FORM 10-KSB
                   U. S. SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D. C.  20549

(Mark One)
            [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 1999

                                      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 No.  1-8069

                        INVESTORS INSURANCE GROUP, INC.
                        (Name of small business issuer)

            Florida                                         13-2574130
 (State or other jurisdiction of                         (I.R.S. Employer
  incorporation or organization)                        Identification no.)

     315 Willowbrook Lane
        West Chester, PA                                      19382
(Address of principal executive offices)                   (Zip Code)

                           Issuer's telephone number:
                                (610) 430-3900

          Securities registered pursuant to Section 12(b) of the Act:

  Common Stock $.50 par value              Over-the-Counter Pink Sheets
     (Title of each class)                    (Name of each exchange
                                               on which registered)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ] NO [X]

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB.  [X]

State the issuer's revenues for its most recent fiscal year: None.

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and ask price of such stock of the issuer as of June 10, 2002: $35,585.
This estimate is based on 1,829,270 shares of the Registrant's Common Stock
which were not beneficially held by board members.

Documents incorporated by reference: None


Transitional small business disclosure format:  YES [ ] NO [X]

<PAGE>
<PAGE> 2
                        INVESTORS INSURANCE GROUP, INC.
                             INDEX TO FORM 10-KSB


                                                                          Page
                                                                          ----
PART I.

     Item 1.   Description of Business.                                      3

     Item 2.   Description of Property.                                      5

     Item 3.   Legal Proceedings.                                            5

     Item 4.   Submission of Matters to a Vote of Security Holders.          5


PART II.

     Item 5.   Market for Common Equity and Related Stockholder Matters.     6

     Item 6.   Management's Discussion and Analysis of Operations.           6

     Item 7.   Consolidated Financial Statements.                            7

     Item 8.   Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure.                         19


PART III.

     Item 9.   Directors, Executive Officers, Promoters and Control
               Persons; Compliance With Section 16(a) of the Exchange Act.  20

     Item 10.  Executive Compensation.                                      21

     Item 11.  Security Ownership of Certain Beneficial
               Owners and Management.                                       24

     Item 12.  Certain Relationships and Related Transactions.              24

     Item 13.  Exhibits and Reports on Form 8-K.                            25

Signatures                                                                  26
















<PAGE>
<PAGE> 3
PART I

Other than historical and factual statements, the matters and items discussed
in this Annual Report on Form 10-K are forward-looking statements that involve
risks and uncertainties.  Actual results of the Company may differ materially
from the results discussed in the forward-looking statements. Certain factors
that could contribute to such differences are discussed with the forward-
looking statements throughout this report.

This report on Form 10-KSB for the fiscal year ended December 31, 1999, is
being filed on August 14, 2002.  The Company is filing this report along with
others in an effort to bring its Securities and Exchange Act of 1934 filings
current.


Item 1. Description of Business
(a) Business Development
      (1) Form and year of organization

		 Investors Insurance Group, Inc. ("IIG" or "Company") was incorporated
		 under the laws of the State of Florida on May 11, 1993 and is the
		 successor corporation of the former Gemco National, Inc. ("Gemco"),
		 a New York corporation founded in 1966.  The change in corporate name
		 was made to increase investor awareness of IIG's market focus and was
		 approved by Gemco's shareholders at the Annual Meeting of Shareholders
		 on June 11, 1993.  The actual change was accomplished by the merger of
		 Gemco National, Inc. into a new Florida corporation, IIG, on
		 September 1, 1993.

	 (2) Any bankruptcy, receivership or similar proceeding

		 NONE

	 (3) Any material reclassification, merger, consolidation, or purchase or
	     sale of significant amount of assets not in the ordinary course of
	     business

		 In May 1998, IIG disposed of all of its subsidiaries and operations.
		 While the Company is currently seeking new business opportunities,
		 since the disposition, its only activities have been to collect
		 interest income and resolve certain outstanding contingencies
		 discussed below.  The Company has no full-time employees; except for a
		 bonus ($50,000 paid in 1998) related to the sale of its subsidiaries,
		 the Company's only officer has served without compensation.

		 In January 1999, IIG paid $500,000 to purchase 100,000 shares (giving
		 effect to subsequent stock splits) of CBCC, Inc. as an investment.
		 Subsequently, CBCC, Inc. changed its name to Stonebridge Financial
		 Corp ("SFB") and became a financial holding company regulated by
		 the Federal Reserve Bank and owning 100% of the shares of Stonebridge
		 Bank.  In April 2001, increased its holdings of SFB stock to 110,000
		 shares.  As of December 31, 1999 SFB had 1,208,850 shares outstanding.








<PAGE>
<PAGE>	4
		 The Company has no phyical assets or place of business, but its sole
		 officer may be contacted at:

                        Mr. Donald Goebert, President
                        315 Willowbrook Lane
                        West Chester, PA 19382

                       (610) 430-3900


(b) Business of the Issuer
	 (1) Principle products or services and their markets

             NONE; Historical information regarding the operating
			 characteristics of IIG's former subsidiaries is presented in IIG's
			 1997 From 10KSB excerpts of which are presented in the attached
			 Appendix A.


	 (2) Distribution methods of the products or services

             NONE; Historical information regarding the operating
             characteristics of IIG's former subsidiaries is presented in IIG's
             1997 From 10KSB excerpts of which are presented in the attached
             Appendix A.


	 (3) Status of any publicly announced new product or service

             NONE; Historical information regarding the operating
             characteristics of IIG's former subsidiaries is presented in IIG's
             1997 From 10KSB excerpts of which are presented in the attached
             Appendix A.


	 (4) Competitive business conditions and the small business issuer's
	     Competitive position in the industry and methods of competition

             NONE; Historical information regarding the operating
             characteristics of IIG's former subsidiaries is presented in IIG's
             1997 From 10KSB excerpts of which are presented in the attached
             Appendix A.


	 (5) Sources and availability of raw materials and the names of principal
	     suppliers

             NONE; Historical information regarding the operating
             characteristics of IIG's former subsidiaries is presented in IIG's
             1997 From 10KSB excerpts of which are presented in the attached
             Appendix A.

	 (6) Dependence on one or a few major customers

             NONE; Historical information regarding the operating
             characteristics of IIG's former subsidiaries is presented in IIG's
             1997 From 10KSB excerpts of which are presented in the attached
             Appendix A.


<PAGE>
<PAGE> 5

	 (7) Patents, trademarks, licenses, franchises, concessions, royalty
	     agreements or labor contracts, including duration

             NONE; Historical information regarding the operating
             characteristics of IIG's former subsidiaries is presented in IIG's
             1997 From 10KSB excerpts of which are presented in the attached
             Appendix A.


	 (8) Need for any government approval of principal products or services

             NONE; Historical information regarding the operating
             characteristics of IIG's former subsidiaries is presented in IIG's
             1997 From 10KSB excerpts of which are presented in the attached
             Appendix A.


	 (9) Effect of existing or probable governmental regulations on the
	     business

             NONE; Historical information regarding the operating
             characteristics of IIG's former subsidiaries is presented in IIG's
             1997 From 10KSB excerpts of which are presented in the attached
             Appendix A.


	(10) Estimate of the amount spent during each of the last two fiscal
	     years on research and development activities, and if applicable the
	     extent to which the cost of such activities are born directly by
	     customers

             NONE; Historical information regarding the operating
             characteristics of IIG's former subsidiaries is presented in IIG's
             1997 From 10KSB excerpts of which are presented in the attached
             Appendix A.


