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THE ZENITH

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934

OR

ZENITH NATIONAL INSURANCE CORP.

(Exact Name of Registrant as Specified in Its Charter)

Registrant's telephone number, including area code: (818) 713-1000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

        Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.        Yes     X     No             

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    / /

        The aggregate market value of the voting stock of the registrant held by non-affiliates of Zenith National Insurance Corp. on March 21, 2002 was $288,328,000 (based on the closing sale price of such stock on such date).

        At March 21, 2002, there were 18,634,000 shares of Zenith National Insurance Corp. common stock outstanding, net of 7,018,000 shares of treasury stock.

DOCUMENTS INCORPORATED BY REFERENCE

        (1)  Portions of the Annual Report to Stockholders for fiscal year ended December 31, 2001 — Part I and Part II.

        (2)  Portions of the Proxy Statement in connection with the 2002 Annual Meeting of Stockholders — Part III.

Total number of pages 39

Exhibit index located on pages 19-25

PART I

Item 1. Business.
General

        Zenith National Insurance Corp. ("Zenith National"), a Delaware corporation incorporated in 1971, is a holding company engaged through its wholly-owned insurance subsidiaries, Zenith Insurance Company ("Zenith Insurance"), ZNAT Insurance Company ("ZNAT Insurance") and Zenith Star Insurance Company ("Zenith Star") (collectively, the "P&C Operations"), in the property-casualty insurance business. Zenith National and its subsidiaries (collectively, "Zenith") also conducts Real Estate operations through a wholly-owned subsidiary which develops land and constructs private residences for sale in Las Vegas, Nevada. On April 1, 1998, Zenith Insurance acquired substantially all of the assets and certain liabilities of RISCORP, Inc. and certain of its subsidiaries (collectively, "RISCORP") related to RISCORP's workers' compensation business (the "RISCORP Acquisition"). Effective March 31, 1999, Zenith Insurance completed the sale of all of the issued and outstanding capital stock of its wholly-owned subsidiary, CalFarm Insurance Company ("CalFarm"), for $273.0 million in cash to Nationwide Mutual Insurance Company.

        The 2001 edition of Best's Key Rating Guide ("Best's") assigns the P&C Operations ratings of A- (Excellent). Moody's Investors Service ("Moody's") has assigned insurance financial strength ratings of Baa1 (Adequate) to the P&C Operations. Standard & Poor's ("S&P") has assigned an insurer financial strength rating to the P&C Operations of A- (Strong). Fitch Ratings ("Fitch") has assigned an insurer financial strength rating to the P&C Operations of A- (Strong). These Best's, Moody's, S&P and Fitch ratings are based upon factors of concern to policyholders and insurance agents and are not directed toward the protection of investors.

        At December 31, 2001, Zenith had approximately 1,200 full-time employees. The principal executive offices of Zenith are located at 21255 Califa Street, Woodland Hills, California 91367-5021, telephone (818) 713-1000.

Glossary of Selected Insurance Terms

        The following terms when used herein have the following meanings:

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Description of the Business

        Zenith is in the business of managing insurance risk and investment risk. Zenith's main business activity is its workers' compensation insurance business. In addition, Zenith maintains a portfolio of investments, principally in fixed maturities, funded by the cash flows from its insurance operations and capital. Investment income from the portfolio is impacted by current and historical interest rates and the amount of funds generated annually from (or used by) operations. Results of insurance operations, excluding investment income, fluctuate based upon the combined ratios including the possibility of material and unpredictable catastrophe losses in Zenith's reinsurance business.

        Zenith classifies its business into the following segments: Workers' Compensation, Reinsurance, Other Property-Casualty (through March 31, 1999, the date of the sale of CalFarm), Real Estate, Investment and Parent. Segments are designated based on the types of products and services provided. The P&C Operations are composed of the Workers' Compensation, Reinsurance and Other Property-Casualty (through March 31, 1999) segments. Zenith's business segments are also described in Notes to Consolidated Financial Statements — Note 20 — "Segment Information" in Zenith's 2001 Annual Report to Stockholders, which note is hereby incorporated by reference.

Workers' Compensation

        Workers' compensation insurance provides coverage for the statutorily prescribed benefits that employers are required to pay to their employees injured in the course of employment. The standard policy issued by Zenith's Workers' Compensation operations provides payments for, among other things, temporary or permanent disability benefits, death benefits, medical and hospital expenses and expenses of vocational rehabilitation. The benefits payable and the duration of such benefits are set by statute, and vary by state and with the nature and severity of the injury or disease and the wages, occupation and age of the employee.

        Generally, premiums for workers' compensation insurance policies are a function of: the applicable premium rate, which varies with the nature of the employees' duties and the business of the employer; the insured employer's experience modification factor (where applicable); and the amount of the insured employer's payroll. Payrolls may be affected significantly by changes in employment and wage levels. A deposit premium is paid at the beginning of the policy period, periodic installments are paid during the policy period and the final amount of the premium is generally determined as of the end of the policy period after the policyholder's payroll records are audited. Except in Florida, where rates for workers' compensation insurance are set by the Department of Insurance, Zenith's rates for workers' compensation are actuarially determined in each state in which it does business. Rates are continually reviewed for adequacy using actuarial analysis of current and anticipated trends in costs. Competition, based on price, in the national workers' compensation insurance industry is intense, even in Florida where dividend plans and retrospectively rated policies form the basis for competition.

        In addition to seeking adequate pricing, Zenith's long-term strategy in the national workers' compensation industry is to provide value-added services that, over the long run, reduce its policyholders' net workers' compensation costs. Loss prevention services focus on work place safety and accident and illness prevention. Claims management services include return to work programs, case management by nurses for serious injuries and management of medical provider services and billings. Investigation and legal services help policyholders to prevent fraud and assist them to favorably resolve litigated claims.

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        During 2001, Zenith wrote workers' compensation insurance in 45 states. Prior to 1992, Zenith's Workers' Compensation operations were concentrated principally in California. Zenith's Workers' Compensation operations expanded to Texas in 1992 with other states following shortly thereafter. Florida operations commenced with the acquisition of the Associated General Commerce Self-Insurers' Trust Fund on December 31, 1996. On April 1, 1998, the RISCORP Acquisition added workers' compensation business in Florida and other states in the Southeast, principally in North Carolina and Alabama. Net premiums earned for the year ended December 31, 2001 by state are set forth in the table below:

        For the past several years, national workers' compensation industry results have been extremely unprofitable as intense competition resulted in inadequate levels of premium rates at the same time as the industry experienced a general trend of declining frequency and of increasing claim severity. In addition, there are reports by certain industry organizations of significant under-reserving in the industry's reported results. Zenith's in-force Workers' Compensation premiums decreased consistently in the several years prior to 2000 as a result of Zenith's endeavors to maintain rate adequacy in the face of intense competition in the national workers' compensation insurance industry. Competitive pricing conditions began to improve in California and certain other states in 2000 and continued in 2001. As a result of this improvement and in conjunction with the rate increases described below, Zenith increased its in-force premiums in California from $98.1 million at December 31, 1999 to $146.7 million at December 31, 2000 and to $210.4 million at December 31, 2001. Outside of California, where competition and pricing are improving only in certain states, Zenith's in-force premiums increased from $145.8 million at December 31, 1999 to $162.4 million at December 31, 2000 and to $209.7 million at December 31, 2001.

