EXHIBIT 10.49 TO CURRENT REPORT ON FORM 8-K DATED AS OF JUNE 30, 2003
      ---------------------------------------------------------------------


                 ASSUMPTION AND INDEMNITY REINSURANCE AGREEMENT

          THIS  ASSUMPTION  AND  INDEMNITY  REINSURANCE  AGREEMENT  (this
"Agreement"),  dated  as  of June 30, 2003, is made by and among HEALTH NET LIFE
INSURANCE  COMPANY, a California domiciled life and disability insurance company
(the  "Company"),  and SAFEHEALTH LIFE INSURANCE COMPANY, a California domiciled
       -------
life  and  disability  insurance company (the "Reinsurer").  The Company and the
                                               ---------
Reinsurer  are  referred  to  herein  collectively  as  the  "Parties".
                                                              -------

     WHEREAS, the Company desires to transfer and assign to the Reinsurer all of
the  Company's  right, title and interest in and to the Novated Vision Policies;

     WHEREAS,  the  Reinsurer  desires to assume all of the Company's duties and
obligations  in connection with, relating to, or arising at any time out of such
Novated  Vision  Policies  upon  the  terms  and  conditions  set  forth herein;

     WHEREAS, the Company desires to cede, on an indemnity reinsurance basis, to
the  Reinsurer, the Company's Policy Liabilities in connection with, relating to
and  arising  out  of  the  Non-Novated  Vision  Policies,  upon  the  terms and
conditions  set  forth  herein;

     WHEREAS,  the  Reinsurer  desires  to  reinsure on an indemnity reinsurance
basis  the  Company's Policy Liabilities arising under or in connection with the
Non-Novated Vision Policies, upon the terms and conditions set forth herein; and

     WHEREAS,  in  connection  with  the  foregoing,  the  Health  Net, Inc. and
SafeGuard  Health  Enterprises,  Inc.  have  entered  into the Purchase and Sale
Agreement  dated  as  of June 30, 2003 (the "Purchase and Sale Agreement") which
                                             ---------------------------
calls  for the execution and delivery of this Agreement as of the Closing of the
transactions  contemplated  thereunder;

     NOW,  THEREFORE, in consideration of the mutual covenants and promises, and
upon the terms and conditions hereinafter set forth, the Parties hereto agree as
follows.

                                    ARTICLE I
                                   DEFINITIONS
                                   -----------

          Capitalized  terms  used  in  this Agreement and not otherwise defined
shall  have  the  meanings  given such terms in the Purchase and Sale Agreement.
For  purposes  of  this  Agreement,  the following terms shall have the meanings
specified  below.

     "Claims"  shall  have  the  meaning  set  forth  in  Section  7.03.
      ------

     "Dispute"  shall  have  the  meaning  set  forth  in  Section  11.02.
      -------

     "Disputed  Claim"  shall  have  the  meaning  set  forth  in  Section 7.03.
      ---------------


<PAGE>
     "Disputed  Complaint"  shall  have  the  meaning set forth in Section 7.05.
      -------------------

     "Effective  Time"  means 11:59 p.m. Pacific Time, on the Closing Date.
      ---------------

     "Extra-Contractual  Liabilities"  means  any  and  all  liabilities  and
      ------------------------------
obligations  of  any  nature,  kind  or  description  (i)  for  consequential,
extra-contractual,  tort,  bad  faith,  exemplary,  punitive, special or similar
damages  and  (ii)  for  statutory  or  regulatory  damages,  fines,  penalties,
forfeitures,  and  similar  charges  of  a  penal  or  disciplinary  nature.

     "GAAP"  means generally accepted accounting principles consistently applied
      ----
throughout  the  specified  period and in a comparable period in the immediately
preceding  year.

     "JAMS"  shall  have  the  meaning  set  forth  in  Section  11.03.
      ----

     "Member  Materials"  shall  have  the  meaning  set  forth in Section 3.01.
      -----------------

     "Members"  means  the  individuals  (including  their  covered  spouses and
      -------
covered  dependents)  entitled  to  Vision Services pursuant to Vision Policies.

     "Non-Novated  Vision  Policies" shall have the meaning set forth in Section
      -----------------------------
2.04.

     "Novated  Vision  Policies"  means those Vision Policies transferred to the
      -------------------------
Reinsurer  by  novation  as of the Novation Date and under which Vision Policies
the  Reinsurer  shall  have become the successor to the Company under the Vision
Policies  as  described  in  Section  2.03.

     "Novation  Date"  shall  have the meaning set forth in Section 3.02 hereof.
      --------------

     "Obligations"  shall  have  the  meaning  set forth in Section 2.01 hereof.
      -----------

     "Policy  Liabilities" means the Company's gross liabilities and obligations
      -------------------
arising  under  or in connection with the Vision Policies to the extent the same
are  unpaid  or unperformed on or after the Effective Time, before deduction for
all other applicable cessions, if any, under the Company's reinsurance programs.
In  addition,  the  term  "Policy  Liabilities"  shall  include:

     (a)  all  Extra-Contractual  Liabilities  that arise from any act, error or
          omission  after the Effective Time, whether or not intentional, in bad
          faith  or otherwise, by the Reinsurer or any of its affiliates, or any
          of  their  respective  officers,  employees, agents or representatives
          relating  to  the Vision Policies, and any attorneys' fees incurred by
          the  Reinsurer  or  the  Company  related  to  such  Extra-Contractual
          Liabilities;

     (b)  all  liabilities  and obligations for premium taxes arising on account
          of  any  premiums  with  respect  to  the Vision Policies allocable to
          coverage  after  the  Effective  Time;

     (c)  all  liabilities  and  obligations  for returns or refunds of premiums
          (irrespective  of  when  due)  under  the  Vision  Policies;


                                      -2-
<PAGE>
     (d)  any  assessment  required  by  any  insurance  guaranty,  insolvency,
          comprehensive  health  association or other similar fund maintained by
          any  jurisdiction  relating to the Vision Policies assessed or imposed
          on  the  basis  of  premium  for  coverage  after  the Effective Time;

     (e)  all  liabilities  and  obligations  for  commission payments and other
          compensation,  if  any,  due  and  payable  with respect to the Vision
          Policies  to  or  for  the benefit of agents and brokers to the extent
          that  such  amount  accrues  after  the  Effective  Time;

     (f)  all  liabilities  and  obligations  for payment of any compensation to
          providers  relating  to  Vision Services provided to Members under the
          Vision  Policies  regardless  of  the  "date  of  service";  and

     (g)  any  obligation  arising  as  a  result of the Reinsurer 's failure to
          perform  its  obligations  pursuant  to  Section  7.07.

     "SAP"  means  statutory  accounting  practices  prescribed  or permitted by
      ---
applicable  insurance regulatory authorities consistently applied throughout the
specified period and in the comparable period in the immediately preceding year.

     "Services"  shall  have  the  meaning  set  forth  in  Section  7.02.
      --------

     "Vision  Policies"  means  all  policies or other agreements (including all
      ----------------
supplements,  endorsements,  riders  and  ancillary  agreements  in  connection
therewith)  with individuals, employers or other group sponsors resident or with
their  principal  place  of  business in California that obligate the Company to
provide,  arrange for the provision of, or indemnify for the cost of vision care
services  and  vision  supplies  as  specified  therein, which policies or other
agreements  (i)  are in effect as of the Effective Time or (ii) become effective
after  the  Effective  Time,  including  through (A) the reinstatement of lapsed
policies  pursuant  to  provisions  therein  or  of  applicable  Law, or (B) the
issuance  or  renewal  thereof  by the Company after the Effective Time to honor
quotes  outstanding  as  of  the Effective Time, or to satisfy renewal rights of
individuals,  employers  or other group sponsors under contractual provisions or
applicable Law, or (C) modifications agreed to by the Reinsurer on behalf of the
Company pursuant to the authority granted to the Reinsurer under Section 7.01 of
this  Agreement, provided, however, Vision Policies shall not include any policy
                 --------  -------
or  other  agreements  (including  all  supplements,  endorsements,  riders  and
ancillary  agreements  in  connection  therewith) with individuals, employers or
other  group  sponsors  that  obligate  the  Company to provide, arrange for the
provision  of,  or  indemnify  for  the  cost of vision care services and vision
supplies  pursuant to any Government Sponsored Contracts, or any policy or other
agreements  (including  all  supplements,  endorsements,  riders  and  ancillary
agreements  in  connection therewith) with individuals, employers or other group
sponsors  that obligate the Company to provide, arrange for the provision of, or
indemnify  for the cost of vision care services and vision supplies to employees
of  the  Company  or  any  Affiliate  of  the  Company.

     "Vision  Services"  shall  have  the  meaning  set  forth  in Section 7.07.
      ----------------


                                      -3-
<PAGE>
                                   ARTICLE II
                       BUSINESS TRANSFERRED AND REINSURED
                       ----------------------------------
          Section  2.01.     Assignment of Vision Policies.  As of the Effective
                             -----------------------------
Time  (i)  except  as  is  otherwise provided in Section 5.01 below, the Company
hereby  transfers and assigns to the Reinsurer all of the Company's right, title
and  interest in the Vision Policies identified in Schedule 2.01 attached hereto
                                                   -------------
and  made  a  part  hereof  and  delegates to the Reinsurer all of the Company's
duties  and  obligations  of  performance  and payment under the Vision Policies
arising after the Effective Time, and (ii) the Reinsurer hereby accepts, assumes
and  agrees  to  perform  all  of  the Company's duties and obligations, whether
direct, indirect, contingent, unliquidated, unmatured or otherwise arising after
the  Effective  Time (collectively, "Obligations"), in connection with, relating
                                     -----------
to,  or  arising  out  of  the  Vision  Policies.