	(11) Cost and effects of compliance with environmental laws (federal,
	     state and local)

             NONE; Historical information regarding the operating
             characteristics of IIG's former subsidiaries is presented in IIG's
             1997 From 10KSB excerpts of which are presented in the attached
             Appendix A.


	(12) Number of total employees and number of full time employees

             NONE; Historical information regarding the operating
             characteristics of IIG's former subsidiaries is presented in IIG's
             1997 From 10KSB excerpts of which are presented in the attached
             Appendix A.







<PAGE>
<PAGE> 6



Item 2. Description of Property

The Company does not own, lease or occupy any real estate nor has it
developed an investment policy related to real estate.

Historical information regarding the operating characteristics of IIG's
former subsidiaries is presented in IIG's 1997 From 10KSB excerpts of
which are presented in the attached Appendix A.


Item 3. Legal Proceedings

Federal Insurance Company V. Gemco National, Inc. (No.00988/88, S.Ct., N.Y.)
In this matter, Federal Insurance Company was pursuing a claim against Gemco
National, Inc. for unpaid premiums for general liability and workmen's
compensation insurance for the Ampat Group, former operating subsidiaries of
Gemco.  Federal Insurance sought compensatory damages in excess of $555,000.
Based on conversation with former employees of Gemco, the Company believes it
has valid defenses to this claim.  Furthermore, there has been no activity
regarding this case since early 1990, even though the lawsuit is still pending.
Under New York law, lawsuits remain pending indefinitely.  Should this case
again become active, the likely outcome could not be predicted with any degree
of certainty.  However, the Company believes the likelihood of having to pay a
claim is remote and that the case would be dismissed as a result of the long
delay by plaintiff in pursuing this action.

Mr. Roger Kling, a former officer of Ampat Eastern, a former subsidiary of
Gemco National, Inc., filed suit against the Company in Florida captioned
Kling v. Investors Insurance Group, Inc.  No.96-07764CA Div. CV-6) to collect
the amount of $49,008.84 for legal fees and out of pocket expenses incurred by
him as a responsible officer in the successful defense against claims brought
by New York State for New York sales and use taxes for the years 1980 through
1985 for Ampat Eastern, plus his legal fees incident to this lawsuit.  On
February 6, 1997, the court entered a judgment against the Company and in favor
of Mr. Kling.  Both parties stipulated that Mr. Kling's loss was $61,000.  The
Company appealed the Judgment but the judgment was affirmed by the First
District Court of Appeals for Florida on July 20, 1998.  As a result of this
judgment, Mr. Kling was paid $19,302.30 on October 27, 1997 but no further
payment was made by the Company.  On April 2, 2002, Mr. Kling filed an action
against the Company and its directors for collection for the sum of $61,978.25,
which amount includes the original judgment outstanding and interest therein.
On May 17, 2002, a conditional oral agreement was reached to settle this matter
for $48,000.00.  In July 2002, this agreement was finalized and settled in full
and complete satisfaction of all claims of Mr. Kling against the Company.




Item 4. Submission of Matters to a Vote of Security Holders

  NONE.  During the reporting period, there was no meeting of the security
  holders, and no voting on any matters.





<PAGE>
<PAGE> 7
PART II

Item 5.  Market for Common Equity and Related Shareholder Matters.

(A) Market Information


  The  Company's  common stock traded on the OTC Pink Sheets and previously
  on the OTC Bulletin Board under the symbol "IIGI". The following table sets
  forth for each period indicated the high and low closing sale prices for the
  Company's sommon stock, as reported by the OTC Pink Sheets.

	                      For the Year ended                For the Year ended
					      December 31, 1999                 December 31, 1998
	                      ------------------                -------------------
	                      High          Low                 High           Low
	                      ----          ---                 ----           ---
	     1st Quarter    $ 1.25           0.11             $ 0.05        $ 0.03
	     2nd Quarter      0.12           0.12               0.14          0.03
	     3rd Quarter      0.12           0.12               0.13          0.11
	     4th Quarter      0.28           0.12               0.14          0.11


(B) Holders.

  As of March 24, 1998, the company's former transfer agent reported that there
  were 719 shareholders of record of common stock of IIG.  Due to a billing
  dispute  between IIG and it's former tansfer agent, no more recent
  information is available.  IIG has no precise knowledge as to the number of
  beneficial holders of IIG's common stock.

(C) Dividends

  IIG has not paid any dividends during the past two years and it does not
  expected to pay dividends in the foreseeable future.

























<PAGE>
<PAGE> 8
Item 6.  Management's Discussion and Analysis or Plan of Operation

Results of Operations

In connection with its acquisition of IIC Inc. ("IIC"), IIG issued an
$8,000,000 subordinated note payable which was due March 31, 1997, with
interest at 8% payable quarterly ("IIG Note").  IIG had several material
outstanding claims against the IIG Note and the matter had been the subject
of litigation for some time.

In April, 1998, IIG and the noteholder executed a Settlement Agreement and
Release (the "Agreement") for global settlement of all the issues related to
the IIG Note, dismissal of all related litigation and mutual releases from
further litigation.  Under the terms of this Agreement which became effective
in May 1998, IIG received $637,711 in cash, the rights to the full federal tax
refund from the 1997 federal tax return, and satisfaction of the IIG Note and
accrued interest.  In return, the noteholder received all the outstanding
shares of IIC, Inc. (including the shares of Investors Insurance Corporation)
and IIG's option to purchase certain securities held by Investors Insurance
Corporation.

The Company accounted for the disposal of IIC and Investors as discontinued
operations and, accordingly, restated its 1997 balance sheet and 1998 statement
of operations.  As a result, the Company's 1998 income from the operations
before tax benefit of IIC and Investors ($200,204) together with its gain on
their disposal of $4,775,960 is reported separately from its loss from
continuing operations.  The gain on the disposal resulted from the cash
received of $637,711 over the carrying value of its subsidiaries ($4,138,249 of
liabilities in excess of the related assets).

The Company's 1998 operating expenses include approximately $71,000 for
nonrecurring legal and consulting fees related to the settlement of the IIG
Note.

In September 1998, Mr. Parker resigned his positions as an officer and
director of IIG and the Board disolved his deferred compensation agreement.
Mr. Goebert has assumed these responsibilities until the Board names
successors.

Since disposing of all of its subsidiaries and operations in 1998, IIG has been
seeking new business opportunities.  While it has reviewed several proposals,
it is continuing its search.  In the interim, IIG has set aside a portion of
its assets in liquid investments to assure funding of its on-going general
corporate expenses; in order to assure a reasonable return to its shareholders,
the balance of its assets have been invested in shares of Stonebridge Financial
Corp ("SFB").  In January 1999, IIG paid $500,000 to purchased 100,000 shares
(adjusted for a subsequent stock split) of CBCC, Inc. as an investment.
Subsequently, CBCC, Inc. changed its name to Stonebridge Financial Corp ("SFB")
and became a financial holding company regulated by the Federal Reserve Bank
and owning 100% of the shares of Stonebridge Bank.  In April 2001, IIG
increased its holdings of SFB stock to 110,000 shares.  As of December 31, 1999
SFB had 1,208,850 shares outstanding.

Until a suitable business opportunity is located, future operating results of
the Company will consist of investment income on the available cash deposits
and the expenses of maintaining the Company's regulatory filings.




<PAGE>
<PAGE> 9
Liquidity and Capital Resources

Management does not expect any liquidity problem in the foreseeable future, nor
does it currently plan any significant change in its investments or number of
employees.


