<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________________
FORM 10-Q/A
(Amendment No. 1)
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-25984
____________________
SUPERIOR NATIONAL INSURANCE GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 95-3994873
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
26601 AGOURA ROAD
CALABASAS, CA 91302
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(818) 880-1600
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
____________________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Number of shares of Common Stock, without par value, outstanding as of
close of business on November 18, 1996: 3,437,523 shares.
<PAGE> 2
The undersigned Registrant hereby amends Item 5 of its Quarterly Report
on Form 10-Q for the quarter ended September 30, 1996, as set forth below, in
order to correct the "Pro Forma Combined - Net income (loss) from continuing
operations" for the year ended December 31, 1995, set forth under "Pro Forma
Financial Information - Unaudited Pro Forma Condensed Statements of Income" for
the nine months ended September 30, 1996, from an erroneously reported net loss
of $10,375,000 to a net gain of $10,375,000.
Furthermore, an additional consideration (number (5)) has been added to
those considerations set forth under Item 5, in order to provide the
Registrant's shareholders with additional information to consider in evaluating
the pro forma financial information. The new discussion specifically addresses
issues for the Registrant's shareholders to consider regarding the effect that
the announcement of the Company's anticipated acquisition of Pac Rim Holding
Corporation has had on the Registrant's stock price and the potential impact of
events involved in the actual consummation of the acquisition. This additional
discussion has been provided by the Registrant to its shareholders in its
standard, informal quarterly report to shareholders, currently in the process of
distribution.
2
<PAGE> 3
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
PRO FORMA FINANCIAL INFORMATION
On September 17, 1996, the Company entered into a definitive agreement
to acquire Pac Rim for a total consideration of approximately $54 million in
cash, which consideration would result in payment of approximately $3.00 to
$3.10 per share to each of Pac Rim's common stockholders and debenture holders
(based upon the number of shares of Pac Rim Common Stock into which the
debentures are convertible), with holders of warrants and options to receive an
amount equal to the spread between the exercise price of their options or
warrants and the per share payment amount to holders of Pac Rim Common Stock.
The actual purchase price per share of Pac Rim Common Stock is subject to a
final analysis of Pac Rim's loss reserves immediately prior to closing.
Consummation of the transaction is subject to regulatory and SNIG shareholder
and Pac Rim stockholder approvals, and various other conditions. The
transaction is projected to close late in the fourth quarter of 1996 or the
first quarter of 1997.
The Company has determined that it is in the best interests of its
shareholders to provide in this report certain pro forma financial information
that assumes the successful completion of the Company's acquisition of Pac Rim.
Set forth below are unaudited pro forma condensed balance sheets and statements
of income, presented at June 30, 1996 and at September 30, 1996. The unaudited
pro forma combined balance sheets data assumes the acquisition of Pac Rim by the
Company took place on the date presented, and combines the Company's balance
sheet data with Pac Rim's balance sheet data on such date using the purchase
method of accounting. The unaudited pro forma statements of operations data
assumes that the acquisition of Pac Rim by the Company took place as of the
beginning of each of the periods presented using the allocation of the purchase
information calculated as of the end of such period, and combines the statement
of operations data for the Company and for Pac Rim for the year ended December
31, 1995 and for either the six-month period ended June 30, 1996 or the
nine-month period ended September 30, 1996. The June 30, 1996 presentation was
provided to the Company's shareholders in the Company's Proxy Statement, dated
November 11, 1996.
The unaudited pro forma financial information is not necessarily
indicative of future operations and should not be construed as representative
of future operations of the combined companies.
In reviewing the pro forma statements, the Company's management urges
shareholders to consider the following:
(1) Reserve Adjustment. The updated pro forma financial information
reflects a $4.5 million addition to claims and claim adjustment expenses for the
1990-1993 accident years that was recorded by Pac Rim in the third quarter of
1996. Management, in performing its due diligence and analyzing Pac Rim's
reserves, contemplated such an adjustment.
(2) Maintenance of Premium Volume. The strategic and financial benefits
expected to be realized as a result of the Company's acquisition of Pac Rim are
dependent on insurance market reception to the combination of the two companies,
and on other factors beyond the Company's control. The ability of the combined
companies to maintain an acceptable percentage of the volume of premiums
historically written by the individual companies, as well as their ability to
maintain gross margins in the face of expected price competition, is uncertain.
It is unlikely the combined entity will maintain the premium volume of the
companies as they existed independently.
(3) Realization of Cost Reductions and Cash Flow Increases. The senior
management of the Company has identified cost reductions that they believe can
be achieved. The Board of Directors of the Company took into account this
expectation in deciding to approve the acquisition of Pac Rim. There can be no
assurance that the Company will be able to realize the expected cost reductions,
or do so within any particular time frame, or to generate additional revenue to
offset any unanticipated inability to realize such expected cost reductions.
