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                                                                  EXECUTION COPY
                                          
                                          
                                          
                                EMPLOYMENT AGREEMENT

     This Employment Agreement ("Agreement") is entered into effective as of the
11th day of December, 1997 ("Effective Date"), on this 8th day of 
January, 1998 between ZENITH NATIONAL INSURANCE CORP., a Delaware corporation
(hereinafter referred to as "Company"), and FREDRICKA TAUBITZ (hereinafter
referred to as "Employee").

     WHEREAS, Employee is presently employed as Executive Vice President and
Chief Financial Officer of Zenith National Insurance Corp. pursuant to a written
Employment Agreement originally effective as of October 1, 1985 for a term of
five years, which agreement was extended and modified pursuant to a written
Employment Agreement dated as of February 28, 1990 for a term of five years
expiring on October 1, 1995 and further extended and modified pursuant to a
written Employment Agreement dated as of December 6, 1994 for a term of three
years expiring on October 1, 1998; and

     WHEREAS, Company and Employee deem it in their respective best interests to
extend the term of said Employment Agreement at the present time and modify
certain other provisions thereof;

     NOW, THEREFORE, it is AGREED as follows:

     1.   EMPLOYMENT.
               (a)  Subject to earlier termination as provided herein, the
Employee is employed as Executive Vice President and Chief Financial Officer of
the Company from the Effective Date through the Term of this Agreement (as
defined below).  In this capacity the Employee shall devote her full business
time and energy to the business, affairs and interests of the Company and
matters related thereto.  During the Term of the Agreement, the Employee shall
have no other employment other than with a subsidiary of the Company, except
with the prior written approval of the Board of Directors of the Company (the
"Board").  The Employee shall have such duties and responsibilities and such
executive power and authority as is customary for an officer in her position and
as shall be allocated to her in such capacity and such other duties and
responsibilities as the Board or the President of the Company shall designate
that are not inconsistent with the Employee's position with the Company. 
Without limiting the foregoing, the Employee shall have such duties and
responsibilities with respect to any subsidiaries of the Company as may be
requested by the Board, including (without limitation) as Executive Vice
President of Zenith Insurance Company, a wholly owned subsidiary of the Company
The Company hereby acknowledges


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and agrees that the Employee shall have the right to serve in any capacity 
with civic, educational, charitable and professional organizations and to 
make and manage personal business investments that do not violate the 
noncompetition provisions of Section 11 of this Agreement so long as such 
activities do not interfere with the discharge of her duties to the Company 
hereunder.

               (b)  During her employment hereunder, the Employee shall report
to the Company's Chief Executive Officer.

               (c)  The Company agrees to reappoint the Employee to the board of
directors of CalFarm Insurance Company ("CalFarm"), which appointment shall
continue throughout the Employee's period of employment hereunder; provided,
however, that the Company's obligation to make such appointment shall expire on
the date the Company ceases to own a controlling interest in CalFarm.  If
elected, the Employee agrees to serve  on the board of CalFarm so long as the
Company owns a controlling interest in CalFarm.

               (d)  The Employee shall not be required to relocate outside of
Southern California in order to perform the services hereunder, without the
Employee's consent, except for travel reasonably required in the performance of
her duties hereunder.

     2.   TERM.  This Agreement shall be in effect for a term commencing on the
Effective Date and expiring on December 31, 2002 ("Expiration Date"), and such
period shall be referred to herein as the "Term" of this Agreement, and such
Term shall not be affected by a termination of employment as elsewhere provided
herein.

     3.   SALARY.  Effective January 1, 1998, Employee shall be paid the sum of
Three Hundred and Ninety One Thousand Dollars per year,  subject to such other
increases as the Board of Directors of Company may from time to time determine
("Base Salary").

     4.   BONUSES.  In addition to the Base Salary, Employee shall  be a
participant in the Executive Officers Bonus Plan of the Company.

     5.   DEFERRED COMPENSATION.  In advance of the annual period for which
earned, the Employee shall have the right to defer all or any portion of her
salary and bonus to a specified date or event.  Any such deferred compensation
shall not be forfeitable and shall bear interest at a rate to be determined by
the Board.  Any election to defer compensation shall be disregarded, and any
compensation so deferred shall be added back, in the calculation of those of
Employee's rights and benefits under this Agreement that are based upon
Employee's salary or bonus or the sum thereof.