          Section  2.02.     Novation.  As  soon  as  practicable  after  the
                             --------
Effective  Time,  the Reinsurer shall use all commercially reasonable efforts to
effect  the assumption by novation by the Reinsurer of the Vision Policies (each
such  Vision  Policy  being  referred to herein as a "Novated Vision Policy" and
                                                      ---------------------
Novated  Vision  Policies  shall  include  any  such subsequently novated Vision
Policies).  If  the  Reinsurer  does  not  for any reason assume by novation any
Vision  Policy,  then  the  Reinsurer shall accept and reinsure, on an indemnity
reinsurance  basis,  100%  of the Policy Liabilities related to such Non-Novated
Vision  Policies  in accordance with the terms and conditions of this Agreement.

          Section  2.03.     Direct  Obligations.  To  the  extent  that  the
                             -------------------
Reinsurer  assumes  by  novation any Vision Policies under applicable Law, as of
the  Novation Date (i) the Reinsurer shall be the successor to the Company under
such  Novated  Vision  Policies  as  if such Novated Vision Policies were direct
obligations  originally  issued  by  the  Reinsurer  and  the Reinsurer shall be
responsible  for  the  performance  of  all  obligations  and the payment of all
benefits  and  amounts  due under the Novated Vision Policies in accordance with
their  terms,  (ii) the Reinsurer shall be substituted in the place and stead of
the  Company,  and  each  Member  under  any  such  Novated  Vision Policy shall
disregard  the  Company  as a party thereto and treat the Reinsurer as if it had
been  originally obligated thereunder except as otherwise provided herein, (iii)
the  Company  shall  be  released  of all liability with respect to such Novated
Vision  Policies, (iv) the Members under such Novated Vision Policies shall have
the  right  to  file  claims arising under such Novated Vision Policies directly
with  the Reinsurer and shall have a direct right of action for indemnification,
benefits  and services under such Novated Vision Policies against the Reinsurer,
and  the Reinsurer hereby consents to be subject to any such direct action taken
by  any  such  Member,  (v)  the  Reinsurer shall be responsible for all matters
relating  to  administration  of  the Novated Vision Policies, including but not
limited to policy changes, reinstatement standards, premium rate changes, policy
renewals,  agent commissions and administrative methods and procedures, and (vi)
any  indemnity  reinsurance  of  such  Novated  Vision  Policies  and  related
liabilities  thereunder  by the Reinsurer shall cease and instead be replaced by
such  assumption  by  novation.

          Section  2.04.     Indemnity  Reinsurance.  Effective  as  of  the
                             ----------------------
Effective Time, the Company shall cede to the Reinsurer, and the Reinsurer shall
assume  from  the  Company on an indemnity reinsurance basis, 100% of the Policy
Liabilities  under all Vision Policies (including those Vision Policies that are
identified  in  Schedule  2.01  attached  hereto  and  made  a  part  hereof)
                --------------


                                      -4-
<PAGE>
which  the  Reinsurer has not for any reason (including the lack of any required
approval  or  consent  of  a  party to a Vision Policy) as of the Effective Time
assumed  by  novation  (each  such  Vision  Policy being referred to herein as a
"Non-Novated  Vision  Policy").  Notwithstanding  the  foregoing,  the  term
 ---------------------------
"Non-Novated  Vision  Policy" shall not include any Vision Policy from and after
the  date  of  its  assumption  by  novation  at  any  time  by  the  Reinsurer.

          Section  2.05.     Policy  Liabilities.  The  Reinsurer  accepts,
                             -------------------
reinsures,  and  assumes the Policy Liabilities subject to any and all defenses,
setoffs,  and  counterclaims to which the Company would be entitled with respect
to  the  Policy  Liabilities,  it  being  expressly understood and agreed by the
Parties  hereto that no such defenses, setoffs, or counterclaims are or shall be
waived  by  the  execution and delivery of this Agreement or the consummation of
the  transactions  contemplated  hereby,  and that the Reinsurer is and shall be
fully  subrogated in and to all such defenses, setoffs, and counterclaims.  From
and after the Effective Time, as among the Parties, the Reinsurer shall bear and
shall  have responsibility for paying or performing all Policy Liabilities.  The
Policy  Liabilities  ceded  under this Agreement shall be subject to any changes
required  by  Law  or regulation and the same rates, terms, conditions, waivers,
interpretations,  modifications  and  alterations  as  the  Non-Novated  Vision
Policies.

                                   ARTICLE III
                     ASSUMPTION CERTIFICATES; OPTION LETTERS
                     ---------------------------------------

          Section  3.01.     Member  Materials.  The Reinsurer shall prepare and
                             -----------------
deliver  to  every party to a Vision Policy a Notice of Transfer, Certificate of
Assumption,  and  Notice  of  Rejection  of  Assumption  substantially  in  the
appropriate  forms  set  forth  in  Exhibit A attached hereto (collectively, the
                                    ---------
"Member  Materials") and otherwise acceptable to both the Reinsurer and Company,
 -----------------
which  shall  inform  each party to a Vision Policy of the proposed transfer and
enable  such  party  to  accept  or  reject  the  assumption  and  novation.

     Section  3.02.     Mailing.  The Member Materials shall be mailed on a date
                        -------
agreed  upon  by  the  Reinsurer and the Company, and, to the extent required by
applicable  Law,  shall  be  reviewed  by  and  found  acceptable  to applicable
regulatory  authorities  prior  to  mailing.  The  Reinsurer  shall deliver only
Member  Materials  that  are  in  compliance  with applicable Law, regulation or
regulatory  authority.  No  assumption by novation of a Vision Policy shall take
effect  until  the earlier of the acceptance of the assumption by the party to a
Vision  Policy  or  90 days (or such other period, if any, as may be required by
applicable Law) (the "Novation Date") after Member Materials have been mailed to
                      -------------
the  party  to  such  Vision  Policy.

     Section  3.03.     Expenses.  All  expenses  incurred by the Parties hereto
                        --------
pursuant  to  this  Article  shall  be  shared  equally  by  the  Parties.

                                   ARTICLE IV
                                      TERM
                                      ----

          Section  4.01.     Term.  This  Agreement  shall  remain  in force and
                             ----
effect until all Policy Liabilities reinsured and assumed by Reinsurer have been
discharged  in  full,  or all Vision Policies are transferred and assumed by the
Reinsurer  by  novation and all obligations of the Reinsurer hereunder have been
discharged  in  full.


                                      -5-
<PAGE>
                                    ARTICLE V
                                  CONSIDERATION
                                  -------------

          Section 5.01.     Consideration to the Reinsurer.  The Reinsurer shall
                            ------------------------------
be  entitled  to  all  premium,  premium  adjustments  and  other  consideration
allocable  to  coverage  after  the  Effective  Time  (irrespective of when due)
received  by  the  Company or the Reinsurer with respect to the Vision Policies.
In  the  event that the Company receives any premium or other consideration with
respect  to  a Vision Policy allocable to coverage after the Effective Time, the
Company  shall  promptly  remit  such  premiums  and  other consideration to the
Reinsurer  along with all pertinent information pertaining thereto including the
nature  of  the  payment,  source of funds, policy number and period to which it
relates.  In  the  event  that  the  Reinsurer  receives  any  premium  or other
consideration  with respect to a contractual liability or contractual obligation
arising  under  a  Vision  Policy  paid or performed by the Company prior to the
Effective  Time,  the  Reinsurer  shall  promptly  remit such premiums and other
consideration  to  the  Company  along with all pertinent information pertaining
thereto  including the nature of the payment, source of funds, policy number and
period  to  which  it  relates.

     Section  5.02.     Application  of  Future  Consideration.  Any  premium,
                        --------------------------------------
premium  adjustments  and  other  consideration  received  and  retained  by the
Reinsurer  pursuant  to  Section  5.01  shall be applied by the Reinsurer to the
oldest  unpaid  obligations or outstanding invoices relating to the period after
the  Effective  Time.

     Section  5.03.     Additional  Consideration  for  Indemnity Reinsurance of
                        --------------------------------------------------------
Non-Novated  Vision Policies.  As additional consideration for the assumption by
   -------------------------
Reinsurer  on  an  indemnity reinsurance basis of 100% of the Policy Liabilities
under  the  Non-Novated  Vision  Policies,  the  Company  shall  (i) transfer to
Reinsurer  at  the  Effective  Time  admitted assets having a net admitted asset
value  determined  in  accordance  with  SAP  as  prescribed or permitted by the
California  Department  of Insurance equal to the Company's net unearned premium
reserve,  loss,  and  loss  adjustment  expense (including losses that have been
incurred but not reported) reserve, if any, attributable to claims arising under
the  Non-Novated Vision Policies prior to the Effective Time; and (ii) assign to
Reinsurer  any amounts due to Company under any reinsurance agreements in effect
on  the  Effective  Time  between  the Company and any reinsurer (other than the
Reinsurer)  relating  to  the  Policy Liabilities assumed by the Reinsurer under
this  Agreement.