        Zenith continually monitors loss development trends and data to establish adequate premium rates and loss reserves. In 2000 and 2001, Zenith increased its Workers' Compensation premium rates in California as follows: effective January 1, 2000 by about 8%; effective September 1, 2000 by about 9%; effective January 1, 2001 by about 8%; and effective August 1, 2001 by about 5%. At the beginning of 2002, Zenith further increased its rates in California by about 26%, including 5% for terrorism. Rate increases in most of the other states in which it does business were implemented at January 1, 2001 and 2002. However, in Florida, rates are set by the Department of Insurance, and were unchanged in 2000 and 2001.

        Zenith expects that the future operating profitability of its Workers' Compensation operations will be dependent upon the following: 1) general levels of competition; 2) industry pricing; 3) legislative and regulatory actions; 4) the frequency and severity of terrorist acts, if any, similar to the World Trade Center attack or anthrax events; and 5) management's ability to estimate the impact of any continuing adverse claim severity trends, including increases in the cost of healthcare, on the adequacy of loss reserves and premium rates. Also, claim frequency trends continue to decline, but the reasons therefor are not clear and management is unable to predict whether these trends will continue. Effective January 1, 2002, consistent with industry practice,

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losses arising from acts of terrorism in the United States were excluded from the coverage provided by many of the reinsurance companies from which Zenith purchases its workers' compensation reinsurance (see under Reinsurance Ceded for further discussion). Zenith is unable to predict when its Workers' Compensation operations will return to underwriting profitability, although it anticipates continuing improvement in the combined ratio and profitability in the short-run with increases in volume and prices and investable cash flow from operations.

Reinsurance

        The Reinsurance operations principally consist of world-wide, assumed reinsurance of property losses from catastrophes and large property risks. Treaties come in a variety of forms, but the principal arrangements in which Zenith participates are either proportional in nature, in which the assuming company shares pro-rata in the premiums and losses of the cedant (quota share reinsurance), or arrangements under which the assuming company pays losses in excess of a certain limit in return for a premium, usually determined as a percentage of the cedant's primary insurance premiums (excess of loss reinsurance). The Reinsurance operations participate in treaties in which, typically, the reinsurance coverage is syndicated to a number of assuming companies. Depending upon market conditions and other factors, the volume of premiums written fluctuates from year to year. By diversifying its geographical spread of risk, Zenith's assumed reinsurance business is written so as to limit expected losses from any one event in a worst-case scenario to a maximum probable loss of approximately 5% of consolidated stockholders' equity.

        Results of the Reinsurance operations may be adversely impacted in years when large catastrophes occur. However, since its inception in 1985, the combined ratio of the Reinsurance operations through December 31, 2001 was 103.0%. In the three years ended December 31, 2001, the Reinsurance operations were adversely impacted by catastrophe losses. Catastrophe losses were $41.7 million, $22.6 million and $18.9 million before tax in 2001, 2000 and 1999, respectively. Catastrophe losses in 2001 included $37.6 million attributable to the terrorist attack on the World Trade Center on September 11, 2001. Catastrophe losses in 2000 were attributable to additional estimates of the impact of the events in 1999. There were frequent catastrophes of a moderate size culminating in severe storms in Europe at the end of 1999. Estimates of the impact of catastrophes on the Reinsurance operations are based on the information that is currently available and such estimates could change based on new information that becomes available or based upon reinterpretation of existing information.

        Effective January 1, 2002, consistent with industry practice in the aftermath of the events of September 11, 2001, losses arising from acts of terrorism were excluded from the coverage provided in Zenith's assumed reinsurance contracts.

Other Property-Casualty

        The Other Property-Casualty operations offered automobile, farmowners, commercial coverages, group health and homeowners coverage, primarily in California, and were operated by CalFarm through March 31, 1999, the effective date of its sale. For the 14 years that Zenith owned CalFarm, the average combined ratio of the Other Property-Casualty operations was 100.1%. The gain on the sale of CalFarm after tax was $104.3 million.

Real Estate Operations

        The Real Estate operations develop land and primarily construct single-family residences in Las Vegas, Nevada. For the years ended December 31, 2001, 2000 and 1999, total revenues recognized in the Real Estate operations were $84.8 million, $84.5 million and $58.7 million, respectively, and pre-tax income was $5.8 million, $5.5 million and $3.6 million, respectively. Land presently owned at a cost of $30.0 million will support the construction of an estimated 1,300 homes over the next several years. Changes in interest rates and other factors could affect future

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home sales, but Zenith believes the land it has acquired is strategically located and will have long term value.

Investments

        The Investment operations provide income and realized gains on investments, primarily from investments in debt securities. Investment policies of Zenith are established by the Board of Directors of each company making the investment, taking into consideration state regulatory restrictions with respect to investments as well as the nature and amount of various kinds of investments. Zenith's principal investment goals are to maintain safety and liquidity, enhance principal values and achieve increased rates of return consistent with regulatory constraints. The allocation among various types of securities is adjusted from time to time based on market conditions, credit conditions, tax policy, fluctuations in interest rates and other factors.

        At December 31, 2001, Zenith's consolidated investment portfolio emphasized high quality, taxable bonds and short-term investments, supplemented by smaller portfolios of redeemable and other preferred and common stocks. Bonds constituted 74% and short-term investments constituted 13% of the carrying value of Zenith's consolidated investment portfolio at December 31, 2001. Bonds with an investment grade rating represented 95% of the consolidated carrying values of bonds at December 31, 2001. The average life of the consolidated portfolio was 5.6 years at December 31, 2001.

        Zenith has identified certain securities, amounting to 97% of the investments in debt securities at December 31, 2001, as "available-for-sale." Stockholders' equity increased by $8.8 million after deferred tax from December 31, 2000 to December 31, 2001 as a result of changes in the fair values of such investments. Stockholders' equity will fluctuate with any changes in the fair values of "available-for-sale" securities.

Parent

        The Parent operations represent Zenith National, a holding company which owns, directly or indirectly, all of the capital stock of the P&C Operations, non-insurance companies and other investment securities.

Loss and Loss Expense Reserves and Claims, and Loss Developments

        Loss reserve adequacy is an inherent risk of the property and casualty insurance business, which Zenith endeavors to minimize through professional claims handling and estimation techniques. Loss reserves, as related to reported claims, are based upon periodic case-by-case evaluation and judgment by Zenith's claims departments. Actuarial techniques and methods are utilized to establish the most reasonably accurate estimate of loss and loss adjustment expense reserves at a point in time including an estimate of the probable amount for unreported claims arising from accidents which have not yet been reported to the P&C Operations, commonly known in the industry as "incurred but not reported". Zenith continually monitors loss development trends and data to establish adequate premium rates and loss reserves. Reserves are based on estimates, and no assurance can be given that the ultimate liability will not be more or less than such estimates.

        Reference is made to the table under Property-Casualty Loss Development in Zenith's 2001 Annual Report to Stockholders, which is hereby incorporated by reference, and the table setting forth the reconciliation of changes in the liabilities for loss and loss adjustment expenses included in Notes to Consolidated Financial Statements — Note 6 — "Liability for Unpaid Loss and Loss Adjustment Expenses" in Zenith's 2001 Annual Report to Stockholders, which is hereby incorporated by reference. These tables show the development of loss and loss adjustment expense liabilities as originally estimated under generally accepted accounting principles ("GAAP")

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at December 31 of each year presented. The accounting methods used to estimate these liabilities are described in Notes to Consolidated Financial Statements — Note 1 — "Summary of Accounting Policies, Operations and Principles of Consolidation" in Zenith's 2001 Annual Report to Stockholders, which note is hereby incorporated by reference. The one year loss and loss adjustment expense reserve development for the P&C Operations is set forth in a table in the Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations in Zenith's 2001 Annual Report to Stockholders, which table is hereby incorporated by reference.

