van Gundy and Messrs. Zax, Miller and Jansen are also similar in that each of them is prohibited during the term of the employment
agreement and for one year thereafter from directly or indirectly influencing customers to divert their business to a competitor of Zenith and from directly or indirectly soliciting any employee of
Zenith to be employed by them or any
enterprise that is a competitor of Zenith. Further, during the term of the employment agreement and so long as each of Ms. Van Gundy or Messrs. Miller or Jansen is receiving benefits
under the employment agreement, he or she may not compete against Zenith or own, assist, manage, advise or participate in an enterprise that competes against Zenith.

Under
the Restricted Stock Plan, shares of unvested restricted shares held by any recipient will vest upon his or her death, termination of employment due to disability or a change in
control of Zenith if the successor corporation does not assume the awards of restricted stock or substitute equivalent awards for them. Since the employment agreements of Ms. Van Gundy and
Messrs. Zax, Miller and Jansen provide for immediate vesting of their restricted stock upon a change in control irrespective of an assumption of awards, such agreements would effectively
supplant the plan's provision, so it would only apply to Mr. Trotman.

In
the discussion that follows, in accordance with SEC rules and regulations, payments and other benefits payable upon early termination and change in control situations are set out as
if the conditions for payments had occurred and/or the termination took place on December 31, 2009. In setting out such payments and benefits, we did not show amounts that had already been
earned as of the termination date, such as accrued salary, accrued vacation, accrued automobile allowance, and unused floating holidays. Also, we do not include any payments or benefits, such as group
health benefits through the month of termination, that are available to all full-time regular employees of Zenith when their employment terminates. (We did, however, choose to include
(a) group life insurance proceeds

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because
of the manner in which the enhanced senior officer's life insurance program, as described under "Perquisites and Other Personal Benefits" in the CD&A in this Item 11, integrates with
the group life insurance program and (b) disability payments because they offset the severance payments upon termination due to disability.)

Notwithstanding
anything to the contrary in the following discussion, if the employment of Ms. Van Gundy or Messrs. Zax, Miller or Jansen is terminated due to death,
disability, by Zenith other than for cause, or for Good Reason (as defined in their employment agreements), the affected Named Executive Officer will receive a prorated bonus for the year of
termination only if such termination occurs on or after July 1 of such year. Such prorated bonus payment would be equal to the highest annual bonus paid or payable to the affected Named
Executive Officer in the three calendar years immediately preceding the year of termination prorated from the beginning of the year of termination to the date of termination. If termination occurs
after the end of a given year but before the annual bonus for such year has been paid, the affected Named Executive Officer shall be entitled to receive such annual bonus; provided, that in the event
the amount of such annual bonus had already been determined by the Compensation Committee prior to termination, then the annual bonus paid shall be equal to the amount so determined. If, however, such
annual bonus had not yet been so determined, then the amount shall be equal to the highest annual bonus paid or payable to the affected Named Executive Officer in the three calendar years immediately
preceding such given year. The foregoing bonus payments are in addition to any other bonus payments to which the affected Named Executive Officer is entitled as severance under their employment
agreements and as described below.

The
amounts set forth below are estimates of the amounts that would be paid to the Named Executive Officers upon their termination. The actual amounts to be paid can only be determined
at the time of each Named Executive Officer's separation from Zenith. Note that except for the immediate vesting of restricted stock pursuant to their employment agreements upon a change in control,
none of Ms. Van Gundy and Messrs. Zax, Miller and Jansen is entitled to any unique benefit conditioned solely on a change in control. However, for the purposes herein, it is assumed that
a termination by Zenith without cause or by the affected Named Executive Officer for Good Reason also occurred following a change in control. If such termination does not also occur, the only amount
that Ms. Van Gundy and Messrs. Zax, Miller and Jansen would realize upon a change in control is the value of the accelerated vesting of their restricted stock. As for Mr. Trotman,
who does not have an employment agreement, the vesting of his shares of restricted stock would accelerate pursuant to the terms of the Restricted Stock Plan applicable to all participants. The plan
provides for such accelerated vesting if there is a change in control and the successor corporation does not assume the awards of restricted stock or substitute equivalent awards for them.

We
will discuss payments and other benefits that would be made or made available to each Named Executive Officer upon termination of employment for the following
reasons:

The
following table sets forth a summary of the potential payments the Named Executive Officers would receive under their employment agreements and certain benefit plans upon each of the
foregoing

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events.
In the interest of readability, we have combined certain of the payment categories. Refer to the information that follows the summary table for more details.

Named Executive Officer

Termination
Scenario

Salary
and Bonus
Payments

Benefits
Continuation
and Income Tax
Reimbursements

Accelerated
Vesting of
Restricted
Stock Value

Life
Insurance
Proceeds

TotalStanley R. Zax

For cause














Voluntary














Disability

$
8,320,000

$
397,221







$
8,717,221Death


8,500,000


25,275




$
5,250,000


13,775,275Without cause


14,000,000


397,221








14,397,221For Good Reason


14,000,000


397,221








14,397,221Change in control(1)


14,000,000


397,221








14,397,221Kari L. Van Gundy

For cause














Voluntary














Disability

$
770,000

$
153,041

$
855,600




$
1,778,641Death


950,000


75,688


855,600

$
1,800,000


3,681,288Without cause


1,650,000


153,041








1,803,041For Good Reason


1,650,000


153,041








1,803,041Change in control(1)(3)


1,650,000


963,786


855,600





3,469,386Keith E. Trotman

For cause














Voluntary














Disability







$
773,760




$
773,760Death








773,760

$
487,500


1,261,260Without cause














For Good Reason














Change in control(2)








773,760





773,760Jack D. Miller

For cause














Voluntary














Disability

$
1,720,400

$
222,428

$
818,400




$
2,761,228Death


1,900,400


26,833


818,400

$
2,000,000


4,745,633Without cause


3,200,800


222,428








3,423,228For Good Reason


3,200,800


222,428








3,423,228Change in control(1)


