SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 240.14a-12

ZENITH NATIONAL INSURANCE CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

ZENITH NATIONAL INSURANCE CORP.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials:
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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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[LOGO]
Zenith National Insurance Corp.
21255 Califa Street
Woodland Hills, California 91367
Telephone (818) 713-1000
NOTICE OF ANNUAL MEETING
- --------------------------------------------------------------------------------

The Annual Meeting of Stockholders of Zenith National Insurance Corp.
("Zenith") will be held at the offices of Zenith, 21255 Califa Street, Woodland
Hills, California, on Thursday, May 15, 1997, at 9:00 a.m., for the following
purposes:

1. To elect a Board of nine (9) Directors.

2. To transact such other business as may properly come before the meeting
and any adjournments thereof.

Stockholders of record at the close of business on March 24, 1997, the
record date fixed by the Board of Directors for the Annual Meeting, are entitled
to notice of, and to vote at, such meeting.

By Order of the Board of Directors

John J. Tickner
SECRETARY
Woodland Hills, California
Dated: March 25, 1997

STOCKHOLDERS, WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON,
ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED FORM OF PROXY IN
THE ACCOMPANYING POSTPAID AND ADDRESSED ENVELOPE. THE PROXY IS REVOCABLE AT ANY
TIME PRIOR TO THE EXERCISE THEREOF BY WRITTEN NOTICE TO ZENITH, AND STOCKHOLDERS
WHO ARE PRESENT AT THE MEETING MAY WITHDRAW THEIR PROXIES AND VOTE IN PERSON IF
THEY SO DESIRE.

ZENITH NATIONAL INSURANCE CORP.
21255 Califa Street,
Woodland Hills, California 91367

------------------------

PROXY STATEMENT

------------------------

VOTING

This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Zenith National Insurance Corp. ("Zenith") of proxies to
be voted at the Annual Meeting of Stockholders of Zenith to be held on Thursday,
May 15, 1997, at 9:00 a.m., and at any adjournments thereof (the "Annual
Meeting"). Any proxy given pursuant to this solicitation may be revoked at any
time prior to its exercise by written notice to Zenith, and the persons
executing the same, if in attendance at the Annual Meeting, may vote in person
instead of by proxy. Unless authority therefor is withheld, all proxies will be
voted as provided therein. In addition to solicitation of proxies by mail,
officers and regular employees of Zenith and its subsidiaries, who will receive
no additional compensation therefor, may solicit proxies by telephone, telegram
or personal interview. The subsidiaries of Zenith are Zenith Insurance Company
("Zenith Insurance"), CalFarm Insurance Company ("CalFarm"), Cal-Ag Insurance
Services, Inc., CalFarm Annuity Service Company, CalFarm Insurance Agency,
CalFarm Properties, Inc., CalRehab Services, Inc., Perma-Bilt, a Nevada
Corporation, Zenith Star Insurance Company, Zenith Risk Management, Inc., ZIC
Lloyd's Underwriting Limited, and ZNAT Insurance Company. The cost of this
solicitation will be borne by Zenith. In addition, Zenith will reimburse
brokerage houses and other custodians, nominees and fiduciaries for expenses
incurred in forwarding solicitation materials to stockholders.

The approximate date on which this Proxy Statement and accompanying form of
proxy are first being sent to stockholders is March 28, 1997.

Only stockholders of record at the close of business on March 24, 1997, the
record date for the Annual Meeting (the "Record Date"), are entitled to notice
of and to vote at such meeting. On such date, Zenith had outstanding 17,667,344
shares of common stock, $1.00 par value per share (the "Common Stock"). Each
share of Common Stock entitles the record holder at such time to one vote on all
matters. With respect to the election of Directors only, however, every
stockholder may cumulate his votes with respect to candidates whose names have
been placed in nomination prior to the vote if, but only if, any stockholder has
given notice at the Annual Meeting prior to voting of his intention to cumulate
his votes. In the event there is cumulative voting for Directors, each
stockholder will be entitled to give one candidate the number of votes equal to
the number of Directors to be elected multiplied by the number of votes to which
the stockholder's shares are entitled, or to distribute his votes on the same
principle among as many candidates as such stockholder thinks fit. In the event
the election of Directors is to proceed with cumulative voting, the holder of
any proxy given pursuant to this solicitation will have the authority to
cumulate the votes to which shares covered by the proxy are entitled and to
distribute the votes among the candidates for election as the holder of the
proxy sees fit. The presence, in person or by proxy, of stockholders holding a
majority of the issued and outstanding shares of Common Stock entitled to vote
shall constitute a quorom. Election of Directors shall be decided by plurality
vote. Other matters submitted for stockholder approval require the affirmative
vote

of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter. Abstentions and broker
non-votes (except on matters for which brokers lack discretionary authority to
vote under New York Stock Exchange rules) will be counted and will have the same
effect as "no" votes.

The Board of Directors knows of no matters to come before the Annual Meeting
other than the matters referred to in this Proxy Statement. If, however, any
matters properly come before the meeting, it is the intention of each of the
persons named in the accompanying proxy to vote such proxies in accordance with
his best judgment thereon.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table contains certain information at the Record Date as to:
(1) all persons who, to the knowledge of Zenith, were the beneficial owners of
more than 5% of the outstanding shares of Common Stock, (2) each of the
Executive Officers named in the Summary Compensation Table, (3) each of the
Directors of Zenith and (4) all 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.

AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS
- -------------------------------------------------- ------------------------ --------

Reliance Insurance Company(2)(3).................. 6,574,445 37.2%
4 Penn Center Plaza
Philadelphia, PA 19103
Harvey L. Silbert(3)(4)(5)........................ 1,058,640 6.0%
10100 Santa Monica Blvd.
Suite 2200
Los Angeles, CA 90067
Gilder, Gagnon, Howe & Co.(6)..................... 1,057,886 6.0%
1775 Broadway
New York, New York 10019
Stanley R. Zax(3)(4)(7)........................... 448,564 2.5%
21255 Califa Street
Woodland Hills, CA 91367
Jack M. Ostrow(3)(4)(8)........................... 100,000 *
9601 Wilshire Blvd.
Beverly Hills, CA 90210
Gerald Tsai, Jr.(4)............................... 50,000 *
200 Park Ave.
New York, New York 10166
Fredricka Taubitz(9).............................. 55,275 *
21255 Califa Street
Woodland Hills, CA 91367
James P. Ross(10)................................. 38,343 *
21255 Califa Street
Woodland Hills, CA 91367
Keith E. Trotman(11).............................. 27,753 *
21255 Califa Street
Woodland Hills, CA 91367

AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS
- -------------------------------------------------- ------------------------ --------

John J. Tickner(12)............................... 12,641 *
21255 Califa Street
Woodland Hills, CA 91367
Max M. Kampelman(4)............................... 4,992 *
1001 Pennsylvania Avenue N.W.
Washington D.C. 20004
William Steele Sessions(4)(13).................... 1,461 *
Weston Centre
112 East Pecan St.
San Antonio, TX 78205
George E. Bello(4)(14)............................ 0 0
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Robert M. Steinberg(4)(14)........................ 0 0
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Saul P. Steinberg(4)(14)(15)...................... 6,574,445 37.2%
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
All Executive Officers and Directors as a group
(14 persons)(16).................................. 8,372,405 46.6%

- ------------------------
* Less than 1%

(1)Subject to applicable community property and similar statutes.

(2)Number of shares shown includes 39,110 shares held by Reliance National
Insurance Company of New York and 39,110 shares held by United Pacific
Insurance Company of New York, both wholly owned subsidiaries of Reliance
Insurance Company. Reliance Insurance Company is a wholly-owned subsidiary
of Reliance Financial Services Corporation, which is a wholly-owned
subsidiary of Reliance Group Holdings, Inc. Saul P. Steinberg, members of
his family and affiliated trusts own approximately 45% of the common stock
of Reliance Group Holdings, Inc., and as a result of such stock holdings,
Saul P. Steinberg may be deemed to control Reliance Group Holdings, Inc.
Pursuant to an Amended Exemption issued to Reliance Insurance Company by the
Insurance Commissioner of the State of California, Reliance Insurance
Company has agreed that it will not vote shares in excess of 28.7% of the
outstanding Common Stock unless it obtains the Insurance Commissioner's
consent or qualifies for an exemption from such consent.

(3)Reliance Insurance Company and each of Jack M. Ostrow, Harvey L. Silbert
(individually and as trustee of a family trust) and Stanley R. Zax were
granted certain rights to require Zenith to register for sale, under the
Securities Act of 1933, shares of Common Stock beneficially owned by each of
them. Zenith granted these rights in connection with the sale in February
1981 of an aggregate of 1,387,375 shares of Common Stock (20.5% of the then
outstanding shares) to Reliance Insurance Company by certain selling
stockholders, including Messrs. Ostrow, Silbert and Zax.

(4)Director of Zenith.

(5)Number of shares shown includes 173,551 shares held by Mr. Silbert as
trustee of certain family trusts, as to which shares Mr. Silbert disclaims
beneficial ownership. Number of shares shown also includes 885,089 shares
held by The Harvey L. and Lillian Silbert Family Trust, a revocable trust,
of which Mr. Silbert is a trustee.

(6)On February 25, 1997, Zenith was supplied with information by Gilder,
Gagnon, Howe & Co. that it holds 1,057,886 shares of Common Stock. Gilder,
Gagnon, Howe & Co. also confirmed that it has shared dispositive power and
shared voting power with respect to 120,000 shares and sole dispositive
power, but no voting power, with respect to 937,886 shares. Gilder, Gagnon,
Howe & Co. disclaims beneficial ownership with respect to all of the shares
shown in the table.

(7)Chief Executive Officer of Zenith. Number of shares shown includes 1,030
shares owned by Mr. Zax as custodian for his adult children, as to which
shares Mr. Zax disclaims beneficial ownership, and 200,000 shares, as to
which options are or will become exercisable within sixty days after the
Record Date.

(8) Number of shares shown consists of 65,000 shares held by The Ostrow Family
Trust, a revocable trust, of which Mr. Ostrow is a trustee and 35,000 shares
held by the Bella Ostrow Unitrust of which Mr. Ostrow is the sole trustee.

(9) Executive Officer of Zenith. Number of shares shown includes 5,025 shares
allocated to such Executive Officer's account in The Zenith 401(k) Plan as
of December 31, 1996, the latest date for which such information is
available, and 43,750 shares, as to which options are or will become
exercisable within sixty days after the Record Date.

(10) Executive Officer of Zenith. Number of shares shown includes 36,250 shares,
as to which options are or will become exercisable within sixty days after
the Record Date.

(11) Executive Officer of Zenith. Number of shares shown consists of 4,003
shares allocated to such Executive Officer's account in The Zenith 401(k)
Plan as of December 31, 1996, the latest date for which such information is
available, and 23,750 shares, as to which options are or will become
exercisable within sixty days after the Record Date.

(12) Executive Officer of Zenith. Number of shares shown consists of 1,391
shares allocated to such Executive Officer's account in The Zenith 401(k)
Plan as of December 31, 1996, the latest date for which such information is
available, and 11,250 shares, as to which options are or will become
exercisable within sixty days after the Record Date.

(13) Shares shown are held in Mr. Sessions' Simplified Employee Pension --
Individual Retirement Account.

(14) Director of Reliance Insurance Company.

(15) Shares shown are those owned by Reliance Insurance Company and certain of
its subsidiaries. See notes (2) and (3) above.

(16) Number of shares shown includes 315,000 shares, as to which options are or
will become exercisable within sixty days after the Record Date, and
excludes shares allocated to The Zenith 401(k) Plan accounts of the
Executive Officers subsequent to December 31, 1996, which information is not
available as of the date of this Proxy Statement. Number of shares shown
also includes 6,574,445 shares owned by Reliance Insurance Company and
certain of its subsidiaries. See notes (2), (3) and (15) above.

(This page intentionally left blank)

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
and the regulations of the Securities and Exchange Commission (the "Commission")
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 Commission and
the New York Stock Exchange 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, 1996, all filing requirements applicable to
its Executive Officers, Directors, and 10% stockholders were complied with,
except that due to inadvertent error, an Executive Officer, Philip R. Hunt, did
not file a Form 4 reporting two cashless exercises of employee stock options for
the purchase of 1,000 and 2,000 shares of Common Stock. Each cashless exercise,
consisting of the exercise of the option and an immediate sale through a broker,
occurred in the same month. Mr. Hunt has subsequently filed a Form 5 reporting
the two cashless exercises.