Workers' Compensation Loss Reserves

        Workers' compensation loss reserves constitute about 81% of the liabilities for unpaid losses and loss adjustment expenses in Zenith's Consolidated Balance Sheet at December 31, 2001. The amount and timing of payments for benefits for workers' compensation claims varies considerably with the nature and severity of the injury and the timeliness of reporting the claim. Payments may take place many years after the initial injury and the establishment of a loss reserve. Zenith regards the timely settlement of its Workers' Compensation claims as important to its profitability and makes use of compromises and releases, where possible, for claim settlements to expedite this process.

        Zenith maintains four regional offices in California and offices in Florida, Texas, Arkansas, Pennsylvania, Utah, Illinois, North Carolina and Alabama, each of which is fully staffed to conduct all workers' compensation claims operations, including review of initial reports of work injury, assignment of appropriate field investigation and determination of whether subrogation should be pursued. Workers' Compensation claims operations are supported by computer systems that provide immediate access to policy coverage verification and claims records and enable Zenith to detail claims payment histories and policy loss experience reports.

        The trend of increasing claims severity in the Workers' Compensation operation has caused some development in prior year reserves. In 2000, Zenith increased it estimate of unpaid Workers' Compensation losses for principally the 1999 accident year by about $8.0 million. In 2001, Zenith's estimates of its prior year Workers' Compensation loss reserves were estimated to be adequate based on the current interpretation of the data, however, estimating the impact of any continuing severity trends is a major risk factor for estimating Zenith's Workers' Compensation loss reserves and for establishing appropriate rates.

        Workers' Compensation reserve strengthening in 1999 is attributable to Zenith's re-estimate of the reserves acquired from RISCORP in 1998 (see Note 14 to the Consolidated Financial Statements in Zenith's 2001 Annual Report to Stockholders, which note is hereby incorporated by reference). The increase in the acquired reserves was recorded as adverse development in 1999 but should be distinguished from adverse development that represents re-estimates of liabilities that originated with Zenith because the re-estimate was needed due to an adjustment to a purchase price arbitration formula.

        In Florida, the Special Disability Trust Fund (the "Fund") assesses workers' compensation insurers to pay for what are commonly referred to as "Second Injuries." Historic assessments have been inadequate to completely fund obligations of the Fund. In late 1997, the Florida statute was amended so that the Fund will not be liable for, and will not reimburse employers or carriers for, Second Injuries occurring on or after January 1, 1998. Zenith Insurance has recorded its receivable from the Fund for Second Injuries based on specific claims and historical experience prior to January 1, 1998. At December 31, 2001, the receivable from the Fund was $18.1 million related to the pre-January 1, 1998 claims.

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Reinsurance Loss Reserves

        Reinsurance loss reserves constitute about 19% of the liabilities for unpaid losses and loss adjustment expenses in Zenith's Consolidated Balance Sheet at December 31, 2001. For the past several years, Zenith has written predominantly property reinsurance for which loss reserves are paid within a few years. Zenith also maintains loss reserves related to assumed reinsurance liability business written all the way back as far as 1985, the year of inception of its Reinsurance operation. Liability reserves in the reinsurance business may take many years to be paid. In addition to information supplied by ceding companies, Zenith makes use of industry experience as well as its own data and opinions in arriving at estimates of ultimate losses for certain reinsurance assumed arrangements. Estimating catastrophe losses in the Reinsurance business is highly dependent upon the nature and timing of the event and Zenith's ability to obtain timely and accurate information with which to estimate its liability to pay losses. Loss reserve estimates for catastrophe losses in recent years have developed unfavorably as discussed below.

        In 2001, Zenith incurred a very significant loss in connection with the attack on the World Trade Center on September 11. There is considerable uncertainty as to the nature and amount of monetary losses associated with the attack on the World Trade Center. Zenith has estimated its share of the loss to be approximately $48.0 million, both gross and net of reinsurance recoverable, by estimating the probable impact to each of its reinsurance contracts based on currently available information. Approximately 70% of the loss is attributable to the contractual maximum loss payable by Zenith under its excess of loss reinsurance contracts; the remainder of the estimated loss is an estimate of its expected loss incurred on assumed quota share reinsurance contracts. Customarily, after a claim, catastrophe reinsurance contracts are renewed for the unexpired term of the original contract and an additional premium, called a reinstatement premium, is due in consideration of the renewal. Zenith has also estimated such reinstatement premiums in connection with its estimate of the World Trade Center loss. The ultimate impact of the World Trade Center loss, after deducting original and reinstatement premium income on Zenith's assumed reinsurance contracts for 2001, is estimated to be $20.0 million before tax, or $13.0 million after tax. Zenith has written its assumed reinsurance business so that its exposure to reinsurance losses from any one event in a worst-case scenario is not expected to be more than approximately 5% of Zenith's stockholders' equity; the expected ultimate loss from the World Trade Center of $13.0 million after tax is within that 5% maximum.

        In 2001, the Reinsurance operations were adversely impacted by $41.7 million of catastrophe losses before tax, including $37.6 million for the World Trade Center loss, after deducting additional premium income earned in the year attributable to original and reinstatement premiums. Catastrophe losses were $22.6 million and $18.9 million before tax in 2000 and 1999, respectively. Catastrophe losses in 2000 were attributable to additional estimates of the events in 1999. There were frequent catastrophes of a moderate size, culminating in severe storms in Europe at the end of 1999. Catastrophe losses in 1999 include additional estimated losses for Hurricane Georges, the principal catastrophe loss in 1998.

        Estimates of the impact of the World Trade Center loss and other catastrophes is based on the information that is currently available and such estimates could change based on any new information that becomes available or based upon reinterpretation of existing information.

Other Property-Casualty Loss Reserves

        Zenith's Other Property-Casualty business was operated primarily by CalFarm, which was sold effective March 31, 1999. Zenith retained no liabilities with respect to the unpaid loss and loss adjustment expenses of CalFarm.

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Environmental and Asbestos Losses

        Zenith has exposure to asbestos losses in its Workers' Compensation operations for medical, indemnity and loss adjustment expenses associated with covered workers' long-term exposure to asbestos or asbestos-contained materials. Most of these claims date back to the 1970's and early 1980's and Zenith's exposure is generally limited to a pro rata share of the workers' compensation-related loss for the period of time coverage was provided. Zenith also has potential exposure to environmental and asbestos losses and loss adjustment expenses beginning in 1985 through its Reinsurance operations but the business reinsured by Zenith in its Reinsurance operations contains exclusion clauses for environmental and asbestos losses. CalFarm (through March 31, 1999) wrote liability coverage under farmowners' and small commercial policies, however, any such liabilities associated with CalFarm were retained by CalFarm when it was sold in 1999 and Zenith retains no exposure to any such liabilities. Environmental and asbestos losses have not been material and Zenith believes that its reserves for environmental and asbestos losses are appropriately established. However, due to the long-term nature of these claims, the ultimate exposure from these claims may vary from the amounts currently reserved.

