Zenith National Insurance (ZNT)

Eligibility and Participation

        Individuals who are over the age of 18 years and employed on a full-time basis by Zenith or any of its subsidiaries that adopt the Plan are eligible to participate. Eligible employees become participants in the Plan by filing with the administrator a written application authorizing payroll deductions.

        As of March 26, 2007, approximately 1,700 employees, including all seven Executive Officers, were eligible to participate in the Plan. Members of Zenith's Board who are not employees and other non-employees such as consultants are not eligible to participate. The actual benefits, if any, to participants in the Plan are not determinable prior to the purchase of shares thereunder as the value, if any, of such shares to their holders is represented by the market price of a share of Common Stock on the date of the purchase and Zenith cannot determine participation levels and contribution rates under the Plan. As of March 26, 2007 the fair market value of one share of Common Stock was $48.32 based upon the closing price for a share of Common Stock on the New York Stock Exchange.

        Under the terms of the Plan, a participant may elect to contribute, by payroll deduction, up to 25% of his or her pre-tax salary or wages on a calendar-year basis. A participant may change or suspend his or her election, provided, that the payroll deduction amount may be modified or suspended only once in any calendar year. Any suspension must be for a period of not less than 4 months and will continue until the participant has notified Zenith to recommence payroll deductions under the Plan.

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        Participant contributions are matched by a contribution by Zenith equal to 25% of the participant's payroll deductions, subject to an overall annual matching contribution limit per calendar year of $1 million on a plan-wide basis. Upon reaching the $1 million threshold, no further matching contributions may be made by Zenith under the Plan for the remainder of the calendar year.

        Pursuant to the Plan, contributions accumulate on a monthly basis and are held, without interest, until delivered to the administrator, together with Zenith's matching contributions, as promptly as possible after the close of the calendar month of withholding. Upon receipt of these amounts, the administrator forwards all employee and Zenith contributions to a brokerage firm for purchase of as many shares of Common Stock as each such participant's contributions and corresponding matching contribution from Zenith will permit and to deposit the purchased Common Stock into an account held for the benefit of all participants. Separate records are kept to identify each participant's interest in such account and each participant is notified of the number of shares of Common Stock acquired for the participant's benefit, the cost thereof, the dates of acquisition, and the total number of shares credited to the participant under the Plan.

        A Participant may at any time sell any or all of the Common Stock held for his or her benefit in the brokerage account.