ELECTION OF DIRECTORS

It is the intention of the persons named in the enclosed proxy, unless
otherwise specifically instructed, to vote the proxies received by them for the
election of the nominees listed in the table below as Directors of Zenith. In
the event that there should be cumulative voting in the election of Directors,
as set forth in this Proxy Statement under "Voting" above, it is the intention
of such persons to distribute the votes represented by each proxy among such
nominees in such proportion as they see fit, unless otherwise specifically
instructed.

All nominees have consented to being named herein and have indicated their
intention to serve if elected. In the unanticipated event that any of the
nominees becomes unable to serve as a Director, the proxies will be voted for a
substitute nominee in accordance with the best judgment of the person or persons
voting them.

A Director of Zenith serves until the next Annual Meeting of Stockholders
and until his successor is elected and qualified.

The nominees for Director listed below were designated by the Board of
Directors of Zenith. The information with respect to each nominee is as supplied
or confirmed by such nominee.

SERVED AS POSITIONS AND PRINCIPAL OCCUPATIONS AND OTHER PUBLICLY HELD
DIRECTOR OFFICES HELD WITH EMPLOYMENT DURING PAST CORPORATIONS IN WHICH
NAME AGE SINCE ZENITH FIVE YEARS DIRECTORSHIPS HELD
- ---------------------------- --- --------- -------------------- ------------------------------ ------------------------------

George E. Bello 61 May Director of Zenith Executive Vice President Reliance Group Holdings, Inc.;
(1) 1984 and Zenith Insurance and Controller of Reliance Reliance Financial Services
Group Holdings, Inc. for more Corporation; Horizon Mental
than the past five years (2) Health Management, Inc.;
United Dental Care, Inc.

Max M. Kampelman 76 February Director of Zenith Attorney, Of Counsel, since None
1989 and Zenith Insurance March 1991, and Partner,
January 1989 to March 1991,
Fried, Frank, Harris, Shriver
& Jacobson; Counselor of the
Department of State and Head
of the U.S. Delegation to
Negotiations on Nuclear and
Space Arms with the Soviet
Union from January 1985 to
January 1989

Jack M. Ostrow 75 September Director of Zenith Attorney and Certified Public None
(1) 1977 and Zenith Accountant for more than the
Insurance, Chairman past five years
of Audit Committee,
Member of
Performance Bonus
Committee

William Steele Sessions 66 September Director of Zenith Attorney, Sessions & Sessions, The O'Gara Company
1993 and Zenith Insurance L.C. since March 1995;
Security Consultant since July
1993; Director, Federal Bureau
of Investigation from 1987 to
1993

Harvey L. Silbert 84 January Director of Zenith Attorney, Of Counsel, Loeb & None
(1)(3) 1978 and Zenith Loeb LLP since March 1991; Of
Insurance, Member of Counsel, Wyman, Bautzer,
Performance Bonus Kuchel & Silbert for more than
Committee five years prior to March
1991; management of personal
investments for more than the
past five years

Robert M. Steinberg 54 February Director of Zenith President and Chief Operating Reliance Group Holdings, Inc.;
(1)(4) 1981 and Zenith Insurance Officer of Reliance Group Reliance Financial Services
Holdings, Inc. and Chairman of Corporation
the Board and Chief Executive
Officer of Reliance Insurance
Company for more than the past
five years (2)

Saul P. Steinberg 57 February Director of Zenith Chairman of the Board and Reliance Group Holdings, Inc.;
(1)(4)(5)(6) 1981 and Zenith Insurance Chief Executive Officer of Reliance Financial Services
Reliance Group Holdings, Inc. Corporation;
for more than the past five Symbol Technologies, Inc.
years (2)

Gerald Tsai, Jr. 68 December Director of Zenith Chairman, President, and Chief Delta Life and Annuity
1991 and Zenith Executive Officer of Delta Company; Meditrust;
Insurance, Chairman Life Corporation since Proffitt's, Inc.; Rite Aid
of Performance Bonus February 1993; management of Corporation; Sequa
Committee private investments since Corporation; Triarc Companies,
January 1989; Chairman and Inc.
CEO, Primerica Corp., February
1987 to December 1988

Stanley R. Zax 59 July Chairman of the Board and President of Zenith and None
(1) 1977 Zenith Insurance for more than the past five years;
Chairman of the Board of CalFarm Life Insurance
Company for more than five years prior to December
1995; Chairman of the Board and President of CalFarm
for more than five years prior to January 1995; and
Chairman of the Executive Committee of the Board of
Directors of CalFarm since January 1995 (7)

- ------------------------------
(1) In connection with the sale in February 1981 of an aggregate of 1,387,375
shares of Common Stock (20.5% of the then outstanding shares) to Reliance
Insurance Company by certain selling stockholders, including Messrs.
Ostrow, Silbert and Zax, the selling stockholders agreed to use their best
efforts to expand the Boards of Directors of Zenith and Zenith Insurance
and to cause (so long as Reliance Insurance Company owns at least 10% of
Zenith's outstanding Common Stock) the election thereto of three qualified
persons designated by Reliance Insurance Company. George E. Bello, Robert
M. Steinberg and Saul P. Steinberg have been so designated.

(2) Reliance Insurance Company, Reliance Group Holdings, Inc. and Reliance
Financial Services Corporation are insurance and insurance holding
companies. Based on Reliance Insurance Company's and certain of its
subsidiaries' holdings of Common Stock, Reliance Insurance Company,
Reliance Group Holdings, Inc., and Reliance Financial Services Corporation
may be deemed to be affiliates of Zenith. See note (6) below.

(3) Mr. Silbert is of counsel to the law firm of Loeb & Loeb LLP, which
performed certain legal services for Zenith in 1996.

(4) Robert M. Steinberg and Saul P. Steinberg are brothers.