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     6.   PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS.  During her
employment hereunder, the Employee shall be entitled to participate in any plan
of the Company relating to stock options, stock purchases, pension, thrift,
profit sharing, life insurance, medical coverage, disability insurance,
education, and other retirement or employee benefits that the Company has
adopted or may adopt for the benefit of its executive employees, and the Company
shall provide the Employee with such insurance or other provisions for
indemnification, defense or hold-harmless of officers that are generally in
effect for other senior executive officers of the Company.  Notwithstanding the
foregoing, nothing contained in this Agreement shall prohibit or limit the right
of the Company to discontinue, modify or amend any plan or benefit in its
absolute discretion at any time; provided, however, that any such
discontinuance, modification or amendment shall apply to employees of the
Company generally, or to a defined group of such employees and shall not apply
solely to the Employee.

     7.   FRINGE BENEFITS; AUTOMOBILE.  In addition to the benefit plans
referred to in Section 6 hereof, the Employee shall be entitled to participate
in any other fringe benefits that are now or may be or become applicable to the
Company's executive employees, including the payment of reasonable expenses for
attending annual and periodic meetings of trade associations, and any other
benefits that are commensurate with the duties and responsibilities to be
performed by the Employee under this Agreement and reimbursement for reasonable
expenses incurred in the course of her duties hereunder in accordance with the
Company's policy with respect thereto.  In addition, the Company shall provide
the Employee with a deluxe car or car allowance of her choice.  The benefits
provided under this Section 7 shall cease upon the Employee's Date of
Termination (as defined below).

     8.   VACATION; CLUB MEMBERSHIPS.  During her employment hereunder, the
Employee shall be entitled to an annual paid vacation in accordance with the
Company's standard employment practices of at least four weeks per year or such
longer period as the Board may approve (prorated on a daily basis for any period
that is less than one calendar year).  Up to four weeks of accrued vacation time
that is not used in a calendar year may be carried over into the following
calendar year.  Upon termination of the Employee's employment for any reason,
the Employee shall be entitled to payment for any accrued but unused vacation
time based upon her then current salary.  The time of paid vacations shall be
scheduled in a reasonable manner by the Employee.

     During her employment hereunder, the Employee shall be entitled to
appropriate professional association and business club memberships, including
reimbursement of payment of dues and assessments pertaining thereto.

     9.   TERMINATION.

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               (a)  DISABILITY.  If, as a result of the Employee's incapacity
due to physical or mental illness, injury or similar incapacity, she shall have
been absent from the full-time performance of her duties with the Company for
six months within any eighteen-month period, her employment may be terminated by
written notice (as provided below) from the Company for "Disability".

               (b)  CAUSE.    Subject to the notice provisions set forth below,
the Company may terminate the Employee's employment for "Cause" at any time. 
Termination for "Cause" shall mean termination upon (1) the continued willful
failure by the Employee to substantially perform her duties with the Company or
her other willful breach of this Agreement (other than any such failure or
breach resulting from her incapacity due to physical or mental illness, injury
or similar incapacity) after a written demand for substantial performance is
delivered to her by the Board, which demand specifically identifies the manner
in which the Board believes that she has failed to substantially perform her
duties, or has otherwise breached this Agreement, (2) the Employee's conviction
of a felony, (3) the Employee's willful misconduct that is materially and
demonstrably injurious to the Company or (4) the violation by the Employee of
Section 11 hereof; provided, however, that the Employee shall not be terminated
for "Cause" unless and until the Board has given the Employee reasonable notice
of its intended actions and the alleged events or activities giving rise thereto
and with respect to those events or activities for which a cure is possible, a
reasonable opportunity to cure such breach and there shall have been delivered
to her a copy of a resolution duly adopted by the Board regarding such actions.

               (c)  CONSTRUCTIVE TERMINATION.     If at any time during the Term
of this Agreement, any of the following events shall occur, the Employee shall
be entitled to terminate her employment hereunder and be treated as if her
employment had been terminated by the Company other than for Cause:

                         (i)  Mr. Stanley R. Zax ceases to be full-time 
     Chairman of the Board and President of the Company other 
     than by reason of death or disability;

                         (ii)  The Employee is removed or otherwise 
     prohibited or restricted in the performance of her duties as set 
     forth in Section 1 hereof;

                         (iii)  Any payment due under this Agreement shall 
     remain unpaid for more than 60 days;

                         (iv)  A Change in Control of the Company (as 
     defined below) shall occur during the Term of this Agreement 
     and, within 180 days after the effective date of any such Change 
     in Control, the Employee delivers to the Company a written 

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     notice of her election to terminate the Agreement effective as 
     of the date set forth in such notice, which effective date shall 
     not be less than 30 days nor more than 90 days after the date 
     of delivery of such written notice.

