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                                                                   EXHIBIT 10.6a


                             EMPLOYMENT AGREEMENT
                             --------------------
                                        

     This Employment Agreement is made on August 16, 1997 between ANCHOR PACIFIC
UNDERWRITERS, INC. ("Employer"), and JAMES R. DUNATHAN ("Executive").

                                   Recitals
                                   --------

     A.   Executive is and has been employed by Employer for more than five (5)
years as its President and Chief Executive Officer. Through such experience, he
has acquired outstanding and special skills and abilities and an extensive
background in and knowledge of Employer's business and the industry in which it
is engaged.

     B.   Employer desires assurance of the continued association and services
of Executive in order to retain his experience, skills, abilities, background,
and knowledge, and is therefore willing to engage his services on the terms and
conditions set forth below.

     C.   Executive desires to continue in the employ of Employer and is willing
to do so on those terms and conditions.

     NOW, THEREFORE, in consideration of the above recitals and of the mutual
promises and conditions in this Agreement, it is agreed as follows:

                             Terms and Conditions
                             --------------------

     1.   Duties and Authority. Employer shall employ Executive as President and
          --------------------                                                  
Chief Executive Officer of Employer. Executive's position as President and Chief
Executive Officer is to remain in effect until changes are deemed necessary and
approved, by action of the Employer's Board of Directors.

     2.   Outside Business Activities. During his employment, Executive shall
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devote his full energies, interests, abilities and productive time to the
performance of this Agreement and shall not, without Employer's prior written
consent, render to other services of any kind for compensation, or engage in any
other business activity that would materially interfere with the performance of
his duties under this Agreement; provided, however, that Executive may continue
to serve as an officer and director of Harden & Company Insurance Services,
Inc., Putnam, Knudsen & Wieking, Inc. and other direct and indirect subsidiaries
of Employer and to receive compensation for those services from Anchor Pacific
Underwriters, Inc. and/or such subsidiaries.

     3.   Covenant Not to Compete During Employment Term. During the employment
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term, Executive shall not, directly or indirectly, whether as a partner,
employee, creditor, shareholder or otherwise, promote, participate in or engage
in any activity or other business competitive with Employer's business.

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     4.   Term of Employment. Subject to earlier termination as provided in this
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Agreement. Executive shall be employed for a term beginning August 1, 1997, and
ending July 30, 2002. Executive's compensation and benefits described under
Section 6, below, shall begin on August 1,1997 and shall be prorated as
necessary.

     5.   Place of Employment. Unless the parties agree otherwise in writing,
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during the employment term, Executive shall perform the services he is required
to perform under this Agreement at Employer's offices, located at 1800 Sutter
Street, Concord, California; provided, however, that Employer may from time to
time require Executive to travel temporarily to other locations on Employer's
business.

     6.   Executive's Compensation and Benefits.
          ------------------------------------- 

          (a)  Basic Salary. Employer shall pay a basic salary to Executive at a
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rate of $140,000 per year, payable on a semi-monthly basis, effective August
1, 1997. The basic salary payable to Executive under this Section 6(a) shall be
subject to increases based upon the personal performance of Executive and the
business performance of Employer as determined by periodic reviews and
evaluations to be conducted at least annually.

          (b)  Incentive Compensation. In addition to the basic salary provided
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for in Section 6(a) above, Employer shall pay to Executive as incentive
compensation a bonus based on Employer's financial performance. The bonus shall
be equal to 4% of Employer's operating results and shall be calculated semi-
annually for the periods ended June 30 and December 31, respectively. The
Employer's operating results shall be based on an EBITDA (earnings before income
taxes, depreciation, and amortization) basis. The bonus shall be paid to
Executive within 30 days of the end of each semi-annual period. To the extent
Employer's operating results for a particular semi-annual period are later
adjusted, any over-payment or under-payment of Executive's bonus will be
adjusted in the next semi-annual period (or, if necessary, such additional semi-
annual periods until the discrepancy is resolved).