(5) On July 30, 1993, Telemundo Group, Inc. ("Telemundo") consented to the
entry of an order for relief under Chapter 11 of the United States
Bankruptcy Code. On December 30, 1994, Telemundo's Plan of Reorganization
was consummated. Saul P. Steinberg previously served as President (February
1990 through February 1991) and Chief Executive Officer (February 1990
through May 1992) of Telemundo.

(6) On December 31, 1996, Zenith Insurance acquired Associated General Commerce
Self-Insurers' Trust Fund ("AGC-SIF"), a Florida workers' compensation
self-insurance fund. Prior to the acquisition, AGC-SIF had entered into
reinsurance arrangements in the ordinary course of business. Some of these
arrangements were with Reliance Insurance Company. As of December 31, 1996,
Zenith's consolidated assets included balances of $20,215,000 relating to
these arrangements with Reliance Insurance Company. Reliance Insurance
Company is a wholly owned subsidiary of Reliance Financial Services
Corporation, which is a wholly owned subsidiary of Reliance Group Holdings,
Inc. Saul P. Steinberg, members of his family and affiliated trusts own
approximately 45% of Reliance Group Holdings, Inc.

(7) Zenith Insurance and CalFarm are wholly-owned subsidiaries of Zenith, as
was CalFarm Life Insurance Company until its sale by Zenith in December
1995.

The Board of Directors communicated frequently during the year ended
December 31, 1996, held five formal meetings, and also took action by unanimous
written consent. Zenith's Board of Directors has a standing Audit Committee and
a Performance Bonus Committee but has no nominating committee or any committee
performing similar functions. The sole member and Chairman of the Audit
Committee is currently Mr. Ostrow. The functions of the Audit Committee are to
recommend to the Board of Directors retention or change of Zenith's independent
auditors; to consider the range of audit and non-audit fees; to review the
independence of the auditors; to meet with them and Zenith's internal audit
personnel to discuss and review the results of their respective examinations and
audit plans for the ensuing year; to review the adequacy of Zenith's system of
internal accounting controls and like matters. The Audit Committee is also
authorized to review and discuss other matters as it deems appropriate. During
1996, the Audit Committee communicated frequently with Zenith's financial and
accounting and internal audit department personnel and independent auditors,
including six formal meetings. The Performance Bonus Committee, consisting of
Messrs. Ostrow, Silbert, and Tsai (Chairman), is responsible for
performance-based compensation plans for Executive Officers, namely, the
Executive Officer Bonus Plan and the 1996 Employee Stock Option Plan as it
relates to grants thereunder to Executive Officers. The Board of Directors
retains responsibility for all other compensation matters. The Performance Bonus
Committee held two formal meetings in 1996, but communicated frequently and also
took action by unanimous written consent. Each Director, except Messrs. Saul P.
Steinberg and Robert M. Steinberg, attended at least 75% of the aggregate of all
meetings of the Board of Directors and of any committees thereof on which such
Director served.

DIRECTORS' COMPENSATION

Zenith pays each Director (other than Mr. Zax, who receives no additional
compensation therefor) a fee of $50,000 per annum for serving as a member of the
Board of Directors. Mr. Ostrow also receives a fee of $25,000 per annum for
serving as the Chairman and sole member of Zenith's Audit Committee.

EXECUTIVE COMPENSATION

The following table sets forth information regarding the compensation paid
during the 1994, 1995, and 1996 fiscal years to Zenith's Chief Executive Officer
and its four other most highly compensated Executive Officers serving as of
December 31, 1996 (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

LONG TERM
COMPENSATION
----------------
AWARDS
ANNUAL COMPENSATION ----------------
--------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
COMPENSATION OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) ($) SARS (#) ($)(3)
- ---------------------------------------- ---- ---------- ---------- --------------- ---------------- ------------

STANLEY R. ZAX 1996 $1,027,320 $ 0 $ 0 1,000,000 $31,926
Chairman of the Board and 1995 1,027,320 1,000,000 0 0 31,926
President of Zenith and 1994 1,027,320 1,500,000 0 0 31,926
Zenith Insurance,
Chairman of the Executive Committee of
the Board of Directors of CalFarm

FREDRICKA TAUBITZ 1996 $ 391,600 $ 200,000 $ 0 0 $ 8,926
Executive Vice President and 1995 380,600 125,000 0 20,000 8,840
Chief Financial Officer of Zenith 1994 368,100 250,000 0 0 8,840
and Zenith Insurance, Senior
Vice President of CalFarm

KEITH E. TROTMAN 1996 $ 340,100 $ 200,000 $ 0 10,000 $ 7,846
Senior Vice President of Zenith 1995 330,600 200,000 0 20,000 7,777
Insurance and CalFarm 1994 325,600 240,000 0 0 7,786

JAMES P. ROSS 1996 $ 283,717 $ 100,000 $ 0 0 $ 7,971
Senior Vice President of 1995 263,717 250,000 8,400(2) 50,000 8,597
Zenith, Zenith Insurance and 1994 254,011 345,000 0 0 13,933
CalFarm

JOHN J. TICKNER 1996 $ 253,704 $ 100,000 $ 0 10,000 $20,991
Senior Vice President and 1995 245,371 75,000 0 15,000 20,905
Secretary of Zenith, Senior Vice 1994 245,528 85,000 0 0 31,326
President, General Counsel and
Secretary of Zenith Insurance and
CalFarm

- ------------------------
(1) All amounts shown were determined and paid under Zenith's Executive Officer
Bonus Plan.

(2) Amount shown for Mr. Ross reflects Zenith's matching contribution under its
Stock Purchase Plan.