3,200,800


222,428


818,400





4,241,628Michael E. Jansen

For cause














Voluntary














Disability

$
720,000

$
123,301

$
892,800




$
1,736,101Death


900,000


75,688


892,800

$
2,000,000


3,868,488Without cause


1,600,000


123,301








1,723,301For Good Reason


1,600,000


123,301








1,723,301Change in control(1)


1,600,000


123,301


892,800





2,616,101


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Payments upon Termination for Cause or upon Voluntary Termination

If the employment of any of Ms. Van Gundy or Messrs. Zax, Miller or Jansen is terminated by Zenith for "cause" or by them
as a voluntary resignation, they will receive their base salary through the date on which the termination was effective. "Cause" is generally defined in the employment agreements as the Named
Executive Officer's (1) failure to substantially perform his or her duties or commitments or any other material breach of the employment agreement (other than a failure or breach resulting from
an incapacity due to physical or mental illness, injury or similar incapacity); (2) participation in activities that are competitive with Zenith's business; (3) conviction of a felony;
or (4) violation of his or her duty to maintain confidentiality as specified in the employment agreement. Mr. Trotman has no employment agreement but if he is terminated for cause, as
may be legally interpreted, or if he voluntarily resigned, he will also only receive his base salary through the date on which termination was effective.

If
a termination by Zenith of the employment of Ms. Van Gundy or Messrs. Zax, Trotman, Miller or Jansen for cause had occurred, or if they had voluntarily terminated their
employment, on December 31, 2009, they would not have been paid any sums or received any benefits other than the base salary that had already been earned by them through the termination date.

If
the reason Mr. Zax voluntarily terminated his employment on December 31, 2009 was because of his retirement, the five-year consulting agreement as described
under "Salary and Employment Agreements" following the Summary Compensation Table in this Item 11 under "Stanley R. Zax" would be entered into between Mr. Zax and Zenith. Amounts
relating to the consulting agreement are not set forth because Mr. Zax is required to perform ongoing service obligations to receive payments (except for benefits continuation in certain
instances).

Payments upon Termination of Employment for Disability

If the employment of any of Ms. Van Gundy or Messrs. Zax, Miller or Jansen is terminated as a result of disability, they
will receive (1) a bonus for the year of termination determined as described on page 27 hereof, (2) their base salary through the termination date and (3) a lump sum amount
equal to one year of (a) base salary to which they would have been entitled under their employment agreements (less amounts received pursuant to any long-term disability plans) and
(b) annual cash bonus. For the purpose of determining the annual cash bonus to be included in the lump sum payment, such bonus would be equal to the highest annual bonus paid or payable for any
one of the three consecutive years immediately preceding the year of termination. In addition, for a period of two years from any of the affected Named Executive Officer's termination of employment,
Zenith will continue to provide them and their family with the same level of life, medical, dental and vision insurance benefits that they were receiving through Zenith immediately prior to
termination. Zenith will also pay any additional amount necessary to reimburse the affected Named
Executive Officer for any taxes imposed solely by reason of receipt of such insurance benefits after the date of termination of employment.

"Disability"
is defined in the employment agreements as an Executive Officer's absence from employment (i) due to his or her inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve
months; or (ii) that resulted from a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less
than twelve months, and caused the Executive Officer to receive income replacement benefits for a period of not less than three months under an accident and health plan covering Zenith's employees; or
(iii) qualifies as a disability under the long term disability plan covering Zenith's employees.

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Under
the Restricted Stock Plan, any shares of unvested restricted stock then held by any recipient, including Ms. Van Gundy and Messrs. Trotman, Miller and Jansen, would
vest upon termination of employment due to disability. Mr. Zax does not currently hold any shares of unvested restricted stock.

If
termination by Zenith of the employment of Ms. Van Gundy or Messrs. Zax, Trotman, Miller or Jansen due to their disability had occurred on December 31, 2009, the
following amounts would have been payable and they would have acquired unrestricted ownership of the shares of restricted stock in the values shown:

Named Executive Officer

Bonus for
Termination
Year(1)

Salary
Continuation(2)

Bonus
Continuation(3)

Benefits
Continuation(4)

Accelerated
Vesting of
Restricted
Stock Value(5)

TotalStanley R. Zax

$
3,000,000

$
2,320,000

$
3,000,000

$
397,221




$
8,717,221Kari L. Van Gundy


250,000


270,000


250,000


153,041

$
855,600


1,778,641Keith E. Trotman














773,760


773,760Jack D. Miller


600,000


520,400


600,000


222,428


818,400


2,761,228Michael E. Jansen


200,000


320,000


200,000


123,301


892,800


1,736,101


Payments upon Death while Employed

Upon the death of Ms. Van Gundy or Messrs. Zax, Miller or Jansen, Zenith will continue to pay either their spouse,
children or estate (1) the affected Named Executive Officer's bonus for the year of termination determined as described on page 27 hereof, (2) the affected Named Executive
Officer's base salary through the date of death and (3) a lump sum amount equal to one year of (a) base salary to which the affected Named Executive Officer would have been entitled
under their employment agreement and (b) annual cash bonus. For the purpose of determining the annual cash bonus to be included in the lump sum payment, such bonus would be equal to the highest
annual bonus paid or payable for any one of the three consecutive years immediately preceding the year of termination. In addition, for a period of two years from the affected Named Executive
Officer's death, his or her family will be provided the same level of medical, dental and vision insurance benefits that they were receiving through Zenith immediately prior to the affected Named
Executive Officer's death. Zenith will also pay any additional amount necessary to reimburse the affected Named Executive Officer's family for any taxes imposed solely by reason of receipt of such
insurance benefits after the death of the affected Named Executive Officer.

Under
the Restricted Stock Plan, shares of unvested restricted stock then held by any recipient, including Ms. Van Gundy and Messrs. Trotman, Miller and Jansen, would vest
upon death while employed. Mr. Zax does not currently hold any shares of unvested restricted stock.

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If Ms. Van Gundy or Messrs. Zax, Trotman, Miller or Jansen had died on December 31, 2009, the following amounts would have been payable and
their spouse, children or estate would have acquired unrestricted ownership of the shares of restricted stock in the values shown:

Named Executive Officer

Bonus for
Termination
Year(1)

Salary
Continuation(2)

Bonus
Continuation(3)

Benefits
Continuation(4)

Accelerated
Vesting of
Restricted
Stock Value(5)

Life
Insurance
Proceeds(6)

TotalStanley R. Zax

$
3,000,000

$
2,500,000

$
3,000,000

$
25,275




$
5,250,000

$
13,775,275Kari L. Van Gundy


250,000


450,000


250,000


75,688

$
855,600


1,800,000


3,681,288Keith E. Trotman














773,760


487,500


1,261,260Jack D. Miller


600,000


700,400


600,000


26,833


818,400


2,000,000


4,745,633Michael E. Jansen


200,000


500,000


200,000


75,688


892,800


2,000,000


3,868,488


Payments upon Termination by Zenith other than for Cause, Disability or Death

If the employment of Ms. Van Gundy or Messrs. Zax, Miller or Jansen is terminated by Zenith for any reason other than for
Cause (as defined in their respective employment agreements), disability or death, Zenith will pay them (1) a bonus for the year of termination determined as described on page 27 hereof,
(2) their base salary through the termination date and (3) a lump sum amount equal to two years of (a) base salary to which they would have been entitled under their employment
agreements and (b) annual cash bonuses. For the purpose of determining the annual cash bonuses to be included in the lump sum payment, each such bonus would be equal to the highest annual bonus
paid or payable for any one of the three consecutive years immediately preceding the year of termination. In addition, for a period of two years from the affected Named Executive Officer's termination
of employment, Zenith will continue to provide the affected Named Executive Officer and his or her family with the same level of life, medical, dental and vision insurance benefits that they were
receiving through Zenith immediately prior to termination. Zenith will also pay any additional amount necessary to reimburse the affected Named Executive Officer for any taxes imposed solely by reason
of receipt of such insurance benefits after the date of termination of employment. Mr. Trotman

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does
not have any agreement regarding such payments upon such termination. If termination of the employment of Ms. Van Gundy or Messrs. Zax, Trotman, Miller or Jansen had occurred on
December 31, 2009 for any reason other than for cause, disability or death, then the following amounts would have been payable:

Named Executive Officer

Bonus for
Termination
Year(1)

Salary
Continuation(2)

Bonus
Continuation(3)

Benefits
Continuation(4)

TotalStanley R. Zax

$
3,000,000

$
5,000,000

$
6,000,000

$
397,221

$
14,397,221Kari L. Van Gundy


250,000


900,000


500,000


153,041


1,803,041Keith E. Trotman














Jack D. Miller


600,000


1,400,800


1,200,000


222,428


3,423,228Michael E. Jansen


200,000


1,000,000


400,000


123,301


1,723,301


Payments upon Termination by Named Executive Officer for "Good Reason" (Constructive Termination)

The employment agreement of each of Ms. Van Gundy and Messrs. Zax, Miller and Jansen provide that they may terminate
their employment for "Good Reason," which is defined as (a) material diminution in their annual base salary, (b) material diminution in their authority, duties, responsibilities or
reporting relationship, (c) material diminution in the budget over which they have authority, (d) material change in geographic work location, or (e) any other material breach of
the employment agreement by Zenith. In effect, termination by an affected Named Executive Officer for Good Reason would be a constructive termination.

If
Ms. Van Gundy or Messrs. Zax, Miller or Jansen terminated their employment for Good Reason, the amounts payable to them under their employment agreement are identical to
the amounts payable as if
they were terminated by Zenith other than for cause, disability or death. Accordingly, if any of Ms. Van Gundy or Messrs. Zax, Miller or Jansen had terminated on December 31,
2009, for Good Reason, then the amounts payable to them would be identical to the amounts shown in the immediately preceding table.

Payments upon a Change in Control

A "change in control" is defined in the employment agreement of each of Ms. Van Gundy and Messrs. Zax, Miller and Jansen
as either:



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Under
the employment agreements of Ms. Van Gundy and Messrs. Zax, Miller and Jansen, the only unique benefit that is conditioned solely on a change in control, as defined
and without any other action being taken, is that all stock options, stock appreciation rights, unvested restricted stock and any and all similar rights granted to them, will become immediately vested
and exercisable. Mr. Zax does not currently hold any stock options, stock appreciation rights, unvested restricted stock or any similar rights. Further, Zenith does not currently have any plans
under which stock options or stock appreciation rights may be granted. In addition, the Restricted Stock Plan provides that unvested restricted stock then held by any recipient would immediately vest
upon a change in control (as defined in the plan) if the successor corporation does not assume the awards of restricted stock or substitute equivalent awards for them. Since the employment agreements
of Ms. Van Gundy and Messrs. Zax, Miller and Jansen provide for immediate vesting of their restricted stock upon a change in control irrespective of an assumption of awards, such
agreements would effectively supplant the plan's provision, so it would only apply to Mr. Trotman.

If,
on December 31, 2009, there had been a change in control under the employment agreements of Ms. Van Gundy and Messrs. Zax, Miller and Jansen, the following
number of unvested shares would have vested for Ms. Van Gundy and Messrs. Trotman, Miller and Jansen at the values shown based on the NYSE closing price of $29.76 per share of Common
Stock on such date:

Named Executive Officer

Number of Shares

Market ValueStanley R. Zax





Kari L. Van Gundy


28,750

$
855,600Keith E. Trotman(1)


26,000


773,760Jack D. Miller


27,500


818,400Michael E. Jansen


30,000


892,800


(1)Also
assumes no assumption or substitution of award by successor corporation.


Under the assumption that there is a change in control on December 31, 2009 followed by a termination by Zenith without cause or by
Ms. Van Gundy, or Messrs. Zax, Miller or Jansen for Good Reason, in addition to acquiring unrestricted ownership of the shares of restricted stock then held, they would have been
entitled to the amounts previously set forth as payable upon such termination, as well as reimbursement of such additional amount, so that none of the benefits received are subject to net reduction
due to the imposition of excise taxes on "excess golden parachute payments," as defined in Section 280G of the Code. Since Mr. Trotman does not have an employment agreement, if his
employment were terminated following a change in control (and if the successor corporation did not

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assume
the awards or provide an equivalent substitution), he would only be entitled to unrestricted ownership of his restricted stock.