Item 7. Financial Statements

                        INVESTORS INSURANCE GROUP, INC.
                               TABLE OF CONTENTS

                                                                        Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                       10

FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999:

Consolidated balance sheets                                              11
Consolidated statements of operations                                    12
Consolidated statements of comprehensive income (loss)                   13
Consolidated statements of shareholders' capital and deficit             14
Consolidated statements of cash flows                                    15
Notes to consolidated financial statements                            16-23





































<PAGE>
<PAGE>10
Report of Independent Certified Public Accountants


The Board of Directors
Investors Insurance Group, Inc. and Subsidiaries
Jacksonville, Florida


We have audited the accompanying consolidated balance sheets of Investors
Insurance Group, Inc. and Subsidiaries as of December 31, 1999 and 1998 and the
related consolidated statements of operations, comprehensive income,
stockholders' capital and deficit and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Investors Insurance Group,
Inc. and Subsidiaries at December 31, 1999 and 1998 and the results of their
operations and their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.


Gallogly, Fernandez & Riley, LLP
Certified Public Accountants
Orlando, Florida
June 19, 2002























<PAGE>
<PAGE>11
                Investors Insurance Group, Inc. and Subsidiaries
                          Consolidated Balance Sheets
                          December 31, 1999 and 1998

                                                           1999         1998
                                                          ------       ------
Assets
 Current Assets:
   Cash and cash equivalents                            $ 208,734    $ 699,089
   Income tax recoverable                                  14,368       14,368
   Other assets                                             1,650        8,568
                                                        ---------    ---------

Total current assets                                      224,752      722,025
Investment, at cost	                                      500,000         -
                                                        ---------    ---------

                                                        $ 724,752    $ 722,025
                                                        =========    =========


Liabilities
 Current Liabilities:
   Accrued expenses                                     $  76,257    $  72,968
                                                        ---------    ---------

Total current liabilities                                  76,257       72,968

Shareholder's Capital and Deficit:
 Preferred stock, no par, authorized
   20,000,000 shares, none issued                            -            -
 Common stock, $0.50 par value; authorized
   30,000,000 shares; issued 2,840,582 in
   1999 and 1998; outstanding 2,836,582
   in 1999 and 1998                                     1,420,291    1,420,291
 Additional paid-in capital                             3,656,474    3,656,474
 Accumulated deficit                                   (4,420,120)  (4,419,558)
 Treasury stock, at cost (4,000 shares
   in 1999 and 1998)                                       (8,150)      (8,150)
                                                        ---------   ----------

Total shareholder's capital and deficit                   648,495      649,057
                                                        ---------   ----------

Total liabilities and shareholder's capital and deficit $ 724,752   $  722,025
                                                        =========   ==========












See accompanying notes to consolidated financial statements.

<PAGE>
<PAGE>12


                Investors Insurance Group, Inc. and Subsidiaries
                     Consolidated Statements of Operations
                 For the Year Ended December 31, 1999 and 1998


                                                  1999          1998
                                                 -------       -------
Revenue                                          $  -       $      -
General and administrative expenses                9,874         87,333
                                                 -------     ----------

Loss from operations                              (9,874)       (87,333)

Interest income                                    9,312         16,689
                                                 -------     ----------

Loss from continuing operations                     (562)       (70,644)

Discontinued operations:
  Income from operations of discontinued
    operations including related income
    tax benefit of $14,691 in 1998                  -           214,895

  Gain on disposal                                  -         4,775,960
                                                 -------     ----------

Net income (loss)                                $  (562)    $4,920,211
                                                 =======     ==========

Basic and diluted earnings (loss) per share:
    Continuing operations                         $(0.00)        $(0.02)
    Discontinued operations                         0.00           1.75
                                                   -----          -----

    Net income (loss)                             $(0.00)        $ 1.73
                                                   =====          =====

Basic and diluted weighted
         average shares outstanding            2,836,582      2,836,582
                                               =========      =========
















See accompanying notes to consolidated financial statements.

<PAGE>
<PAGE>13


                Investors Insurance Group, Inc. and Subsidiaries
              Consolidated Statements of Comprehensive Income (Loss)
                 For the Year Ended December 31, 1999 and 1998


                                                         1999       1998
                                                       -------    --------
Net income (loss)                                      $  (562) $ 4,920,211
Other comprehensive income:
 Change in unrealized value of the net
    equity in discontinued operations,
    before income tax:
        From operations                                              74,639
        From disposal                                     -      (1,895,206)
                                                        -------   ---------

      Net impact before income taxes                      -      (1,820,567)

 Income tax expense related to the
    change in unrealized value of net
    equity in discontinued operations                     -           -
                                                       -------    ---------

      Other comprehensive income                          -      (1,820,567)
                                                       -------    ---------

Comprehensive income (loss)                            $  (562) $ 3,099,644
                                                       =======    =========




























See accompanying notes to consolidated financial statements.

<PAGE>
<PAGE>14
<TABLE>
<CAPTION>

                Investors Insurance Group, Inc. and Subsidiaries
           Consolidated Statements of Shareholder's Capital and Deficit
                 For the Year Ended December 31, 1999 and 1998

                                  Common Stock                       Net
                               -------------------   Additional   unrealized
                              Number of                paid-in    investment    Accumulated  Treasury
                               shares      Amount      capital   gains(losses)   deficit      stock
                              ---------   --------   ----------  -------------  -----------  --------
<S>                           <C>        <C>         <C>         <C>            <C>          <C>
Balance at December 31, 1997  2,840,582  $1,420,291  $3,656,474     $1,820,567  $(9,339,769) $(8,150)
Change in unrealized losses        -           -           -        (1,820,567)        -        -
Net income                         -           -           -              -       4,920,211     -
                              ---------  ----------  ----------  -------------  ------------ --------

Balance at December 31, 1998  2,840,582   1,420,291   3,656,474           -      (4,419,558)  (8,150)
Net loss                           -           -           -              -            (562)    -
                              ---------  ----------  ----------  -------------  ------------ --------

Balance at December 31, 1999  2,840,582  $1,420,291  $3,656,474  $        -     $(4,420,120) $(8,150)
                              =========  ==========  ==========  =============  ============ ========




</TABLE>





























See accompanying notes to consolidated financial statements.

<PAGE>
<PAGE>15


                Investors Insurance Group, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                 For the Year Ended December 31, 1999 and 1998

                                                   1999         1998
                                                 --------     --------
Cash flows from operating activities:
 Net income (loss)                               $   (562)  $4,920,211
 Adjustments to reconcile net income (loss) to
    net cash provided by (used in)
	operating activities:
  Equity in earnings of discontinued operations      -        (214,895)
  Gain on disposal of discontinued operations        -      (4,775,970)
  Income tax refund received                         -         123,262
  Change in other assets and liabilities, net      10,207      (30,229)
                                                 --------   ----------

 Net cash provided by operating activities          9,645       22,379

Cash flows provided by (used in)
    investing activities:
 Purchase of investment                          (500,000)        -
 Sale of IIC and settlement of the IIG Note          -         637,710
                                                  -------    ---------

     Net cash flows provided by (used in)
          investing activities                   (500,000)     637,710

Cash flows from financing activities:
 Dividends received                                  -          39,000
                                                  -------    ---------

      Net change in cash and cash equivalents    (490,355)     699,089

Cash and cash equivalents
  Beginning of year                               699,089         -
                                                  -------    ---------

  End of year                                    $208,734    $ 699,089
                                                  =======    =========
















See accompanying notes to consolidated financial statements.