          (c)  Stock Options. In addition to the basic salary and incentive
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compensation, and as recognition of the contribution that Executive has made to
Employer, Employer shall grant to Executive additional stock options to acquire
no less than 50,000 shares of Employer's common stock pursuant to the Anchor
Pacific Underwriters, Inc. 1994 Stock Option Plan (the "Plan"). Executive's
Stock Option grant under the Plan shall be priced at 100% of the market price of
Employer's common stock on the date of grant. Executive's stock option grant
under the Plan shall be immediately vested for exercise from and after the date
of grant and shall be for a ten (10) year term.

          (d)  Additional Benefits. During the employment term, Executive shall
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be entitled to receive all other benefits of employment generally available to
Employer's other executive and managerial employees when and as he becomes
eligible for them, including group health benefits, life insurance (at three
times salary) and six (6) weeks

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of annual paid vacation. Vacation allowance to increase by one (1) week every
three (3) years, beginning with the effective date of this Agreement.
Executive's vacation benefits shall be subject to Employer's policies on
limitations on accruing vacation time.

          (e)  Expenses. During the employment term, Employer shall reimburse
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Executive for reasonable out-of-pocket expenses incurred in relation to
Employer's business, including all travel expenses, food and lodging while away
from home, subject to documentation to be submitted monthly and such other
policies as Employer may from time to time reasonably establish for its
employees.

          (f)  Automobile Allowance. During the employment term, Employer shall
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furnish to Executive an automobile allowance or shall make lease payments on a
car leased in the name of Executive.

     7.   Employer's Ownership of Intangibles.  All processes, inventions,
          -----------------------------------                            
patents, copyrights, trademarks and other intangible rights that may be
conceived or developed by Executive, either alone or with others, during the
term of Executive's employment, whether or not conceived or developed during
Executive's working hours, and with respect to which the equipment, supplies,
facilities or trade secret information of Employer was used, or that relate to
the business of Employer or to Employer's actual or demonstrably anticipated
research and development, or that result from any work performed by Executive
for Employer, shall be the sole property of Employer. Executive shall disclose
to Employer all inventions conceived during the term of employment, whether or
not the property of Employer under the terms of the preceding sentence, provided
that such disclosure shall be received by Employer in confidence. Executive
shall execute all documents, including patent applications and assignments,
required by Employer to establish Employer's rights under this Section.

     8.   Indemnification by Employer.  Employer shall, to the maximum extent
          ---------------------------                                       
permitted by law, indemnify and hold Executive harmless against expenses,
including reasonable attorneys' fees, judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with a proceeding arising
by reason of Executive's employment by Employer or any of its direct or indirect
subsidiaries. Employer shall advance to Executive any expenses incurred in
defending such proceeding to the maximum extent permitted by law.

     9.   Termination of Agreement.
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          (a)  Termination for Cause.  Employer may terminate this Agreement at
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any time without notice if Executive commits any material act of dishonesty,
discloses confidential information, is guilty of gross carelessness or
misconduct, or unjustifiably neglects his duties under this Agreement. In the
event Executive is terminated for cause under this Section 9(a), he shall be
paid his basic salary due under Section 6(a) through the date of his
termination, all rights under Section 6(b) shall be lost and unvested stock
options granted under Section 6(c) shall be treated in the manner provided for
in the Plan.

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          (b)  Termination on Resignation.  Executive may terminate this 
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Agreement by giving Employer six (6) months' prior written notice of
resignation. In the event Executive resigns under this Section 9(b), he shall be
entitled to receive six (6) months' basic salary due under Section 6(a), any
bonus due under Section 6(b) will be prorated through the date of his
resignation and unvested stock options granted under Section 6(c) shall be
treated in the manner provided for in the Plan.

          (c)  Termination on Death.  If Executive dies during the initial term 
               --------------------   
or during any renewal terms of this Agreement, this Agreement shall be
terminated on the last day of the calendar month of his death.  In the event
Executive dies, he or his estate shall be entitled to the basic salary due under
Section 6(a) through the end of the month in which his death occurs, any bonus
due under Section 6(b) shall be prorated through the end of the month in which
his death occurs, and any unvested stock options granted under Section 6(c)
shall be treated in the manner provided for in the Plan.