The
amounts payable under this scenario are as follows (1):

Named Executive Officer

Bonus for
Termination
Year(2)

Salary
Continuation(3)

Bonus
Continuation(4)

Benefits
Continuation(5)

Accelerated
Vesting of
Restricted
Stock Value(6)

280G Excise Tax
Reimbursement(7)

TotalZax

$
3,000,000

$
5,000,000

$
6,000,000

$
397,221







$
14,397,221Van Gundy


250,000


900,000


500,000


153,041

$
855,600

$
810,745


3,469,386Trotman














773,760





773,760Miller


600,000


1,400,800


1,200,000


222,428


818,400





4,241,628Jansen


200,000


1,000,000


400,000


123,301


892,800





2,616,101


Compensation Committee Interlocks and Insider Participation

All decisions on Executive Officer compensation for 2009 were made by the Compensation Committee. The committee consists of
Ms. Reynolds and Messrs. Miller (Chairman), Rothenberg and Zavis. None of the members of the committee is or was an officer or employee of Zenith or any of its subsidiaries and none of
them has any relationship with Zenith that is required to be disclosed.

Director Compensation

During 2009, Zenith paid each Director (other than Mr. Zax, who received no additional compensation for serving as a Director)
an annual cash fee of $90,000 for serving as a member of the Board. Each Director who served on a committee of the Board received an additional annual cash fee of $40,000 for each committee on which
he or she served. The Director who served as Chairman of the Audit Committee received an additional annual cash fee of $10,000. All fees are paid to Directors

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quarterly
in advance as a retainer and when a Director is appointed to the Board or a committee at other than the beginning of a calendar quarter, his or her fees for that quarter are prorated.

A
non-employee Director may elect to defer all or a portion of his or her future cash compensation pursuant to the 2003 Non-Employee Director Deferred
Compensation Plan ("Deferred Compensation Plan") by completing and returning a deferred compensation agreement to Zenith prior to December 31 of the year preceding the year in which the
deferral is to be made. The Director may defer all or a portion of his or her director compensation into a deferred cash account, a stock unit account, or a combination thereof. Amounts in the
deferred cash account will be credited with interest at the prime rate. Amounts in the stock unit account are represented by stock units, which will fluctuate in value in accordance with the Common
Stock. The stock unit account will also be credited with additional units with respect to dividends that would have been paid if the stock units were actual shares of Common Stock. The number of stock
units credited to the stock unit account with respect to deferred compensation or dividends will be determined by dividing the dollar amount of the compensation deferred, or the dividends deemed
received, by the NYSE closing price per share of Common Stock on the last trading day preceding the day the deferred compensation or dividend is payable. Deferral accounts are fully vested at all
times but are unfunded. All deferral elections remain in effect until changed by the Director. Subject to compliance with Section 409A of the Code, distributions under the Deferred Compensation
Plan will generally commence after a participant ceases to be a non-employee Director of Zenith and are payable in cash and may be made in a lump sum or in annual installments over five or
ten years as elected by the participant. Participants may also elect an early benefit distribution date as to all or a portion of accumulated benefits, which may commence no earlier than
24 months after Zenith receives the participant's deferral election.

In
addition to cash compensation, 2,500 shares of restricted stock are also awarded annually upon a Director's election at the Annual Meeting of Stockholders. The award is made under the
Restricted Stock Plan and 833 shares vest on each of the first two anniversaries of the award date and 834 shares on the third anniversary of the award date, provided the recipient is serving as a
Director on the applicable vesting date. See "Restricted Stock Awards" following the Summary Compensation Table in this Item 11 for a description of the Restricted Stock Plan. (If a Director is
appointed on a date other than an Annual Meeting of Stockholders, the number of shares of restricted stock awarded at the time of such appointment will be adjusted proportionately downward in order to
reflect the period of time from such appointment to the next Annual Meeting of Stockholders, at which time the annual 2,500 shares will be awarded.) Directors are also reimbursed for all
out-of-pocket expenses incurred in connection with their service on the Board or its committees. Pursuant to the terms of the Restricted Stock Plan, the Compensation Committee
determined that the 4,750 shares of unvested restricted stock held by Mr. Panetta should immediately vest on February 2, 2009 when he retired as a Director in order to accept appointment
as Director of the Central Intelligence Agency of the United States of America.

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2009 Director Compensation Table

The following table sets forth the compensation received by all Directors in 2009 for service on the Board or its committees, other
than Mr. Zax, who does not receive any additional compensation for serving as a Director. The total compensation set forth in the table does not include any reimbursements made by Zenith for
out-of-pocket expenses incurred by Directors in connection with their service on the Board or its committees or the direct payment by Zenith of such expenses.

Director

Fees Earned or
Paid in Cash(1)

Stock
Awards(2)

All Other
Compensation(2)

TotalJerome L. Coben *

$
155,834

$
74,637

$
1,272

$
231,743Max M. Kampelman


130,000


56,025


1,967


187,992Robert J. Miller


170,000


56,025


1,967


227,992Fabian Nuñez


163,334


56,025


1,307


220,666Catherine B. Reynolds


170,000


56,025


1,967


227,992Alan I. Rothenberg


206,667
(3)

56,025


1,967


264,659William S. Sessions


130,000


56,025


1,967


187,992Michael Wm. Zavis


180,000


56,025


1,967


237,992Leon E. Panetta **


42,500








42,500


Director

Board

Audit
Committee

Compensation
Committee

Nominating
and Corporate
Governance
Committee

Healthcare
Committee(b)

TotalJerome L. Coben(a)

$
82,500

$
36,667







$
36,667

$
155,834Max M. Kampelman


90,000







$
40,000





130,000Robert J. Miller


90,000




$
40,000


40,000





170,000Fabian Nuñez


90,000








36,667


36,667


163,334Catherine B. Reynolds


90,000


40,000


40,000








170,000Alan I. Rothenberg


90,000


40,000


40,000





36,667


206,667William S. Sessions


90,000








40,000





130,000Michael Wm. Zavis


90,000


50,000


40,000








180,000Leon E. Panetta(c)


22,500


10,000





10,000





42,500




Forfeiture
rates are not assumed or factored into the determination of the fair value of the restricted shares for the purposes of the table and the value of future dividends is assumed to be
reflected in the closing price per share of Common Stock and, consequently, in the fair value of each award. Therefore, dividends paid on unvested restricted stock are not shown separately in the
table. However, this assumption that the value of future dividends is reflected in the closing price per share of Common Stock and the fair value of each award was made only with respect to regular
quarterly dividends declared and paid by Zenith. That assumption was not made with respect to the extra dividend of $0.40 per share that was declared and paid in December 2009 on all outstanding
shares of Common Stock. Thus, $1,272 is shown for Mr. Coben, $1,307 is shown for Mr. Nuñez and $1,967 is shown for each of the other Directors (except for
Mr. Panetta) under the All Other Compensation column for the extra dividend of $0.40 per share that each Director received on his or her unvested restricted stock.