(4) Coordination of Operations. The success of the acquisition of Pac Rim
in enhancing long-term shareholder value depends in part on the ability of the
management of the Company to coordinate and integrate the operations of the
business enterprises of the Company and Pac Rim. As in every business
combination, such coordination will require the dedication of management
resources, which may temporarily divert attention from the day-to-day business
of the Company. There can be no assurance that the coordination necessary to
realize the expected benefits of the acquisition of Pac Rim will be achieved.
3
<PAGE> 4
(5) Dilution and Increased Leverage. In evaluating the Company and Pac Rim
on a pro forma basis, shareholders also should consider a number of issues in
connection with the price of the Company's common stock. On September 17, 1996,
the Company announced that it had entered into a definitive agreement to acquire
Pac Rim for approximately $54 million, to be financed through a $44 million term
loan and the sale of $18 million of the Company's common stock at $7.53 per
share. Since that date, the Company's common stock price has increased over five
points to close on November 20, 1996, at $13-1/8, apparently indicating that the
market approves of the Company's decision to acquire Pac Rim and sees
significant added value in the combination of the companies. While the market's
confidence is gratifying, management wishes to remind the Company's shareholders
that it is extremely difficult to anticipate the market's reaction to events as
they unfold. There can be no assurance that the completion of the acquisition of
Pac Rim will have a continued favorable effect on the trading price of the
Company's common stock.
In addition to the factors described above concerning the combination
of the companies, shareholders should note that, while the increased leverage
resulting from the $44 million term loan has been disclosed, it is possible
that when the loan is actually incurred the market will view the Company's
common stock as riskier and the trading price may fall. Further, the dilutive
effect (given the current trading price) of the issuance of $18 million of
common stock at $7.53 per share has been previously described and presumably
has been taken into account by an efficient market in setting the current
trading price of the Company's common stock. However, even taking into account
the fact that the $7.53 per share represents the average daily closing price of
the Company's common stock over an agreed-upon period of time preceding the
date of the definitive agreement, and the fact that without the firm
commitment of a major equity investment the acquisition transaction could not
have been agreed to and the event that caused the Company's stock price to
begin its rise to its current levels would not have occurred, it is entirely
possible that the issuance of those shares, the incurrence of the term debt, and
the consummation of the Pac Rim acquisition, could result in a decline in the
trading price of the Company's common stock.
4
<PAGE> 5
PRO FORMA FINANCIAL INFORMATION
ACQUISITION OF PAC RIM HOLDING CORPORATION BY SUPERIOR NATIONAL INSURANCE
GROUP, INC.
PURCHASE ACCOUNTING METHOD
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Purchase
SNIG Accounting Pro Forma
SNIG Pac Rim Adjustments Adjustments Combined
-------- -------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Bonds and notes:
Available-for sale, at market . . $51,543 $112,277 $163,820
Equity securities, at market . . . 643 643
Funds withheld from reinsurers, at
amortized cost . . . . . . . . . 87,359 87,359
Invested cash . . . . . . . . . . . 15,198 4,777 19,975
-------- -------- -------- -------- --------
Total Investments . . . . . . . . 154,743 117,054 0 0 271,797
Cash . . . . . . . . . . . . . . . 2,290 1,493 54,070 (d) (57,100)(k) 753
Reinsurance receivables . . . . . . 32,054 4,275 36,329
Premiums receivable (less allowance
for doubtful accounts) . . . . . 15,513 13,650 29,163
Deferred policy acquisition costs . 3,062 1,241 4,303
Income taxes . . . . . . . . . . . 9,847 10,482 (139)(h) 20,190
Goodwill . . . . . . . . . . . . . -- -- 1,062 (l) 1,062
Other assets . . . . . . . . . . . 9,530 15,294 (1,265 (e) 23,109
(450 (f)
-------- -------- -------- -------- --------
Total Assets . . . . . . . . . . $227,039 $163,489 $54,070 $(57,892) $386,706
======== ======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities:
Claims and claim adjustment
expenses . . . . . . . . . . . . $122,650 $90,709 $213,359
Unearned premiums . . . . . . . . . 9,633 5,586 15,219
Long-term debt - Imperial Bank . . 7,930 (7,930)(a)
Debentures payable . . . . . . . . 18,769 (18,769)(g) 0
Term loan - The Chase Manhattan
Bank . . . . . . . . . . . . . . 44,000 (b) 44,000
Policyholder dividends . . . . . . 6,187 233 6,420
Accounts payable and other
liabilities . . . . . . . . . . . 14,436 6,369 2,700 (i) 23,505
-------- -------- -------- -------- --------
Total Liabilities . . . . . . . . 160,836 121,666 36,070 (16,069) 302,503
Preferred securities issued by
affiliate; authorized 1,100,000
shares: issued and outstanding
966,860 shares in 1996 . . . . . 22,272 22,272
Shareholders' Equity:
Common stock and additional paid-
in-capital . . . . . . . . . . . . 15,943 29,719 18,000 (c) (29,719)(j) 33,943
Unrealized (loss) on investments . (584) (270) 270 (j) (584)
Paid in capital - warrants . . . . 2,206 1,800 (1,800)(j) 2,206
Retained earnings . . . . . . . . . 26,366 10,574 (10,574)(j) 26,366
-------- -------- -------- -------- --------
Total Shareholders' Equity . . . 43,931 41,823 18,000 (41,823) 61,931
-------- -------- -------- -------- --------
Total Liabilities and
Shareholders' Equity . . . . . . $227,039 $163,489 $54,070 $(57,892) $386,706
======== ======== ======== ======== ========
</TABLE>
See accompanying explanatory notes to pro forma financial statements.
