Superior National Announces Agreement With California Department of Insurance.

Business Editors

OAK PARK, Calif.--(BUSINESS WIRE)--Sept. 11, 2000

Superior National Insurance Group, Inc. (SNTL or Superior National) announced that on Friday, September 8, 2000, it reached an agreement with the California Department of Insurance ("CDI") and certain affiliates of the Kemper Insurance Group ("Kemper") under which the conservation of SNTL's insurance companies and SNTL's reorganization efforts will continue simultaneously. With the formation of this agreement the orderly transition of SNTL's prior insurance underwriting operations to Kemper and the CDI was accomplished. In addition, Superior National's insurance servicing operations, conducted through SN Insurance Services, Inc. ("SNIS") and SN Insurance Administrators, Inc. ("SNIA"), were separated from Superior National's prior underwriting operations so that SNIS and SNIA can continue their operations under SNTL control.

Under the agreement, SNIS and SNIA remain approved and licensed entities to conduct their historic managing agency and third party administrator business. The agreement sets forth protocols for the retention of services of certain Superior National employees, access to or ownership of SNTL's computer systems and domain name, and relinquishment of certain rights and assets via releases and indemnities. The agreement also resolved certain inter-company accounting issues, as a result of which SNIS remitted $24.0 million to the CDI upon execution of the agreement, and will remit at least $30.6 million of additional funds to the CDI upon approval of the agreement by the several courts having jurisdiction over Superior National and its former insurance subsidiaries. The CDI also agreed to a zero cost commutation of a longstanding reinsurance contract between a conserved insurance company and a Bermuda-domiciled affiliate of SNTL.

J. Chris Seaman, Superior National President and Chief Executive Officer, stated, "Superior National is pleased to have been able to assist the Conservation and Liquidation Office of the California Department of Insurance in its model rehabilitation of Superior National's former insurance subsidiaries. The disputes sometimes encountered in complex situations such as this were ultimately preempted by the good will of all parties involved."

Superior National Insurance Group, Inc. is the parent company of SN Insurance Services, Inc. and SN Insurance Administrators, Inc., workers' compensation insurance servicing organizations operating throughout the United States. Superior National previously announced that it sought Chapter 11 protection and that the California Department of Insurance had seized the assets and operations of Superior National's five California domiciled insurance subsidiaries. Superior National Insurance also previously announced that it filed a lawsuit alleging that Foundation Health Corporation, Foundation Health Systems, Inc., and Milliman & Robertson, Inc., defrauded SNTL when in 1998 Foundation Health Corporation sold Business Insurance Group, Inc. to Superior National knowing at the time of the sale that Business Insurance Group was insolvent, and further alleging that Milliman & Robertson, Inc. conspired with FHC and FHS and assisted in the execution of the fraud. A trial date for the lawsuit has been set in December of 2001.