     Section 5.04.     Additional Consideration for Assumption of Novated Vision
                       ---------------------------------------------------------
Policies.  As  additional  consideration  for  the  assumption  by  novation  by
--------
Reinsurer  of  the  Novated  Vision  Policies, the Company shall (i) transfer to
Reinsurer  within  five  (5)  Business  Days after the end of the calendar month
following  the  Novation  Date admitted assets having a net admitted asset value
determined  in  accordance with SAP as prescribed or permitted by the California
Department  of  Insurance  equal  to the Company's net unearned premium reserve,
loss,  and loss adjustment expense (including losses that have been incurred but
not  reported) reserve, if any, attributable to claims arising under the Novated
Vision  Policies  prior  to the Effective Time; and (ii) assign to Reinsurer any
amounts  due  to  Company  under  any  reinsurance  agreements  in effect on the
Effective  Time between the Company and any reinsurer (other than the Reinsurer)
relating  to  the  Novated  Vision  Policies assumed by the Reinsurer under this
Agreement.


                                      -6-
<PAGE>
                                   ARTICLE VI
                            ACCOUNTING AND SETTLEMENT
                            -------------------------

     Section  6.01.     Accounting  Reports.  On or before the last Business Day
                        -------------------
of  each  month,  the  Reinsurer  shall  provide  the  Company  with  reports of
activities  under this Agreement with respect to the Non-Novated Vision Policies
for the preceding month showing any amounts due the Company or the Reinsurer, as
the case may be, as reimbursement for paid claims, premiums or other amounts due
with  respect to the Non-Novated Vision Policies and any information required by
the  Statement  of  Statutory Accounting Principles, as amended, of the National
Association  of  Insurance Commissioners.  On or before the last Business Day of
January,  April,  July and October, the Reinsurer shall provide the Company with
quarterly  reports  or  an  annual  report  of  such  activities as appropriate.


     Section  6.02.     Financial  Statement Information.  The Reinsurer and the
                        --------------------------------
Company  shall  each  provide  the  other  with  the  financial,  accounting and
actuarial information necessary to prepare SAP regulatory, tax and GAAP monthly,
quarterly  and  annual  financial  statements  and  returns  and  satisfy  other
requirements  including  reserve  and  related  calculations  regarding  the
Non-Novated Vision Policies in the form reasonably required by the Reinsurer and
the  Company.  The  Company and the Reinsurer shall agree to mutually acceptable
procedures  and  time  schedules  for  the  transmission  and  receipt  of  such
information.

     Section  6.03.     Settlements.  Within  ten  (10)  Business  Days  after
                        -----------
delivery  of  each monthly report, the Reinsurer and the Company shall settle on
an  estimated  basis,  all amounts then due under this Agreement for that month.
The  Reinsurer  and the Company shall make a final settlement of all amounts due
for  each  calendar  year within twenty (20) Business Days after the delivery of
the  annual  report  referred  to  in  Section  6.01  hereof.

     Section  6.04.     Net Payment Basis.  Amounts payable under this Agreement
                        -----------------
by  the  Parties  hereto shall be settled against each other, dollar for dollar,
and  only  a  net  payment  shall  be due; provided, however, that no balance or
                                           --------  -------
amount  due by the Parties under any other agreement shall be offset against any
obligation  arising  under  this  Agreement.

     Section  6.05.     Late  Payments.  Should  any  payment  due  any party be
                        --------------
received  by  such  party  more than sixty (60) days after the due date for such
payment  under this Agreement, interest shall accrue from the date on which such
payment  was  due  (taking  into  account  the  provisions of 6.06 hereof) until
payment  is  received  by the party entitled thereto, at an annual rate equal to
the  Bank  of America Reference Rate quoted for six month periods as reported in
The  Wall  Street  Journal  on the first Business Day of the month in which such
payment  first  becomes  due.

     Section  6.06.     Federal  Funds.  All settlements in accordance with this
                        --------------
Agreement  shall  be made by wire transfer of immediately available funds on the
due  date,  or  if  such  day  is not a Business Day, on the next day which is a
Business  Day.  Payment  may  be  made by check payable in immediately available
funds  in  the event the party entitled to receive payment has failed to provide
wire  transfer  instructions.




                                      -7-
<PAGE>
     Section  6.07.     Reports  to  Regulatory Authorities.  During the term of
                        -----------------------------------
this  Agreement,  the Reinsurer and the Company shall promptly furnish the other
copies of any and all filings with, and reports or communications received from,
any  regulatory  authority  which  relates  directly  and  materially  to  the
Non-Novated  Vision  Policies,  including,  without  limitation,  each  annual
statement,  each  quarterly  financial report to the regulatory authority of the
party's domicile having principal jurisdiction over the party and each report on
periodic  examination  issued  by  such  regulatory  authority  to the extent it
relates  to  the  Non-Novated  Vision  Policies.

                                   ARTICLE VII
                     VISION POLICY ADMINISTRATION; REPORTING
                     ---------------------------------------

     Section  7.01.     Administration  of  Non-Novated  Vision  Policies.  The
                        -------------------------------------------------
Company  hereby  grants  the  Reinsurer  authority  in  all  matters relating to
administration  of  the  Non-Novated  Vision Policies to the fullest extent such
authority  may  be  granted  pursuant  to applicable Law.  In furtherance of the
foregoing,  the Company hereby nominates, constitutes and appoints the Reinsurer
as  its  attorney-in-fact  with  respect  to  the rights, duties, privileges and
obligations  of the Company in and to the Non-Novated Vision Policies, with full
power  and  authority  to  act  in the name, place and stead of the Company with
respect to the Non-Novated Vision Policies.  Without limiting the foregoing, the
Reinsurer  shall  provide reasonable advance notice to the Company of its intent
to  cancel  specific  Non-Novated  Vision  Policies  for non-payment of premium.
Unless  the  Company  objects to the proposed cancellations within five calendar
days  of  receipt of the notice from the Reinsurer, the Reinsurer shall have the
right  to  cancel  the  referenced  Non-Novated Vision Policies on behalf of the
Company  for  non-payment of premium in a manner consistent with applicable Law.
If  the  Company  objects to the proposed cancellation of any Non-Novated Vision
Policy for non-payment of premium, the Company shall indemnify the Reinsurer for
any  unpaid  premium  with  respect  to  any  such  policy  until such policy is
cancelled.

     Section  7.02.     Administration.  The  Reinsurer  shall,  at its expense,
                        --------------
provide  the  technical  and  administrative  service,  assistance  and  support
functions described in Schedule 7.02 attached hereto (the "Services") reasonably
                       -------------                       --------
necessary  or  appropriate  for  the proper management and administration of the
Non-Novated  Vision  Policies,  which  shall  include,  but  not  be limited to,
Services  required  for  the  proper  administration  of  the Non-Novated Vision
Policies prior to the Effective Time and not performed as of the Effective Time.
The  Services  at  all  times  shall be consistent with the Company's prevailing
practices  and procedures as of the Effective Time with respect to similar types
of policies actually communicated by the Company to Reinsurer and all applicable
Law, regulations, and regulatory actions and pronouncements.  (As used elsewhere
in this Agreement, the terms "prevailing practices and procedures" will refer to
the  Company's  prevailing  practices  and  procedures  as of the Effective Time
communicated  by  the  Company  to  the  Reinsurer).

     Section  7.03.     Claims  Payment  Instructions.  The Reinsurer at its own
                        -----------------------------
cost  shall  administer  and  process  all  payments  to reimburse providers and
Members  for  covered Vision Services under the Non-Novated Vision Policies (the
"Claims")  in conformance with the Company's prevailing practices and procedures
 ------
with  respect  to  similar  types  of policies, including review, investigation,
adjustment, settlement, defense and payment of Claims, special investigation and
anti-fraud  compliance,  and  preparation  of any report required concerning the




                                      -8-
<PAGE>
foregoing  Vision  Services  and  will,  in  connection  with  such  Claims
administration,  retain,  at  its  sole  discretion  and  cost,  any  outside
investigation  firms,  adjusters,  attorneys  or  other  professionals  that the
Reinsurer  deems necessary in the adjustment of such Claims.  If a Claim arising
prior  to the Effective Time under a Non-Novated Vision Policy is presented that
the  Reinsurer  in  good  faith  disputes,  the Reinsurer shall consult with the
Company.  If, after such consultation, the Reinsurer and the Company disagree as
to  how  to resolve a Claim, the Company shall be entitled to assume, at its own
expense,  the control of the handling or the defense of such a disputed Claim (a
"Disputed  Claim"),  including employment of counsel.  The Company shall apprise
 ---------------
the  Reinsurer of and consult with the Reinsurer with respect to the progress of
a  Disputed  Claim.  In  exercising  such control, the Company shall act in good
faith  in  accordance  with  generally  accepted  claims  practices  of  similar
insurance  companies under similar circumstances.  Any payment of any portion of
a  Disputed  Claim  made by the Company shall be added to the Policy Liabilities
and  shall  be unconditionally binding on the Reinsurer; provided, however, that
                                                         --------  -------
if  the  Company  receives  an  offer of settlement or compromise from the other
parties to a Disputed Claim for a particular amount or obtains a commitment from
such  other  parties that they would accept a compromise or settlement requiring
only the payment of a specific amount, the granting of an appropriate release or
similar  accommodation,  and  the Company, after mandatory consultation with and
over  the  objection  of the Reinsurer, refuses to consent thereto and elects to
continue  to dispute or otherwise pursue such Disputed Claim, then the liability
of  the Reinsurer with respect of such Disputed Claim shall be deemed limited to
that  amount including expenses which the Company would have been liable if such
compromise  or  settlement  had  been  accepted  by  the  Company.