5
<PAGE> 6
PRO FORMA FINANCIAL INFORMATION
ACQUISITION OF PAC RIM HOLDING CORPORATION BY SUPERIOR NATIONAL INSURANCE
GROUP, INC.
PURCHASE ACCOUNTING METHOD
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Purchase
SNIG Accounting Pro Forma
SNIG Pac Rim Adjustments Adjustments Combined
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Bonds and notes:
Available-for-sale, at market $ 35,608 $ 110,136 $ 145,744
Equity securities, at market 769 - 769
Funds withheld from reinsurers, at amortized 79,469 - 79,469
cost
Invested cash 33,748 2,405 36,153
----------- ----------- ----------- ----------- -----------
Total Investments 149,594 112,541 - - 262,135
Cash 2,332 732 54,370 (d) (57,100) (k) 334
Reinsurance receivables 38,217 4,076 42,293
Premiums receivable (less allowance for
doubtful accounts) 15,371 21,204 36,575
Deferred policy acquisition cost 3,120 1,255 4,375
Income taxes 9,536 9,660 (109) (h) 19,087
Goodwill - - 5,998 (l) 5,998
Other assets 9,924 12,995 (1,164) (e) 21,305
(450) (f)
----------- ----------- ----------- ----------- -----------
Total Assets $ 228,094 $ 162,463 $ 54,370 $ (52,825) $ 392,102
=========== =========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Claims and claim adjustment expenses $ 113,539 $ 92,517 $ 206,056
Unearned premiums 9,808 7,088 16,896
Long-term debt - Imperial Bank 7,630 (7,630) (a) -
Debentures payable 18,854 (18,854) (g) -
Term loan - The Chase Manhattan Bank 44,000 (b) 44,000
Policyholder dividends 4,517 247 4,764
Accounts payable and other liabilities 24,576 7,086 2,700 (i) 34,362
----------- ----------- ----------- ----------- -----------
Total Liabilities 160,070 125,792 36,370 (16,154) (306,078)
Preferred securities issued by affiliate;
authorized 1,100,000 shares: issued
and outstanding 966,860 shares in 1996 22,921 22,921
Shareholders' Equity:
Common stock and additional paid-in-capital 15,956 29,719 18,000 (c) (29,719) (j) 33,956
Unrealized (loss) on investments (137) (211) 211 (j) (137)
Paid in capital - warrants 2,206 1,800 (1,800) (j) 2,206
Retained earnings 27,078 5,363 (5,363) (j) 27,078
----------- ----------- ----------- ----------- -----------
Total Shareholders' Equity 45,103 36,671 18,000 (36,671) 63,103
----------- ----------- ----------- ----------- -----------
Total Liabilities and Shareholders' Equity $ 228,094 $ 162,463 $ 54,370 $ (52,825) $ 392,102
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to pro forma financial statements.
6
<PAGE> 7
PRO FORMA FINANCIAL INFORMATION
ACQUISITION OF PAC RIM HOLDING CORPORATION BY SUPERIOR NATIONAL INSURANCE
GROUP, INC.