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Director

Number of
Shares Awarded

Grant Date
Fair ValueJerome L. Coben


3,180

$
74,637Max M. Kampelman


2,500


56,025Robert J. Miller


2,500


56,025Fabian Nuñez


2,500


56,025Catherine B. Reynolds


2,500


56,025Alan I. Rothenberg


2,500


56,025William S. Sessions


2,500


56,025Michael Wm. Zavis


2,500


56,025Leon E. Panetta *










As
of December 31, 2008, Mr. Rothenberg's stock unit account under this plan consisted of 16,507 units, valued at $521,126 based on the NYSE closing price of $31.57 per share of Common
Stock on such date. As of December 31, 2009, Mr. Rothenberg's stock unit account consisted of 26,557 stock units, valued at $790,336 based on the NYSE closing price of $29.76 per share
of Common Stock on such date. The $269,210 increase in value of Mr. Rothenberg's account during 2009 consisted of the following:

$
206,667

Deferred director cash fee54,430

Dividend equivalents8,113

Change due to market value fluctuations$
269,210


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Table of Contents

Restricted Stock Held by Non-employee Directors that Vested in 2009

The following table sets out the number of shares that each Director acquired upon the vesting of restricted stock (that is, shares of
restricted stock on which the restrictions lapsed in 2009) and the value realized upon vesting. The value realized is based on the NYSE closing price per share of Common Stock on the dates on which
the shares vested.

Stock AwardsDirector

Number of Shares
Acquired on Vesting

Value Realized
on VestingJerome L. Coben





Max M. Kampelman


2,333

$
51,657Robert J. Miller


2,333


51,657Fabian Nuñez


383


11,092Catherine B. Reynolds


2,333


51,657Alan I. Rothenberg


2,333


51,657William S. Sessions


2,333


51,657Michael Wm. Zavis


2,333


51,657Leon E. Panetta *


4,750


133,570


*Mr. Panetta
retired from the Board on February 2, 2009 and the vesting of 4,750 shares of unvested restricted stock held by him accelerated and
immediately vested on such date.


Value of Unvested Restricted Stock Held by Non-employee Directors at 2009 Year-End

As of December 31, 2009, the non-employee Directors' aggregate unvested restricted stock holdings and their values
(based on the NYSE closing price of $29.76 per share of Common Stock on December 31, 2009) were:

Director

Number of
Shares That Have
Not Vested

Market Value of
Shares That Have
Not VestedJerome L. Coben


3,180

$
94,637Max M. Kampelman


4,917


146,330Robert J. Miller


4,917


146,330Fabian Nuñez


3,267


97,226Catherine B. Reynolds


4,917


146,330Alan I. Rothenberg


4,917


146,330William S. Sessions


4,917


146,330Michael Wm. Zavis


4,917


146,330Leon E. Panetta *








*Mr. Panetta
retired from the Board on February 2, 2009 and the vesting of 4,750 shares of unvested restricted stock held by him accelerated and
immediately vested on such date.


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Table of Contents

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership of Certain  Beneficial Owners and Management

The following table contains certain information as of February 25, 2010 as to: (1) all persons who, to our knowledge,
were the beneficial owners of more than 5% of the outstanding shares of Common Stock; (2) each of the Named Executive Officers (as named in the Summary Compensation Table in Item 11);
(3) each of the Directors; and (4) all of the Executive Officers and Directors as a group. The persons named hold sole voting and investment power with respect to
the shares shown opposite their respective names, unless otherwise indicated. The information with respect to each person specified is as supplied or confirmed by such person.

Name and Address of Beneficial Owner

Amount and Nature of
Beneficial Ownership(1)

Percent
of ClassBlackRock, Inc.(2)40 East 52nd Street.
New York, NY 10022


3,757,302


9.9
%Fairfax Financial Holdings Limited, et. al.(3)95 Wellington Street West, Suite 800
Toronto, Ontario, Canada M5J 2N7


3,118,441


8.2
%Gilder, Gagnon, Howe & Co. LLC(4)1775 Broadway, 26th Floor
New York, NY 10019


2,345,755


6.2
%Stanley R. Zax(5)21255 Califa St.
Woodland Hills, CA 91367


806,567


2.1
%Michael Wm. Zavis(6)525 West Monroe St., Suite 1600
Chicago, IL 60661


25,457


*Catherine B. Reynolds(7)21680 Ridgetop Circle
Sterling, VA 20166


22,095


*Alan I. Rothenberg(8)1875 Century Park East, Suite 1450
Los Angeles, CA 90067


21,250


*Max M. Kampelman(9)1001 Pennsylvania Ave. N.W.
Washington, D.C. 20004


19,238


*William S. Sessions(10)2099 Pennsylvania Ave. N.W., Suite 100
Washington, D.C. 20006


15,941


*Robert J. Miller(11)900 South Pavilion Center Dr.
Las Vegas, NV 89144


11,750


*


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Table of Contents

Name and Address of Beneficial Owner

Amount and Nature of
Beneficial Ownership(1)