Reinsurance Ceded

        In accordance with general industry practices, the P&C Operations annually purchase, principally from large United States reinsurance companies, excess of loss reinsurance to protect Zenith against the impact of large, irregularly occurring losses. Such reinsurance reduces the magnitude of sudden and unpredictable changes in net income and the capitalization of the P&C Operations. Reinsurance makes the assuming reinsurer liable to the ceding company to the extent of the reinsurance. It does not, however, discharge the ceding company from its primary liability to its policyholders in the event the reinsurer is unable to meet its obligations under such reinsurance treaty. Zenith monitors the financial condition of its reinsurers and does not believe that it is exposed to any material credit risk through its ceded reinsurance arrangements other than in connection with Reliance Insurance Company ("Reliance"). Historically, no material amounts due from reinsurers have been written off as uncollectible. However, on October 3, 2001, the Commonwealth Court of Pennsylvania issued an Order of Liquidation for Reliance in response to a petition from the Pennsylvania Department of Insurance. At December 31, 2001, Reliance owed Zenith Insurance $6.0 million of reinsurance recoverable on paid and unpaid losses in connection with reinsurance arrangements assumed by Zenith Insurance in its 1996 acquisition of the Associated General Commerce Self-Insurers' Trust Fund. As of December 31, 2001, Zenith recorded a $3.0 million provision for impairment of the reinsurance recoverable from Reliance. Zenith cannot currently predict the ultimate outcome of this matter; but it is possible that if the Pennsylvania Department of Insurance increases its estimates of Reliance's unpaid liabilities or uncollectible reinsurance recoverables without considering additional investment income, Zenith may not recover any of its reinsurance recoverable from Reliance.

        During 2001, in the Workers' Compensation operations, reinsurance covered all claims between $0.6 million ($0.8 million in 2002) and $100.0 million per occurrence. The coverage from $0.6 million ($0.8 million in 2002) to $5.0 million is placed with General Reinsurance Corporation, the coverage from $5.0 million to $10.0 million with Employers Reinsurance Corporation and the remaining three layers from $10.0 million to $60.0 million primarily with NAC Reinsurance Corporation, AXA Reinsurance Company, Transatlantic Reinsurance Company, GE Reinsurance Corporation, St. Paul Fire and Marine Insurance Company, and the London reinsurance market (primarily Lloyd's syndicates and certain United Kingdom reinsurance companies). Catastrophe reinsurance covered an additional $40.0 million in excess of $60.0 million and was placed with Transatlantic Reinsurance Company, American National Insurance Company, American United Life Insurance Company and ReliaStar Life Insurance Company (only 50% of this coverage was placed in 2002).

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        Effective January 1, 2002, consistent with industry practice in the aftermath of the events of September 11, 2001, losses arising from acts of terrorism were excluded from the coverage by many of the reinsurers participating in Zenith's ceded reinsurance arrangements. However, Zenith purchased protection covering up to $9.0 million, per occurrence or in the aggregate and in excess of $1.0 million, of losses arising out of terrorist acts for 2002. The coverage up to $5.0 million was provided by General Reinsurance Corporation and from $5.0 to $10.0 million by Employers Reinsurance Corporation.

        In connection with the RISCORP Acquisition, Zenith Insurance entered into an aggregate excess of loss reinsurance agreement with Inter-Ocean Reinsurance Company, Ltd., which provides ceded reinsurance for unpaid loss and allocated loss adjustment expenses assumed by Zenith from RISCORP at April 1, 1998 up to $50.0 million in excess of $182.0 million. Reinsurance recoverable from Inter-Ocean Reinsurance Company is secured by a trust account.

        Zenith Insurance and a reinsurance subsidiary of Odyssey Re Holdings Corp., a subsidiary of Fairfax Financial Holdings Limited ("Fairfax"), entered into a 10% quota share ceded reinsurance agreement with respect to all new and renewal workers' compensation business written by Zenith Insurance in the three years commencing January 1, 2002. At December 31, 2001, Fairfax owned approximately 42% of the outstanding common stock of Zenith National.

        Insurance premiums ceded by the P&C Operations amounted to $14.4 million, $10.6 million and $16.3 million in 2001, 2000 and 1999, respectively, or 2.9%, 3.0% and 4.2% of gross earned premiums in the years ended December 31, 2001, 2000 and 1999, respectively. Receivable from reinsurers on unpaid losses amounted to $221.5 million and $264.6 million at December 31, 2001 and 2000, respectively, of which approximately $142.6 million and $185.4 million, respectively, were reinsurance recoverables relating to reinsurance arrangements entered into by RISCORP. The principal reinsurers from which such RISCORP-related amounts are recoverable are: American Re-Insurance Company, Chartwell Reinsurance Company, Continental Casualty Co., Swiss Re-Insurance Company and Trenwick Reinsurance Company.

        In its Reinsurance business, Zenith's targeted maximum exposure to losses from assumed reinsurance is expected to be limited to a maximum probable loss from any one event of approximately 5% of Zenith's consolidated stockholders' equity.

        The companies in the P&C Operations are parties to an intercompany pooling agreement. Under such agreement, the results of underwriting operations are ceded (the risks are transferred) to Zenith Insurance and are then reapportioned, or retro-ceded (the risks are transferred back), to the companies party to the agreement. At December 31, 2001, the proportions of the pooling were as follows: Zenith Insurance, 97.5%; ZNAT Insurance, 2.0%; and Zenith Star, 0.5%. Transactions pursuant to the pooling agreement are eliminated on consolidation and have no impact on Zenith's consolidated financial statements.

Marketing and Staff

        The business in the Workers' Compensation operations is produced by approximately 2,300 independent licensed insurance agents and brokers throughout California, Florida, Texas and other states in which Zenith conducts its business. Zenith Insurance's assumed reinsurance premiums are generated nationally by brokers and reinsurance intermediaries.

        Applications for insurance and reinsurance submitted by all agents and brokers are evaluated by professional underwriters based upon numerous factors, including underwriting criteria and standards, geographic areas of underwriting concentration, actuarial judgments of rate adequacy, economic considerations, and review of known data on the particular risk. The P&C Operations, not their agents and brokers, retain authority over underwriting, claims processing, safety engineering and auditing.

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Competition

        Competition in the insurance business is based upon price, product design and quality of service. The insurance industry is highly competitive, and competition is particularly intense in the national workers' compensation industry. The P&C Operations compete not only with other stock companies, but with mutual companies and other underwriting organizations such as the State Compensation Insurance Fund in California. Competition also exists with self-insurance and captive insurers. Many companies in competition with the P&C Operations have been in business for a much longer time, have a larger volume of business, are more widely known, and/or possess substantially greater financial resources.

Regulation

        The insurance business is subject to state-by-state regulation and legislation focused on solvency, pricing, market conduct, claims practices, underwriting, accounting, investment criteria and other areas. Such regulation and legislation is subject to continual change; and compliance is an inherent risk of the business.

State Departments of Insurance

        Insurance companies are primarily subject to regulation and supervision by the department of insurance in the state in which they are domiciled and, to a lesser extent, other states in which they conduct business. The P&C Operations are primarily subject to regulation and supervision by the California Department of Insurance, except for Zenith Star, which is primarily subject to regulation and supervision by the Texas Department of Insurance. These states have broad regulatory, supervisory and administrative powers. Such powers relate to, among other things, the grant and revocation of licenses to transact business; the licensing of agents; the standards of solvency to be met and maintained; the nature of and limitations on investments; approval of policy forms and rates; periodic examination of the affairs of insurance companies; and the form and content of required financial statements.