     For purposes of this paragraph, a Change in Control shall mean either 
(i) a merger or consolidation of the Company with or into another company in
which the Company does not survive; or (ii) an assignment of this Agreement by
the Company under the provisions of Section 12(b) hereof; or (iii) the sale of
all or substantially all of the Company's assets; or (iv) a change in the
identities of a majority of the members of the Board within a one-year period or
less; or (v) any other transaction that would require a party or affiliated
group of parties to obtain approval from or require such transactions to be
presented for approval by, the California Insurance Commissioner (assuming there
is no preemption of California insurance laws by federal law).

               (d)  NOTICE OF TERMINATION.  Any purported termination of the
Employee's employment by the Company or by her shall be communicated by a
written notice ("Notice of Termination") that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the provision so indicated.

               (e)  DATE OF TERMINATION, ETC.  "Date of Termination" shall mean
(1) if the Employee's employment is terminated by her death, the date of her
death; (2) if the Employee's employment is terminated for Disability, thirty
days after Notice of Termination is given; (3) if the Employee's employment is
terminated for Cause, the date specified in the Notice of Termination, which
shall not be less than thirty days from the date such Notice of Termination is
given; and (4) if the Employee's employment is terminated for any other reason,
the date specified in the Notice of Termination.

     10.  COMPENSATION UPON TERMINATION OR DURING DISABILITY.  The Employee
shall be entitled to the following benefits during a period of disability, or
upon termination of her employment, as the case may be, if such period or
termination occurs during the Term of this Agreement:

               (a)  During any period that the Employee fails to perform her
full-time duties with the Company as a result of incapacity due to physical or
mental illness, injury or similar incapacity, she shall continue to receive her
compensation and other benefits payable to her under this Agreement at the rate
in effect at the commencement of any such period, together with all compensation
payable to her under the Company's disability plan or program or other similar
plan during such period, until her employment is terminated pursuant to Section
9(a) hereof.  Thereafter, or in the event the Employee's


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employment shall be terminated by reason of her death, her benefits shall be 
determined under the Company's retirement, insurance and other compensation 
programs then in effect in accordance with the terms of such programs, and 
the Company shall have no further obligations to her under this Agreement.

               (b)  If at any time the Employee's employment shall be terminated
(i) by reason of her death, (ii) by the Company for Cause or Disability or (iii)
by her (other than by reason of a constructive termination pursuant to Section
9(c) hereof), the Company shall pay her (or her appropriate payee, as determined
in accordance with Section 12 (c) hereof) her full base salary through the Date
of Termination at the rate in effect at the time Notice of Termination is given,
plus all other amounts to which she is entitled under any compensation plan of
the Company at the time such payments are due, and the Company shall have no
further obligations to her under this Agreement.  In addition, in the event the
Employee's employment is terminated by reason of the Employee's death or
Disability, the Employee (or her appropriate payee) shall be entitled to receive
a pro rata portion of any bonus that would otherwise have been payable to the
Employee with respect to the year in which the Employee's employment is
terminated.  For purposes of this provision, if the Employee's bonus for such
year has not been determined, the Employee shall be deemed to have been entitled
to a bonus equal to the highest annual bonus paid or payable to the Employee
during the three consecutive years immediately preceding her termination.

               (c)  If the Employee's employment should be terminated by the
Company other than for Cause or Disability or by the Employee by reason of a
constructive termination pursuant to Section 9(c) hereof, she shall be entitled
to the benefits provided below ("Severance Payments"):

                    (i)  The Company shall pay to the Employee her full
     base salary through the Date of Termination, at the rate in effect
     at the time Notice of Termination is given, plus all other amounts
     to which she is entitled under any compensation plan of the 
     Company, in each case at the time such payments are due;

                    (ii)  Company shall pay to Employee a cash lump 
     sum payment, no later than the fifteenth day following the 
     effective date of the Notice of Termination, equal to the greater 
     of (a) two times the sum of (x) her Base Salary at the rate in 
     effect as of the effective date of the Notice of Termination and 
     (y) the highest annual bonus paid or payable to Employee 
     during the three consecutive years immediately preceding her 
     termination of employment, or (b) the "actuarial equivalent" of 
     all Base Salary and bonus payments that would have been 
     payable to Employee pursuant to Paragraphs 3 and 4 of this 


