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                                                                     Exhibit 4.1


                                    AMENDMENT


                  THIRD AMENDMENT, dated as of November 25, 1998 (the
"Amendment"), to the Rights Agreement, dated as of June 5, 1995, as amended (the
"Rights Agreement"), between Gryphon Holdings Inc., a Delaware corporation (the
"Company"), and State Street Bank and Trust Company, as Rights Agent (the
"Rights Agent").

                  WHEREAS, the Company and the Rights Agent are parties to the
Rights Agreement; and

                  WHEREAS, pursuant to Section 27 of the Rights Agreement, the
Company and the Rights Agent desire to amend the Rights Agreement as set forth
below.

                  NOW, THEREFORE, in consideration of the premises and the
mutual promises set forth herein, the parties hereto agree as follows:

                  Section 1. Amendments to Section 1.

                  (a) The definitions of "Beneficial Owner" and "beneficially
own" are amended by adding the following at the end thereof:

         "Notwithstanding anything contained in this Agreement to the contrary,
none of Markel, Acquisition Corp. or any of their Affiliates or Associates shall
be deemed to be the Beneficial Owner of, or to beneficially own, any of the
Common Shares of the Company solely by virtue of the approval, execution or
delivery of the Merger Agreement."

                  (b) The following definitions are added to Section 1 of the
Rights Agreement:

         "Acquisition Corp." shall mean MG Acquisition Corp., a Delaware
corporation.

         "Markel" shall mean Markel Corporation, a Virginia corporation.

         "Merger" shall mean the merger of the Company with and into Acquisition
Corp. in accordance with the General Corporation Law of the State of Delaware
upon the terms and subject to the conditions set forth in the Merger Agreement.

         "Merger Agreement" shall mean the Agreement and Plan of Merger, dated
as of November 25, 1998, by and among Markel, Acquisition Corp. and the Company,
but shall not include any amendment to such Merger Agreement.

         "Offer" shall mean the tender offer to acquire all the outstanding
Common Shares contemplated by the Merger Agreement.
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                  Section 2. Expiration Date.

                  Section 7(a) of the Rights Agreement is hereby amended by
replacing the word "or" with a comma immediately prior to the symbol "(iii)" and
by adding immediately prior to the parenthetical at the end thereof the
following:

         ", (iv) upon the acceptance for payment of and payment for Common
Shares pursuant to the Offer or (v) immediately prior to the Effective Time (as
defined in the Merger Agreement) of the Merger; whereupon the Rights shall
expire"

                  Section 3. New Section 35.

                  The following is added as a new Section 35 to the Rights
Agreement:

                  "Section 35. The Offer and the Merger, etc.

                  Notwithstanding anything in this Agreement to the contrary,
none of (a) the approval, execution or delivery of the Merger Agreement or the
performance by any party of the transactions contemplated thereby or permitted
thereunder or (b) the making of (or the public announcement of the intent to
make) the Offer or the acceptance for payment of or payment for Common Shares
pursuant to the Offer shall cause (i) Markel or Acquisition Corp. or any of
their Affiliates or Associates to be an Acquiring Person, (ii) a Shares
Acquisition Date to occur or (iii) a Distribution Date to occur."

                  Section 4. Severability. If any term, provision, covenant or
restriction of this Amendment is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Amendment shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

                  Section 5. Governing Law. This Amendment shall be deemed to be
a contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such State
applicable to contracts made and to be performed entirely within such State.

                  Section 6. Counterparts. This Amendment may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.

                  Section 7. Effect of Amendment. Except as expressly modified
herein, the Rights Agreement, as previously amended, shall remain in full force
and effect in accordance with the provisions thereof.
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                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed all as of the day and year first above written.

                                     GRYPHON HOLDINGS INC.


ATTEST:
                                     By:       /s/ Robert M. Coffee
                                               ---------------------------------
                                        Name:  Robert M. Coffee
- -------------------                     Title: Senior Vice President


                                     STATE STREET BANK AND TRUST COMPANY


ATTEST:
                                     By:       /s/ Charles Rossi
                                               ---------------------------------
                                        Name:  Charles Rossi
- -------------------                     Title: President