Percent
of ClassFabian Nuñez(12)1414 K Street, 6th Floor
Sacramento, CA 95814


3,650


*Jerome L. Coben(13)5482 Wilshire Blvd., #1579
Los Angeles, CA 90036


3,180


*Keith E. Trotman(14)21255 Califa St.
Woodland Hills, CA 91367


95,520


*Jack D. Miller(15)21255 Califa St.
Woodland Hills, CA 91367


66,145


*Michael E. Jansen(16)21255 Califa St.
Woodland Hills, CA 91367


60,408


*Kari L. Van Gundy(17)21255 Califa St.
Woodland Hills, CA 91367


46,464


*All Executive Officers and Directors as a group (16 persons)(18)


1,359,369


3.6
%


Reporting Person

Percent of
Outstanding

Amount
Beneficially Owned

Shared
Voting Power

Shared
Dispositive PowerMr. Watsa


8.2
%

3,118,441


3,118,441


3,118,4411109519


8.2
%

3,118,441


3,118,441


3,118,441Sixty Two


8.2
%

3,118,441


3,118,441


3,118,441810679


8.2
%

3,118,441


3,118,441


3,118,441Fairfax


8.2
%

3,118,441


3,118,441


3,118,441Odyssey America


6.2
%

2,344,541


2,344,541


2,344,541US Fire Insurance


1.9
%

734,900


734,900


734,900North River Insurance


0.1
%

39,000


39,000


39,000Newline


0.7
%

250,000


250,000


250,000


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Change in Control

On February 17, 2010, an Agreement and Plan of Merger dated February 17, 2010 ("Merger Agreement") was entered into by
and among Zenith, Fairfax Financial Holdings Limited ("Fairfax') and Fairfax Investments II USA Corp. ("Merger Subsidiary"), an indirect
wholly-owned subsidiary of Fairfax. Pursuant to the Merger Agreement, after satisfaction of customary closing conditions, the transaction will be consummated and Zenith will become a wholly-owned
subsidiary of Fairfax. At that time, all outstanding shares of Common Stock, other than shares held as treasury stock by Zenith, owned by the Merger Subsidiary or any wholly-owned subsidiary of
Fairfax, or owned by Zenith's stockholders who properly exercise appraisal rights under Delaware law, will be cancelled and converted into the right to receive $38 in cash.

Consequently,
upon consummation of the transaction, there will be a change in control of Zenith. See the Current Report on Form 8-K filed by Zenith with the SEC on
February 18, 2010 for further information on the Merger Agreement and the proposed transaction.

Equity Compensation Plan Information

The following is a summary, as of December 31, 2009, of the shares of Common Stock that may be issued pursuant to outstanding
options, rights or warrants granted under Zenith's equity compensation plans and the number of shares available for future issuance under such plans.

Plan Category

Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)

Weighted-average
exercise price of
outstanding
options,
warrants and
rights
(b)

Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in
column (a))
(c)Equity compensation plans approved by security holders








133,170
(1)Equity compensation plans not approved by security holders(2)








Total



(3)


(3)

133,170
(1)


The number of shares available under the Restricted Stock Plan, as of February 25, 2010, remains at 133,170. However, pursuant to Janet
Frank's employment agreement executed on January 11, 2010, upon her commencement of employment on March 15, 2010 as President of Zenith Insurance, she will be awarded 50,000 shares of
restricted stock.

Zenith
also maintains an employee stock purchase plan that was approved by stockholders in 2007 and which is available to all employees. Under the terms of the plan, a participant may
elect to contribute, by payroll deduction, up to 25% of his or her pre-tax salary or wages on a calendar-year basis. Each participant's contribution is matched by a cash
contribution from Zenith of 25% of the participant's payroll deductions and the combined amount is used to purchase Common Stock on the open market for the participant. No securities are issuable
under the employee stock purchase plan. Zenith's matching contribution is limited to $1 million per calendar year on a plan-wide basis and upon

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reaching
this limit, no further matching contributions may be made by Zenith for the remainder of the calendar year.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Independence of Directors

The Board is composed entirely of independent Directors, except for Mr. Zax, who serves as Chairman of the Board and President
of Zenith (and in this capacity is the Chief Executive Officer of Zenith), and is an employee of Zenith Insurance, a wholly-owned subsidiary of Zenith.

The
Board has established certain guidelines that conform to the NYSE listing standards and other applicable laws, rules and regulations to assist it in determining independence.
Employing these guidelines, the Board makes an annual determination as to the independence of each Director.

In
determining independence, the Board evaluates whether Directors have any material relationships with Zenith and considers all relevant facts and circumstances. In making an
independence determination, the Board will consider the facts and circumstances not merely from the standpoint of the Director, but also from the standpoint of persons or organizations with which the
Director is affiliated.

The
Board has established that charitable donations and political contributions by Zenith to an entity or organization with which a Director or his or her immediate family member is
associated shall not be considered material and shall not affect a Director's independence if the donations or contributions meet either of the following exceptions:

Based
on the applicable standards and the exceptions set forth above (which are contained in Zenith's Corporate Governance Guidelines posted on Zenith's website, www.thezenith.com), each of the Directors
other than Mr. Zax was determined to be independent. In the past three years, only two of the Directors
had a relationship with Zenith that was not within the foregoing categorical exceptions and in each instance, the relationship was determined by the Board to be immaterial. Mr. Coben was a
partner through the end of 2008 with a law firm that provided legal services to Zenith; however, the percentage of partnership income that he received in each of 2008 and 2007 attributable to Zenith
was immaterial. Mr. Nunez received politically related contributions and gifts from Zenith in 2008 and 2007 totaling less than $4,000, that were determined by the Board to be immaterial, but
nonetheless required to be reported under campaign finance laws.

No
Executive Officer of Zenith serves on the Compensation Committee or on the board of directors of a company that employs a Director or his or her immediate family member.

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Related Person Transactions Approval  Policy and Procedures

The Board adopted a written Related Person Transactions Policy on December 7, 2006, which requires the review and approval by
the Audit Committee of all transactions between Zenith and any Director, Executive Officer, 5% or greater stockholder, an immediate family member of any of the foregoing, or any entity of which any of
the foregoing persons is an employee, principal or significant owner. If the Audit Committee is unable to convene, the Chair of the Audit Committee is delegated the authority to review and approve
transactions subject to the policy. In addition, the General Counsel and the Chief Financial Officer of Zenith are responsible for the day-to-day enforcement of the policy.
Excluded from review and approval under the policy are donations to a charitable or not-for-profit organization of $100,000 or less in any calendar year, political
contributions of $50,000 or less in any calendar year, and compensation, benefits and perquisites that have been approved in accordance with other established procedures of Zenith.