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     Agreement had Employee continued to be employed through 
     the Expiration Date (the "Severance Period"), assuming, for 
     purposes of this Paragraph, that the annual bonus payable to 
     Employee pursuant to Paragraph 4 of this Agreement for each 
     year of such remaining term is equal to the highest annual bonus 
     paid or payable to Employee during the three consecutive years immediately
     preceding her termination of employment.  For purposes of this subparagraph
     10(c)(ii), "actuarial equivalent" shall be determined by an actuary
     selected by Company, subject to approval by Employee, and calculated in
     accordance with the actuarial assumptions used by the Pension Benefit
     Guaranty Corporation to value liabilities for pension plans terminating as
     of the effective date of Employee's or Company's Notice of Termination;

                         (iii)  All stock option rights, stock appreciation 
     rights, and any and all other similar rights theretofore granted to 
     the Employee, including, but not limited to, the Employee's right 
     to receive cash in lieu of exercising stock options, as may be 
     provided in her stock option agreements, shall vest and shall 
     then be exercisable in full, and the Employee shall have 90 days 
     following her termination within which to exercise any and all 
     such rights and the restrictions on any and all shares of restricted 
     stock granted to the Employee that are outstanding on the Date 
     of Termination shall lapse as of the Date of Termination;

                         (iv)  During the Severance Period the Company 
     shall, at its cost, arrange to provide the Employee with life, 
     disability, dental, accident and group health insurance benefits
     substantially similar to those that she was receiving immediately 
     prior to the Notice of Termination plus an additional amount 
     necessary to reimburse the Employee for any taxes imposed 
     solely by reason of her receipt of such benefits following her 
     termination of employment.  Notwithstanding the foregoing, the 
     Company shall not provide any benefit otherwise receivable by 
     the Employee pursuant to this subparagraph if an equivalent 
     benefit is actually received by her at any time during the 
     Severance Period and any such benefit actually received by her 
     shall be reported to the Company.

               (d)  The Company shall continue in effect for the benefit of the
Employee all insurance or other provisions for indemnification, defense or hold-
harmless of officers or directors of the Company that are in effect on the date
the Notice of Termination is sent to the Employee or the Company with respect to
all of her acts and omissions while an officer or director as fully and
completely as if


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such termination had not occurred, and until the final expiration or running
of all periods of limitation against actions that may be applicable to such
acts or omissions.

               (e)  The Employee shall have the right to terminate her
employment under this Agreement upon thirty (30) days notice to the Company
without liability to the Company for damages incurred solely by reason of such
termination.

               (f)  Nothwithstanding anything to the contrary in this Agreement,
in the event that Employee becomes entitled to the Severance Payments, if any of
the Severance Payments will be subject to the tax (the "Excise Tax") imposed by
section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
Company shall pay to Employee an additional amount (the "Gross-Up Payment") such
that the net amount retained by Employee, after deduction of any Excise Tax on
the Total Payments (as hereinafter defined) and any federal, state and local
income and other tax and Excise Tax upon the payment provided for by this
Paragraph 10(f), shall be equal to the Total Payments.  For purposes of
determining whether any of the Total Payments will be subject to the Excise Tax
and the amount of such Excise Tax, (i) any other payments or benefits received
or to be received by Employee in connection with a Change in Control or
Employee's termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with Company, any person
whose actions result in a change in control or any person affiliated with
Company or such person (which, together with Severance Payments, shall
constitute "Total Payments"), shall be treated as "parachute payments" within
the meaning of section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of section 280G(b)(1) shall be treated as subject
to the Excise Tax, unless in the opinion of tax counsel selected by Company's
independent auditors and acceptable to Employee, such other payments or benefits
(in whole or in part) do not constitute parachute payments, or such excess
parachute payments (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of section 280G(b)(4) of the Code
in excess of the base amount, within the meaning of section 280G(b)(3) of the
Code, or are otherwise not subject to the Excise Tax, (ii) the amount of the
Total Payments which shall be treated as subject to the Excise Tax shall be
equal to the lesser of (A) the total amount of the Total Payments or (B) the
amount of excess parachute payments within the meaning of section 280G(b)(1)
(after applying clause (i), above), and (iii) the value of any non-cash benefits
or any deferred payment or benefit shall be determined by Company's independent
auditors in accordance with the principles of sections 280G(d)(3) and (4) of the
Code.  For purposes of determining the amount of the Gross-Up Payment, Employee
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the