     10.  Effect of Combination or Dissolution. This Agreement shall not be
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terminated by Employer's voluntary or involuntary dissolution or by any merger
in which Employer is not the surviving or resulting corporation, or on any
transfer of all or substantially all of Employer's assets. In the event of any
such merger or transfer of assets, the provisions of this Agreement shall be
binding on and inure to the benefit of the surviving business entity or the
business entity to which such assets shall be transferred.

     11.  Disclosure of Confidential Information and Trade Secrets Prohibited.
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In the course of his employment, Executive may have access to confidential
information and trade secrets relating to Employer's business. Except as
required in the course of this employment by Employer, Executive will not,
without Employer's prior consent, either during his employment by Employer or
for three (3) years after termination of this employment, directly or
indirectly, disclose to any third person any such confidential information or
trade secrets.

     12.  Disclosure of Customer Information and Solicitation of Other Employees
          ----------------------------------------------------------------------
Prohibited. In the course of his employment, Executive will have access to
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confidential records and data pertaining to Employer's customers and to the
relationship between these customers and Employer's employees. Such information
is considered secret and is disclosed to Executive in confidence. During his
employment by Employer and for three (3) years after termination of that
employment, Executive shall not, directly or indirectly, disclose or use any
such information, except as required in the course of his employment by
Employer. In addition, for three (3) years after termination of his employment,
Executive shall not induce or attempt to induce any employee to discontinue
employment with Employer for the purpose of employment with any competitor of
Employer.

     13.  Payment Upon Termination or Permanent Disability. Notwithstanding any
          ------------------------------------------------                     
provision of this Agreement, if Employer terminates this employment agreement
for any reason other than cause or Executive becomes permanently disabled or
unable to perform his duties as President and Chief Executive Officer, Employer
shall pay

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Executive (i) an amount equal to twelve (12) months basic salary due under
Section 6(a), at Executive's then current rate of compensation; (ii) any
accrued, but unpaid, bonus due under Section 6(b); and (iii) for a period of
twelve (12) months, all benefits, including the automobile allowance described
in Section 6(f), to which Executive would otherwise be entitled had the
Agreement not been so terminated. If Executive is permanently disabled, any
obligations under this Section 13 shall be reduced, on a dollar-for-dollar
basis, by any disability insurance payments made to Executive during the twelve
(12) month period.

     14.  Miscellaneous Provisions.
          ------------------------ 

          (a)  Integration. This Agreement contains the entire agreement between
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the parties and supersedes all prior oral and written agreements,
understandings, commitments and practices, between the parties, including all
prior employment agreements, whether or not fully performed by Executive before
the date of this Agreement. No amendments to this Agreement may be made except
by mutual consent and in writing signed by both parties.

          (b)  Choice of Law.  The formation, construction, and performance of
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this Agreement shall be construed in accordance with the laws of the State of
California.

          (c)  Notices.  Any notice to Employer required or permitted under this
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Agreement shall be given in writing by Executive, either by personal service or
by registered or certified mail, postage prepaid, addressed to Employer at its
then principal place of business. Any such notice to Executive shall be given in
a like manner and, if mailed, shall be addressed to Executive at his home
address then shown in Employer's files. For the purpose of determining
compliance with any time limit in this Agreement, a notice shall be deemed to
have been duly given (i) on the date of service, if served personally on the
party to whom notice is to be given, or (ii) on the fifth business day after
mailing, if mailed to the party to whom the notice is to be given in the manner
provided in this Section.

          (d)  Remedies.  If either party obtains a judgment against the other 
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by reason of breach of this Agreement, a reasonable attorneys' fee as fixed by
the court shall be included in such judgment.

          (e)  Severability.  If any provision of this Agreement is held invalid
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or unenforceable, the remainder of this Agreement shall nevertheless remain in
full force and effect. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in any other circumstances.

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          Executed by the parties as of the date and year first above written.


                                  "Employer"

                                  ANCHOR PACIFIC UNDERWRITERS, INC.


                                  By:      /s/ Audie J. Dudum
                                     --------------------------------
                                         Audie J. Dudum, Chairman



                                  "Executive"

                                  /s/ James R. Dunathan
                                  ----------------------------------
                                  James R. Dunathan

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