     Section  7.04.     Communications  Relating to Non-Novated Vision Policies.
                        -------------------------------------------------------
On  and  after  the  Effective  Time,  the Company shall forward promptly to the
Reinsurer  all  notices and other written communications it receives relating to
the  Non-Novated  Vision  Policies  (including  all inquiries or complaints from
state  insurance  regulators,  agents,  brokers  and  Members and all notices of
claims,  suits  and  actions  for  which  it  receives service of process).  The
Company  shall  be  entitled  to  retain  copies  of  all  such  materials.


     Section  7.05.     Complaint  Handling  Procedure.  The  Parties  shall
                        ------------------------------
cooperate  with  each other in providing information necessary to respond to any
inquiries  and  complaints  concerning  the  Non-Novated  Vision  Policies.  All
inquiries  and complaints concerning the Non-Novated Vision Policies received by
the  Company  shall be forwarded immediately by facsimile or overnight mail to a
contact  person  designated by the Reinsurer for reply.  After consultation with
the  Company, except as provided below, the Reinsurer shall answer all inquiries
and  complaints  received  by it concerning the Non-Novated Vision Policies.  If
the  Reinsurer  and  the  Company  disagree as to the appropriate response to an
inquiry  or  complaint,  the  Company  shall  be  entitled to assume, at its own
expense,  the  control  of  the  handling  of  the  response  to such inquiry or
complaint  (a  "Disputed  Complaint"),  including  employment  of  counsel.  The
                -------------------
Company  shall  apprise  the  Reinsurer  of  and consult with the Reinsurer with
respect  to  the  progress of a Disputed Complaint.  In exercising such control,
the  Company  shall  act  in good faith consistent with the Company's prevailing
practices  and  procedures  as  of  the  Effective  Time with respect to similar
inquiries  or  complaints.  Any  payment  arising  out  of  a Disputed Complaint
controlled  by  the  Company,  to  the  extent such payment constitutes an Extra
Contractual  Liability,  shall  be  added to the Policy Liabilities and shall be
unconditionally binding on the Reinsurer; provided, however, that if the Company
                                          --------  -------
receives  an  offer  of  settlement  or  compromise  from  the  other




                                      -9-
<PAGE>
parties  to a Disputed Complaint for a particular amount or obtains a commitment
from  such  other  parties  that  they  would  accept a compromise or settlement
requiring  only the payment of a specific amount, the granting of an appropriate
release  or similar accommodation, and the Company, after mandatory consultation
with  and  over  the  objection of the Reinsurer, refuses to consent thereto and
elects  to continue to dispute or otherwise pursue such Disputed Complaint, then
the  liability of the Reinsurer with respect of such Disputed Complaint shall be
deemed  limited  to  that  amount including expenses for which the Company would
have  been  liable  if  such  compromise and settlement had been accepted by the
Company.  Upon  answering  such  inquiries  or  complaints,  the Reinsurer shall
furnish  the  Company with a copy of the complaint file.  The Reinsurer shall be
solely  responsible  for maintaining any complaint files, complaint registers or
other  reports of any kind, which are required to be maintained under applicable
Law.

     Section  7.06.     Filings.  The  Reinsurer shall handle all compliance and
                        -------
regulatory  matters  relating  to  the  administration of the Non-Novated Vision
Policies,  including  monitoring  changes in applicable Law, filing and refiling
forms and rates, and preparing and filing all reports and other filings required
by  applicable  Law.  The  Reinsurer  shall provide to the Company copies of all
reports  and filings with respect to the Non-Novated Vision Policies required to
be  made  with  any  Governmental  Authority.

     Section  7.07.     Provider  Services.  In  fulfilling  its  Obligations
                        ------------------
pursuant to Section 2.01, the Reinsurer shall provide, arrange for the provision
of,  or  indemnify  for  the  cost of vision care services and supplies ("Vision
                                                                          ------
Services")  required to satisfy all obligations with respect to the provision of
--------
Vision  Services  to  Members  and their dependents under the Non-Novated Vision
Policies.  The Reinsurer shall be responsible for the recruitment, credentialing
and  management  of,  and for contracting with, or gaining access to vision care
and  service  providers  adequate  for  the  delivery  of all Vision Services to
Members  required  by  or  incidental  to  the  Non-Novated  Vision  Policies.

     Section  7.08.     Administration  of  Novated Vision Policies.  Except for
                        -------------------------------------------
those  services  to  be provided to the Reinsurer by the Company pursuant to the
Transition  Services  Agreement,  administration  and  servicing  of the Novated
Vision  Policies  shall  be  the  sole  responsibility  of  the  Reinsurer.

     Section  7.09.     Communications  Relating to Novated Vision Policies.  On
                        ---------------------------------------------------
and  after  the  Effective  Time,  the  Company  shall  forward  promptly to the
Reinsurer  all  notices and other written communications received by it relating
to the Novated Vision Policies (including all inquiries or complaints from state
insurance  regulators,  agents,  brokers and insureds and all notices of claims,
suits  and actions for which it receives service of process).  The Company shall
be  entitled  to  retain  copies  of  all  such  materials.

     Section  7.10.     Novation  Reports.  Within  ten (10) Business Days after
                        -----------------
the  end  of  each  month  after the Effective Time, beginning with the month in
which the first novation of an Vision Policy occurs, the Reinsurer shall provide
to  the  Company  a  report  indicating  all  Vision Policies that have been the
subject  of  a  novation  by  the  Reinsurer  during  the  prior  month.

     Section  7.11.     Inspection.  Each  party  hereto  and  its  respective
                        ----------
authorized  representatives  shall have the right, upon prior written notice, at
reasonable  times  during  normal  business  hours,




                                      -10-
<PAGE>
to  inspect and review all books, records, accounts, reports, tax returns, files
and information of the other party hereto reasonably relating to this Agreement.
The  Parties shall keep all non-public information received from the other party
strictly  confidential,  and  unless  otherwise  required  by  applicable Law or
Governmental Authority, shall not disclose any of the same without obtaining the
prior  approval  of  the  party  providing  the  information.  The rights of the
Parties  under  this  Section  7.11 shall survive termination of this Agreement.

                                  ARTICLE VIII
                     REGULATORY APPROVALS; STATEMENT CREDIT
                     --------------------------------------

     Section 8.01.     Regulatory Approvals.  The consummation of this Agreement
                       --------------------
and  the  transactions  contemplated  hereby  are  expressly contingent upon and
subject  to obtaining any and all such approvals and consents as may be required
by  applicable Law, regulation, or Governmental Authority.  No provision in this
Agreement  shall  be  deemed  to  require  any  party  hereto to take any action
prohibited  by applicable Law, regulation, or regulatory authority.  The form of
any  application  for  any  such  approvals  or  consents  as may be required by
applicable  Law,  regulation, or Governmental Authority shall be approved by the
Company  and  the  Reinsurer  prior  to  the  filing  of  any  such application.

     Section 8.02.     Statement Credit.  The Reinsurer shall at its own expense
                       ----------------
take  all  actions  reasonably  necessary  to  permit the Company to obtain full
financial  statement  credit in all applicable jurisdictions for the reinsurance
provided to it by the Reinsurer and the assumptions by novation pursuant to this
Agreement,  including,  if  necessary,  posting  acceptable  security.

                                   ARTICLE IX
                                 INDEMNIFICATION
                                 ---------------

     Section  9.01.     Indemnification  by  the Reinsurer.  The Reinsurer shall
                        ----------------------------------
indemnify,  defend  and  hold  the  Company harmless from and against all Policy
Liabilities and all losses, liabilities, claims, damages and expenses (including
reasonable attorneys' fees and expenses) that are based upon or arise out of the
breach  of  any  obligation  of  the  Reinsurer  provided for in this Agreement.


     Section  9.02.     Indemnification  by  the  Company.  The  Company  shall
                        ---------------------------------
indemnify  the  Reinsurer  against,  and  hold  them  harmless from, all losses,
liabilities,  claims, damages and expenses (including reasonable attorneys' fees
and  expenses)  that are based upon or arise out of the breach of any obligation
of  the  Company  provided  for  in  this  Agreement.

                                    ARTICLE X
                                   INSOLVENCY
                                   ----------

     Section  10.01.     Payments  by  the  Reinsurer.  With  respect  to  any
                         ----------------------------
Non-Novated  Vision  Policy,  the  Reinsurer  hereby agrees that all amounts due
under  this  Agreement  with respect to the Non-Novated Vision Policies shall be
payable  by the Reinsurer to any conservator, liquidator, or statutory successor
of  the  Company  on  the basis of the claims allowed against the Company by any
court  of competent jurisdiction or by any conservator, liquidator, or statutory
successor  of  the  Company  having  authority  to  allow  such  claims, without
diminution  because  of that insolvency, or because the conservator, liquidator,
or  statutory  successor  has  failed  to  pay  all  or a portion of any claims.
Payments  by  the  Reinsurer  as  set  forth  in  this  Section  10.01  shall be


                                      -11-
<PAGE>
made  directly  to  the  Company or to its conservator, liquidator, or statutory
successor,  except  where  the  Non-Novated  Vision Policy specifically provides
another payee of such reinsurance in the event of the insolvency of the Company.