<PAGE>
<PAGE>16


                Investors Insurance Group, Inc. and Subsidiaries
                     Notes to Consolidated Financial Statements

(1) SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation:

Investors Insurance Group, Inc. ("IIG") is a Florida corporation that formerly
operated predominantly in the life insurance industry, with its primary
product emphasis on the sale of flexible premium deferred annuities through
May 28, 1998. All of the Company's former insurance operations were conducted
through Investors Insurance Corporation ("Investors") a corporation licensed
to sell life, annuity and health insurance in 21 states.  Investors was a
wholly-owned by IIC, Inc. ("IIC"), an insurance holding company and a direct
wholly-owned subsidiary of IIG (collectively with IIG the "Company").   The
accompanying consolidated financial statements of the Company are prepared
in accordance with generally accepted accounting principles ("GAAP"). All
significant intercompany items have been eliminated in consolidation.

As further described in Note 2, on May 28, 1998, Investors Insurance Group, Inc.
disposed of all of its subsidiaries and operations.  While the Company is
currently seeking new business opportunities, since the disposition, its only
activities have been to collect interest income and pay accrued and operating
expenses of the Company.



     a) Current assets and liabilities

        Current assets include cash and cash equivalents and other assets
        expected to be used or converted into cash within one year.  Current
        liabilities are those obligations the Company expects to fund with
        current assets or funds generated by operations.


     b) Cash and cash equivalents

        For both Balance Sheet classification and the Statements of Cash Flows,
        cash and investments with original maturities of less than three months
        are considered "Cash and cash equivalents".


     c) Federal Income Taxes

        The Company files a consolidated tax return.  Any differences between
        the consolidated tax and the total amounts that would be due under
        separate tax filings is paid or retained by IIG.











<PAGE>
<PAGE>17


        The Company uses the asset and liability method of accounting for
        income tax expense prescribed by SFAS No. 109, "Accounting for Income
        Taxes."  Under this method of accounting, deferred tax assets and
        liabilities are recognized for the estimated future tax consequences
        attributable to differences between the financial statement carrying
        amounts of existing assets and liabilities and their respective tax
        bases.  Deferred tax assets and liabilities are measured using enacted
        tax rates in effect for the year in which those temporary differences
        are expected to be recovered or settled.  Deferred tax assets are
        recorded net of the applicable valuation allowance.  The effect on
        deferred tax assets and liabilities of a change in tax rates is
        recognized in income during the period that includes the enactment
        date.


    (d) Stock-Based Compensation:

        The Company follows Accounting Principles Board Opinion No. 25,
        "Accounting for Stock Issued to Employees" and related interpretations
        in accounting for its stock-based compensation plans rather than the
        alternative fair value accounting provided under SFAS No. 123
        "Accounting for Stock-Based Compensation."


    (e) Earnings per Share of Common Stock:

        IIG accounts for earnings per share of common stock in accordance with
        Statement of Financial Accounting Standards No 128, Earnings per Share.
        Under this Statement, the weighted average number of common shares
        outstanding during the year is used to calculate the Basic Earnings per
        Share.  The Diluted Earnings per Share adjusts the Basic Earnings per
        Share calculation to include potentially dilutive common shares.  As
        discussed in Note 5, at December 31, 1998 and 1999, the Company had
        issued options which, if exercised, could result in 67,409 potentially
        dilutive common shares.  All such shares were anti-dilutive for purposes
        of earnings per share for the years ended December 31, 1999 and 1998.


    (f) Use of Estimates:

        The preparation of financial statements in conformity with generally
        accepted accounting principles requires management to make estimates
        and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent assets and liabilities at the
        date of the financial statements and the reported amounts of revenues
        and expense during the reporting period.  Actual results could differ
        from those estimates.











<PAGE>
<PAGE>18

    (g) Comprehensive Income

        Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
        Comprehensive Income."  This Statement requires that all items
        recognized under accounting standards as components of comprehensive
        income be reported in annual consolidated financial statements and be
        displayed with the same prominence as other items in annual
        consolidated financial statements.  Other comprehensive income may
        include foreign currency translation adjustments, minimum pension
        liability adjustments and unrealized gains and losses on marketable
        securities classified as available for sale.


    (h) Concentrations of Credit Risk

        Financial instruments which potentially subject the Company to
        concentrations of credit risk consist principally of temporary cash
        balances invested in banks in excess of the FDIC insurance limits.


    (i) Fair Value of Financial Instruments

        Fair value estimates discussed herein are based upon certain market
        assumptions and pertinent information available to management as of
        December 31, 1999.  The respective carrying value of certain
        on-balance-sheet financial instruments approximated their fair values.
        These financial instruments include cash and cash equivalents and
        accrued expenses.  Fair values were assumed to approximate carrying
        values for these financial instruments since they are short term in
        nature and their carrying amounts approximate fair values or they are
        receivable or payable on demand.


    (j) Recent Accounting Pronouncements

        In June 2001, the Financial Accounting Standards Board finalized FASB
        Statements No. 141, "Business Combinations" (SFAS 141), and No. 142,
        "Goodwill and Other Intangible Assets" (SFAS 142).  SFAS 141 requires
        the use of the purchase method of accounting and prohibits the use of
        the pooling-of-interests method of accounting for business combinations
        initiated after June 30, 2001.  SFAS 141 also requires that the Company
        recognize acquired intangible assets apart from goodwill if the
        acquired intangible assets meet certain criteria.  SFAS 141 applies to
        all business combinations initiated after June 30, 2001 and for
        purchase business combinations completed on or after July 1, 2001.
        It also requires, upon adoption of SFAS 142, that the Company
        reclassify the carrying amounts of intangible assets and goodwill
        based on the criteria in SFAS 141.











<PAGE>
<PAGE>19

        SFAS 142 requires, among other things, that companies no longer
        amortize goodwill, but instead test goodwill for impairment at least
        annually.  In addition, SFAS 142 requires that the Company identify
        reporting units for the purposes of assessing potential future
        impairments of goodwill, reassess the useful lives of other existing
        recognized intangible assets, and cease amortization of intangible
        assets with an indefinite useful life.  An intangible asset with an
        indefinite useful life should be tested for impairment in accordance
        with the guidance in SFAS 142.  SFAS 142 is required to be applied in
        fiscal years beginning after December 15, 2001 to all goodwill and
        other intangible assets recognized at that date, regardless of when
        those assets were initially recognized. SFAS 142 requires the Company
        to complete a transitional goodwill impairment test six months from
        the date of adoption.  The Company is also required to reassess the
        useful lives of other intangible assets within the first interim
        quarter after adoption of SFAS 142.  The implementation of FAS 141 and
        142 is not expected to have a material impact on the Company's
        financial position or results of operations.

        In June 2001, the FASB issued Statement of Financial Accounting
        Standards No. 143, "Accounting for Asset Retirement Obligations"
        (FAS 143).  FAS 143 changes the measurement of an asset retirement
        obligation from a cost-accumulation approach to a fair value
        approach, where the fair value (discounted value) of an asset
        retirement obligation is recognized as a liability in the period
        in which it is incurred and accretion expense is recognized using
        the credit-adjusted risk-free interest rate in effect when the
        liability was initially recognized.  The associated asset retirement
        costs are capitalized as part of the carrying amount of the long-lived
        asset and subsequently amortized into expense.  The pre-FAS 143
        prescribed practice of reporting a retirement obligation as a contra-
        asset will no longer be allowed.  The implementation of this Statement
        is not expected to have a material impact on the Company's financial
        position or results of operations when it takes effect on January 1,
        2003.