        Detailed annual and quarterly reports are required to be filed by the P&C Operations with the Departments of Insurance in which they are licensed to transact business, and their businesses and accounts are subject to periodic examination by such agencies, usually at three year intervals. The California Department of Insurance is currently conducting an examination of Zenith Insurance and ZNAT Insurance as of December 31, 2000. Zenith Insurance and ZNAT Insurance were examined by the California Department of Insurance as of December 31, 1996 and the Report of Examination contained no material findings. Zenith Star was examined by the Texas Department of Insurance as of December 31, 1996, and the Report of Examination contained no material findings. The Texas Department of Insurance has informed Zenith that it will conduct an examination of Zenith Star as of December 31, 2001.

        In California, Zenith Insurance and ZNAT Insurance are required to maintain on deposit investments meeting specified standards that have an aggregate market value equal to the companies' workers' compensation loss reserves. For this purpose, loss reserves are defined as the current estimate of reported and unreported claims net of reinsurance, plus a statutory formula reserve based on a minimum of 65% of workers' compensation earned premiums for the latest three years. Zenith Insurance and ZNAT Insurance are subject to similar deposit requirements in certain other states based on those states' retaliatory statutes.

The National Association of Insurance Commissioners

        The National Association of Insurance Commissioners ("NAIC") is a group formed by state Insurance Commissioners to discuss issues and formulate policy with respect to regulation, reporting and accounting of insurance companies. Although the NAIC has no legislative authority

11

and insurance companies are at all times subject to the laws of their respective domiciliary states and, to a lesser extent, other states in which they conduct business, the NAIC is influential in determining the form in which such laws are enacted. Model Insurance Laws, Regulations and Guidelines (the "Model Laws") have been promulgated by the NAIC as a minimum standard by which state regulatory systems and regulations are measured. Adoption of state laws which provide for substantially similar regulations to those described in the Model Laws is a requirement for accreditation by the NAIC.

        In 1998, the NAIC adopted the Codification of Statutory Accounting Principles guidance (the "Codification"), which, effective January 2001, replaced the previous Accounting Practices and Procedures manual as the NAIC's primary guidance on statutory accounting. (Statutory accounting is a comprehensive basis of accounting for insurance companies based on the Codification and state laws, regulations and general administrative rules.) The Codification provides guidance for the areas where statutory accounting had been silent and changed previous statutory accounting in some areas. The California and Texas Departments of Insurance have adopted the Codification. The Codification did not have a material impact on the statutory capital and surplus of the P&C Operations when it was adopted.

        Under NAIC Model Laws, insurers are required to maintain minimum levels of capital based on their investments and operations, known as "risk based capital" ("RBC") requirements. At December 31, 2001, adjusted capital under the RBC regulations for Zenith Insurance was 215% of the required level of capital under the regulations.

        The NAIC Insurance Regulatory Information System ("IRIS") key financial ratios, developed to assist insurance departments in overseeing the financial condition of insurance companies, are reviewed by experienced financial examiners of the NAIC and State Insurance Departments to select those companies that merit highest priority in the allocation of the regulators' resources. The 2001 IRIS results for Zenith Insurance showed three results outside the "normal" range for such ratios, as such range is determined by the NAIC. These three results were attributable to the growth in Workers' Compensation premiums in 2001 compared to 2000 and underwriting losses, including the catastrophe losses, in 2000 and 2001.

Insurance Holding Company System Regulatory Act

        The P&C Operations are subject to the California and Texas Insurance Holding Company System Regulatory Acts ("Holding Company Acts"), which contain certain reporting requirements, including the requirement that such subsidiaries file information relating to capital structure, ownership, financial condition and general business operation. The Holding Company Acts also limit dividend payments and material transactions by the P&C Operations. See Item 5. for a discussion of dividend restrictions related to the Holding Company Acts.

Item 2. Properties.

        Zenith Insurance owns a 130,000 square foot office facility in Woodland Hills, California which is the corporate home office of Zenith National, Zenith Insurance and ZNAT Insurance. Zenith Insurance also owns a 120,000 square foot branch office facility in Sarasota, Florida and a 2 acre vacant parcel in the vicinity. In the regular conduct of business, Zenith Insurance leases offices in various cities. See Notes to Consolidated Financial Statements — Note 15 — "Commitments and Contingent Liabilities" in Zenith's 2001 Annual Report to Stockholders, which note is hereby incorporated by reference. Zenith considers its owned and leased facilities to be adequate for the needs of the organization.

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Item 3. Legal Proceedings.

        On April 1, 1998, pursuant to an Asset Purchase Agreement dated June 17, 1997 (as amended from time to time, the "Asset Purchase Agreement") between Zenith Insurance and RISCORP, Zenith Insurance acquired substantially all of the assets and certain liabilities of RISCORP related to RISCORP's workers' compensation business (the "RISCORP Acquisition"). The total purchase price for such acquired assets and liabilities was determined by a three-step process in which RISCORP and its external accounting and actuarial consultants and Zenith Insurance and its external accounting and actuarial consultants made and presented their estimates of the GAAP values of the assets and liabilities acquired by Zenith Insurance to an independent third party, acting as a Neutral Auditor and Neutral Actuary. Such estimates varied considerably, particularly with respect to the value of premiums receivable and the liability for unpaid losses and loss adjustment expenses. On March 19, 1999, the Neutral Auditor and Neutral Actuary issued its report determining the disputes between the parties. That report indicated that the value of the assets transferred to Zenith Insurance exceeded the value of the liabilities assumed by Zenith Insurance by $92.3 million.

        Zenith Insurance and RISCORP entered into a settlement agreement dated July 7, 1999 (the "Settlement Agreement") providing for the resolution of certain claims arising out of the RISCORP Acquisition. Pursuant to the Settlement Agreement, Zenith Insurance and RISCORP agreed, among other things, that RISCORP may request that the Neutral Auditor and Neutral Actuary (a) review an alleged error concerning the proper treatment of certain reinsurance treaties in its determinations with respect to the purchase price for the RISCORP Acquisition, without waiving whatever rights RISCORP may have to litigation of such issue, (b) determine whether the issue was properly in dispute before the Neutral Auditor and Neutral Actuary and (c) if so, determine the merits of the issue and whether a correction is appropriate. Zenith Insurance and RISCORP also agreed that Zenith Insurance would receive $6.0 million from an escrow account established pursuant to the Asset Purchase Agreement, and RISCORP would receive the balance of the escrow account. In a submission made to the Neutral Auditor and Neutral Actuary, RISCORP claimed that the purchase price for the RISCORP Acquisition should be adjusted by either $5.9 million or $23.4 million as a result of alleged errors in the original determination of the Neutral Auditor and Neutral Actuary with respect to the purchase price. On October 7, 1999, the Neutral Auditor and Neutral Actuary informed Zenith Insurance and RISCORP that it would not consider the issue raised by RISCORP because the issue had not previously been raised as a dispute pursuant to the procedures set forth in the engagement letter. On January 13, 2000, RISCORP filed a complaint against Zenith Insurance and the Neutral Auditor and Neutral Actuary in the Superior Court of Fulton County in the State of Georgia. On October 9, 2000, RISCORP filed a First Amended Complaint in the Superior Court of Fulton County. RISCORP's First Amended Complaint alleges causes of action for breach of contract against the Neutral Auditor and Neutral Actuary and, in conjunction, seeks a declaration that would have the effect of requiring Zenith to pay either $18.1 million (and related charges) or $5.9 million. RISCORP also has asserted causes of action for professional negligence solely against the Neutral Auditor and Neutral Actuary in which it seeks damages of either $18.1 million (and related charges) or $5.9 million. On May 1, 2001, the Superior Court granted in their entirety motions for judgment on the pleadings filed by Zenith Insurance and the Neutral Auditor and Neutral Actuary. The Georgia Court of Appeals rejected RISCORP's petition for expedited review of the Superior Court's decision pending a determination of counterclaims filed by Zenith Insurance and the Neutral Auditor and Neutral Actuary before the Superior Court. Zenith is unable to predict the outcome of this litigation.