     Section  10.02.     Claims.  It  is  agreed  that  in  the  event  of  the
                         ------
insolvency of the Company, the liquidator, receiver or other statutory successor
of the Company shall give prompt written notice to the Reinsurer of the pendency
or  submission  of  a  Claim  under  the  Non-Novated  Vision Policies reinsured
hereunder.  During  the  pendency  of  such claim, the Reinsurer may investigate
such Claim and interpose, at its own expense, in the proceeding where such claim
is to be adjudicated, any defense available to the Company or its receiver.  The
expense  thus  incurred  by  the  Reinsurer  is  chargeable against the Company,
subject  to  any  court  approval,  as  a  part  of  the  expense of insolvency,
liquidation,  or  rehabilitation  to  the extent of a proportionate share of the
benefit  which  accrues  to  the  Company  solely  as  a  result  of the defense
undertaken  by  the  Reinsurer.

     Section 10.03.     Novated Vision Policies.  All amounts due a Member under
                        -----------------------
the  Novated  Vision  Policies shall be payable by the Reinsurer on the basis of
the  liability  of  the  Reinsurer  under  the  Novated Vision Policies, without
diminution  because  of  the insolvency of the Company.  Any benefits or amounts
due  to  Members  with  respect  to  a  Novated  Vision  Policy shall be paid or
performed  by  the  Reinsurer  in  accordance  with  the  Novated Vision Policy.

                                   ARTICLE XI
                                   ARBITRATION
                                   -----------

     Section  11.01.     Conciliation.  If  a dispute between any of the Parties
                         ------------
relating  to  this  Agreement is not resolved within ten (10) Business Days from
the  date  that  any  party has notified another party that such dispute exists,
then  such  dispute shall be submitted on the next Business Day for conciliation
to  a  senior  executive  officer or his or her designee of each party.  If such
senior  executive officers are unable to resolve the dispute within fifteen (15)
Business  Days  from  the  date  that  it  is first presented to them, then such
dispute  shall  be  referred  to  binding  arbitration.

     Section  11.02.     Arbitration.  In  the  event of any dispute between the
                         -----------
Parties  hereto relating to, arising out of, or in connection with any provision
of  this  Agreement (hereinafter a "Dispute"), the Parties to this Agreement and
their  representatives,  designees,  successors  and assigns agree that any such
Dispute  shall be settled by binding arbitration to take place in Orange County,
California.

     Section  11.03.     Appointment  of  Arbitrator.  Any arbitration hereunder
                         ---------------------------
shall  be  conducted by a single arbitrator chosen from the panel of arbitrators
of  the  Judicial  Arbitration & Mediation Services ("JAMS") with experience and
expertise  in  the vision HMO or vision indemnity insurance business.  If a JAMS
arbitrator  with  specific  experience  in  the  vision  HMO or vision indemnity
insurance business is not available, the arbitrator must have general experience
in  the  health insurance industry.  Within ten (10) days of notice of a Dispute
from  Company  to Reinsurer or notice from Reinsurer to Company, the Company and
Reinsurer  shall  use  their  best  efforts  to  choose  a  mutually  agreeable
arbitrator.  If the Company and the Reinsurer cannot agree on an arbitrator, the
arbitrator  shall  promptly  be  selected  by  JAMS.


                                      -12-
<PAGE>
     Section  11.04.     Procedures.  The  party  submitting  a  Dispute  to
                         ----------
arbitration  hereunder  shall  present  its case to the arbitrator and the other
party  hereto  in  written form within twenty (20) days after the appointment of
the  arbitrator.  The  other  party  hereto  shall then have twenty (20) days to
submit a written response to the arbitrator and the original party who submitted
the  Dispute  to  arbitration.  After  timely  receipt of each party's case, the
arbitrator  shall  have  twenty  (20)  days  to  render  his  or  her  decision.

     Section  11.05.     Applicable  Law.  The  arbitrator  is  relieved  from
                         ---------------
judicial  formalities  and,  in  addition  to  considering the rules of law, the
limitations  contained  in  this  Agreement and the customs and practices of the
health  care  industry,  shall make his or her award with a view to effectuating
the  intent  of  this  Agreement.

     Section  11.06.     Decisions  Final.  The decision of the arbitrator shall
                         ----------------
be  final and binding upon the Parties, and judgment may be entered thereon in a
court  of  competent  jurisdiction.

     Section  11.07.     Costs.  Each  party  shall  bear  its  own  cost  of
                         -----
arbitration,  and  the  costs  of  the arbitrator shall be shared equally by the
Parties.

     Section  11.08.     Equitable  Relief.  Sections  11.01 and 11.02 shall not
                         -----------------
apply  to  any claim for equitable relief, including, without limitation, claims
for  specific  performance, a preliminary injunction, or a temporary restraining
order.  Such claims shall be submitted to a court of competent jurisdiction, and
neither  party shall be required to post any bond or other security.  If a party
chooses  to  pursue equitable relief, such conduct shall not constitute a waiver
of, or be deemed inconsistent with, the arbitration provisions set forth in this
Article  XI.  Once  the claims for equitable relief are finally decided, any and
all remaining claims shall be submitted to arbitration pursuant to Section 11.02
and  the  arbitrator  shall be bound by the findings and rulings of the court on
the  claims  for  equitable  relief.

     Section  11.09.     Survival  of  Article.  This  Article  XI shall survive
                         ---------------------
termination  of  this  Agreement.

                                   ARTICLE XII
                                  MISCELLANEOUS
                                  -------------

     Section  12.01.     Notices.  Any notice or other communication required or
                         -------
permitted  hereunder  shall  be  in  writing  and  shall be delivered by hand by
certified  process  server,  certified  or  registered mail (postage prepaid and
return  receipt requested), by a nationally recognized overnight courier service
(appropriately  marked for overnight delivery) or by facsimile (with request for
immediate  confirmation  of  receipt in a manner customary for communications of
such  respective  type).  Notices  shall  be effective upon receipt and shall be
addressed  as  follows:

     If to the Reinsurer:   SafeGuard  Health  Enterprises,  Inc.
                            95  Enterprise,  Suite  100
                            Aliso  Viejo,  California  92656
                            Attn.:  James  E.  Buncher
                            President  and  Chief  Executive  Officer
                            Tel:  (949)  425-4100
                            Fax:  (949)  425-4101


                                      -13-
<PAGE>

                    with  a  copy  to:

                            Ronald  I.  Brendzel
                            Senior  Vice  President  and  General  Counsel
                            SafeGuard  Health  Enterprises,  Inc.
                            95  Enterprise,  Suite  100
                            Aliso  Viejo,  California  92656
                            Tel:  (949)  425-4110
                            Fax:  (949)  425-4586

                    and

                            David  K.  Meyercord
                            Strasburger  and  Price,  LLP
                            901  Main  Street,  Ste.  4300
                            Dallas,  Texas  75202-3794
                            Tel:  (214)  651-4525
                            Fax:  (214)  659-4023

     If  to  the  Company:

                            Health  Net,  Inc.
                            21650  Oxnard  Street
                            Woodland  Hills,  California  91367
                            Attention:  General  Counsel
                            Facsimile:  (818)  676-7503

                    with  a  copy  to:

                            Sonnenschein  Nath  &  Rosenthal
                            685  Market  Street,  6th  Floor
                            San  Francisco,  California  94105
                            Attention:  Kenneth  B.  Schnoll
                            Facsimile:  (415)  543-5472

     All  notices and other communications required or permitted under the terms
of  this  Agreement  that are addressed as provided in this Section shall (i) if
delivered  personally  or  by  overnight express, be deemed given upon delivery;
(ii) if delivered by facsimile transmission, be deemed given when electronically
confirmed;  and  (iii)  if sent by registered or certified mail, be deemed given
when  received.  Any  party  from time to time may change its address for notice
purposes by giving a similar notice specifying a new address, but no such notice
shall  be  deemed  to have been given until it is actually received by the party
sought  to  be  charged  with  the  contents  thereof.

     Section  12.02.     Entire  Agreement.  This  Agreement  (including  the
                         -----------------
Exhibits and Schedules hereto) and the Transaction Agreements contain the entire
agreement  and  understanding  among


                                      -14-
<PAGE>
the Parties with respect to the transactions contemplated hereby, and supersedes
all  prior agreements and understandings, written or oral, with respect thereto.


the Parties with respect to the transactions contemplated hereby, and supersedes
all  prior agreements and understandings, written or oral, with respect thereto.

     Section  12.03.     Expenses.  Except  as  otherwise  expressly provided in
                         --------
this  Agreement,  whether  or  not  the  transactions  contemplated  hereby  are
consummated,  each  of  the  Parties hereto shall pay its own costs and expenses
incident to preparing for, entering into and carrying out this Agreement and the
consummation  of  the  transactions  contemplated  hereby.

     Section  12.04.     Counterparts.  This Agreement may be executed in one or
                         ------------
more  counterparts,  each of which shall be deemed an original, but all of which
shall constitute one and the same instrument and shall become effective when one
or  more  counterparts  have been signed by each of the Parties and delivered to
the  other  Parties.

     Section  12.05.     No  Third  Party  Beneficiary.  Except  as  otherwise
                         -----------------------------
specifically  provided  in this Agreement, nothing in this Agreement is intended
or  shall  be construed to give any person, other than the Parties hereto, their
successors  and permitted assigns, any legal or equitable right, remedy or claim
under  or  in  respect of this Agreement or any provisions contained herein, and
Reinsurer  shall  not  be  directly  liable  hereunder  to  any Member under any
Non-Novated  Vision  Policy.