        In August 2001, the FASB issued SFAS No. 144 "Accounting for the
        Impairment or Disposal of Long-Lived Assets," which addresses financial
        accounting and reporting for the impairment or disposal of long-lived
        assets.  While SFAS No. 144 supersedes both SFAS No. 121, "Accounting
        for the Impairment of Long-Lived Assets and for Long-Lived Assets to
        Be Disposed Of" and APB Opinion No. 30, "Reporting the Results of
        Operations - Reporting the Effects of Disposal of a Segment of a
        Business, and Extraordinary, Unusual and Infrequently Occurring Events
        and Transactions," it retains the fundamental provisions of those
        Statements.  SFAS No. 144 becomes effective for fiscal years beginning
        after December 15, 2001.  The Company does not expect the adoption of
        SFAS 144 to have material impact on its financial position and
        results of operations.

        The Financial Accounting Standards Board has issued Statements of
        Financial Accounting Standards No. 133 ("Accounting for Derivative
        Instruments and Hedging Activities").  This Statement is not applicable
        to the Company at this time.





<PAGE>
<PAGE>20


(2) Note Payable, Settlement of Related Litigation and Discontinued Operations

In connection with its initial acquisition of IIC, IIG issued an
$8,000,000 subordinated note payable which was due March 31, 1997, with
interest at 8% payable quarterly (the "IIG Note").  This note was the subject
of litigation for many years. In April 1998, IIG and the noteholder executed a
Settlement Agreement and Release (the "Agreement") for global settlement of
all the issues related to the IIG Note, dismissal of all related litigation
and mutual releases from further litigation which became effective May 28,
1998.  As a result of the agreement, the Company was paid $637,710 in cash,
received the rights to the federal tax refund from the 1997 federal tax return
totaling $123,262 that was collected in 1998, and satisfaction of the IIG Note
and all accrued interest.  In return, the noteholder received all the
outstanding shares of IIC (including the shares of Investors) and IIG's
option to purchase certain securities held by Investors.

The Company accounted for the disposal of IIC and Investors as discontinued
operations and, accordingly, restated its 1997 balance sheet and 1998 statement
of operations.  As a result, the Company's 1998 income from the operations
before tax benefit of IIC and Investors ($200,204) together with its gain on
their disposal of $4,775,960 is reported separately from its loss from
continuing operations.  The gain on the disposal resulted from the cash
received of $637,711 over the carrying value of its subsidiaries ($4,138,249 of
liabilities in excess of the related assets).


(3) INVESTMENT, at Cost

In January 1999, IIG acquired 100,000 shares (adjusted for a subsequent stock
split) of common stock in a community bank for $500,000 and it uses the cost
method to account for this investment.  Subsequent to year-end, IIG acquired
an additional 10,000 shares of common stock for $100,000.


(4) INCOME TAXES

Actual income tax expense (benefit) for 1999 and 1998 differed from the
"expected" tax expense (benefit) for those years as computed by applying the
U.S. Federal corporate income tax rate of 34% to income before income taxes
by the following:

                                                         1999           1998
                                                        ------         ------
Computed "expected" tax expense (benefit)                (34)%          (34)%
Changes in the valuation allowance related
    to the net loss carryforward                          34             34
                                                        ------         ------

    Actual income tax expense (benefit)                   -  %           -  %
                                                        ======         ======








<PAGE>
<PAGE>21

The components of the deferred tax assets and liabilities at December 31 are
as follows:

                                                         1999           1998
                                                       --------       --------
Deferred tax assets:
 Operating loss carryforward                          $2,807,129     $2,808,706
 Capital loss carryforward                               430,216        430,216
 Other                                                    28,356         26,569
                                                      ----------     ----------

  Net deferred tax assets                              3,265,701      3,265,491
Valuation Allowance                                    3,265,701      3,265,491
                                                      ----------     ----------

Net deferred tax assets and liabilities               $     -        $    -
                                                      ==========     ==========

The net increase (decrease) in the total valuation allowance for the years
ended in 1999 and 1998 was $210 and $(615,239), respectively.  The change
in 1998 includes a reduction of $635,414 resulting from the disposal of
IIG's subsidiaries and the related increase in the operating and capital
tax loss carryforward balances.

Based on its current operating results, IIG is not expected to be able to
utilize its net operating loss carryforward and capital loss carryforward
balances until it finds a suitable business opportunity.  In the interim,
IIG will continue to provide a full 100% valuation allowance on its
deferred tax assets.

At December 31, 1999, IIG had capital loss carryforward of $1,153,395 expiring
in 2003 and an operating tax loss carryforward of $7,525,815 which expires as
described below:

                    Year of              Operating
                   expiration        Loss Carryforward
                   ----------        -----------------
                       2001              $3,312,812
                       2003                 248,087
                       2004                 741,690
                       2005                 869,767
                       2007                 135,644
                       2008                 397,263
                       2009                 205,693
                       2010                 440,780
                       2011                 868,422
                       2012                 305,657
                                         ----------

                                         $7,525,815
                                         ==========

Beginning in 1996, IIG included Investors in its consolidated tax return.
Since the sale of its subsidiaries in 1998, only the losses of IIG alone will
be available to offset its future income.




<PAGE>
<PAGE>22

If the Preferred Shares discussed in Notes 6 are issued, the resulting "change
in control" could substantially reduce the Company's ability to utilize its
non-life loss carryforwards.  Further, based on its current financial
condition, the Company cannot be assured that it will have the ability to
utilize its tax loss carryforwards.


(5) STOCK OPTIONS

IIG has three incentive stock option plans for the benefit of employees or
agents of the Company and its subsidiaries ("1982 Plan," "1992 Plan" and
"Agents Plan").

Under the 1982 Plan, options for up to 67,409 shares of IIG's common stock are
authorized and outstanding.  These options were fully exercisable, but expired,
unexercised, in 2000.

Under the 1992 Plan, options for up to 500,000 shares of IIG's common stock may
be granted to employees of the Company and/or its subsidiaries.  Options for
445,000 shares have been granted; all of these options expired, unexercised,
prior to the end of 1998.

As of December 31, 1998, all purchase options authorized under the Agent's Plan
have been granted and all outstanding purchase options expired, unexercised.
The Company has no plans to grant future options under the Agent's Plan as
these options related to the operations of the Company's former insurance
subsidiaries.

Outstanding options to purchase common stock at December 31, 1999 were as
follows:
                                           Average
               Outstanding    Options       Option      Year of
                 Options    Exercisable     Price     Expiration
                 -------      -------      --------    -------
1982 Plan         67,409       67,409      $ 0.6250      2000


(6) PREFERRED STOCK

IIG is authorized to issue 20 million shares of no-par preferred stock.  IIG's
Board is authorized to establish the actual number of shares to be issued in a
series, fix the designations, powers, preferences and rights within a series of
shares and set the qualifications, limitations or restrictions thereof without
further shareholder approval.  The Board has taken no action relating to these
shares and none have been issued.


(7) RELATED PARTY TRANSACTIONS

Over the past several years, Vice President Donald Goebert, who serves without
compensation, devoted a substantial amount of his time to resolution of the
issues related to the IIG Note.  In 1998, in recognition of these services,
IIG's Board of Directors authorized $50,000 in consulting fees for Mr. Goebert
and reimbursement of $16,500 for legal and financing expenses he had paid on
behalf of IIG.




<PAGE>
<PAGE>23

(8) DEFERRED COMPENSATION

IIG had a Deferred Compensation Plan which provided for annual payments of
$8,500 into a Trust for the benefit of its president.  Under the terms of this
agreement, if IIG were to become insolvent, the Trust would be subject to the
claims of IIG's general creditors; otherwise, the monies deposited into the
Trust would not revert back to IIG.