        Zenith National and its subsidiaries are defendants in various other litigation. In the opinion of management, after consultation with legal counsel, such litigation is either without merit or the ultimate liability, if any, will not have a material adverse effect on the consolidated financial condition, results of operations or cash flows of Zenith.

Item 4. Submission of Matters to a Vote of Security Holders.

        Not applicable.

13

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

        Zenith National's common stock, par value $1.00 per share, is traded on the New York Stock Exchange under the symbol ZNT. The table below sets forth the high and low sales prices of the common stock for each quarterly period during the last two fiscal years.

        As of March 21, 2002, there were 247 registered holders of record of Zenith National common stock.

        The table below sets forth information with respect to the amount and frequency of dividends declared on Zenith National common stock. Based upon Zenith's financial condition, it is currently expected that cash dividends will continue to be paid in the future.

        The Holding Company Acts limit the ability of Zenith Insurance to pay dividends to Zenith National, and of ZNAT Insurance and Zenith Star to pay dividends to Zenith Insurance, by providing that the appropriate insurance regulatory authorities in the states of California and Texas must approve any dividend that, together with all other such dividends paid during the preceding twelve months, exceeds the greater of: (a) 10% of the paying company's statutory surplus as regards policyholders at the preceding December 31; or (b) 100% of the net income for the preceding year. In addition, any such dividend must be paid from policyholders' surplus attributable to accumulated earnings. In each of the years ended December 31, 2001 and 2000, Zenith Insurance paid $10.0 million in dividends to Zenith National. During 2002, Zenith Insurance will be able to pay $22.8 million in dividends to Zenith National without prior approval.

        On December 5, 2001 Zenith National sold one million shares of its common stock, par value $1.00 per share, to Odyssey Reinsurance Corporation, an indirect subsidiary of Fairfax, in a private

14

placement for an aggregate purchase price of $25.0 million. This transaction was exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), under Rule 506 of Regulation D of the Securities Act. No underwriting discounts or commissions were payable by Zenith National in connection with the transaction.

Item 6. Selected Financial Data.

        The 5-Year Summary of Selected Financial Information, included in Zenith's 2001 Annual Report to Stockholders, is hereby incorporated by reference.

Item 7. Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations.

        Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations, included in Zenith's 2001 Annual Report to Stockholders, is hereby incorporated by reference.

Item 7a. Quantitative and Qualitative Disclosures about Market Risk.

        The "Market Risk of Financial Instruments" section of the Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations included in Zenith's 2001 Annual Report to Stockholders, is hereby incorporated by reference.

Item 8. Financial Statements and Supplementary Data.

        Reference is made to the Property-Casualty Loss Development data in Zenith's 2001 Annual Report to Stockholders for information setting forth the loss and loss adjustment expense liability development for 1991 through 2001 and to the Consolidated Financial Statements and Notes thereto in Zenith's 2001 Annual Report to Stockholders, which are hereby incorporated by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

        None.

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PART III

Item 10. Directors and Executive Officers of the Registrant.

        The information set forth under the captions "Section 16(a) Beneficial Ownership Reporting Compliance" and "Election of Directors" in the Proxy Statement distributed to stockholders in connection with Zenith's 2002 Annual Meeting of Stockholders (the "Proxy Statement"), which is to be filed by Zenith after the date this Report on Form 10-K is filed, is hereby incorporated by reference.

Executive Officers of the Registrant

        Each of the executive officers is an officer of Zenith National and certain of its subsidiaries and each has occupied an executive position with Zenith National or a subsidiary of Zenith National for more than five years, except for:

        Jack D. Miller - Served as the President and Chief Executive Officer of Industrial Indemnity Company, a property-casualty insurance company, from 1995 to 1997; as acting President and Chief Executive Officer from 1994 to 1995; and in various other positions from 1987 to 1994 culminating in Executive Vice President and Chief Executive Officer.

        Robert E. Meyer - Served as Senior Vice President and Actuary of Industrial Indemnity Company, a property-casualty insurance company, from 1992 to 1997, prior to that served as Senior Vice President and Actuary of the Workers' Compensation Insurance Rating Bureau of California.

        William J. Owen - Served as Vice President of Finance for Zenith Insurance from 1997 to 1999, previously served as Vice President of Finance from 1996 to 1997 with Blue Cross of California, a subsidiary of WellPoint Health Networks, Inc., and prior to that held various positions in Zenith Insurance culminating in Vice President of Finance.

        There are no family relationships between any of the executive officers, and there are no arrangements or understandings pursuant to which any of them were selected as officers.

Item 11. Executive Compensation.

        The information set forth under the headings "Directors' Compensation," "Executive Compensation," "Summary Compensation Table," "Option/SAR Grants in Last Fiscal Year," "Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values," "Employment Agreements and Termination of Employment and Change in Control Arrangements," "Compensation Committee Interlocks and Insider Participation" and "Board of Directors' Report on Executive Compensation; Performance Bonus Committee Report on Performance-Based Compensation Plans for Executive Officers" in the Proxy Statement is hereby incorporated by reference.

16

Item 12. Security Ownership of Certain Beneficial Owners and Management.

        The information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" in the Proxy Statement is hereby incorporated by reference.

Item 13. Certain Relationships and Related Transactions.

        The information set forth in footnotes 1, 2 and 3 to the table set forth under the caption "Election of Directors" and under the caption "Certain Transactions with Fairfax Financial" in the Proxy Statement is hereby incorporated by reference.

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PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

        (a)  Documents filed as part of the report:

1.

Financial Statements:

Report of Independent Accountants incorporated herein by reference from Zenith's 2001 Annual Report to Stockholders

Consolidated Financial Statements and notes thereto incorporated herein by reference from Zenith's 2001 Annual Report to Stockholders in Item 8 of Part II above:

Consolidated Financial Statements of Zenith National Insurance Corp. and Subsidiaries:

Consolidated Balance Sheet as of December 31, 2001 and 2000

Consolidated Statement of Operations for the years ended December 31, 2001, 2000 and 1999

Consolidated Statement of Cash Flows for the years ended December 31, 2001, 2000 and 1999

Consolidated Statement of Stockholders' Equity for the three years ended December 31, 2001

Notes to Consolidated Financial Statements

2.

Financial Statement Schedules:

Report of Independent Accountants on Financial Statement Schedules

Zenith National Insurance Corp. and Subsidiaries:

As of December 31, 2001:

I — Summary of Investments — Other Than Investments in Related Parties

For the years ended December 31, 2001, 2000 and 1999:

III — Supplementary Insurance Information

IV — Reinsurance

Zenith National Insurance Corp.:

As of December 31, 2001 and 2000 and for the years ended December 31 2001, 2000 and 1999:

II — Condensed Financial Information of Registrant

    The information on Property-Casualty Loss Development is in Zenith's 2001 Annual Report to Stockholders.

    Schedules other than those listed above are omitted since they are not applicable, not required or the information required to be set forth therein is included in the consolidated financial statements or in the notes thereto.