     Section  12.06.     Amendment.  This  Agreement  may  only  be  amended  or
                         ---------
modified  by  a  written instrument executed on behalf of the Parties hereto and
any  such  amendment  shall  be  subject  to  receipt  of  any and all consents,
approvals,  permits and authorizations required to be obtained from Governmental
Authorities.

     Section  12.07.     Assignment; Binding Effect.  Neither this Agreement nor
                         --------------------------
any  of  the  rights,  interests  or  obligations  under this Agreement shall be
assigned, in whole or in part, by either of the Parties hereto without the prior
written  consent  of  the other party, and any such assignment that is attempted
without such consent shall be null and void.  Subject to the preceding sentence,
this  Agreement  shall  be  binding  upon,  inure  to  the  benefit  of,  and be
enforceable  by  the  Parties  and  their  respective  successors  and permitted
assigns.

     Section  12.08.     Invalid Provisions.  If any provision of this Agreement
                         ------------------
is  held  to  be  illegal, invalid, or unenforceable under any present or future
Law,  and  if the rights or obligations of the Parties under this Agreement will
not  be  materially  and adversely affected thereby, (a) such provision shall be
fully  severable;  (b) this Agreement shall be construed and enforced as if such
illegal,  invalid, or unenforceable provision had never comprised a part hereof;
and  (c)  the  remaining provisions of this Agreement shall remain in full force
and  effect  and shall not be affected by the illegal, invalid, or unenforceable
provision  or  by  its  severance  herefrom.

     Section  12.09.     Duty of Cooperation.  Each party hereto shall cooperate
                         -------------------
fully  with  the  other  party  hereto  in  all  reasonable respects in order to
accomplish  the  objectives  of  this  Agreement.

     Section  12.10.     Governing Law.  This Agreement shall be governed by and
                         -------------
construed  in  accordance  with  the  Law  of  the  State  of  California.


                                      -15-
<PAGE>
     Section  12.11.     Waiver.  Any term or condition of this Agreement may be
                         ------
waived  in  writing  at  any  time  by the party that is entitled to the benefit
thereof.  A  waiver  on  one  occasion shall not be deemed to be a waiver of the
same  or any other breach or nonfulfillment on a future occasion.  All remedies,
either under the terms of this Agreement, or by Law or otherwise afforded, shall
be  cumulative  and  not  alternative,  except  as  otherwise  provided  by Law.

     Section  12.12.     Errors  and  Omissions.  Inadvertent  delays, errors or
                         ----------------------
omissions  that  occur  or  are  made  in  connection  with  the  transactions
contemplated  by  this  Agreement shall not relieve any party from any liability
that  would  have  attached  had  such  delay,  error  or omission not occurred,
provided that such error or omission is rectified by the party making such error
or  omission  as  soon  as  possible  after  discovery thereof and such error or
omission  does  not  prejudice  any  other  party.

     Section  12.13.     Interpretation.  For  purposes  of  this Agreement, the
                         --------------
terms "hereof", "herein", "hereto", "hereunder", and derivative or similar words
       ------    ------    ------    ---------
refer  to  this  Agreement  (including  the  exhibits  hereto) as a whole unless
otherwise  indicated.  Whenever  the  words "include", "includes" or "including"
                                             -------    --------      ---------
are  used  in  this  Agreement, they shall be deemed to be followed by the words
"without  limitation".  Whenever  the  singular  is  used herein, the same shall
 -------------------
include  the  plural,  and  whenever  the  plural is used herein, the same shall
include  the  singular,  where appropriate.  The headings used in this Agreement
have  been inserted for convenience and do not constitute matter to be construed
or  interpreted  in  connection  with  this  Agreement.

     Section  12.14.     Business  Associate.  In  performing  functions,
                         -------------------
activities,  or  services for, or on behalf of, the Company involving the use or
disclosure  of  Protected  Health Information, as that term is defined in 45 CFR
164.501,  the  Reinsurer  shall  comply with the Business Associate Addendum set
forth  in  Schedule  12.14  hereto.
           ---------------

     IN  WITNESS  WHEREOF, the Company and the Reinsurer have each executed this
Agreement  as  of  the  date  first  written  above.


                                 SAFEHEALTH  LIFE  INSURANCE  COMPANY



                                 By:  /s/  James  E.  Buncher
                                      -----------------------------------------
                                      James  E.  Buncher
                                      President  and  Chief  Executive  Officer



                                 HEALTH  NET  LIFE  INSURANCE  COMPANY


                                 By:  /s/  Douglas  King
                                      -----------------------------------------
                                      Douglas  King
                                      President


                                      -16-
<PAGE>
                                  SCHEDULE 2.01

                        HEALTH NET LIFE INSURANCE COMPANY
                                 VISION POLICIES

The Vision Policies identified by group and individual contract number and name:

                    To be determined as of the Effective Time


                                      -17-
<PAGE>
                                  SCHEDULE 7.02
                                    SERVICES

                                  SCHEDULE 7.02

                                    SERVICES

     The  Reinsurer  agrees to perform, consistent with the Company's prevailing
practices  and  procedures and the terms of the Non-Novated Vision Policies, all
services  reasonably  necessary  for,  and incident to the proper management and
administration of, the Non-Novated Vision Policies, including but not limited to
the  following  services:

A.   All  Member  services relating to the Non-Novated Vision Policies including
     the  following:

     1.   Billing  and  collection  of  premiums for Non-Novated Vision Policies
          that  are not issued to an individual, employer or other group sponsor
          together with a medical product of the Company or any Affiliate of the
          Company;

     2.   Setting renewal rates in a manner consistent with the rates and rating
          plans  filed  by the Company with applicable Governmental Authorities;

     3.   Process  and  payment  of  claims;

     4.   Handle  Member service requests (including adding new Members to group
          Vision  Policies,  deleting  Members  from  group  Vision  Policies),
          administration  of  COBRA  responsibilities,  inquiries and complaints
          relating  to  the  Non-Novated  Vision  Policies;

     5.   Preparation  and  mailing  of  premium  notices  on  a timely basis to
          Members  and  parties to the Non-Novated Vision Policies; transmission
          of additional premium notices, lapse notices, reinstatement offers and
          other  notices  to  Members  and  parties  to  Vision  Policies;

     6.   Underwriting  and  processing  of  any  and  all  policy  changes  and
          reinstatements;

     7.   Member  mailings  of  any  necessary  endorsements  or  other contract
          documents;

     8.   Preparation of quarterly financial statement data (within ten Business
          Days  after  the  end  of  a  calendar  quarter)  and annual financial
          statement  data (within 35 calendar days after the end of the calendar
          year), for inclusion in the Company's applicable financial statements;

     9.   Administration  of  any  agreement  providing  for  the  payment  of
          commissions  relating  to  any  Non-Novated  Vision  Policy;

     10.  Development,  as  necessary,  and  maintenance  of  computer  systems
          required  to  provide  the  Services.


                                      -18-
<PAGE>
B.   All  services  performed  by  the  Reinsurer's  employees  providing legal,
     compliance,  actuarial,  accounting,  treasury,  human  resources  and data
     processing,  including  the  preparation  of  financial  and other relevant
     reports.


                                      -19-
<PAGE>
                                 SCHEDULE 12.14

                           BUSINESS ASSOCIATE ADDENDUM

This Business Associate Addendum (the "Addendum") supplements and is made a part
of  the  Assumption and Indemnity Reinsurance Agreement (the "Agreement") by and
between  Health  Net  Life Insurance Company (the "Company") and SafeHealth Life
Insurance  Company  (the "Reinsurer"), and is effective as of the effective date
of  the  Agreement.

                                    Recitals

A.   The  Company  may disclose certain information to the Reinsurer pursuant to
     the  terms  of the Agreement, some of which may constitute Protected Health
     Information,  as  defined  below.

B.   The  parties  intend to protect the privacy and provide for the security of
     Protected  Health  Information  in  compliance  with  the  Health Insurance
     Portability  and  Accountability  Act  of  1996,  Public  law  No.  104-191
     ("HIPAA") and the regulations promulgated thereunder by the U.S. Department
     of Health and Human Services (the "HIPAA Regulations") and other applicable
     laws.

C.   The  purpose  of  this  Addendum  is  to  satisfy  certain  standards  and
     requirements of HIPAA and the HIPAA Regulations, including, but not limited
     to,  45  CFR  164.502(e)  and  45  CFR  164.504(e).

In  consideration  of  the mutual promises below and the exchange of information
pursuant  to  the  Agreement  and  this  Addendum, the parties agree as follows:

1.     Definitions

(a)     Business  Associate  means  the  Reinsurer  to  the  extent  it performs
functions, activities, or services for, or on behalf of, the Company pursuant to
the  Agreement  involving the use or disclosure of Protected Health Information.

(b)     Covered  Entity  means  the  Company.

(c)     "Privacy  Rule"  means  the  Standards  for  Privacy  of  Individually
Identifiable  Health Information at 45 CFR part 160 and part 164, subparts A and
E.

(d)     "Protected  Health  Information"  has  the  same  meaning  as  the  term
"protected  health  information"  in  45 CFR 164.501, limited to the information
created  or  received by Business Associate from or on behalf of Covered Entity.

(e)     Capitalized  terms  used but not otherwise defined in this Addendum have
the  same  meaning  as  those  terms  in  the  Privacy  Rule.