(3) The following amounts are included in the above table: (a) Zenith's matching
contributions made in fiscal year 1996 to The Zenith 401(k) Plan, as
follows: Stanley R. Zax, none; Fredricka Taubitz, $3,166; Keith E. Trotman,
$3,166; James P. Ross, none; and John J. Tickner, $3,166; (b) the dollar
value of insurance premiums paid in fiscal year 1996 by, or on behalf of,
Zenith with respect to term life insurance for the benefit of the Named
Executive Officer, as follows: Stanley R. Zax, $9,000; Fredricka Taubitz,
$5,760; Keith E. Trotman, $4,680; James P. Ross, $1,800; and John J.
Tickner, $4,500; and (c) the dollar value of the benefit to the Named
Executive Officer of premiums paid by, or on behalf of, Zenith during fiscal
year 1996, with respect to certain split dollar life insurance policies, as
follows: Stanley R. Zax, $22,926; Fredricka Taubitz, none; Keith E. Trotman,
none; James P. Ross, $6,171; and John J. Tickner, $13,325.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS/SARS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM (4)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME GRANTED (#) (1) FISCAL YEAR ($/SH) (2) DATE (3) 5% ($) 10% ($)
- ------------------------- --------------- ------------ ----------- ---------- ----------- -----------

Stanley R. Zax 1,000,000 70.3% $23.6250 3/14/06 $14,857,636 $37,652,166
Fredricka Taubitz -- -- -- -- -- --
Keith E. Trotman 10,000 .7% $27.5625 12/09/01 $ 76,150 $ 168,272
James P. Ross -- -- -- -- -- --
John J. Tickner 10,000 .7% $27.5625 12/09/01 $ 76,150 $ 168,272

- ------------------------
(1) Options granted in 1996 are not exercisable during the first year following
the date of grant. Except for Mr. Zax's, each option becomes exercisable as
to 25% of the total number of underlying shares in the second year following
the date of grant and as to an additional 25% in each of the next three
years. Mr. Zax's options become exercisable as to 20% of the total number of
underlying shares in the second year following the date of grant and as to
an additional 20% in each of the next four years. However, if there is a
Change of Control (as defined in his employment agreement), Mr. Zax's
options thereupon become fully exercisable.

(2) All options were granted with an option price equal to the market price of
the Common Stock on the date of grant (based on the average of the high and
low prices on the New York Stock Exchange for such date).

(3) Except for Mr. Zax's, the options granted in 1996 expire on the earlier to
occur of (a) five years from the date of grant, (b) in the event of
termination of the optionee's employment, three months from the date of such
termination, or (c) in the event of the optionee's death, one year from the
date thereof and, following termination of employment or death, may be
exercised only to the extent they were exercisable on the date of the
optionee's termination of employment or death. Mr. Zax's options expire on
the earlier to occur of (a) ten years from the date of grant, (b) in the
event of termination of his employment, three months from the date of such
termination, and (c) in the event of his death, one year from the date
thereof and, following termination of employment or death, may be exercised
in full (whether or not otherwise vested) to the extent not previously
exercised. However, if termination of employment is by reason of Mr. Zax's
breach of any material obligation under his employment agreement, Mr. Zax's
options may be exercised only to the extent they were exercisable on the
date of termination of his employment.

(4) The potential gains shown are net of the option exercise price and do not
include the effect of any taxes associated with exercise. The amounts shown
are for the assumed rates of appreciation only, do not constitute
projections of future stock price performance, and may not necessarily be
realized. Actual gains, if any, on stock option exercises depend on the
future performance of the Common Stock, continued employment of the optionee
through the term of the option, and other factors.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT FY-END (#) OPTIONS/SARS AT FY-END ($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ------------ ------------ ----------- ------------- ----------- -------------

Stanley R. Zax -- -- 0 1,000,000 $ 0 $3,750,000
Fredricka Taubitz -- -- 43,750 21,250 $324,297 $ 117,266
Keith E. Trotman -- -- 23,750 31,250 $119,297 $ 117,266
James P. Ross 15,000 $136,186 36,250 43,750 $214,141 $ 248,047
John J. Tickner -- -- 11,250 23,750 $ 57,891 $ 77,422

EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS

Effective December 6, 1994, Zenith entered into an amended and restated
employment agreement with Mr. Zax, which extends the expiration date of his
employment agreement from December 31, 1995 to December 31, 1998. The amended
and restated employment agreement provides for an annual base compensation plus
an annual bonus to be determined under Zenith's Executive Officer Bonus Plan.
Under the agreement, Mr. Zax's base compensation is continued at $1,000,000,
subject to such other increases as the Board of Directors may determine from
time to time. Upon Mr. Zax's death, Zenith will continue to pay either his wife,
children or estate his base compensation and annual bonus for a period of twelve
months. If Mr. Zax's employment is terminated for disability, he will receive
his base compensation and annual bonus for a period of six months. If Mr. Zax's
employment is terminated for breach by him of his employment agreement, he will
receive his base compensation through the end of the month in which the
termination occurs. If his employment is terminated for any reason other than
for breach of his employment agreement, death, or disability, Zenith will pay
Mr. Zax his base compensation and annual bonus through the term of his
employment agreement. Upon a Change in Control (as defined in the employment
agreement) of Zenith, all stock options and stock appreciation rights granted to
Mr. Zax, to the extent not exercisable at such time, become immediately
exercisable. In addition, if Mr. Zax's employment is terminated subsequent to
any Change in Control either by Mr. Zax within 180 days of the Change in Control
or by Zenith for any reason other than disability or breach of his employment
agreement, Mr. Zax is entitled to receive Severance Payments (as defined below).

Effective December 6, 1994, Zenith entered into an amended and restated
employment agreement with Ms. Taubitz, which extends the expiration date of her
employment agreement from October 1, 1995 to October 1, 1998. The amended and
restated employment agreement provides for an annual base compensation plus an
annual bonus to be determined under Zenith's Executive Officer Bonus Plan and
certain additional benefits. The base compensation is currently $376,000,
subject to such increases as the Board of Directors may determine from time to
time.

Effective February 16, 1995, Zenith entered into an amended and restated
employment agreement with Mr. Tickner, which extends the expiration date of his
employment agreement from October 1, 1995 to October 1, 1998. The amended and
restated employment agreement provides for an annual base compensation plus an
annual bonus to be determined under Zenith's Executive Officer Bonus Plan and
certain additional benefits. The base compensation is currently $249,500,
subject to such increases as the Board of Directors may determine from time to
time.

Zenith's employment agreements with Ms. Taubitz and Mr. Tickner provide that
if her or his employment is terminated by Zenith other than for cause or
disability, the executive is entitled to Severance Payments. In addition, each
of Ms. Taubitz and Mr. Tickner may terminate her or his employment with Zenith
and receive Severance Payments should (a) Mr. Zax cease, for any reason other
than death or disability, to be the full-time Chairman of the Board and
President of Zenith, (b) she or he be prohibited or restricted in the
performance of her or his duties, (c) any payment due her or him under her or
his agreement remain unpaid for more than 60 days, or (d) she or he give written
notice of termination of the employment agreement to Zenith within 180 days
following a Change in Control (as defined in the employment agreements) of
Zenith.