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3.

Exhibits

  The Exhibits listed below are included in this Report.

19

20

21

22

23

24

*Management contract or compensatory plan or arrangement

(b)

Reports on Form 8-K

Zenith filed a Current Report on Form 8-K on December 6, 2001 in connection with the completion of the sale of 1,000,000 shares of its common stock to Odyssey Reinsurance Corporation for $25,000,000.

25

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 27, 2002.

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated, on March 27, 2002.

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CONSENT OF INDEPENDENT ACCOUNTANTS

        We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File Numbers 33-8948, 33-22219, 333-04399, 333-79199 and 333-62798) of our report dated February 6, 2002 relating to the consolidated financial statements as of December 31, 2001 and 2000, and for each of the three years in the period ended December 31, 2001, which appears in the 2001 Annual Report to Stockholders of Zenith National Insurance Corp. (the "Company"), which is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. We also consent to the incorporation by reference of our report dated February 6, 2002 relating to the financial statement schedules, which appears in such Annual Report on Form 10-K.

PricewaterhouseCoopers LLP

Los Angeles, California
March 27, 2002

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REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES

To the Board of Directors of
    Zenith National Insurance Corp.:

Our audits of the consolidated financial statements referred to in our report dated February 6, 2002 appearing in the 2001 Annual Report to Stockholders of Zenith National Insurance Corp. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedules listed in Item 14(a)(2) of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

PricewaterhouseCoopers LLP

Los Angeles, California

February 6, 2002

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SCHEDULE I — SUMMARY OF INVESTMENTS —

OTHER THAN INVESTMENTS IN RELATED PARTIES


ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES

December 31, 2001

(1)

Original cost for equity securities. Original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts for fixed maturities.

(2)

Amount at which shown in the balance sheet may differ from Cost or Fair Value for fixed maturities depending on the classification of the underlying securities in accordance with Statement of Financial Accounting Standards No. 115 — "Accounting for Investments in Certain Debt and Equity Securities."

F-3

SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT

ZENITH NATIONAL INSURANCE CORP.

BALANCE SHEET

ASSETS

See notes to condensed financial information.

F-4

SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT

ZENITH NATIONAL INSURANCE CORP.

STATEMENT OF OPERATIONS

See notes to condensed financial information.

F-5

SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT

ZENITH NATIONAL INSURANCE CORP.

STATEMENT OF CASH FLOWS

See notes to condensed financial information.

F-6

SCHEDULE II—CONDENSED FINANCIAL INFORMATION OF REGISTRANT

ZENITH NATIONAL INSURANCE CORP.

NOTES TO CONDENSED FINANCIAL INFORMATION

        The accompanying condensed financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes thereto of Zenith National Insurance Corp. ("Zenith National") and subsidiaries. Certain prior year numbers have been reclassified to conform to the current year presentation.

A.    Investment In Subsidiaries

        Zenith National owns, directly or indirectly, 100% of the outstanding stock of Zenith Insurance Company ("Zenith Insurance"); ZNAT Insurance Company; Zenith Star Insurance Company; Perma-Bilt, a Nevada Corporation ("Perma-Bilt"); Zenith Development Corp. ("ZDC"); and Zenith National Insurance Capital Trust I (the "Trust"). These investments are included in the financial statements on the equity basis of accounting. Included in investment in subsidiaries at December 31, 2001 and 2000 was $2.0 million of the unamortized excess of cost over underlying net tangible assets of companies acquired prior to 1970, which is considered to have continuing value.

        Zenith National funds the land acquisitions of its Real Estate operations through intercompany loans. The receivable from subsidiaries mainly comprises principal and interest on loans to Perma-Bilt and ZDC of $43.7 million and $55.4 million at December 31, 2001 and 2000, respectively, for which interest is charged at the rate of prime plus 2% (6.75% at December 31, 2001 and 11.5% at December 31, 2000).

        Zenith National files a consolidated federal income tax return. The equity in (loss) income of subsidiaries is net of a provision for federal income tax benefit of $8.8 million in 2001 and $21.9 million in 2000 and a federal income tax expense of $32.2 million in 1999. Zenith National has tax allocation procedures with its subsidiaries and the 2001, 2000 and 1999 condensed financial information reflect Zenith National's portion of the consolidated tax.

        Zenith Insurance paid dividends to Zenith National of $10.0 million in 2001, $10.0 million in 2000 and $130.0 million in 1999 including a dividend of $100.0 million for which prior approval was obtained from the California Department of Insurance in 1999. Zenith National made a contribution of $25.0 million in cash in 2000 to the capital and surplus of Zenith Insurance. In 2001, Zenith National contributed all of the outstanding capital stock of Perma-Bilt, a Nevada Corporation, to Zenith Insurance at an equity basis value of $14.2 million.

B.    Senior Notes Payable

        Zenith National had $57.2 million and $58.5 million outstanding of the $75.0 million issued of its 9% Senior Notes due 2002 (the "9% Notes") at December 31, 2001 and 2000, respectively. Interest on the 9% Notes is payable semi-annually. The 9% Notes are general unsecured obligations of Zenith National. Issue costs of $1.2 million are being amortized over the term of the 9% Notes. In the years ended December 31, 2001, 2000 and 1999, $5.3 million, $5.8 million and $6.9 million, respectively, of interest and issue costs were expended.

C.    Extraordinary Item — Gain on Extinguishment of Debt

        In 2000, Zenith National paid $22.8 million to repurchase $16.5 million aggregate principal amount of its outstanding 9% Senior Notes and $8.0 million aggregate liquidation amount of the outstanding 8.55% Capital Securities (the "Redeemable Securities") of the Trust, a Delaware statutory business trust, all of the voting securities of which are owned by Zenith National. The repurchases in 2000 resulted in an extraordinary gain before tax of $1.5 million. In 2001, Zenith National paid $1.3 million to repurchase $1.3 million aggregate principal

F-7

amount of the outstanding 9% Notes. Zenith National used its available cash balances to fund these purchases.

D.    Subordinated Debentures

        Zenith National had $77.3 million of the 8.55% Subordinated Deferrable Interest Debentures due 2028 (the "Subordinated Debentures") issued to the Trust outstanding at December 31, 2001 and 2000. The semi-annual interest payments on the Subordinated Debentures may be deferred by Zenith National for up to ten consecutive semi-annual periods. The Subordinated Debentures are redeemable at any time by Zenith at the then present value of the remaining scheduled payments of principal and interest. The issue cost of the Subordinated Debentures of $0.3 million is being amortized over the term of the Subordinated Debentures. During each year ended December 31, 2001, 2000 and 1999, $6.7 million of interest and issue costs were expensed.

        The Subordinated Debentures are subordinated to all other indebtedness of Zenith National.

E.    Common Stock

        On December 5, 2001, Zenith National sold one million shares of its common stock, par value $1.00 per share, in a private placement for $25.00 per share to Odyssey Reinsurance Corporation, an indirect subsidiary of Fairfax Financial Holdings Limited ("Fairfax"). Fairfax and its affiliates currently own approximately 42% of Zenith National's outstanding common stock.

