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                                 EMPLOYMENT AGREEMENT

    This Employee Agreement, made as of FEBRUARY 17, 1997, by and between
SUPERIOR NATIONAL INSURANCE GROUP, INC. ("Superior National"), a California
corporation, and ARNOLD J. SENTER ("Employee"), an individual, residing at 35
Buckskin Road, Bell Canyon, CA. 91307.


                                 W I T N E S S E T H:

    WHEREAS, Superior National and Employee wish to establish the terms and
conditions that shall apply to Employee's employment with Superior National;

    NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:

    1.   EMPLOYMENT. Superior National hereby employs Employee, and Employee
hereby accepts this employment as Executive Vice-President and Chief Operating
OFFICER of Superior National (reference herein to Superior National shall also
mean each of the subsidiary companies of Superior National) and in conformance
with the terms and conditions set forth herein agrees to exercise and perform
faithfully and to the best of Employee's ability and experience on behalf of
Superior National the powers and duties customarily exercised and performed by a
Chief Operating Officer and Executive Vice-President of an insurance group.
Employee shall devote Employee's full time efforts to the business affairs of
Superior National.  The terms of the Employment Term Sheet attached hereto as
Addendum A are made a part hereof.

    2.   LOCATION.  Employee's services pursuant to this Agreement shall be
performed at Superior National's offices in Los Angeles County, California and
such other locations as Superior National's offices may be located.  Employee
shall not be required to relocate outside of Southern California in order to
perform the services hereunder, without the Employee's consent, except for
travel reasonably required in the performance of Employee's duties hereunder.

    3.   TERM OF EMPLOYMENT.  Subject to section 7 hereof, Employer hereby
employs Employee, and Employee agrees to be so employed for a term of three
years, commencing on February 17, 1997, and renewing automatically for one-year
increments unless notice of non-renewal is given by Employer at least sixty (60)
days prior to the end of the then-current term of this Agreement.

    4.   COMPENSATION AND OTHER BENEFITS.   As compensation in full for
services to be rendered by Employee hereunder, Superior National shall pay and
Employee shall accept the following:

         4.1  SALARY.  From the date of this Agreement until termination of
employment, Superior National shall pay Employee a salary determined by the
Board of Directors of  Superior National, payable in accordance with Superior
National's payroll policies.  Employee's starting salary shall be set forth at
Addendum "A".


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         4.2  BENEFITS.  In conformance with Superior National's standard
employment practices for senior executives, Employee shall be entitled to such
vacation, medical, life insurance, accident, disability and dental benefits and
auto allowance, as shall be authorized from time to time by Superior National's
Board of  Directors.

         4.3  BONUSES.  During the term of this Agreement Employee shall be
entitled to such discretionary bonuses or incentive compensation as may be
authorized from time to time by Superior National's Board of Directors.

         4.4  OPTIONS.  Employee shall initially be granted a stock option to
purchase 25,000 Shares of Superior National Insurance Group, Inc. common stock,
no par value, at a purchase price of $11.38 per share pursuant to the form of
Stock Option Agreement set forth hereto as Addendum "B".

    5.   EXPENSES.  In addition to the salary and benefits provided hereunder,
Superior National shall pay for or reimburse Employee for those expenses
reasonably incurred in the course of Employee's activities for Superior
National, including transportation, living and related expenses incurred by
Employee during travel on behalf of Superior National away from Superior
National's principal office and for other business and entertainment expenses
reasonably incurred by Employee in connection with the business of Superior
National.

    6.   TERMINATION BY EMPLOYEE.

         6.1  VOLUNTARY TERMINATION.  In the event Employee voluntarily resigns
or quits employment with Superior National, then, without limitation of Superior
National's other legal or equitable remedies, Superior National shall have no
further obligation hereunder and no further payments of any kind shall be
payable by Superior National to Employee under this Agreement; provided,
however, Employee shall be entitled to receive payments, if any, under any
existing vacation pay, retirement and other benefit plans and policies then
maintained by Superior National and under which Employee may, at such time and
under the separate terms of such plans and policies, be eligible to receive
payment or other benefits.