During
2009, there were no transactions that required review or approval as a related person transaction under the Related Person Transactions Policy.

The
Related Person Transactions Policy is posted on Zenith's website,www.thezenith.com.

Item 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

PricewaterhouseCoopers LLP ("PwC"), an Independent Registered Public Accounting Firm, was Zenith's independent auditors for
fiscal years 2009 and 2008.

Fees
billed to Zenith by PwC during 2009 and 2008 were as follows:

Audit Fees

The aggregate fees (including expenses) billed in 2009 and 2008 to Zenith by PwC for professional services rendered for the audit of
Zenith's financial statements for the years ended December 31, 2009 and 2008, reviews of financial statements included in the Quarterly Reports on Form 10-Q for 2009 and
2008, and in connection with Zenith's statutory and regulatory filings for 2009 and 2008 were $1,645,500 and $1,821,500, respectively.

Audit-Related Fees

The aggregate fees (including expenses) billed to Zenith in 2009 and 2008 by PwC for assurance and related services by PwC that are
reasonably related to the performance of the audit or reviews of Zenith's financial statements for 2009 and 2008 that are not reported under "Audit Fees" were $86,000 for each year. The services
comprising these fees were the audits of Zenith's 401(k) Plan performed in 2009 and 2008.

Tax Fees

The aggregate fees billed to Zenith in 2009 and 2008 by PwC for professional services rendered by PwC for tax compliance, tax advice
and tax planning were $120,000 and $140,000, respectively. The services comprising these fees were primarily reviews and advice on Zenith's federal income and state franchise tax returns for 2009 and
2008.

All Other Fees

The aggregate fees billed to Zenith in 2009 and 2008 by PwC for products and services (other than the services reported under "Audit
Fees," "Audit-Related Fees" and "Tax Fees") were $19,000 for each year. In 2009, the fees were for a license to use PwC's proprietary accounting research tool and support

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the
California Department of Insurance review and in 2008, the fees were for licenses to use PwC's proprietary accounting research tool and to use PwC's proprietary benchmarking tool.

Pre-Approval of Independent Auditors' Services

All of PwC's services were pre-approved by the Audit Committee in 2009. The Audit Committee pre-approves
services either: (1) by approving a request from management to engage PwC for a specific project at a specific fee or rates; or (2) by pre-approving certain types of services
that would comprise the fees within each of the above captions at PwC's usual and customary rates. Under this second category, the services pre-approved for each of the above captions
were: "Audit Services"  review of unaudited consolidated quarterly financial statements included in the Quarterly Reports on Form 10-Q prior to filing with the
Commission; "Tax Fees"  review of, and advice on, federal and state tax returns; and "All Other Fees"  license of PwC's proprietary accounting research
database.

There
were no waivers of the pre-approval requirements. All services were pre-approved by the Audit Committee prior to the commencement of services by PwC.

PART IV

Item 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) 3. Exhibits

An amended and restated Exhibit Index is filed as part of this Amendment No. 1 following the Signatures and is incorporated
herein by reference.

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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 3, 2010.

ZENITH NATIONAL INSURANCE CORP.By:

/s/ STANLEY R. ZAX Stanley R. Zax
Chairman of the Board and President


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 3, 2010.

/s/ STANLEY R. ZAX Stanley R. Zax

Chairman of the Board and President
(Principal Executive Officer)/s/ JEROME L. COBEN Jerome L. Coben

Director/s/ MAX M. KAMPELMAN Max M. Kampelman

Director/s/ ROBERT J. MILLER Robert J. Miller

Director/s/ FABIAN NUÑEZ Fabian Nuñez

Director/s/ CATHERINE B. REYNOLDS Catherine B. Reynolds

Director/s/ ALAN I. ROTHENBERG Alan I. Rothenberg

Director/s/ WILLIAM S. SESSIONS William S. Sessions

Director/s/ MICHAEL WM. ZAVIS Michael Wm. Zavis

Director/s/ KARI L. VAN GUNDY Kari L. Van Gundy

Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)


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Table of Contents

EXHIBIT INDEX

Zenith
National Insurance Corp. and Subsidiaries

3.1

Amended and Restated Certificate of Incorporation of Zenith National Insurance Corp. filed with the Delaware Secretary of State on May 30, 2006. (Incorporated herein by reference to Exhibit 3.1 to Zenith's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.)3.2

Amended and Restated Bylaws of Zenith National Insurance Corp., as currently in effect. (Incorporated herein by reference to Exhibit 3.2 to Zenith's Current Report on Form 8-K filed May 19,
2009.)4.1

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.)4.2

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.)4.3

Certificate of Amendment to Certificate of Trust of Zenith National Insurance Capital Trust I, dated August 1, 2006. (Incorporated herein by reference to Exhibit 4.3 to Zenith's Annual Report on
Form 10-K for the year ended December 31, 2006.)*10.1

Zenith National Insurance Corp. Third Amended and Restated 2004 Restricted Stock Plan (as amended and restated May 13, 2008). (Incorporated herein by reference to Exhibit 10.1 to Zenith's Current Report on
Form 8-K filed on May 13, 2008.)*10.2

Zenith National Insurance Corp. 2004 Restricted Stock Plan, Form of Award Agreement for Non-Employee Directors. (Incorporated herein by reference to Exhibit 10.5 to Zenith's Quarterly Report on Form 10-Q for
the quarter ended March 31, 2006.)*10.3

Zenith National Insurance Corp. 2004 Restricted Stock Plan, Form of Award Agreement for Employees (performance-based vesting). (Incorporated herein by reference to Exhibit 10.1 to Zenith's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2009.)*10.4

Zenith National Insurance Corp. 2004 Restricted Stock Plan, Form of Award Agreement for Employees (time-based vesting). (Incorporated herein by reference to Exhibit 10.2 to Zenith's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2009.)*10.5

Employment Agreement dated January 11, 2010 between Zenith National Insurance Corp. and Janet Frank. (Incorporated herein by reference to Exhibit 10.1 to Zenith's Current Report on Form 8-K filed on
January 11, 2010.)*10.6

Amended and Restated Employment Agreement effective June 3, 2009 between Zenith National Insurance Corp. and Michael E. Jansen. (Incorporated herein by reference to Exhibit 10.2 to Zenith's Current Report on
Form 8-K filed on June 8, 2009.)*10.7

Amended and Restated Employment Agreement effective June 3, 2009 between Zenith National Insurance Corp. and Robert E. Meyer. (Incorporated herein by reference to Exhibit 10.3 to Zenith's Current Report on
Form 8-K filed on June 8, 2009.)