PURCHASE ACCOUNTING METHOD
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31, 1995 Six Months Ended June 30, 1996
--------------------------------------------- ------------------------------------------------
Pro
Pro Forma Forma Pro Forma Pro Forma
SNIG(1) Pac Rim(1) Adjustments Combined SNIG Pac Rim Adjustment Combined
------ --------- ----------- -------- ---- ------- ---------- --------
Inc. (Decr) Inc. (Decr)
(In thousands, except for share and per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Net premiums earned . . $89,735 $76,016 $165,751 $43,033 41,259 $84,292
Net investment income
and capital gains . . 9,784 8,542 -- 18,326 4,265 3,696 7,961
-------- -------- -------- -------- -------- --------
Total Revenues . . . 99,519 84,558 184,077 47,298 44,955 92,253
EXPENSES:
Claims and claim
adjustment expenses,
net of reinsurance . 56,605 50,957 107,562 22,600 31,132 53,732
Underwriting and
general and
administrative
expenses . . . . . . 27,348 30,309 57,657 18,246 13,424 31,670
Policyholder dividends (5,742) 132 (5,610) (1,406) (141) (1,547)
Goodwill amortization . -- -- 39(a) 39 -- -- 20 (a) 20
Interest expense . . . 9,619 2,306 (2,306)(b) 12,329 4,796 1,165 1,165)(b) 6,111
(800)(c) (319)(c)
3,510(d) 1,634 (d)
-------- -------- -------- -------- -------- -------- -------- --------
TOTAL EXPENSES . . . 87,830 83,704 443 171,977 44,236 45,580 170 89,986
-------- -------- -------- -------- -------- -------- -------- --------
Income before income
taxes, preferred
securities dividends
and accretion,
discontinued
operations,
extraordinary items,
and cumulative effect
of change in
accounting for income
taxes . . . . . . . . 11,689 854 (443) 12,100 3,062 (625) (170) 2,267
Income tax expense
(benefit) . . . . . . (12) 279 (151)(e) 116 1,048 (185) (58)(e) 805
Income (loss) before
preferred securities
dividends and
accretion,
discontinued
operations,
extraordinary items,
and cumulative effect
of change in
accounting for income
taxes . . . . . . . . 11,701 575 (292) 11,984 2,014 (440) (112) 1,462
Preferred securities
dividends and
accretion, net of
income tax benefit . . (1,488) -- -- (1,488) (810) -- -- (810)
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss) from
continuing operations $10,213 $575 $(292) $10,496 $1,204 $(440) $(112) $652
======== ======== ======== ======== ======== ======== ======== ========
Per common share:
Income (loss) from
continuing operations $2.98 $0.06 $1.51 $0.27 $(0.05) $0.10
Weighted average shares
outstanding . . . . . 3,430,373 9,528,000 7,103,711 5,318,118 9,528,000 7,236,211
</TABLE>
(1) Derived from audited financial statements.
See accompanying explanatory notes to pro forma financial statements.
7
<PAGE> 8
PRO FORMA FINANCIAL INFORMATION
ACQUISITION OF PAC RIM HOLDING CORPORATION BY SUPERIOR NATIONAL INSURANCE
GROUP, INC.
PURCHASE ACCOUNTING METHOD
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 NINE MONTHS ENDED SEPTEMBER 30, 1996
-------------------------------------------- --------------------------------------------
PRO FORMA PRO FORMA
ADJUST- PRO FORMA ADJUST- PRO FORMA
SNIG(1) PAC RIM(1) MENTS COMBINED SNIG PAC RIM MENT COMBINED
------- ---------- --------- --------- ---- ------- --------- ---------
INC.(DECR) INC.(DECR)
(In thousands, except for share and per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Net premiums earned 89,735 76,016 165,751 66,040 63,415 129,455
Net investment income and
capital gains 9,784 8,542 18,326 6,394 5,597 11,991
---------- ---------- ------ ---------- ---------- ---------- ------ ----------
Total Revenues 99,519 84,558 184,077 72,434 69,012 141,446
EXPENSES:
Claims and claim adjustment
expenses, net of reinsurance 56,605 50,957 107,562 36,801 51,886 88,687
Underwriting and general and
administrative expenses 27,348 30,309 57,657 26,330 20,551 46,881
Policyholder dividends (5,742) 132 (5,610) (2,121) (127) (2,248)
Goodwill amortization - - 222 (a) 222 - - 167 (a) 167
Interest expense 9,619 2,306 (2,306) (b) 12,329 6,922 1,752 (1,752) (b) 8,900
(800) (c) (475) (c)
3,510 (d) 2,453 (d)
---------- ---------- ------ ---------- ---------- ---------- ------ ----------
TOTAL EXPENSES 87,830 83,704 626 172,160 67,932 74,062 393 142,387
---------- ---------- ------ ---------- ---------- ---------- ------ ----------
Income before income taxes,
preferred securities
dividends and accretion,
discontinued operations,
extraordinary items, and
cumulative effect of change in
accounting for income taxes 11,689 854 (626) 11,917 4,502 (5,050) (393) (941)
Income tax expense (benefit) (12) 279 (213) (e) 54 1,348 606 (134) (e) 1,820
---------- ---------- ------ ---------- ---------- ---------- ------ ----------
Income (loss) before
preferred securities
dividends and accretion,
discontinued operations,
extraordinary items, and
cumulative effect of
change in accounting for
income taxes 11,701 575 (413) 11,863 3,154 (5,656) (259) (2,761)
Preferred securities
dividends and accretion,
net of income tax benefit (1,488) - - (1,488) (1,238) - (1,238)
---------- ---------- ------ ---------- ---------- ---------- ------ ----------
Net income (loss) from
continuing operations $ 10,213 $575 ($413) $10,375 $1,916 ($5,656) ($259) ($3,999)
========== ========== ====== ========== ========== ========== ====== ==========
Per common share:
Income (loss) from
continuing operations $ 2.98 $ 0.06 $1.51 $0.41 ($0.59) ($0.69)
Weighted average shares
outstanding 3,430,373 9,528,200 7,103,711 5,316,873 9,528,200 5,827,989
</TABLE>
(1) Derived from audited financial statements.