    7.   TERMINATION BY SUPERIOR NATIONAL.

         7.1  TERMINATION FOR CAUSE.  In the event Superior National terminates
Employee's employment for cause ("For Cause"), it shall have no further
obligation to compensate Employee other than to pay for services rendered
through the date of such termination For Cause.  For the purposes of this
Agreement, termination For Cause shall be limited to the following:

              (a)  Employee is convicted of, or pleads guilty or nolo
centendere to, any felony or any crime involving fraud, dishonesty or moral
turpitude:


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              (b)  Employee unlawfully misappropriates funds or other assets of
Superior National or its subsidiaries;

              (c)  Employee becomes unable, due to physical or mental illness
or injury to carry on the full-time duties and services required to be performed
by Employee for six consecutive months or for a total of six months during any
twelve-month period;

              (d)  Employee fails or refuses to comply with a reasonable
directive of Superior National's Board of Directors that is consistent with the
terms of this Agreement and with California law (as applicable), or Employee
materially neglects Employee's duties, is grossly negligent in the performance
of those duties, engages in gross misconduct materially injurious to Superior
National or Employee breaches this Agreement;

              (e)  Employee engages or participates, directly or indirectly,
without the prior written consent of Superior National's Board of Directors, in
any business that is in competition in any manner with the businesses of
Superior National whether as an employee, agent, employer, principal, partner,
shareholder (except as a shareholder of any outstanding class of securities of a
corporation that has a class of securities traded on a national securities
exchange or in the over-the-counter market), officer, director or any other
individual or representative capacity whatsoever;

              (f)  Employee's death;

              (g)  A material conflict of interest between Superior National
and Employee.

         For the purpose of effectuating a termination For Cause under
subsection 7.1(e), Superior National shall give Employee thirty days (30) prior
written notice setting forth the alleged basis of the Cause and the fact that
Employee shall have thirty (30) days from the date of such notice to cure such
Cause.  If Employee fails to cure such Cause within 30 days of the date of such
notice, Employee's employment shall be automatically terminated on the 31st day
following the date of such notice.

         7.2  TERMINATION OTHER THAN FOR CAUSE.

              (a)  Any termination of Employee's employment under this
Agreement by Superior National other than For Cause (as defined in Paragraph
7.1) shall be deemed to be a termination without cause ("Without Cause").
Superior National may terminate Employee's employment under this Agreement
Without Cause at any time.  In the event that Superior National terminates
Employee's employment Without Cause, then from the effective date of this
termination and continuing for the then remaining full term of this Agreement
provided for in section 3, Superior National will pay Employee a termination
benefit equal to One Hundred Percent (100%) of Employee's fixed monthly salary
to which Employee was entitled


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in the month in which such termination occurred (the termination benefit).  
During the period of payment of monthly termination benefits Employee shall 
not be deemed to be employed by Superior National, however Employee shall be 
entitled to also receive, under the same terms and conditions, those medical 
and dental insurance benefits as Superior National may, from time to time, 
provide to its regular full-time senior executives.  Employee shall be 
responsible for "employee premium contributions" for such medical and dental 
coverages on the same basis that Superior National's full-time senior 
executives are assessed for individual and/or dependent coverages, and such 
contributions will be deducted from sums due Employee hereunder.  Employee 
will have the opportunity to continue all coverages which Employee is 
entitled to continue under COBRA legislation within the time periods provided 
under COBRA. Information regarding COBRA rights will be mailed to Employee at 
the appropriate time.  Employee will also be entitled to any conversion 
rights provided by the terms of the individual coverage plans.

              (b)  Any termination of Employee or significant diminution of
Employee's duties and responsibilities in connection with any reorganization,
merger, or consolidation of Superior National, a result of which Superior
National does not survive or in which the outstanding voting stock of Superior
National prior to such event represents less than Fifty Percent (50%) of the
outstanding voting stock of the surviving entity (collectively, "Change of
Control"), shall be deemed a termination Without Cause.  In the event of a
termination Without Cause occurring as a result of a Change of Control, this
Agreement shall be deemed to have a three-year remaining term and Superior
National or the surviving entity will pay Employee the monthly termination
benefit in accordance with Subparagraph 7.2(a) above.

         7.3  During any period (prior to a termination) for which Employee is
unable to carry on the full-time duties and services required of Employee due to
physical or mental illness or injury, salary and benefits, as of the beginning
of the period of incapacity, payable in accordance with Superior National's
payroll policies.

         7.4  Employee shall be entitled to a pro rata participation in any
bonuses or incentive compensation determined pursuant to section 4.3 for both
the year prior to which a termination under sections 7.1(c) or (f) or 7.2 should
occur and for the year during which such termination occurs.

    8.   NON-HIRING OF SUPERIOR NATIONAL PERSONNEL.  As long as Superior
National is making payments to Employee under the terms of this Agreement and
for a period twelve months subsequent to the termination of any such payments,
Employee will not hire or cause any person employed by Superior National as of
Employee's termination date or during the six-month period prior to such
termination date to be hired by another employer competing in any manner with
the businesses of Superior National.  Recognizing the


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irreparable nature of the injury that could be caused by Employee's violation of
any provision of this Paragraph 8, Employee agrees that in addition to and
without limitation of any rights which Superior National may have hereunder, any
such violation shall be the proper subject matter for immediate injunctive
relief and entitle Superior National to terminate this Agreement whereupon no
further amounts shall be payable by Superior National to Employee under this
Agreement.