For purposes of the foregoing, "Severance Payments" include the following
benefits: (1) in the case of Mr. Tickner, all salary payments that would have
been payable to the executive for the greater of (a) the remaining term of the
employment agreement or (b) one year, plus a pro rata portion of any bonus that
would have been payable to the executive with respect to the year of
termination; (2) in the case of Mr. Zax and Ms. Taubitz, a cash lump sum payment
equal to the greater of (a) twice the sum of the executive's then current base
compensation and the highest annual bonus paid or payable during the three
consecutive years immediately preceding termination of employment or (b) the
actuarial equivalent of the base compensation and annual bonuses that would have
been payable to the executive under the remaining term of the employment
agreement; (3) continuation of life, disability, dental, accident and group
health insurance benefits, plus an additional amount necessary to reimburse the
executive for any taxes attributable solely to the executive's receipt of such
benefits; (4) in the case of Ms. Taubitz and Mr. Tickner, vesting of all stock
option and similar rights; and (5) an additional payment, if necessary, to
assure that none of the above benefits are subject to net reduction due to the
imposition of excise taxes under section 4999 of the Internal Revenue Code of
1986, as amended.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

In 1996, all decisions on Executive Officer compensation, other than
decisions related to performance-based compensation plans, were made by the
Board of Directors. Mr. Zax, Chairman of the Board and President, is a member of
the Board of Directors, and except with respect to his own compensation,
participated in the Board of Directors' deliberations concerning Executive
Officer compensation.

The Performance Bonus Committee, consisting of Messrs. Ostrow, Silbert, and
Tsai, determines matters relating to performance-based compensation plans for
Executive Officers. Mr. Silbert is of counsel to the law firm of Loeb & Loeb
LLP, which performed certain legal services for Zenith in 1996.

BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION; PERFORMANCE
BONUS COMMITTEE REPORT ON PERFORMANCE BASED
COMPENSATION PLANS FOR EXECUTIVE OFFICERS

Zenith's entire Board of Directors made determinations with respect to
compensation of Executive Officers in 1996, except with respect to Mr. Zax's
compensation, which is established in Board of Directors' actions from which Mr.
Zax excuses himself and in which he does not participate and except with respect
to matters related to performance-based compensation plans for Executive
Officers. The Performance Bonus Committee made determinations under
performance-based compensation plans for Executive Officers. The Board of
Directors' report on Executive Compensation and the Performance Bonus
Committee's report on its determinations shall not be deemed to be incorporated
by reference through any general statement incorporating by reference this proxy
statement into any filings under the Securities Act of 1933 or under the
Securities Exchange Act of 1934 and shall not otherwise be deemed to be filed
under such Acts.

The Board of Directors' report on Executive Compensation follows:

EXECUTIVE OFFICERS
The level of compensation for Executive Officers of Zenith is intended to be
competitive (that is, "attractive") and to provide appropriate incentives.
Executive Officers of Zenith are generally compensated through salary, grants of
stock options, and bonuses under the Executive Officer Bonus Plan. The Executive
Officer Bonus Plan, approved by the stockholders of Zenith at the 1994 Annual
Meeting, is administered by the Performance Bonus Committee. The Performance
Bonus Committee also grants stock options to Executive Officers under Zenith's
1996 Employee Stock Option Plan. The report of the Performance Bonus Committee
follows this report.

The level of an Executive Officer's base compensation is generally based on
a combination of (1) the performance of Zenith, (2) the performance of the
insurance subsidiary, if any, to which the Executive Officer is principally
assigned, and (3) a subjective and qualitative evaluation of the personal
contribution made by the Executive Officer to Zenith. Success in these areas
does not translate mechanically into compensation levels; the manner in which
these factors are taken into account is discretionary with the Board of
Directors and is not based on any formulaic weighting.

The performance of Zenith is generally measured by the combined ratio of its
property and casualty insurance operations and by its overall profitability.
Zenith strives for and has achieved long term average combined ratios that are
about 100%. Zenith also strives for combined ratios that compare favorably in
both the short and long term with insurers primarily engaged in writing workers'
compensation insurance. In addition, Zenith endeavors to have loss ratios that
are among the lowest for the industry in any rolling previous five year period.
The performance of the Zenith insurance subsidiaries is generally measured by
the same factors, as applicable.

With respect to the subjective and qualitative evaluation of an Executive
Officer's personal contribution to the business of Zenith, a variety of factors
are taken into account. These factors vary and include, but are not limited to,
the manner in which the Executive Officer favorably affects Zenith's combined
ratio and profitability. Equally, if not more, important is the manner in which
the Executive Officer performs in Zenith's environment, which fosters an
entrepreneurial spirit, teamwork, and a commitment to education. Zenith believes
an entrepreneurial spirit maximizes profits, promotes sound execution of good
business fundamentals, and maintains a pool of executive talent. Teamwork is
crucial to the effective and efficient implementation of Zenith's goals. A
commitment to education means a dedication to lifelong learning and training for
oneself and creating conditions so that the workforce is similarly dedicated.
Such dedication is critical to Zenith's ability not only to meet change, but to
use it to its competitive advantage. In such an environment, proactive and
innovative approaches are strongly encouraged and rewarded.

On the operational side, activities that demonstrate an opportunistic
outlook, anticipation of changing business conditions and the development of
postures to take advantage of opportunities to increase short and long term
profits are rewarded. On the administrative side, efficiency, competence, strong
compliance efforts, anticipation and avoidance of problems, as well as
innovation, are rewarded.

Certain of the Executive Officers are employed under employment agreements
that provide for minimum base compensation and annual bonuses. Determinations as
to salary increases for these Executive Officers, as well as those without
employment agreements, are discretionary and are not made on the basis of a
formulaic weighting of the factors described above. Bonuses are determined in
accordance with the Executive Officer Bonus Plan.