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highest marginal rate of taxation in the state and locality of Employee's 
residence on the date of termination of employment, net of the maximum 
reduction in federal income taxes which could be obtained from deduction of 
such state and local taxes.  In the event that the Excise Tax is subsequently 
determined to be less than the amount taken into account hereunder at the 
time of termination of Employee's employment, Employee shall repay to 
Company, at the time that the amount of such reduction in Excise Tax is 
finally determined, the portion of the Gross-Up Payment attributable to such 
reduction (plus that portion of the Gross-Up Payment attributable to the 
Excise Tax and federal, state and local income tax imposed on the Gross-Up 
Payment being repaid by the Employee to the extent that such repayment 
results in a reduction in Excise Tax and/or a federal, state or local income 
tax deduction) plus interest on the amount of such repayment at the rate 
provided in section 1274(b)(2)(B) of the Code.  In the event that the Excise 
Tax is determined to exceed the amount taken into account hereunder at the 
time of the termination of Employee's employment (including by reason of any 
payment the existence or amount of which cannot be determined at the time of 
the Gross-Up Payment), Company shall make an additional Gross-Up Payment in 
respect of such excess (plus any interest, penalties or additions payable by 
the Employee with respect to such excess) at the time that the amount of such 
excess is finally determined.

     11.  DISCLOSURE OF INFORMATION.
               (a)  Employee acknowledges that the list of Company's customers,
as they may exist from time to time, and Company's trade secrets and other
confidential information are valuable, special and unique assets of Company's
business.  Employee will not, during or after the Term of Employment, disclose
to any person, firm, corporation, association, or any other entity or use for
her own benefit, any list of Company's customers, or any part thereof, or any of
Company's trade secrets or other confidential information, for any reason or
purpose whatsoever.

               (b)  Employee agrees that upon leaving the employ of Company she
will deliver to Company and not keep or deliver to anyone else, any and all
memoranda, specifications, documents and in general any and all material
relating to Company's business that she may have under her possession or
control.

               (c)  Employee recognizes that she will possess confidential
information about other employees of Company relating to their education,
experience, skills, abilities, compensation and benefits, and interpersonal
relationships with customers of Company.  The Employee recognizes that the
information she will possess about these other employees is not generally known,
is of substantial value to Company in developing its products and in securing
and retaining customers, and will be acquired by her because of her business
position with Company.  Employee agrees that, during the period


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ending on the last day of the one-year period following her termination of 
employment, she will not, directly or indirectly, solicit or recruit any 
employee of Company for the purpose of being employed by her, or any 
business, individual, partner, firm, corporation or other entity that is then 
in competition with Company ("Competitor") on whose behalf she is acting as 
an agent, representative or employee.  The Employee further agrees that she 
will not convey any such confidential information or trade secrets about 
other employees of Company to anyone affiliated with her or to any Competitor.

               (d)  Employee further acknowledges that the remedy at law for any
breach by her of the covenants contained in Paragraphs 11(a) and (b) will be
inadequate and that in the event of a breach, or threatened breach, by Employee
of the covenants contained therein, Company shall be entitled to an injunction
restraining Employee from using, for her own benefit, and/or from disclosing, in
whole or in part, the list of Company's customers, and/or Company's trade
secrets or other confidential information, and/or from rendering any services to
any person, firm, corporation, association or other entity to whom such a list,
and/or such trade secrets or other confidential information, in whole or in
part, have been disclosed, or are threatened to be disclosed and such other
declaratory relief as is proper to cause Employee to return to Company any and
all memoranda, specifications, documents and all other material relating to
Company's business that she may have under her possession or control.  Nothing
herein shall be construed as prohibiting Employee from pursuing professional
employment or investments utilizing her own skills and knowledge or Company from
pursuing any other remedies available to Company from such breach or threatened
breach, including the recovery of damages from Employee.  The provisions of this
Paragraph 11 shall survive the expiration or termination, for any reason, of
this Agreement and of Employee's employment.

     12.  ASSIGNMENTS/MITIGATION.
               (a)  This Agreement and the rights, interest and benefits
hereunder are personal to the Employee and shall not be assigned, transferred,
pledged, or hypothecated in any way by the Employee, and shall not be subject to
execution, attachment or similar process.  Any attempted assignment, transfer,
pledge, or hypothecation, or the levy of any execution, attachment or similar
process thereon, shall be null and void and without effect.

               (b)  The Company shall have the right to assign this Agreement
and to delegate all of its rights, duties and obligations hereunder, whether in
whole or in part, to any parent, affiliate, successor, or subsidiary
organization of the Company or corporation with which the Company may merge or
consolidate or which acquires by purchase or otherwise all or substantially all
of the Company's consolidated assets, but such assignment shall not release the
Company from its obligations under this Agreement, and in the event of any such



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assignment by the Company, the Employee may, at her sole option, exercise her
termination rights under the provisions of Section 9(c)(iv) of this Agreement.

               (c)  This Agreement shall inure to the benefit of and be
enforceable by the Employee and her personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.  If the Employee should die while any amount would still be payable to
her hereunder had she continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
her devisee, legatee or other designee or, if there is no such designee, to her
estate.

               (d)  The Employee shall have no duty to mitigate the Company's
obligations hereunder by seeking other employment or by becoming self-employed;
provided, however, that life, disability, dental, accident, group health
insurance and other health and welfare benefits received by the Employee during
or with respect to the Severance Period and attributable to services rendered
during such period by the Employee to persons or entities other than the Company
shall be applied to reduce the Company's obligation to provide such benefits
hereunder.  Not less frequently than annually (by the end of the month of the
month next following the month in which the Effective Date occurs), the Employee
shall account to the Company as to the amount of such benefits; if the Company
has paid amounts in excess of those to which the Employee was entitled (after
giving effect to the offsets provided above), the Employee shall reimburse the
Company promptly thereafter for such excess.

     13.  NOTICE.  Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or five business days after being mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed (a) if to
the Employee, to P. O. Box 2001, La Jolla, California 92038 and (b) if to the
Company, to 21255 Califa Street, Woodland Hills, California 91367, Attention:
Stanley R. Zax, with a copy to the Secretary of the Company; or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt thereof.

     14.  SECTION HEADINGS.  The Section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.

     15.  SEVERABILITY.  The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.



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     16.  COUNTERPARTS.  This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

     17.  ARBITRATION.  Any dispute or controversy arising under or in
connection with this Agreement (other than an action for injuctive relief
pursuant to Section 11 hereof) shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators in Los Angeles, California in
accordance with the rules of the American Arbitration Association then in
effect.  Such arbitrators shall only have jurisdiction to award contract
damages.  Judgment may be entered on the arbitrators' award in any court having
jurisdiction.  The Employee, if prevailing, shall be entitled to reimbursement
of all of her reasonable expenses in arbitration, including reasonable
attorneys' fees.  In the event of a good faith dispute regarding the payment of
salary or benefits under this Agreement, the Company shall make the disputed
payments to the Employee as if such dispute did not exist during the pendency of
such good faith dispute, and, following the resolution of such dispute, the
Employee shall reimburse the Company for any overpayments.

     18.  LEGAL FEES.  The Company agrees to reimburse the Employee for all
reasonable legal fees and other reasonable expenses incurred in connection with
the negotiation and preparation of this Agreement.

     19.  COMPANY PROPERTY.  The Employee agrees that at the time she leaves the
employment of the Company she will deliver to the Company, and will not keep or
deliver to anyone else, all notebooks, memoranda, documents, computer discs, and
any and all other material relating to the Company's business or constituting
the Company's property, whether or not the Employee was the author or recipient
of such material.

     20.  MISCELLANEOUS.
          (a)  No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by the Employee and such officer as may be specifically designated by
the Board.  No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.

          (b)  This instrument contains the entire agreement of the parties
hereto relating to the subject matter hereof and it replaces and supersedes all
prior agreements and understandings, oral and written, between the parties
hereto.  No agreements or representations, oral or otherwise, express or
implied,


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with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.

          (c)  The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of California without
regard to its conflicts of law principles.

          (d)  All references to Sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such Sections.

          (e)  Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.

          (f)  The obligations created under the provisions of Sections 5, 8,
10, 11, 12, 17, 18 and 19 shall survive the expiration, suspension or
termination, for any reason, of this Agreement or the Employee's employment
hereunder until such obligations created thereunder are fully satisfied.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                                                  ZENITH NATIONAL INSURANCE
                                                  CORP.


                                                  By:/s/ Stanley R. Zax
                                                     ------------------- 
                                                     STANLEY R. ZAX, Chairman

                                                  EMPLOYEE:

                                                  /s/ Fredricka Taubitz
                                                      -----------------
                                                      FREDRICKA TAUBITZ