                                      -20-
<PAGE>
2.     Obligations  and  Activities  of  Business  Associate

(a)     Business  Associate  shall  not  use  or  disclose  Protected  Health
Information  other than as permitted or required by this Addendum or as Required
By  Law.

(b)     Business  Associate  shall  use appropriate safeguards to prevent use or
disclosure of the Protected Health Information other than as provided for by the
Agreement  and  this  Addendum.

(c)     Business  Associate  agrees  to mitigate, to the extent practicable, any
harmful  effect  that  is  known to Business Associate of a use or disclosure of
Protected  Health  Information  by  Business  Associate  in  violation  of  the
requirements  of  this  Addendum.

(d)     Business  Associate shall report to Covered Entity any use or disclosure
of  the  Protected Health Information not provided for by this Addendum of which
it  becomes  aware.

(e)     Business  Associate  shall  ensure  that  any  agent,  including  a
subcontractor,  to  whom it provides Protected Health Information received from,
or created or received by Business Associate on behalf of, Covered Entity agrees
to  the  same  restrictions  and  conditions that apply through this Addendum to
Business  Associate  with  respect  to  such  information.

(f)     Business  Associate  shall  provide  access,  at  the request of Covered
Entity,  and  in  the time and manner designated by Covered Entity, to Protected
Health Information in a Designated Record Set, to Covered Entity or, as directed
by  Covered  Entity, to an Individual in order to meet the requirements under 45
CFR  164.524

(g)     Business  Associate  agrees to make any amendment(s) to Protected Health
Information in a Designated Record Set that the Covered Entity directs or agrees
to pursuant to 45 CFR 164.526 at the request of Covered Entity or an Individual,
and  in  the  time  and  manner  designated  by  Covered  Entity.

(h)     Business  Associate  agrees  to  make its internal practices, books, and
records,  including  policies and procedures, relating to the use and disclosure
of  Protected  Health  Information  received  from,  or  created  or received by
Business Associate on behalf of, Covered Entity available to the Secretary, in a
time  and  manner  designated  by  the  Secretary, for purposes of the Secretary
determining  Covered  Entity's  compliance  with  the  Privacy  Rule.

(i)     Business  Associate  agrees  to  document  such disclosures of Protected
Health  Information  and  information  related  to  such disclosures as would be
required  for  Covered  Entity  to  respond to a request by an Individual for an
accounting  of disclosures of Protected Health Information in accordance with 45
CFR  164.528.

(j)     Business  Associate agrees to provide to Covered Entity, in the time and
manner  designated  by  Covered Entity, information collected in accordance with
Section  (2)(i)  of  this  Addendum,  to  permit  Covered Entity to respond to a
request  by  an  Individual for an accounting of disclosures of Protected Health
Information  in  accordance  with  45  CFR  164.528.


                                      -21-
<PAGE>
3.   Permitted  Uses  and  Disclosures  by  Business  Associate  General Use and
     Disclosure  Provisions

     Except as otherwise limited in this Addendum, Business Associate may use or
disclose  Protected  Health  Information  to  perform  functions, activities, or
services  for,  or  on  behalf of, Covered Entity as specified in the Agreement,
provided  that such use or disclosure would not violate the Privacy Rule if done
by  Covered  Entity.

4.     Specific  Use  and  Disclosure  Provisions

(a)     Except as otherwise limited in this Addendum, Business Associate may use
Protected  Health  Information  for  the proper management and administration of
Business  Associate  or  to  carry  out  the  legal responsibilities of Business
Associate.

(b)     Except  as  otherwise  limited  in this Addendum, Business Associate may
disclose  Protected  Health  Information  for  the  proper  management  and
administration  of Business Associate, provided that disclosures are Required By
Law, or Business Associate obtains reasonable assurances from the person to whom
the  information  is  disclosed  that  it  will  remain confidential and used or
further  disclosed  only  as Required By Law or for the purpose for which it was
disclosed  to the person (which purpose shall be consistent with the limitations
imposed  by this Addendum) and the person notifies the Business Associate of any
instances  of  which it is aware in which the confidentiality of the information
has  been  breached.

(c)     Except as otherwise limited in this Addendum, Business Associate may use
Protected  Health  Information  to  provide Data Aggregation services to Covered
Entity  as  permitted  by  42  CFR  164.504(e)(2)(i)(B).

(d)     Business  Associate  may  use  Protected  Health  Information  to report
violations  of law to appropriate Federal and State authorities, consistent with
45  CFR  164.502(j)(1).

5.   Obligations  of  Covered  Entity  Provisions  for  Covered Entity To Inform
     Business  Associate  of  Privacy  Practices  and  Restrictions

(a)     Covered  Entity shall notify Business Associate of any limitation in its
notice  of  privacy  practices  in accordance with 45 CFR 164.520, to the extent
that  such  limitation  may  affect  Business  Associate's  use or disclosure of
Protected  Health  Information.

(b)     Covered  Entity  shall  notify  Business Associate of any changes in, or
revocation  of,  permission by an Individual to use or disclose Protected Health
Information, to the extent that such changes may affect Business Associate's use
or  disclosure  of  Protected  Health  Information.

(c)     Covered Entity shall notify Business Associate of any restriction on the
use or disclosure of Protected Health Information that Covered Entity has agreed
to  in  accordance  with 45 CFR 164.522, to the extent that such restriction may
affect  Business  Associate's use or disclosure of Protected Health Information.


                                      -22-
<PAGE>
(d)     Covered  Entity  shall not request Business Associate to use or disclose
Protected  Health  Information in any manner that would not be permissible under
the Privacy Rule if done by Covered Entity, except as permitted by Sections 4(b)
and  4(c)  of  this  Addendum.

6.     Term  and  Termination

(a)     This  Addendum  shall  be  effective  as  of  the  effective date of the
Agreement,  and  shall  terminate  when  all of the Protected Health Information
provided  by  Covered  Entity  to  Business Associate, or created or received by
Business  Associate  on  behalf  of  Covered Entity, is destroyed or returned to
Covered  Entity,  or,  if it is infeasible to return or destroy Protected Health
Information,  protections  are  extended to such information, in accordance with
the  termination  provisions  in  this  Section.

(b)     Upon Covered Entity's knowledge of a material breach of this Addendum by
Business  Associate, Covered Entity shall either: (i) provide an opportunity for
Business  Associate  to  cure the breach or end the violation and terminate this
Addendum,  and  the  provision  for  performance  of  functions,  activities, or
services  for,  or  on behalf of Covered Entity under the Agreement, if Business
Associate  does  not  cure  the  breach  or  end  the  violation within the time
specified  by  Covered Entity; (ii) immediately terminate this Addendum, and the
provision  for  performance  of  functions,  activities,  or services for, or on
behalf of Covered Entity under the Agreement, if Business Associate has breached
a  material  term of this Addendum and cure is not possible; or (iii) if neither
termination  nor  cure  is  feasible,  report  the  violation  to the Secretary.

(c)     Effect  of  Termination.

      (i)   Except  as  provided  in  paragraph  (ii)  of  this  section,  upon
            termination  of  this  Addendum,  for any reason, Business Associate
            shall  return  or  destroy all Protected Health Information received
            from Covered Entity, or created or received by Business Associate on
            behalf  of  Covered  Entity,  and  shall  retain  no  copies  of the
            Protected  Health  Information.  This  provision  shall  apply  to
            Protected  Health  Information  that  is  in  the  possession  of
            subcontractors  or  agents  of  Business  Associate.

      (ii)  In  the  event  that Business Associate determines that returning or
            destroying  the Protected Health Information is infeasible, Business
            Associate  shall  provide  to  Covered  Entity  notification  of the
            conditions  that  make return or destruction infeasible. Upon mutual
            agreement that return or destruction of Protected Health Information
            is  infeasible,  Business  Associate shall extend the protections of
            this Addendum to such Protected Health Information and limit further
            uses  and  disclosures of such Protected Health Information to those
            purposes that make the return or destruction infeasible, for so long
            as  Business  Associate maintains such Protected Health Information.

7.     Miscellaneous

(a)     Regulatory  References. A reference in this Addendum to a section in the
        ----------------------
Privacy  Rule  means  the  section  as  in  effect  or  as  amended.


                                      -23-
<PAGE>
(b)     Amendment.  The  Parties  agree  to  take such action as is necessary to
        ---------
amend  this  Addendum  from  time  to time as is necessary for Covered Entity to
comply  with  the  requirements  of  the  Privacy  Rule  and  the  HIPAA.

(c)     Survival.  The  respective  rights and obligations of Business Associate
        --------
under  Section  6(c)  of  this  Addendum  shall  survive the termination of this
Addendum.

(d)     Interpretation.  The  provisions of this Addendum shall prevail over any
        --------------
provisions  in  the Agreement that may conflict with or appear inconsistent with
any  provision  of  this  Addendum.  Any  ambiguity  in  this  Addendum shall be
resolved  to  permit  Covered  Entity  to  comply  with  the  Privacy  Rule.


                                      -24-
<PAGE>
                                    EXHIBIT A
                                    ---------
                                TO ASSUMPTION AND
                              INDEMNITY REINSURANCE
                                    AGREEMENT
                                MEMBER MATERIALS



                         NOTICE OF TRANSFER (California)

Dear  Policyholder:

     This notifies you of an agreement reached between Health Net Life Insurance
Company  ("Health Net") and SafeHealth Life Insurance Company ("SafeHealth") for
the  transfer  of  your  vision  policy  from  Health  Net  to SafeHealth.  This
assumption  will be effective as of 12:01 a.m. Pacific Time, on _______________,
2003.