In 1996, the combined ratio of Zenith's property and casualty operations was
below the combined ratio for the industry as a whole. Given this performance and
taking into account the subjective and qualitative evaluations of individual
Executive Officers, the level of an individual Executive Officer's base
compensation was set accordingly. Please see the separate report of the
Performance Bonus Committee for a discussion of the bonuses earned by and stock
options granted to Executive Officers in 1996.

STANLEY R. ZAX, CHIEF EXECUTIVE OFFICER
Mr. Zax is never present when the Board of Directors deliberates with
respect to his compensation and, accordingly, does not participate in Board of
Directors' decisions on his own compensation.

Mr. Zax's base salary for 1996 was set out in his four year amended and
restated employment agreement executed in 1994. Under the employment agreement,
increases to base compensation are at the discretion of the Board of Directors
and are not based on formulaic weighting of factors. In determining whether to
grant any salary increase, the same performance criteria that are applied to
Executive Officers in general are applied to Mr. Zax. Also, as with Executive
Officers generally, bonuses to Mr. Zax are determined in accordance with the
Executive Officer Bonus Plan.

Taking the objective and subjective criteria described above into account,
the Board of Directors was generally satisfied with Mr. Zax's initiative and
leadership during 1996. The Board of Directors was concerned, as was Mr. Zax,
with unsatisfactory results in California, but believed Mr. Zax's base
compensation should continue at its present level with any further incentives
and rewards to be under the Executive Officer Bonus Plan.

SECTION 162(M) POLICY
Section 162(m) of the Internal Revenue Code of 1986, as amended, 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 $1,000,000 per year. However, the
limitation does not apply to compensation which is performance-based, earned
under a plan approved by Zenith's stockholders and which satisfies certain other
conditions set forth in Section 162(m) and the regulations thereunder. Stock
option grants awarded to Executive Officers under Zenith's 1996 Employee Stock
Option Plan and bonuses payable under the Executive Officer Bonus Plan are
intended to comply with Section 162(m). Accordingly, neither income accruing to
Executive Officers upon exercise of stock options nor the amount of any bonus
payment made to Executive Officers under the Executive Officer Bonus Plan should
be subject to the $1,000,000 limit on deductibility. The Board of Directors has
determined that it will pay Mr. Zax's annual salary even though any portion in
excess of $1,000,000 would not be deductible by Zenith.

Stanley R. Zax, Chairman of the Board

George E. Bello Harvey L. Silbert
Max M. Kampelman Robert M. Steinberg
Jack M. Ostrow Saul P. Steinberg
William Steele Sessions Gerald Tsai, Jr.

The Performance Bonus Committee's report on its determinations on
performance-based compensation plans for Executive Officers follows:

The Performance Bonus Committee is responsible for administering the
Executive Officer Bonus Plan and for granting stock options to Executive
Officers under the 1996 Employee Stock Option Plan. In so doing, the Performance
Bonus Committee implements and reinforces the compensation philosophy of the
Board of Directors, as set out in the Board of Directors' Report on Executive
Compensation.

EXECUTIVE OFFICER BONUS PLAN
The Executive Officer Bonus Plan was approved by the stockholders at the
1994 Annual Meeting as a performance-based compensation plan. It provides for
bonuses to Executive Officers based upon attainment by Zenith in any fiscal year
of an objectively measured performance goal, namely a combined ratio that is
below the industry's combined ratio. The Executive Officer Bonus Plan provides
for bonuses to Executive Officers up to an amount equal to:

100% of his or her salary at the beginning of the fiscal year if the Company
Combined Ratio for such fiscal year is at least three percentage points, but
less than five percentage points, below the Industry Combined Ratio or

150% of his or her salary at the beginning of the fiscal year if the Company
Combined Ratio for such fiscal year is at least five percentage points below
the Industry Combined Ratio;

provided, however, in either instance, the Performance Bonus Committee may, in
its sole discretion, on a case by case basis, reduce such bonus by any amount.

In 1996, Zenith's combined ratio was 99.8% before accrual for bonuses under
the Executive Officer Bonus Plan; the industry's 1996 combined ratio, as
estimated and reported by A.M. Best Company, was 107.0%. Accordingly, the
objective performance goal under the Executive Officer Bonus Plan was met, which
the Performance Bonus Committee hereby certifies in accordance with Section
162(m) of the Internal Revenue Code of 1986, as amended. Pursuant to the terms
of the Executive Officer Bonus Plan, each Executive Officer may receive a
maximum bonus equal to 150% of his or her salary in effect as of January 1,
1996.

EXECUTIVE OFFICERS
The Performance Bonus Committee undertook a subjective and qualitative
evaluation of the personal contribution made by each Executive Officer, other
than Stanley R. Zax, the Chief Executive Officer. This subjective and
qualitative evaluation considered the same factors set out in the Board of
Directors' Report on Executive Compensation. Based on these evaluations, the
Performance Bonus Committee exercised its discretion with respect to the bonus
to be paid to each Executive Officer and reduced the amount payable in all
cases. For all Executive Officers, with the exception of Mr. Zax, the total
percentage of the bonuses paid was 29.4% of the maximum that could have been
paid.

STANLEY R. ZAX, CHIEF EXECUTIVE OFFICER
As it had with the other Executive Officers, the Performance Bonus Committee
undertook a subjective and qualitative evaluation of the personal contribution
made by Mr. Zax and arrived at an amount to be awarded to him. Mr. Zax, however,
stated that he would not accept any bonus. The Performance Bonus Committee,
taking Mr. Zax's position into account, reconsidered its determination and
decided he would receive no bonus currently, despite Zenith's excellent
performance with respect to its combined ratio. However, the Performance Bonus
Committee retains the discretion to pay, at a future date, all or any portion of
the maximum bonus Mr. Zax could have received with respect to Fiscal Year 1996,
based on his performance.

STOCK OPTION GRANTS

EXECUTIVE OFFICERS

From time to time the Performance Bonus Committee grants options to
Executive Officers to purchase Common Stock. Options are considered a part of
compensation to recognize an Executive Officer's contribution and to reinforce
that Executive Officer's long term commitment to the success of Zenith. The
Performance Bonus Committee's determination to grant options to an Executive
Officer is based on the recommendation of the Chairman of the Board, subjective
measures and prior grants to that Executive Officer. Beyond these general
considerations, there is no particular formula governing the number of shares
awarded.