See accompanying explanatory notes to pro forma financial statements.
8
<PAGE> 9
EXPLANATORY NOTES: DESCRIPTION OF PRO FORMA ADJUSTMENTS
1) The following descriptions reference the adjustments as labeled on the
unaudited pro forma condensed balance sheets as of June 30, 1996 and
September 30, 1996:
(a) Adjustment to long-term debt to reflect the redemption of
SNIG's outstanding loan with Imperial Bank.
(b) Adjustment to senior debt payable to reflect a $44 million
credit facility from one or more banks including Chase
(the "Term Loan").
(c) Adjustment to reflect the shares of the Company's common stock
to be issued and sold (the "Newly Issued Stock") pursuant to
the terms of the Stock Purchase Agreement (as defined in "Item
6. Exhibits and Reports on Form 8-K," below).
(d) The increase in cash represents total funds provided by the
$62 million obtained from the Term Loan and the Newly Issued
Stock, less the repayment of $7.630 million of Imperial Bank
debt.
(e) Adjustment to other assets to write-off the unamortized
debenture issuance costs resulting from the redemption of Pac
Rim's Series A Convertible Debentures (the "Convertible
Debentures").
(f) Adjustment to other assets reflects a netting of receivables
due from the Chief Executive Officer of Pac Rim against
associated severance payments.
(g) Adjustment to debentures payable to reflect the redemption of
the Convertible Debentures.
(h) Adjustment to deferred tax assets to write-off the deferred
tax asset relating to the unrealized loss on investments.
(i) Adjustment to accounts payable and other liabilities to
reflect assumption of amounts payable to officers of Pac Rim,
gross of the receivable referred to in (f) above.
(j) Adjustment to common stock and additional paid-in-capital to
reflect the elimination of Pac Rim stockholder equity interest.
(k) Reduction of cash to reflect the following items: i) purchase
of Pac Rim Common Stock for $28.6 million, ii) redemption of
the Pac Rim Series 1, 2 and 3 Detachable Warrants and options
for $3.5 million, iii) redemption of the Convertible
Debentures for $20.0 million, and iv) direct costs of the
acquisition of Pac Rim of $5 million.
(l) The excess of the purchase price paid for Pac Rim over the
amounts assigned to identifiable assets acquired less
liabilities assumed is recorded as goodwill.
2) The following descriptions reference the adjustments as labeled on the
unaudited pro forma condensed statements of operations for the year
ended December 31, 1995 and either the six months ended June 30, 1996
or the nine months ended September 30, 1996:
(a) Adjustment represents amortization of goodwill on a straight
line basis over an estimated 27-year period.
(b) Adjustment represents the elimination of interest expense on
the Convertible Debentures payable as if the redemption of the
Convertible Debentures had been effective on January 1, 1995.
(c) Adjustment represents the elimination of interest expense on
the Company's term loan with Imperial Bank as if the repayment
of such term loan had been effective on January 1, 1995.
(d) Adjustment represents the interest expense on the Company's
Term Loan as if the Term Loan had been effective on January 1,
1995.
(e) Adjustment represents the tax effect of pro forma adjustments
at an effective tax rate of 34%.
9
<PAGE> 10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: December 2, 1996 SUPERIOR NATIONAL INSURANCE GROUP, INC.
By /s/ J. Chris Seaman
----------------------------
Name: J. Chris Seaman
Title: Executive Vice President and
Chief Financial Officer
10