F.    Commitments and Contingent Liabilities

RISCORP Litigation

        On April 1, 1998, pursuant to an Asset Purchase Agreement dated June 17, 1997 (as amended from time to time, the "Asset Purchase Agreement") between Zenith Insurance and RISCORP, Inc. and certain of its subsidiaries (collectively, "RISCORP"), Zenith Insurance acquired substantially all of the assets and certain liabilities of RISCORP related to RISCORP's workers' compensation business (the "RISCORP Acquisition"). The total purchase price for such acquired assets and liabilities was determined by a three-step process in which RISCORP and its external accounting and actuarial consultants and Zenith Insurance and its external accounting and actuarial consultants made and presented their estimates of the GAAP values of the assets and liabilities acquired by Zenith Insurance to an independent third party, acting as a Neutral Auditor and Neutral Actuary. Such estimates varied considerably, particularly with respect to the value of premiums receivable and the liability for unpaid losses and loss adjustment expenses. On March 19, 1999, the Neutral Auditor and Neutral Actuary issued its report determining the disputes between the parties. That report indicated that the value of the assets transferred to Zenith Insurance exceeded the value of the liabilities assumed by Zenith Insurance by $92.3 million.

        Zenith Insurance and RISCORP entered into a settlement agreement dated July 7, 1999 (the "Settlement Agreement") providing for the resolution of certain claims arising out of the RISCORP Acquisition. Pursuant to the Settlement Agreement, Zenith Insurance and RISCORP agreed, among other things, that RISCORP may request that the Neutral Auditor and Neutral Actuary (a) review an alleged error concerning the proper treatment of certain reinsurance treaties in its determinations with respect to the purchase price for the RISCORP Acquisition, without waiving whatever rights RISCORP may have to litigation of such issue, (b) determine whether the issue was properly in dispute before the Neutral Auditor and Neutral Actuary and (c) if so, determine the merits of the issue and whether a correction is appropriate. Zenith Insurance and RISCORP also agreed that Zenith Insurance would receive $6.0 million from an escrow account established pursuant to the Asset Purchase Agreement, and RISCORP would receive the balance of the escrow account. In a submission made to the Neutral Auditor and

F-8

Neutral Actuary, RISCORP claimed that the purchase price for the RISCORP Acquisition should be adjusted by either $5.9 million or $23.4 million as a result of alleged errors in the original determination of the Neutral Auditor and Neutral Actuary with respect to the purchase price. On October 7, 1999, the Neutral Auditor and Neutral Actuary informed Zenith Insurance and RISCORP that it would not consider the issue raised by RISCORP because the issue had not previously been raised as a dispute pursuant to the procedures set forth in the engagement letter. On January 13, 2000, RISCORP filed a complaint against Zenith Insurance and the Neutral Auditor and Neutral Actuary in the Superior Court of Fulton County in the State of Georgia. On October 9, 2000, RISCORP filed a First Amended Complaint in the Superior Court of Fulton County. RISCORP's First Amended Complaint alleges causes of action for breach of contract against the Neutral Auditor and Neutral Actuary and, in conjunction, seeks a declaration that would have the effect of requiring Zenith to pay either $18.1 million (and related charges) or $5.9 million. RISCORP also has asserted causes of action for professional negligence solely against the Neutral Auditor and Neutral Actuary in which it seeks damages of either $18.1 million (and related charges) or $5.9 million. On May 1, 2001, the Superior Court granted in their entirety motions for judgment on the pleadings filed by Zenith Insurance and the Neutral Auditor and Neutral Actuary. The Georgia Court of Appeals rejected RISCORP's petition for expedited review of the Superior Court's decision pending a determination of counterclaims filed by Zenith Insurance and the Neutral Auditor and Neutral Actuary before the Superior Court. Zenith is unable to predict the outcome of this litigation.

Other Litigation

        Other than the RISCORP litigation described above, Zenith National and its subsidiaries are defendants in various other litigation. In the opinion of management, after consultation with legal counsel, such litigation is either without merit or the ultimate liability, if any, is not expected to have a material adverse effect on the consolidated financial condition, results of operations or cash flows of Zenith.

Contingencies Surrounding the Order of Liquidation of Reliance Insurance Company

        On October 3, 2001, the Commonwealth Court of Pennsylvania issued an Order of Liquidation for Reliance Insurance Company ("Reliance") in response to a petition from the Pennsylvania Department of Insurance. At December 31, 2001, Reliance owed Zenith Insurance $6.0 million of reinsurance recoverable on paid and unpaid losses in connection with reinsurance arrangements assumed by Zenith Insurance in its 1996 acquisition of the Associated General Commerce Self-Insurers' Trust Fund. As of December 31, 2001, Zenith Insurance recorded a $3.0 million provision for impairment of the reinsurance recoverable from Reliance. Zenith Insurance cannot currently predict the ultimate outcome of this matter; but it is possible that if the Pennsylvania Department of Insurance increases its estimates of Reliance's unpaid liabilities or uncollectible reinsurance recoverables without considering additional investment income, Zenith Insurance may not recover any of its reinsurance recoverable from Reliance.

        State Guarantee Funds ("Guarantee Funds") exist to ensure that policyholders (holders of direct insurance polices but not of reinsurance policies) receive payment of their claims if insurance companies become insolvent. The Guarantee Funds are funded primarily by statutorily prescribed assessments they bill to other insurance companies doing business in their states. Various mechanisms exist in these states for assessed insurance companies to recover these assessments. Upon the Order of Liquidation of Reliance, the Guarantee Funds became primarily liable for the payment of Reliance's policyholder liabilities. The declaration of an insolvency establishes the presumption that assessments by the Guarantee Funds are probable. Zenith Insurance writes workers' compensation insurance in many of the states where Reliance has unpaid workers' compensation liabilities and expects to receive Guarantee

F-9

Fund assessments, some of which may be based on certain of the premiums it has already earned at December 31, 2001. Zenith Insurance is currently unable to determine the ultimate amount and timing of all such assessments. At December 31, 2001, Zenith Insurance has accrued an estimated liability of $2.7 million, net of expected recoveries of $2.4 million, for probable future Guarantee Funds assessments. This estimate is based on currently available information and could change based on additional information or reinterpretation of existing information concerning the Order of Liquidation for Reliance and the actions of the Guarantee Funds. Zenith Insurance also expects that it will receive continuing Guarantee Fund assessments in connection with the Reliance insolvency in many of the states in which it writes workers' compensation insurance. The ultimate impact of such assessments will depend upon the amount and timing of the assessments and of any recoveries to which Zenith Insurance is entitled.

Contingency Surrounding Recoverability of Special Disability Trust Fund Receivable

        In Florida, the Special Disability Trust Fund (the "Fund") assesses workers' compensation insurers to pay for what are commonly referred to as "Second Injuries." Historic assessments have been inadequate to completely fund obligations of the Fund. In late 1997, the Florida statute was amended so that the Fund will not be liable for and will not reimburse employers or carriers for Second Injuries occurring on or after January 1, 1998. Zenith Insurance has recorded its receivable from the Fund for Second Injuries based on specific claims and historical experience prior to January 1, 1998. At December 31, 2001 and 2000, the receivable from the Fund was $18.1 million and $31.1 million, respectively, related to the pre-January 1, 1998 claims.

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SCHEDULE III — SUPPLEMENTARY INSURANCE INFORMATION
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES

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SCHEDULE IV — REINSURANCE
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES

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Item 1. Business. General
Item 2. Properties.
Item 3. Legal Proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Item 6. Selected Financial Data.
Item 7. Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations.
Item 7a. Quantitative and Qualitative Disclosures about Market Risk.
Item 8. Financial Statements and Supplementary Data.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Item 10. Directors and Executive Officers of the Registrant.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Item 13. Certain Relationships and Related Transactions.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.