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EXHIBIT INDEX (continued):

*10.8

Amended and Restated Employment Agreement effective June 3, 2009 between Zenith National Insurance Corp. and Jack D. Miller. (Incorporated herein by reference to Exhibit 10.1 to Zenith's Current Report on
Form 8-K filed on June 8, 2009.)*10.9

Amendment No. 1 dated January 11, 2010 to Amended and Restated Employment Agreement between Zenith National Insurance Corp. and Jack D. Miller. (Incorporated herein by reference to Exhibit 10.2 to
Zenith's Current Report on Form 8-K filed on January 11, 2010.)*10.10

Amended and Restated Employment Agreement effective June 3, 2009 between Zenith National Insurance Corp. and Davidson M. Pattiz. (Incorporated herein by reference to Exhibit 10.4 to Zenith's Current Report
on Form 8-K filed on June 8, 2009.)*10.11

Amended and Restated Employment Agreement effective June 3, 2009 between Zenith National Insurance Corp. and Kari L. Van Gundy. (Incorporated herein by reference to Exhibit 10.5 to Zenith's Current Report on
Form 8-K filed on June 8, 2009.)*10.12

Amended and Restated Employment Agreement between Zenith National Insurance Corp. and Stanley R. Zax effective September 22, 2008, (Incorporated herein by reference to Exhibit 10.1 to Zenith's Current Report
on Form 8-K filed on September 22, 2008.)*10.13

Amended and Restated Zenith National Insurance Corp. Executive Officer Bonus Plan dated February 12, 2003. (Incorporated herein by reference to Exhibit 10.5 to Zenith's Quarterly Report on Form 10-Q for
the quarter ended March 31, 2003.)*10.14

First Amendment effective December 1, 2008 to Amended and Restated Zenith National Insurance Corp. Executive Officer Bonus Plan dated February 12, 2003. (Incorporated herein by reference to
Exhibit 10.17 to Zenith's Annual Report on Form 10-K for the year ended December 31, 2008.)*10.15

Zenith National Insurance Corp.'s revised policy on non-business use of the company-owned aircraft by executive officers and imputation of income therefor. (The information under the caption "Company-Owned Aircraft
Usage Policy" in Item 1.01 of Zenith's Current Report on Form 8-K filed on May 26, 2006 is incorporated herein by reference.)*10.16

Amended and Restated Zenith National Insurance Corp. 2003 Non-Employee Director Deferred Compensation Plan effective December 1, 2008. (Incorporated herein by reference to Exhibit 10.19 to Zenith's Annual
Report on Form 10-K for the year ended December 31, 2008.)*10.17

Amended and Restated Zenith National Insurance Corp. 2003 Non-Employee Director Deferred Compensation Plan effective December 1, 2008, Form of Deferred Compensation Agreement. (Incorporated herein by reference to
Exhibit 10.20 to Zenith's Annual Report on Form 10-K for the year ended December 31, 2008.)10.18

Workers' 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. (Incorporated herein by reference to Exhibit 10.36 to Zenith's Annual Report on Form 10-K for the year ended December 31, 2001.)


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EXHIBIT INDEX (continued):

10.19

Credit Agreement, dated as of February 16, 2007, between Zenith National Insurance Corp., and Bank of America, N.A. (Incorporated herein by reference to Exhibit 10.39 to Zenith's Annual Report on Form 10-K
for the year ended December 31, 2006.)10.20

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.)11

Statement of recomputation of per share earnings. (Incorporated herein by reference to Notes to Consolidated Financial Statements  Note 13  "Net Income and Dividends per Share").21

Subsidiaries of the Registrant. (Incorporated herein by reference to Exhibit 21 to Zenith's Annual Report on Form 10-K for the year ended December 31, 2009, filed with the SEC on February 10,
2010.)23

Consent of PricewaterhouseCoopers LLP dated February 10, 2010. (Incorporated herein by reference to Exhibit 23 to Zenith's Annual Report on Form 10-K for the year ended December 31, 2009,
filed with the SEC on February 10, 2010.)31.1

Certification of the Chief Executive Officer pursuant to Exchange Rule 13a-14(a) or Rule 15d-14(a). (Incorporated herein by reference to Exhibit 31.1 to Zenith's Annual Report on Form 10-K for the
year ended December 31, 2009, filed with the SEC on February 10, 2010.)31.2

Certification of the Chief Financial Officer pursuant to Exchange Rule 13a-14(a) or Rule 15d-14(a). (Incorporated herein by reference to Exhibit 31.2 to Zenith's Annual Report on Form 10-K for the
year ended December 31, 2009, filed with the SEC on February 10, 2010.)31.3

Certification of the Chief Executive Officer pursuant to Exchange Rule 13a-14(a) or Rule 15d-14(a), a copy of which certification is filed herewith as Exhibit 31.3.31.4

Certification of the Chief Financial Officer pursuant to Exchange Rule 13a-14(a) or Rule 15d-14(a), a copy of which certification is filed herewith as Exhibit 31.4.32

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. section 1350. (Incorporated herein by reference to Exhibit 32 to Zenith's Annual Report on Form 10-K for
the year ended December 31, 2009, filed with the SEC on February 10, 2010.)99.1

Available-for-sale investment portfolio as of December 31, 2009. (Incorporated herein by reference to Exhibit 99.1 to Zenith's Annual Report on Form 10-K for the year ended December 31, 2009, filed
with the SEC on February 10, 2010.)


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