In 1996, the following Named Executive Officers were granted options to
purchase Common Stock under the 1996 Employee Stock Option Plan, in the amounts
set forth below:

John J. Tickner...................................... 10,000 shares
Keith E. Trotman..................................... 10,000 shares

STANLEY R. ZAX, CHIEF EXECUTIVE OFFICER

In early 1996, the Performance Bonus Committee granted Mr. Zax options to
purchase 1,000,000 shares of Common Stock under the 1996 Employee Stock Option
Plan. The factors considered by the Performance Bonus Committee in making the
grant were based on subjective measures and prior option grants. In particular,
the Performance Bonus Committee took note of the fact that prior to this grant,
Mr. Zax had no outstanding stock options. The last time options were granted to
Mr. Zax was in 1987, and all of those options had expired or had been exercised
by 1995.

Gerald Tsai, Jr., Chairman
Jack M. Ostrow
Harvey L. Silbert

STOCK PRICE PERFORMANCE GRAPH

The Stock Price Performance Graph below compares the cumulative total
returns of the Common Stock, the Standard and Poor's 500 Stock Index ("S&P 500")
and the Standard and Poor's 500 Property-Casualty Insurance Index ("S&P PC") for
a five year period. Stock price performance is based on historical results and
is not necessarily indicative of future stock price performance. The following
graph assumes $100 was invested at the close of trading on the last trading day
preceding the first day of the fifth preceding fiscal year in the Common Stock,
the S&P 500, and the S&P PC. The calculation of cumulative total return assumes
reinvestment of dividends. The graph was prepared by Standard and Poor's
Compustat, which obtained factual materials from sources believed by it to be
reliable, but which disclaims responsibility for any errors or omissions
contained in such data. The Stock Price Performance Graph shall not be deemed
incorporated by reference through any general statement incorporating by
reference this proxy statement into any filings under the Securities Act of 1933
or under the Securities Exchange Act of 1934 and shall not otherwise be deemed
to be filed under such Acts.

COMPARATIVE FIVE-YEAR TOTAL RETURNS
ZENITH, S&P 500 AND S&P PC
(PERFORMANCE RESULTS THROUGH 12/31/96)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

ZNT S&P 500 S&P PC

1991 100.00 100.00 100.00

1992 124.08 107.62 117.11

1993 146.18 118.46 115.04

1994 155.16 120.03 120.67

1995 152.60 165.13 163.38

1996 203.11 203.05 198.53

INFORMATION RELATING TO INDEPENDENT PUBLIC ACCOUNTANTS

Zenith's independent auditor for fiscal year 1996 was Coopers & Lybrand
L.L.P. and, upon the recommendation of the Audit Committee, the Board of
Directors of Zenith has selected Coopers & Lybrand L.L.P. as Zenith's
independent auditor for fiscal year 1997.

Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the Annual Meeting and will have an opportunity to respond to appropriate
questions and to make a statement if they desire to do so.

For information concerning Zenith's Audit Committee, see "Election of
Directors" above.

STOCKHOLDER PROPOSALS AT THE NEXT ANNUAL
MEETING OF STOCKHOLDERS

Stockholders of Zenith who intend to submit proposals to Zenith's
stockholders at the next Annual Meeting of Stockholders to be held in 1998 must
submit such proposals to Zenith no later than November 25, 1997 in order for
them to be included in Zenith's proxy materials for such meeting. Stockholder
proposals should be submitted to Zenith National Insurance Corp., 21255 Califa
Street, Woodland Hills, California 91367, Attention: Secretary.

By Order of the Board of Directors

JOHN J. TICKNER
SECRETARY

Dated: March 25, 1997

[LOGO]
PROXY

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF ZENITH NATIONAL INSURANCE CORP.
FOR THE ANNUAL MEETING OF STOCKHOLDERS, MAY 15, 1997

The undersigned stockholder hereby appoints Jack M. Ostrow, Harvey L.
Silbert, and Stanley R. Zax and each or any of them (each with full power of
substitution), proxies for the undersigned to vote all shares of Common Stock
of Zenith National Insurance Corp. ("Zenith") owned by the undersigned at the
Annual Meeting of Stockholders to be held on Thursday, May 15, 1997, at 9:00
a.m., at the offices of Zenith, 21255 Califa Street, Woodland Hills,
California, and at any adjournments thereof, in connection with the matters
set forth in the Notice of Annual Meeting and Proxy Statement dated March 25,
1997 (the "Proxy Statement"), copies of which have been received by the
undersigned.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS OF THE STOCKHOLDER, BUT IF NO INSTRUCTIONS ARE GIVEN THIS PROXY
WILL BE VOTED FOR ELECTION OF DIRECTORS AS PROVIDED BY ZENITH'S PROXY
STATEMENT AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.

IN THE EVENT OF CUMULATIVE VOTING IN THE ELECTION OF DIRECTORS, THE PROXIES
MAY DISTRIBUTE THE VOTES REPRESENTED BY THIS PROXY AMONG THE NOMINEES IN SUCH
PROPORTION AS THEY SEE FIT.

(Continued and to be marked, signed and dated on other side)

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Please mark
your votes as /X/
indicated in
this example

FOR all nominees listed below (except WITHHOLD AUTHORITY to vote for
as marked to the contrary below) all nominees listed below

1. Election of Directors: / / / /

George E. Bello, Max M. Kampelman, Jack M. Ostrow, William Steele Sessions,
Harvey L. Silbert, Robert M. Steinberg, Saul P. Steinberg, Gerald Tsai, Jr.
and Stanley R. Zax.

2. In their discretion, upon such other matters as may properly come before
the meeting.

(INSTRUCTION: To withhold authority for any individual nominee write that
nominee's name in the space provided below.)

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Dated:______________________,1997

Signature________________________

Signature_________________________

Note Please sign EXACTLY as your name
appears herein. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
such. If executed by a corporation, an
authorized officer should sign, and the
corporate seal should be affixed. A proxy
for shares held in joint ownership should
be signed by each joint owner.

Please mark, sign and date this Proxy and return it promptly in the accompanying
envelope, which requires no postage if mailed in the United States.

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