    9.   CONFIDENTIAL INFORMATION.  Employee shall not, except as may be
required by law, use any Confidential Information for any purpose other than on
behalf of Superior National and to not use any Confidential Information for any
purpose adverse to Superior National.  For purposes of this Agreement, the term
Confidential Information shall refer to certain confidential information
developed by Superior National as a necessary function of the conduct of its
businesses including, but not limited to, the identity, lists and/or
descriptions of producers or policyholders, financial data, projections, plans
and reports developed for management purposes and not otherwise disseminated,
internal policies and procedures, management systems and procedures, employee
records and information, and other information that may be developed from time
to time by Superior National and be designated as confidential.  Such
Confidential Information is unique and has been developed and effectively
applied by Superior National in the conduct of its businesses and constitutes a
valuable and essential asset of the businesses of Superior National.  Employee
agrees to protect the confidentiality of and to take all appropriate steps to
prevent unauthorized disclosure or use of the Confidential Information, and
otherwise prevent the Confidential Information from entering the public domain
or the possession by unauthorized persons, with the same degree of reasonable
and appropriate care as Employee uses with respect to Employee's own
confidential information.

         9.1  All documents or media containing the Confidential Information
are, and at all times shall remain, the sole property of Superior National.

         9.2  Without diminishing or waiving any rights of Superior National
otherwise available under law, the term of Employee's covenants of
non-disclosure set forth in this section 9 shall be continuing and shall survive
the termination of this Agreement.  Employee's covenants not to use or disclose
the Confidential Information shall terminate as to any information that is or
becomes public knowledge through no fault of Employee and may be utilized by the
public without obligation to Superior National.  Termination of Employee's
obligations pursuant to the previous sentence shall have no effect on Superior
National's rights to enforce the non-disclosure obligations with respect to
conduct occurring before the information became public knowledge.

    10.  TERMINATION OF PAYMENTS.  No further termination benefits shall be
payable to Employee under the terms of this Agreement from and after any time
when Employee commences, without the prior 


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written consent of Superior National's Board of Directors, any activity 
described in Subparagraph 7.1(e) of this Agreement.

    11.  NON-COMPETITION.    During such employment and for a period of two (2)
years thereafter, employee shall not at any time, directly or indirectly, use or
disclose to any persons, except Superior National and its duly authorized
officers and employees entitled thereto, employee's customer, broker and agent
lists, credit classifications, records, statistics, or other information
acquired by employee in the course of his employment in any capacity whatsoever,
nor in any manner, directly or indirectly, aid or be party to any acts the
effect of which would tend to divert, diminish, or prejudice the good will or
business of Superior National.


    12.  REMEDIES OF SUPERIOR NATIONAL.  Employee recognizes and agrees that
the duties and services to be rendered by Employee hereunder are of a special,
unique and intellectual character and that Employee's failure to perform those
duties and services will cause irreparable and immeasurable harm to Superior
National.  Employee also recognizes and agrees that the restrictions on
Employee's activities contained in this Agreement are required for the
reasonable protection of Superior National's business.  Superior National will
be entitled, if it so elects, to institute and prosecute proceedings at law or
in equity or obtain damages with respect to such breach or to enforce the
specific performance of this Agreement by Employee or to enjoin Employee from
engaging in any activity in violation hereof.

    13.  NOTICES.  All notices which Superior National is required or permitted
to give to Employee shall be given by first class mail addressed to Employee at
Employee's residence indicated above or such other place as Employee may, from,
time to time, designate in writing to Superior National.  All notices which
Employee is required to give to Superior National hereunder will be given in
duplicate by registered mail, one copy addressed to Superior National's Board of
Directors and the other to Superior National's Corporate Secretary, at Superior
National's principal place of business.

    14.  ENTIRE AGREEMENT; AMENDMENT.  This Agreement supersedes and terminates
any and all prior understandings, agreements or contracts, whether oral or in
writing, if any, entered into between Employee and Superior National as of the
effective date of this Agreement with respect to all matters covered hereunder.
This Agreement constitutes the entire agreement between the parties pertaining
to the subject matters hereof.  No representative of Superior National is
authorized to make to any person any representation, warranty or promise with
respect to the subject matters hereof not contained or referred to herein.  No
change, termination, waiver or other modification of any provision hereof shall
be binding on Superior National or Employee unless in writing and entered into
between Employee and the Board of Directors of Superior National.

