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.



                  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.






                  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: ______________________
                                                         Name:
___________________                                      Title:


                                                     STATE STREET BANK AND TRUST
                                                     COMPANY


ATTEST:
                                                     By: ______________________ 
                                                         Name:
____________________                                     Title: