<PAGE>



                                                             EXHIBIT 10.3


                               SEVERANCE AGREEMENT


         THIS  AGREEMENT is made and entered into as of this 23rd day of July,
1997,  by and between THE  CENTRIS  GROUP,  INC.,  a Delaware  corporation  (the
"Company"), and CHARLES M. CAPORALE ("Executive").

                                    RECITALS

         WHEREAS, the Executive is currently employed by the Company and is
considered a key employee of the Company; and

         WHEREAS, the Company desires to retain the services of the Executive;
and

         WHEREAS,  the Company and the Executive desire to set forth the amounts
payable and benefits to be provided by the Company to the Executive in the event
of a  termination  of the  Executive's  employment  with the  Company  under the
circumstances  set forth herein  after the  happening of a Change in Control (as
defined herein);

         NOW,  THEREFORE,  in  consideration  of the  foregoing  and the  mutual
agreements  contained  herein,  and intending to be legally  bound  hereby,  the
parties agree as follows:

                                    AGREEMENT

         1. Continued  Employment.  In reliance upon the promises of the Company
            ---------------------
hereinafter contained,  the Executive agrees that, for a period of not less than
six (6) months commencing on the date set forth above, and subject to reasonable
absences  for  illness,  holiday and  vacation  or personal  leave of absence in



                                       1
<PAGE>




accordance  with the  Company's  policies  and  practices  in effect on the date
hereof,  the Executive will continue his  employment  with the Company and shall
devote his best  efforts to such duties as may be assigned to him by the Company
from time to time.

         2. Other Severance Arrangements.  Except to the extent specifically set
            ----------------------------
forth herein, in the event of the termination of the Executive's employment with
the Company,  the  Executive  shall be entitled to receive any Company  benefits
payable under any employee benefit plan, program,  policy or arrangement as such
may  then  be in  effect,  including  all  such  termination  arrangements  with
Executive that may be described in any employment agreement.

         3. Effective  Date.  This  Agreement  shall be effective as of the date
            ---------------
first above  written  ("Effective  Date") and shall  continue and remain in full
force and  effect  until the  termination  of  Executive's  employment  with the
Company,  unless this Agreement is earlier terminated by the parties in writing.
The completion of six (6) months of employment with the Company by the Executive
as  set  forth  in  Section  1  shall  not  be  a  condition  precedent  to  the
effectiveness  of this  Agreement  or to the payments of amounts or provision of
benefits  hereunder in the event the Executive's  employment with the Company is
terminated under the circumstances described in Section 4(b).

         4. Termination of Employment.
            -------------------------
            (a)    Events Requiring No Payments Under Section 5: In the event
the  Executive's  employment  with the  Company is  terminated  under any of the
following  circumstances,  no payments shall be or become due and owing, and the
Company shall have no other obligations under Section 5 of this Agreement:

                   (i)      By either party for any reason prior to the 
     happening of a Change in Control (as hereinafter defined);

                   (ii)     By either party for any reason at any time more
     than two (2) years after a Change in Control;



                                       2
<PAGE>



                   (iii)    By the Company at any time,  whether  prior to,
     contemporaneous  with or subsequent to a Change in Control, for reason of
     "Cause" (as hereinafter defined) or due to the request or demand of any
     regulatory authority; or

                   (iv)     By the  Executive at any time,  whether  prior to,
     contemporaneous  with or subject to a Change in Control, upon his
     retirement or resignation for reasons other than "Good Reason" (as
     hereinafter defined).

Notwithstanding  the  foregoing,  nothing  contained  in this Section 4(a) shall
prevent the Executive or his spouse,  heirs,  estate or personal  representative
from  receiving  any amounts  payable under any other plan,  program,  policy or
arrangement that is not a severance plan, program, policy or arrangement.

                  (b) Events  Requiring  Payments  Under Section 5: In the event
the  Executive's  employment  with the  Company is  terminated  under any of the
following  circumstances set forth in (i) and (ii) below, the Company shall make
the payments and provide the benefits as set forth in Section 5:

                         (i)   By the  Company,  contemporaneously  with or
     within two (2) years after the happening of a Change in Control, for any
     reason other than (1) for Cause or (2) due to the request or demand of any
     regulatory authority; or

                         (ii)  By the Executive, contemporaneously with or
     within two (2) years after a Change in Control, for Good Reason.

                  (c) For purposes of this  Agreement,  the term  "Cause"  shall
mean (i) the commission by Executive of any material act of fraud or dishonesty;
(ii) a final  conviction  of  Executive of a felony in either a state or federal
court  proceeding;  (iii)  intentional  and  willful  failure  by  Executive  to



                                       3
<PAGE>




faithfully  carry out his  duties and  responsibilities  as an  employee  of the
Company,  after reasonable  notice in writing to and discussion  thereafter with
Executive;  and (iv) Executive engaging in activities which place Executive in a
direct or indirect  conflict with the Company or its interests.  The decision as
to the existence of "Cause," as described in (i), (iii) and (iv) above, shall be
determined  by a majority  of the  Company's  nonemployee  Directors;  provided,
however,  if there is a change in the  composition  of the Board such that those
persons  who  served as  nonemployee  Directors  on the  Effective  Date of this
Agreement  represent  less  than  fifty  percent  (50%) of the  total  number of
nonemployee Directors, then "Cause" shall be determined by use of the Settlement
of Disputes provisions set forth in Section 8 of this Agreement.

                  (d) For  purposes of this  Agreement,  the term "Good  Reason"
shall mean the following five (5) events; provided,  however, that Executive may
waive in writing his  objection to the  occurrence  of any such event,  in which
case such event will no longer constitute "Good Reason":

                      (i)    Any material breach by the Company of its
     obligations contained in this Agreement;

                      (ii)   The assignment to the Executive of any duties
     inconsistent with the status of his position with the Company as such
     duties and position existed on the day immediately preceding the happening
     of a Change in Control, or an alteration in the nature or status of the
     Executive's duties and responsibilities that renders the Executive's
     position to be of less dignity, responsibility or scope from that which
     existed on the day immediately preceding the happening of a Change in
     Control; provided, however, it shall not be an event of Good Reason if the
     Executive is assigned additional duties for the Company or any affiliate
     or subsidiary of the Company which are not inconsistent with the duties
     described in Section 1 hereof so long as the aggregate of all duties
     assigned to the Executive in connection with his service with the Company,
     its affiliates or subsidiaries do not require the Executive to devote, on
     a consistent and sustained basis, substantially more time than other
     senior level executives of the Company are required to devote to their
     duties;



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<PAGE>




                           (iii)    A reduction by the Company in the 
      Executive's annual base salary as was in effect on the day immediately
      preceding the happening of a Change in Control or as the same may be 
      increased from time to time;

                           (iv)     The failure of the Company to continue in
      effect of the  benefits  enjoyed by the  Executive  under the Company's
      1988 Employee  Stock Plan or its 1991 Employee Stock Option Plan or under
      the Company's Incentive  Compensation  Program, or any other compensation
      plan,  program  or  arrangement,  or any  of  the  Company's pension,
      retirement,  profit sharing,  savings, life insurance,  medical,
      health-and-accident,  disability or other employee benefit plans, programs
      or  arrangements  as they  existed on the day  immediately  preceding  the
      happening  of a Change  in  Control,  or the  failure  of the  Company  to
      continue  the  Executive's  participation  therein;  or the failure by the
      Company to provide the Executive  with the number of paid vacation days to
      which he is entitled on the basis of years of service  and  position  with
      the Company in accordance with the Company's  normal vacation  policy,  or
      the failure of the Company to continue or if the Company adversely changes
      or reduces other specific  contractual benefits or perquisites provided to
      Executive as they existed on the day  immediately  preceding the happening
      of a Change in  Control,  including,  but not  limited  to,  providing  an
      automobile  or an automobile  allowance,  club  memberships,  and dues for
      professional associates for Executive;

                           (v)      The  assignment  of the  Executive to an
      office which is located more than 50 miles from the office at which the
      Executive was primarily performing his duties on the day immediately
      preceding the happening of a Change in Control.



                                       5
<PAGE>




                  (e) For  purposes  of this  Agreement,  a "Change in  Control"
shall  mean the  occurrence,  after the  Effective  Date  hereof,  of any of the
following  events if such events are not  approved by the Board of  Directors of
the Company prior to their occurrence;

                      (i)     At any time during the term of this Agreement, any
      "person" (as such term is used in Sections 13(d) and 14(d) of the
      Securities  Exchange  Act of 1934 (the "Exchange Act") and the regulations
      of the Securities and Exchange Commission (the "SEC") thereunder, each as
      in effect on the Effective Date of this Agreement (including any such
      persons that may be deemed to be acting in concert with respect to the
      Company or the acquisition, ownership or voting of Company securities)
      becomes, directly or indirectly, the "beneficial owner" (as defined in
      Rule 13d-3 under the Exchange Act and the regulations of the SEC
      thereunder, each as in effect on the Effective Date of this Agreement) of
      outstanding  securities of the Company  representing 15% or more of the
      combined voting power of the Company's then outstanding securities. For
      purposes of this subsection (i) of Section 4(e) of the Agreement, a person
      becomes, directly or indirectly,  the beneficial owner of outstanding
      securities of the Company representing  15% or more of the combined
      voting power of the Company's outstanding securities when such person,
      together with all affiliates and associates of such person, acquires
      beneficial ownership of, in the aggregate, a number of voting shares of
      the Company equal to 1% or more of the voting shares then outstanding,
      and thereupon or thereafter beneficially owns (as defined in the
      aforenoted Rule 13d-3 under the Exchange Act) 15% or more of the voting
      shares of the Company then outstanding; provided, however, that the
      concept of any person becoming the owner of 15% or more of the combined
      voting shares shall not include:  (A) the Company, any wholly owned
      subsidiary of the Company, any employee benefit plan of the Company or of
      a subsidiary of the Company, or any person holding voting shares for or
      pursuant to the terms of any such employee benefit plan; or (B) any person
      if such person would not otherwise be a 15% stockholder but for a
      reduction in the number of outstanding voting shares resulting from a
      stock repurchase program or other similar plan instituted by the Company
      or from a self-tender offer of the Company, which plan or tender offer



                                       6
<PAGE>



      commenced  on or after the Effective Date of this Agreement;  provided,
      however, that the concept of becoming  the owner of 15% or more of the
      combined  voting  shares  shall include such beneficial owner after the
      first date upon which (x) such person, since the date of commencement of
      such plan or tender offer, shall have  acquired  beneficial ownership of,
      in the aggregate, a number of voting shares of the Company equal to 1% or
      more of the voting shares then outstanding, and (y) such person, together
      with all affiliates and associates of such person, shall beneficially own
      15% or more of the voting  shares  of  the  Company  then  outstanding.
      In calculating the percentage of the person for purposes of this
      subsection, voting shares that are beneficially owned by such person shall
      be deemed outstanding, and voting shares that are not beneficially owned
      by such person and that are subject to issuance upon the exercise or
      conversion of outstanding conversion rights, exchange rights, rights 
      (other than rights), warrants or options shall not be deemed outstanding.
      The Board of Directors shall have the absolute authority to make a final 
      determination as to whether any Person is or is not to be considered a 15%
      Stockholder for purposes of this Agreement, which determination shall be
      conclusive for all purposes and shall be binding upon the Company and 
      upon the Executive.

                      (ii)    At any time during the term of this  Agreement the
      composition of the Board of Directors of the Company is changed such that
      persons who were directors of the Company as of the Effective Date, or
      persons  nominated or elected as directors by a majority of such persons
      who were directors as of the Effective Date, do not continue to comprise
      a majority of the members of such Board of Directors of the Company;

                      (iii)   At any time during the term of this Agreement the
      stockholders of the Company approve a merger or consolidation  of  the
      Company with, or a reorganization transaction involving the Company and,
      any other entity, other than a merger, consolidation or reorganization
      which would result in the voting securities of the Company outstanding
      immediately prior thereto continuing to represent (either by remaining
      outstanding or by being converted into voting securities of the surviving
      entity) at least 50% of the combined voting  power of the voting



                                       7
<PAGE>




      securities of the Company or such surviving entity outstanding immediately
      after such merger or consolidation; or

                      (iv)    At any time during the term of this Agreement the
      stockholders of the Company approve a plan of complete liquidation of the
      Company or an agreement for the sale or disposition by the Company of more
      than 50% of its consolidated assets.

      5.  Obligations of the Company Upon  Termination  of  Employment.  Upon
          ------------------------------------------------------------
termination of Executive's  employment with the Company under the  circumstances
set  forth in  Section  4(b),  the  Executive  shall  be  entitled  to  receive,
notwithstanding such termination,  the following payments and to be provided the
following benefits:

          (a)  Salary and Bonus:  Subject to the limitations set forth in
Section 7 hereof,  the Company shall pay to the  Executive  that amount which is
equal to his regular  base salary,  at the rate then in effect,  for a period of
two (2) years,  plus a bonus in an amount  which  shall be equal to the  largest
cash bonus actually received by Executive during his term of employment with the
Company;  provided,  however,  that if  Executive  shall  have  entered  into an
Employment  Agreement  with  the  Company  which  is in  effect  at the  time of
Executive's termination, then and in that event the Company and Executive hereby
agree that upon Executive's  termination  Executive shall be entitled to receive
either (i) the salary and bonus termination payments under this Section 5(a), or
(ii) the salary and bonus terminations  payments provided for in such Employment
Agreement,  whichever salary and bonus termination  payment is the greater;  but
under no conditions shall Executive be entitled to receive upon termination both
the salary and bonus termination payments under this Severance Agreement and the
salary and bonus termination payments under any such Employment Agreement.

          (b)  Method of Payment:  The payments due to Executive under Section
5(a) of this Agreement shall be made as follows:



                                       8
<PAGE>


                           (i)      The Company shall pay to the Executive his
      regular base salary in installments consistent with the Company's payroll
      practices then in effect, or in a single lump sum payment, whichever
      method is selected by Executive, in his sole discretion;

                           (ii)     The Company shall pay to Executive the bonus
      payments in a single lump sum; and

                           (iii)    Any lump sum payments due to Executive
      shall be paid to Executive on the Effective Date of his termination of
      employment.

                  (c) Other  Benefits:  The Company shall  continue in force for
Executive for a period of two (2) years after  Executive's  termination the life
insurance, medical, health-and-accident and disability benefit plans or programs
then in  effect  on the  date  of  Executive's  termination  from  the  Company;
provided,  however,  that such other  benefits as are set forth in this  Section
5(c) shall not be required to be available to Executive if subsequent employment
by Executive with another employer offers to Executive similar plans or programs
in which the benefits equal or exceed the benefits which Executive could receive
under the Company's plans or programs as provided herein.

         6. No Duty to Mitigate. The Executive shall not be required to mitigate
            -------------------
the amount of any payment  required  hereunder by seeking  other  employment  or
otherwise,  nor shall the  amount  paid  hereunder  be  reduced or offset by any
compensation  earned or received by the Executive as a result of employment with
another  employer,  self-employment  or any amount received from any other plan,
program, policy or arrangement of the Company.

         7.  Nonapplicability  of  Excise  Tax.  The  parties  intend  that this
             ---------------------------------
Agreement  shall govern the rights an obligations of the parties with respect to
severance payments payable upon a termination of Executive's employment with the
Company, and that the excise tax as now provided in Section 280G of the Internal
Revenue  Code  shall  not  be  applicable  to  payments  under  this  Agreement.



                                       9
<PAGE>




Accordingly,  the parties agree that the aggregate amount which shall be paid to
Executive  under this Agreement shall be $1.00 less than that amount which would
make  such  payment  to  Executive  an  "excess  parachute  payment"  under  the
provisions of Sections 280G of the Internal Revenue Code, and to which an excise
tax would be applicable.

         8.       Settlement of Disputes.
                  ----------------------
                  (a) It is specifically  agreed that any controversy or dispute
between   the   parties   to  this   Agreement   involving   the   construction,
interpretation,  application,  performance or breach of the terms,  covenants or
conditions of this Agreement or in any way arising under this  Agreement  shall,
on demand of one of the parties by written  notice hereto served on the other in
the manner  prescribed  in Section 9(a) hereof,  be  determined  pursuant to the
general  reference  procedures  prescribed by California Code of Civil Procedure
Sections 638(1), et seq., as they may be amended from time to time, by a retired
or former  judge of the  Superior  Court  for the  County  of  Orange,  State of
California.   The  parties  intend  this  general  reference   agreement  to  be
specifically enforceable in accordance with said Section 638(1).

                  (b) The  reference may be commenced by any party hereto by the
filing in the Superior Court of the State of California for the County of Orange
of a petition or a motion for a general reference proceeding.

                  (c) The  petition or motion may  designate as a sole referee a
retired judge working with JAMS who is acceptable to that party.  If the parties
to the reference  proceeding  are unable to mutually  agree upon a referee,  the
Presiding  Judge or any judge of the Orange  County  Superior  Court to whom the
matter is assigned  shall  appoint a retired or former  Orange  County  Superior
Court Judge from those listed with JAMS as available to act as a referee.

                  (d) The petition and any opposition or response  thereto shall
recite in a clear and  meaningful  manner the factual  basis of the  controversy
between the parties and  identify  the issues to be submitted to the referee for
decision.




                                       10
<PAGE>




                  (e)  The   parties   acknowledge   that  this   Agreement   is
specifically enforceable and that the decision by the referee is tantamount to a
judgment by a trial  court (CCP ss. 644) and is subject to review in  accordance
with  CCP ss.  645,  and  that  any  judgment  rendered  in the  trial  court is
appealable in the same manner as any other trial court judgment.

                  (f) The parties may agree on limited  discovery.  However,  in
the absence of an  agreement,  each party may: (i) take up to three  depositions
not  totaling  more  than  six  hours  cumulatively;  (ii)  propound  one set of
interrogatories, not to exceed 20 single questions; (iii) serve not more than 10
requests for admissions;  and (iv) propound not to exceed 15 requests to produce
documents,  all as may be  "reasonable,"  as measured by the  circumstances  and
amount in dispute  between the parties.  Any  disagreements  between the parties
regarding discovery matters shall be resolved by the referee.

                  (g) The hearing shall be held within 60 days after the referee
is selected.  The referee shall issue a written  memorandum of decision  setting
forth his findings of fact and conclusions of law.

         9.       Miscellaneous.
                  -------------
                  (a) Notices: All notices and other communications  required or
permitted  to be given  under this  Agreement  shall be in writing  and shall be
deemed to have been duly  given if  delivered  personally  or sent by  certified
mail, return receipt requested,  first-class  postage prepaid, to the parties to
this Agreement at the following addresses:

                  If to the Company:        The Centris Group, Inc.
                                            650 Town Center Drive, Suite 1600
                                            Costa Mesa, California  92626
                                            Attention:  Chief Executive Officer

                  If to Executive:          Charles M. Caporale
                                            181 Rumson Road
                                            Rumson, New Jersey  07760




                                       11
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or to such  other  address  as either  party to this  Agreement  shall have last
designated  by notice to the other party.  All such  notices and  communications
shall be deemed to have been  received  on the earlier of the date of receipt or
the third business day after the date of mailing thereof.

                  (b) Binding Effect;  Benefits: This Agreement shall be binding
upon and  inure to the  benefit  of the  parties  to this  Agreement  and  their
respective  successors  and  assigns.  Nothing  in this  Agreement,  express  or
implied,  is intended or shall be construed  to give any person,  other than the
parties to this Agreement or their respective  successors or assigns,  any legal
or equitable right,  remedy or claim under or in respect of any agreement or any
provision contained herein.

                  (c) Waiver:  Either party hereto may by written  notice to the
other (i) extend the time for the performance of any of the obligations or other
actions of the other under this Agreement; (ii) waive compliance with any of the
conditions  or covenants of the other  contained  in this  Agreement;  and (iii)
waive or modify  performance  of any of the  obligations of the other under this
Agreement.  Except as  provided  in the  preceding  sentence,  no  action  taken
pursuant to this Agreement,  including, without limitation, any investigation by
or on behalf of any party,  shall be deemed to  constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements  contained  herein.  The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any preceding or succeeding  breach,  and no failure by either party to exercise
any right or privilege hereunder shall be deemed a waiver of such party's rights
or  privileges  hereunder or shall be deemed a waiver of such party's  rights to
exercise the same any subsequent time or times hereunder.

                  (d)      Amendment:  This  Agreement  may  be  terminated, 
amended,  modified  or  supplemented  only  by a  written instrument executed
by the Executive and the Company.



                                       12
<PAGE>




                  (e)  Nonassignability:  Neither this  Agreement nor any right,
remedy,  obligation or liability  arising hereunder or by reason hereof shall be
assignable  by either the Company or the  Executive  without  the prior  written
consent of the other party.

                  (f)  Governing  Law: This Agreement  shall be governed by and
construed in accordance  with the laws of the State of California, regardless
of the law that might be applied under principles of conflict of laws.

                  (g)  Section and Other  Headings:  The section and other
headings  contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.

                  (h)  Withholding  of Taxes:  The  Company  may  withhold  from
amounts required to be paid to the Executive  hereunder any applicable  federal,
state, local and other taxes with respect thereto;  provided,  however, that the
Company  shall  promptly  pay over the amounts so  withheld  to the  appropriate
taxing  bodies and  provide to the  Executive  appropriate  statements  on forms
proscribed for such purposes on the amounts so withheld.

                  (i)  Severability:  If, for any reason,  any provision of this
Agreement is held invalid,  such invalidity shall not affect any other provision
of this Agreement not held so invalid,  and each such other provision  shall, to
the full extent  consistent with law,  continue in full force and effect. If any
provision of this Agreement shall be held invalid in part, such invalidity shall
in no way affect the rest of such provision not held so invalid, and the rest of
such provision,  together with all other provisions of this Agreement,  shall to
the full extent  consistent with law continue in full force and effect.  If this
Agreement  is held  invalid  or  cannot  be  enforced,  then to the full  extent
permitted by law, any prior  agreement on the subject  matter of this  Agreement
between the Company (or any  predecessor  thereof)  and the  Executive  shall be
deemed reinstated as if this Agreement had not been executed.




                                       13
<PAGE>

                  (j) Counterparts: This Agreement may be executed in any number
of  counterparts,  each of which  shall be deemed to be an  original  and all of
which together shall be deemed to be one and the same instrument.

         IN WITNESS  WHEREOF,  the  Company  has  caused  this  Agreement  to be
executed  by a duly  authorized  officer,  and the  Executive  has  signed  this
Agreement, all as of the date first above written.


         Company:                      THE CENTRIS GROUP, INC.
         -------                           


                                       By /S/ DAVID L. CARGILE
                                          --------------------
                                          DAVID L. CARGILE
                                          President and Chief Executive Officer

         Executive:
         ---------


                                       /S/ CHARLES M. CAPORALE
                                       -----------------------
                                       CHARLES M. CAPORALE



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