    15.  CALIFORNIA LAW; SEVERABILITY.  This Agreement shall be governed and
construed in accordance with the laws of the State of California.  In the event
any provision of this Agreement or the application of any provision to any
signatory hereto shall be held by a court of competent jurisdiction to the
contrary to any applicable California or Federal law, the remaining provisions
of this Agreement shall remain in full force and effect.  In the event of a
declaratory, injunctive or enforcement action or in the event of any other
litigation between Employee or Superior National arising under or with respect
to this Agreement and not found subject to the terms of section 15 following
shall be conducted in a State or Federal court sitting in Los Angeles County,
California.


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    16.  ARBITRATION.  Except for the rights of the parties to apply to a court
of competent jurisdiction for a Temporary Restraining Order to preserve the
status quo or prevent irreparable harm pending the selection and confirmation of
any arbitrator, any disputes under this Agreement involving its interpretation
or the obligations of a party hereto, and any other disputes whatsoever between
Employee and Superior National, shall be determined by binding arbitration in
accordance with the commercial arbitration  rules of the American Arbitration
Association, in the County of Los Angeles, State of California.  Arbitration
shall be conducted by one (1) impartial arbitrator by mutual agreement.  If
Superior National and Employee are unable to agree on the arbitrator within
thirty (30) days of first demand for arbitration, Employee and Superior National
shall each select two (2) arbitrators from a qualified list of available
arbitrators prepared by the Los Angeles County Bar Association.  The four names
shall be placed on identical pieces of paper and placed in a "blind" lottery
with the names not visible, from which "blind" lottery Employee shall select one
paper.  The arbitrator selected shall then be the arbitrator.  The arbitrator
shall have the authority to permit discovery, to the extent deemed appropriate
by the arbitrator, upon request of a party.  The arbitrator shall have no power
or authority to add to or detract from the agreements of the parties or to award
other than compensatory damages.  The cost of the arbitration, including the
expenses of investigating and attorneys' fees, shall be borne by the party not
prevailing on the merits; or, if appropriate, shared by the parties based on
their culpability on the merits; or, if the foregoing are not appropriate, then
borne equally.  The arbitrator shall have the authority to grant injunctive
relief in a form substantially similar to that which would otherwise be granted
by a court of law.  The resulting arbitration award may be enforced, or
injunctive relief may be sought, in the Superior Court of the County of Los
Angeles, California, which the parties hereby stipulate is a court of competent
jurisdiction.

    17.  WAIVER.  Waiver by Superior National or Employee of any provision or
any rights under any provision of this Agreement in any instance shall not be
taken as a waiver of any subsequent breach of such provision or as a continuing
waiver of the provision itself.

    18.  ASSIGNMENT.  The rights of Employee hereto shall inure to the benefit
of and be binding upon the successors and assigns of Superior National
consistent with the terms of this Agreement and regardless of the form in which
such succession or assignment takes place.  This Agreement and the rights,
interest and benefits hereunder are personal to Employee and shall not be
assigned, transferred, pledged, or hypothecated in any way by Employee, and
shall not be subject to execution, attachment or similar process.  Any attempted
assignment, transfer, pledge, or hypothecation, or the levy of any execution,
attachment of similar process thereon, shall be null and void and without
effect.


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    19.  ATTORNEYS' FEES, COSTS.  If either party shall bring an action against
the other party hereto by reason of a breach of any covenant, warranty,
representation or condition herein, or otherwise arising out of this Agreement,
whether for declaratory or other relief, the prevailing party in such suit shall
be entitled to such party's costs of suit and attorneys' fees, which shall be
payable whether or not such action is prosecuted to judgment.  Costs and
attorneys fees resulting from any arbitration shall be governed by section 15,
hereof.

    20.  PARAGRAPH HEADINGS.  Paragraph headings are for the purpose of
convenience only and shall not be considered to be any part of this Agreement.

    21.  COUNTERPARTS.  More than one counterpart of this Agreement may be
executed by the parities hereto, and each counterpart shall be deemed an
original, and all counterparts together shall be one agreement.

    IN WITNESS WHEREOF, the parties hereto have executed this Agreement to take
effect the date first stated above.

EMPLOYEE



-----------------------------------------------
         Arnold J. Senter

Date:
     ------------------------------------------


SUPERIOR NATIONAL INSURANCE GROUP, INC.


By: William L. Gentz
   --------------------------------------------

Title: President
      -----------------------------------------

Date:
     ------------------------------------------





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                                                                    ADDENDUM "A"



                       EMPLOYMENT TERM SHEET - ARNOLD J. SENTER



Position:          Executive Vice-President and Chief Operating Officer
                   Superior National Insurance Group, Inc. and subsidiaries


Salary:            Effective February 17, 1997, $200,000 annually


Stock Option:      25,000 share at $11.38


Car Allowance:     $1,000 per month


Health Insurances: On same terms, conditions and coverages of other
                   Superior National senior executives


Life Insurance:    As to be agreed


Expenses:          Usual and customary