     SafeHealth  Life  Insurance Company is licensed to provide vision insurance
products in California. To introduce you to SafeHealth, attached is a summary of
essential  information  about  SafeHealth.

     Your  rights as a policyholder and the terms of your policy will not change
as  a  result  of the transfer. Your benefits will not change as a result of the
transfer  [although  Health  Net's  provider  network  will be replaced with the
provider  network of SafeHealth and certain providers in the Health Net provider
network  may not be available in the SafeHealth provider network]. If you accept
the  transfer,  SafeHealth  will  provide  your  coverage.  It  will have direct
responsibility  for  the  payment  of  all claims and benefits and for all other
policy  obligations.  Health  Net  will  no  longer have any obligations to you.

     You  have  the  following  options  with  regard  to the assumption of your
policy:

Option  1.     Accept the transfer of your policy from Health Net to SafeHealth.

Option  2.     Reject  the  proposed  transfer of your policy from Health Net to
               SafeHealth.  If  you  choose  this option, Health Net will remain
               your  insurer  and  you will have no rights to claim any payments
               from  SafeHealth[, although SafeHealth will be administering your
               Health  Net  vision  policy  until  your insurance terminates, as
               indicated  below].

     Health  Net  and  SafeHealth  recommend  that  you  choose  Option  1.

     If you wish to choose Option 1, simply do not return the Rejection Form and
you  will  automatically  be  deemed to have accepted this option upon _________
[date].  You  should  then attach the [enclosed] Certificate of Assumption [that
you  will  be  receiving  under  separate  cover]  to  your  policy.


                                      -25-
<PAGE>
     If  you  wish  to choose Option 2, you must complete the enclosed Rejection
Form,  sign  it  and  return  it within _____ days of this Notice. If you do not
return  the Rejection Form within that time, you will be deemed to have accepted
the  transfer of your policy. [You should also return the [enclosed] Certificate
of  Assumption.]

     In  considering  whether  to accept the assumption, please note that Health
Net  intends to cease offering vision insurance as promptly as practicable after
the  transfer of its vision business to SafeHealth.  Rejection of the assumption
may  ultimately  result in termination of your coverage.  [Please also note that
Health  Net  has  contracted  with SafeHealth to administer its vision insurance
policies  until Health Net is able to withdraw completely from the market.  As a
result,  if  you reject the assumption, although Health Net would remain legally
responsible  for its policy obligations to you, SafeHealth will be administering
your  Health  Net  vision  policy  until  your  insurance  terminates.]

     The  enclosed  Certificate  of Assumption should be attached to your policy
unless  you  choose  to  reject  the  assumption  of  your  policy.

     Your  current  and  future  premiums  should  be  paid as indicated by your
premium  notices.

     If  you  have  any  questions  about the assumption of your policy or about
SafeHealth,  please  feel  fee  to  call  SafeHealth  at (800) 962-9633. Written
inquiries may be mailed to: SafeHealth at 95 Enterprise, Suite 100, Aliso Viejo,
California  92656-2605.

                              Sincerely,



_________________________________          _________________________________

SAFEHEALTH  LIFE  INSURANCE               HEALTH  NET  LIFE  INSURANCE  COMPANY
COMPANY


                                      -26-
<PAGE>
                             NOTICE TO GROUP MEMBERS



     Health  Net Life Insurance Company ("Health Net") is presently implementing
a  plan that is intended to ensure uninterrupted coverage for our customers.  As
part  of  the  plan,  we  have  entered  into  an agreement with SafeHealth Life
Insurance Company ("SafeHealth"), that will assume Health Net's vision insurance
business.  SafeHealth  will  replace  Health  Net  under  your  vision insurance
coverage  with  Health  Net  effective  ________________,  2003.

     Your  rights  as  an  insured and the terms of your certificate of coverage
will not change as a result of the transfer, except as set forth in the enclosed
Certificate  of  Assumption.  Your  benefits  will not change as a result of the
transfer.

     The  enclosed  Certificate  of  Assumption  should  be  attached  to  your
certificate  of  coverage.

     Assumption  of  your  vision  insurance  coverage  will  be effective as of
____________,  2003, at 12:01 a.m. Pacific Time. If you have any questions about
the  assumption  of  your  contract or about SafeHealth, please feel fee to call
SafeHealth  at (800) 962-9633. Written inquiries may be mailed to: SafeHealth at
95  Enterprise,  Suite  100,  Aliso  Viejo,  California  92656-2605.

                              Sincerely,

_________________________________          _________________________________

SAFEHEALTH  LIFE  INSURANCE                HEALTH  NET  LIFE  INSURANCE  COMPANY
COMPANY


                                      -27-
<PAGE>
                            CERTIFICATE OF ASSUMPTION

                                                                    [Individual]

     You  are  hereby  notified  that  SafeHealth  Life  Insurance  Company has,
effective  as  of  _________,  2003  (the "Effective Time"), assumed all rights,
liabilities,  and  obligations  of  Health Net Life Insurance Company under your
vision  insurance  policy  with  Health  Net  Life  Insurance  Company.

     From  and  after  the  Effective  Time,  all  references  in your policy or
certificate  to  "Health  Net  Life  Insurance  Company"  are  hereby changed to
"SafeHealth  Life  Insurance Company." Except for the substitution of SafeHealth
for Health Net as your insurer, your rights as a insured will not be affected by
the  change  in  companies,  and  the  terms  and  conditions  of your policy or
certificate  will  not  be  changed  by  reason  of  the  assumption.

     All  correspondence  and  inquiries  concerning your policy or certificate,
including  premium  payments,  policy  or  certificate  changes,  and notices of
claims,  should  be  submitted  to:

     SafeHealth  Life  Insurance  Company
     95  Enterprise,  Suite  100
     Aliso  Viejo,  California  92656-2605

This  Certificate  of  Assumption, as of the Effective Time, forms a part of and
should be attached to the policy or certificate issued to you by Health Net Life
Insurance  Company.

     IN  WITNESS  WHEREOF,  SafeHealth  Life  Insurance  Company has caused this
Certificate  of  Assumption  to  be  duly  signed  and  issued.



                                            ____________________________________
                                            SafeHealth  Life  Insurance  Company


                                      -28-
<PAGE>
                        NOTICE OF REJECTION OF ASSUMPTION

                                  [California]

To:  HEALTH  NET  LIFE  INSURANCE  COMPANY

     REJECTION
     ---------

     I  have  reviewed  the  Certificate  of  Assumption whereby SafeHealth Life
Insurance  Company  would assume all of the rights, liabilities, and obligations
of  Health  Net  Life  Insurance  Company  under  my  vision insurance policy or
certificate previously issued by Health Net Life Insurance Company.  I have also
reviewed  the  Notice  of  Transfer  describing  the  transaction.

     I  hereby  notify you that I REJECT the proposed assumption of my policy or
                                --------
certificate  and  substitution  of SafeHealth Life Insurance Company thereunder,
and  I  wish  to  retain my policy or certificate with Health Net Life Insurance
Company.  I  UNDERSTAND  THAT  HEALTH  NET  LIFE  INSURANCE  COMPANY  INTENDS TO
DISCONTINUE  ITS  VISION INSURANCE BUSINESS AND THAT REJECTION OF THE ASSUMPTION
MAY  ULTIMATELY  RESULT  IN  TERMINATION  OF  MY  COVERAGE.

DATE:


______________________________________
Policyholder  Signature


______________________________________
Print  or  Type  Name


______________________________________
ID  #  from  the  Health  Net  Life  Insurance  Company
Identification  Card  Issued  to  Policy  Holder


                                      -29-
<PAGE>
                            CERTIFICATE OF ASSUMPTION

                                                                         [Group]

     You  are  hereby  notified  that  SafeHealth  Life  Insurance  Company has,
effective  as of _____________, 2003 (the "Effective Time"), assumed all rights,
liabilities,  and  obligations  of  Health Net Life Insurance Company under your
vision  insurance  policy  with  Health  Net  Life  Insurance  Company.

     From and after the Effective Time, all references in your policy to "Health
Net  Life  Insurance  Company"  are hereby changed to "SafeHealth Life Insurance
Company."

     All  correspondence and inquiries concerning your policy, including premium
payments,  policy  changes,  and  notices  of  claims,  should  be submitted to:

     SafeHealth  Life  Insurance  Company
     95  Enterprise,  Suite  100
     Aliso  Viejo,  California  92656-2605

     Except  as  described  in  this Certificate of Assumption, your rights as a
policy holder will not be affected by the change in companies, and the terms and
conditions  of your policy will not be changed by reason of the assumption. This
Certificate  of Assumption, as of the Effective Time, forms a part of and should
be  attached  to  the  vision  insurance policy issued to you by Health Net Life
Insurance  Company. Copies of this Certificate of Assumption must be distributed
to  covered  group members under the policy for attachment to their certificates
of  coverage.

     IN  WITNESS  WHEREOF, Health Net Life Insurance Company and SafeHealth Life
Insurance  Company  have caused this Certificate of Assumption to be duly signed
and  issued.



______________________________________
Health  Net  Life  Insurance  Company



______________________________________
SafeHealth  Life  Insurance  Company






                                      -30-
<PAGE>