In 1997, the balance of funds in the trust account was released in partial
settlement of a claim against IIG.  As of December 31, 1997, there were no funds
in the trust account, however, consistent with it's initial intent, IIG had
recognized a liability to pay deferred compensation of $34,000.  Subsequent to
the disposal of IIC and the resignation of IIG's former president, the Board of
Directors decided to cancel the Deferred Compensation Plan.  As a result, IIG
reversed the $34,000 liability and recorded a negative charge to salary expense
in 1998.











































<PAGE>
<PAGE>24
Item 8. Changes in and Disagreements with Accountants on Accounting
        and Financial Disclosure

	Effective July 1, 2000, the partners in the Orlando, Florida office of
	BDO Seidman, LLP purchased the Orlando accounting practice of BDO Seidman,
	LLP and are continuing the practice under the name of Gallogly, Fernandez
	and Riley, LLP ("GFR"), an independent member of the BDO Seidman Alliance.
	Investors Insurance Group, Inc. ("IIG") is currently in the process of
	bringing its SEC filings current and, since the Orlando office had been
	primarily involved in IIG's 1996 and 1997 audits, IIG decided to continue
	this relationship.  Therefore, on July 13, 2001, IIG's Board of Directors
	dismissed BDO and retained GFR as its new independent certifying public
	accountants.

	BDO's report on IIG's most recent audited statements financial statements
	as of and for the years ended December 31, 1997 and 1996 contained no
	adverse opinion or a disclaimer of opinion and was not qualified or
	modified as to uncertainty, audit scope or accounting principles, except
	for the report on 	the financial statements for the years ended
	December 31, 1997 and 1996, which were modified as to a going concern
	uncertainty.  In connection with the audits of the two fiscal years ended
	December 31, 1997 and 1996 and the subsequent periods through the date
	hereof, there were no disagreements between IIG and BDO on any matter of
	accounting principles or practices, financial statement disclosure, or
	audit scope or procedure.  Further, there were no reportable events
	described in Item 304(a)(1)(iv) of Regulation SB.


































<PAGE>
<PAGE>25
PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons


Directors

The Board of Directors of the Company currently consists of two directors
whose terms expire at the next, as yet unshceduled, Shareholders' Annual
Meeting.  The directors are Messrs. Donald F.U. Goebert and Jesse H. Riebman.
The Board has not decided when, or if, it will name a new director for the
remainder of these terms.

As of July 15, 2002, the following table sets forth the age and address of each
currently active director, the principal occupation or employment of each
director during the previous five years, the year in which each  individual
initially became a director of the Company and other directorships in any
company with a class of securities registered pursuant to section 12 of the
Exchange Act or subject to the requirements of sections 15(d) of such Act or
any company registered as and investment company under the Investment Company
Act of 1940.

                        Position with the Company and Principal Occupation or
Name                    Employment During Past Five Years
---------------------   ------------------------------------------------------
Donald F.U. Goebert
315 Willowbrook Lane
West Chester, PA 19382
Age 65
Director Since June 11, 1987

                       Acting President, Acting Chief Executive Officer, Acting
                       Chief Financial Officer from May 1998 to present;
                       Vice President and a Director of the Company from June
                       1987 to present; Secretary and Treasurer of the Company
                       from June 1987 to June 1992; Chairman of the Board of
                       RELM Wireless Corporation for more than the past five
                       years.

Jesse H. Riebman
1680 Huntingdon Pike, Unit #121
Huntingdon Valley, PA 19006
Age 73
Director Since September 25, 1996

                       Director of the Company since September 25, 1996; AEL
                       Industries, Inc. from October 1959 to February 1996:
                       Treasurer 1963, Vice President 1980;


The Securities and Exchange Commission requires filing of public reports by
directors, officers and beneficial owners of more than ten (10%) percent of
any class of Securities of a company registered pursuant to Section 12 of the
Securities Exchange Act.  The rules require proxy statement disclosure of
those directors, officers and more than ten (10%) percent beneficial owners
that fail to file required reports or that fail to timely file such reports.
The Company requests and has received confirmations of compliance from each of
its directors and officers.  The Company is not aware of any failure to file
the required documents.

<PAGE>
<PAGE>26

Item 10. Executive Compensation

Directors Compensation

A director receives a fee in the amount of $500 for each meeting of the Board
of Directors and receives a fee in the amount of $300 for each meeting of any
standing committee of the Board of Directors.  The Company has no other
arrangements regarding compensation for services as a director and these fees
were suspended indefinitely in early 1997.

Executive Officers

As of December 31, 1999, the name and age of each executive officer of the
Company, the office or offices held by such person and the date on which such
person initially held such office or offices are set forth below.

                                                            Initial Date
        Name                        Office                   of Office
------------------------ ---------------------------------- -------------
Donald F.U. Goebert, Age 62
                         Acting President                   May 1998
                         Acting Chief Executive Officer     May 1998
                         Acting Chief Financial Officer     May 1998
                         Vice President                     July 1989

Each officer is elected to serve until the next annual meeting of directors is
held and until a successor is elected and has qualified, or until the earlier
of his death, resignation or removal from office.

The business experience for the previous five (5) years of Mr. Goebert is set
forth above under "Directors".  Mr. Goebert has no employment agreement.

The following table shows the compensation paid or accrued by the Company or
its Subsidiaries for the fiscal years ended December 31, 1999,1998,and 1997
to, or for the account of, the Chief Executive Officer and each of the four
highest paid executive officers whose cash compensation exceeded $100,000.

                      SUMMARY COMPENSATION TABLE
                      --------------------------
Name and                                                          All Other
Principle Position                  Year                        Compensation
------------------                  ----                        ------------
Donald F.U. Goebert,
Acting President,
Acting Chief Executive Officer,
Acting Chief Financial Officer,
Vice President
                                    1999                              -
                                    1998                           66,500(1)
									1997                              -

        (1) Over the past several years, Vice President Donald Goebert, who
		    serves without compensation, devoted a substantial amount of his
			time to resolution of the issues related to the IIG Note.  In
			recognition of these services, Mr. Goebert was paid $50,000
			in consulting fees.  In addition, Mr. Goebert was reimbursed
			$16,500 for legal and financing expenses he paid on behalf of IIG.


<PAGE>
<PAGE>27
Executive and Other Employee Benefit Plans

                       Incentive Stock Option Plan No. 1

The Company currently has in effect an Incentive Stock Option Plan adopted by
the Shareholders of the Company in 1982 which provides that (a) options for up
to 200,000 shares of common stock may be issued to employees of the Company
and/or its subsidiaries; (b) the exercise price shall not be less than fair
market value on the date of grant; (c) the term of an option may not exceed
ten (10) years and will end no later than three (3) months after termination
of employment, death or retirement or one (1) year after date of permanent
disability; and (d) such other terms as set forth in the Plan or as may be set
by the Company's Board of Directors. The Plan and each option is subject to
the provisions of section 422 of the Internal Revenue Code of 1986, as
amended. The Plan is applicable only to those options currently outstanding
(67,409 shares as of December 31, 1999) and no additional options may be
granted under the Plan.  All remaining options expired, unexercised, in 2000.


                       Incentive Stock Option Plan No. 2

The Company currently has in effect an Incentive Stock Option Plan adopted by
the Shareholders of the Company on June 18, 1992 which provides that (a)
options for up to 500,000 shares of common stock, par value $.50 per share,
may be issued to employees of the Company and/or its subsidiaries; (b) the
exercise price shall not be less than the fair market value of the shares on
the date on which the option is granted; (c) the term of the option may not
exceed ten (10) years and will end no later than three (3) months after an
employee's death, retirement or termination from service for any reason other
than disability and shall expire no later than one (1) year after an
employee's termination from service due to disability; and (d) such other
terms set forth in the Plan or as may be approved by the Board of Directors of
the Company. The Plan and each option is subject to Section 422 of the
Internal Revenue Code of 1986, as amended.

All outstanding options under this plan expired, unexercised prior to the end
of 1998.























<PAGE>
<PAGE>28
                  Option Exercises and Fiscal Year End Values

The following table provides information as to the unexercised options to
purchase the Company's Common Stock granted in fiscal year 1999 and prior
fiscal years to the named officers and the value of said options held by them
as of the end of the year.

                     OPTION VALUES AS OF DECEMBER 31, 1999

                Number of Unexercised Options    Value of Unexercised at
                   at December 31, 1999 (#)       In-the-Money Options
                                                at December 31, 1999($) *
                  -------------------------     -------------------------
Name              Exercisable Unexercisable     Exercisable Unexercisable
----------------  ----------- -------------     ----------- -------------
Donald F.U. Goebert    67,409       -                -           -

   * Value determined from market price at the fiscal year end ($0.13) less
     exercise price. The actual value, if any, an executive may realize will
     depend on the stock price on date of exercise of option, so there is no
     assurance the value stated will be equal to the value realized by the
     executive.

                       Simplified Employee Pension Plan

On January 1, 1992, the Company's subsidiary, Investors Insurance Corporation,
adopted a Simplified Employee Pension Plan. This same plan was subsequently
adopted by the Company on June 11, 1993.  Under the Plan, the Company may
contribute each year for each employee the lesser of fifteen percent (15%) of
each employee's salary (not to exceed $150,000) or thirty thousand dollars
($30,000). Contributions under the Plan are not mandatory and no contributions
were made in 1999 or 1998.




























<PAGE>
<PAGE>29

Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information concerning the beneficial security
ownership of the Company's common stock by the Directors and Executive
Officers, individually and as a group. The table also sets forth the only
persons who, to the company's knowledge, are the beneficial owners of more
than five (5%) percent of the outstanding voting securities of the company.


                                            Shares Owned
Name and Address                         Beneficially as of       Percent of
 of Beneficial Owner                        July 15, 2002          Class (1)
-------------------------                ------------------       ----------
Donald F.U. Goebert                          882,212 (2)             31.1%
315 Willowbrook Lane
West Chester, PA 19382

Jesse H. Riebman                             125,000 (3)              4.4%
1680 Huntingdon Pike, Unit #121
Huntingdon Valley, PA 19006

All Directors and Officers
        of the Company                     1,007,212 (2-3)           35.5%


(1) These percentages are computed by dividing the number of shares of common
    stock shown for each person by the sum of (i) the number of shares of
    common stock outstanding on July 15, 2002, and (ii) the number of
    shares which that particular person beneficially owns pursuant to stock
    options and stock warrants.

(2) Mr. Goebert is the direct owner of 195,554 shares.  In addition,
    Mr. Goebert has beneficial ownership through Chester County Fund, Inc.
    of 686,658 shares.

(3) The shares listed as beneficially owned by Mr. Riebman include 8,000
    shares owned by his wife.






















<PAGE>
<PAGE>30

Item 12. Certain Relationships and Related Transactions

Transactions Involving Directors and Officers

In January 1999, IIG paid $500,000 to purchase 100,000 shares (after giving
effect to subsequent stock splits) of CBCC, Inc. as an investment and
increase its holding to 60,000 in April 2001.  CBCC, Inc. has changed its name
to Stonebridge Financial Corp ("SFB") and now operates as a financial holding
company regulated by the Federal Reserve Bank and owning 100% of the shares of
Stonebridge Bank.  IIG vice president and director Donald F. U. Goebert is also
a director and shareholder of FSB.  Through IIG and other holdings, Mr. Goebert
beneficially owned 365,667 shares of FSB (22.9% of FSB's total outstanding
shares as of March 15, 2001.

Over the past several years, Vice President Donald Goebert, who serves without
compensation, devoted a substantial amount of his time to resolution of the
issues related to the IIG Note.  During 1998, in recognition of these services,
Mr. Goebert was paid $50,000 in consulting fees.  In addition, Mr. Goebert was
reimbursed $16,500 for legal and financing expenses he paid on behalf of IIG.


Item 13.  Exhibits and Reports on Form 8-K

(a)     1.      Financial Statements
                  (i)   Report of Independent Certified Public Accountants
                 (ii)   Consolidated Balance Sheets
                (iii)   Consolidated Statements of Operations
                 (iv)   Consolidated Statements of Shareholders' Equity
                  (v)   Consolidated Statements of Cash Flows
                 (vi)   Notes to Consolidated Financial Statements

                See Index to Financial Statements on page 9.

        2.      Exhibits
                See the Exhibit Index of this Annual Report on Form 10-KSB at
                page 62.

(b)     Reports on Form 8-K

The Company has filed no Forms 8-K during the last quarter of 1998 or the
first quarter of 1999.  However, the Company did file a Form 8K on July 13,
2001 relating to the change in auditors (see discussion under Item 8 above).

















<PAGE>
<PAGE>31

                                  SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) 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.

                                         INVESTORS INSURANCE GROUP, INC.


August 26, 2002                           By:  /s/ Donald F. U. Goebert
                                         --------------------------------
                                         Donald F. U. Goebert, Chariman of
                                         the Board and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.  The duties and
responsibilities of the chief financial officer and controller have been
assumed by Mr. Donald F. U. Goebert.


By:     /s/ Donald F. U. Goebert                          August 26, 2002
        ----------------------------
        Donald F. U. Goebert, Director


By:     /s/ Jesse H. Riebman                              August 26, 2002
        ----------------------------
        Jesse H. Riebman , Director






























<PAGE>
<PAGE>32

                        Investors Insurance Group, Inc.
                                  Exhibit Index
 Regulation S-K
 Exhibit Table
 Reference                 Description of Exhibit                    Document
 -------- ------------------------------------------------    -----------------
   3      Articles of Incorporation of Registrant             see 1995 Form 10K

   3      Amendment to the Articles of Incorporation of       see 1995 Form 10K
          Registrant to authorize preferred stock

   3      Bylaws of Registrant                                see 1995 Form 10K

   4      Stock Purchase Agreement, dated March 31, 1989,     see 1995 Form 10K
          among Gemco National, Inc., Corporate Life
          Insurance Company and IIC, Inc., relating to the
          capital stock of IIC, Inc., Investors Insurance
          Corporation and Westchester Reinsurance, Ltd.

  10      Incentive Stock Option Plan, effective              see 1995 Form 10K
          June 8, 1982.

  10      Incentive Stock Option Plan, effective              see 1995 Form 10K
          June 18, 1992.

  10      1995 Agent Stock Option Plan, effective             see 1995 Form 10K
          January 1, 1995.

  10      Reinsurance Agreement, INVE0001, between            see 1995 Form 10K
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life Insurance
          Company, effective October 1, 1991.

  10      Addendum No. 1, effective January 1, 1993, to       see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 2, effective December 1, 1993, to      see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 3, effective March 1, 1994, to         see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 4, effective April 1, 1994, to         see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.



<PAGE>
<PAGE>33

  10      Addendum No. 5, effective August 1, 1994, to        see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 6, effective October 1, 1994, to       see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 7, effective March 27, 1995 to         see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 8, effective May 1, 1995 to            see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 9, effective January 19, 1996 to     see 1996 Form 10KSB
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 10, effective September 1, 1996 to   see 1996 Form 10KSB
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 11, effective January 1, 1997 to     see Form 10QSB
          Reinsurance Agreement INVE0001 between           dated March 31, 1997
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 12, effective September 30, 1997    see Form 10QSB
          to Reinsurance Agreement INVE0001 between    dated September 30, 1997
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Reinsurance Agreement between the Registrant's      see 1995 Form 10K
          subsidiary, Investors Insurance Corporation and
          New Era Life Insurance Company, effective
          December 31, 1995.

  10      Amendment No. 1 to the Reinsurance Agreement      see 1996 Form 10KSB
          between the Registrant's subsidiary, Investors
          Insurance Corporation and New Era Life Insurance
          Company, effective December 31, 1996.


<PAGE>
<PAGE>34

  10      Third Party Administration Agreement dated       see From 10QSB dated
          October 18, 1996 between the Registrant's          September 30, 1996
          subsidiary, Investors Marketing Group, Inc.
          and Republic-Vanguard Life Insurance Company.

  10      Management and Service Agreement between            see 1995 Form 10K
          Registrant and Registrant's subsidiary, Investors
          Insurance Corporation, effective January 1, 1993.
          (Note: see termination agreement)

  10      Management Agreement between Registrant and         see 1995 Form 10K
          Registrant's subsidiary, Investors Marketing
          Group, Inc., effective June 10, 1994.
          (Note: see termination agreement)

  10      Termination of Management and Service Agreement   see 1995 Form 10KSB
          between Registrant and Registrant's subsidiary,
          Investors Insurance Corporation, effective
          December 31, 1997

  10      Termination of Management Agreement between       see 1995 Form 10KSB
          Registrant and Registrant's subsidiary,
          Investors Marketing Group, effective
          December 31, 1997

  10      Management Agreement between the Registrant's     see 1995 Form 10KSB
          subsidiaries Investors Insurance Corporation and
          Investors Marketing Group, Inc. effective
          January 1, 1998

  10      Employment agreement between Registrant's           see 1995 Form 10K
          subsidiary, Investors Insurance Corporation, and
          Melvin C. Parker, dated July 1, 1993.

  10      Deferred compensation agreement between Registrant  see 1995 Form 10K
          and Melvin C. Parker, dated December 12, 1994.

  10      Employment agreement between Registrant and         see 1995 Form 10K
          Melvin C. Parker, dated April 19, 1996.

  10      Employment agreement between Registrant's           see 1995 Form 10K
          subsidiary, Investors Insurance Corporation, and
          Susan F. Powell, dated July 1, 1993.

  10      Indemnity agreement between Registrant and          see 1995 Form 10K
          Melvin C. Parker, re: service as an officer of
          Investors Marketing Group, Inc., dated
          June 10, 1994.

  10      Indemnity agreement between Registrant and          see 1995 Form 10K
          Susan F. Powell, re: service as an officer of
          Investors Marketing Group, Inc., dated
          June 10, 1994.

  10      Agreement with California to raise additional       see 1995 Form 10K
          capital for Investors Insurance Corporation
          dated February 20, 1996.


<PAGE>
<PAGE>35

  10      Agreement dated July 30, 1997 with Arizona          see Form 10QSB
          regarding reinsurance and certain operating       dated June 30, 1997
          issues.

  10      Agreement Dated December 31, 1997,               See Form 10KSB dated
          termination of the Management and Service         December 31, 1997
		  Agreement with Investors Insurance Corporation
		  dated January 1, 1993.

  10      Agreement Dated December 31, 1997,               See Form 10KSB dated
          termination of the Management and Service         December 31, 1997
		  Agreement with Investors Marketing Group
		  dated June 10, 1994.

  10      Agreement Dated January 1, 1998,                 See Form 10KSB dated
          Management and Service between Investors          December 31, 1997
		  Insurance Corporation Agreement and Investors
		  Marketing Group.

  10      Agreement dated April 1998, Settlement and       See Form 10QSB dated
          Release Agreement with National Heritage Life       March 31, 1998
		  Insurance Company in Liquidation.

  11      Statement of Computation of Earnings per Share.    See Consolidated
                                                             Statement of
                                                             Operations and
                                                             Note 1 to the
                                                             Consolidated
                                                             Financial
                                                             Statements.

  16      Letter from BDO Seidman related to change of     See Form 10KSB dated
          auditors.                                          December 31, 1999


  21      Subsidiaries of Registrant.                               36























<PAGE>
<PAGE>36
                         Subsidiaries of the Registrant

As of December 31, 1999, Investors Insurance Group, Inc. had no subsidiaries.

























































<PAGE>
<PAGE>37

Appendix A
==========
             Historical information regarding the operating characteristics of
			 IIG's former subsidiaries is presented in IIG's 1997 From 10KSB.
			 Excerpts from this document are presented below.
=================================================

PART I

Item 1. Description of Business

                             Business Development

Investors Insurance Group, Inc. ("IIG") is a holding company which manages its
subsidiaries' operations and recruits agents for its life insurance
subsidiary.  IIG was incorporated under the laws of the State of Florida on
May 11, 1993 and is the successor corporation of the former Gemco National,
Inc. ("Gemco"), a New York corporation founded in 1966.  The change in
corporate identity was made to increase investor awareness of IIG's current
market focus and was approved by Gemco's shareholders at the Annual Meeting of
Shareholders on June 11, 1993.  The actual change was accomplished by the
merger of Gemco National, Inc. into a new Florida corporation, IIG, on
September 1, 1993.

IIG has one subsidiary, (IIC, Inc.) an insurance holding company, which serves
as the intermediate parent of Investors Insurance Corporation ("Investors"), a
life insurance company founded in 1956.  Investors has one subsidiary
Investors Marketing Group, Inc. ("IMG") which recruits agents and acts as
a third party administrator ("TPA") for a select group of unaffiliated life
insurance companies.

In late 1996, Investors suspended new sales in California (see discussion
below under Regulation and Licensing) and the Company began using IMG as a TPA
to market and service new business in California for its primary reinsurer,
Republic-Vanguard Life Insurance Company ("RVL").  Under this agreement, IMG
will receive override commission and servicing fees for the business IMG
generates through its agent network.  The Company plans to expand its TPA
business with other insurance companies and into other states and in 1997, it
began acting as a TPA for the business included in New Era Life Insurance
Company ("NEL") novation discussed below.  IIG was unable to adequately
capitalize IMG for this new venture, therefore, on January 1, 1997 all of the
outstanding shares of IMG were contributed to Investors.  This reorganization
enabled IMG to obtain the required operating capital from Investors.

The Company has been actively trying to raise additional capital to provide
liquidity for IIG and to enable Investors to continue to reduce its level of
reinsurance.  As an alternative, IIG has also been trying to sell Investors.
These efforts have yet to be successful and have created substantial doubt
about the ability of IIG to continue to pay its bills as they become due
(see discussion under IIG's Liquidity and Capital Resources in Item 6.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.)







<PAGE>
<PAGE>38
                            Business of the Issuer

The Company specializes in the sale of flexible premium deferred annuity
products.

The Company seeks to make sales of retirement savings products by offering
annuity products that meet the demands of agents and the pre- and post-
retirement population.  The Company markets its products through independent
agents licensed in 21 states.  Investors' agents are recruited by IIG, as well
as through other national marketing agencies ("NMAs").  As of December 31,
1997, the Company had approximately 949 active independent agents licensed to
sell the Company's products.  Since 1990, approximately 90% of annuity
premiums received by Investors have been produced by agents recruited by IIG
or its predecessor.

The IIG's Corporate Headquarters is located at 7200 West Camino Real, Suite
203, Boca Raton, Florida 33433.  The Corporate Headquarters' telephone number
is (561) 391-5043.  The Company's Administrative and Financial operations are
located at 3030 Hartley Road, Jacksonville, Florida 32257.  The telephone
number at this location is (904) 260-6990.


Products

The Company specializes in the sale of flexible premium deferred annuity
("FPDA") products to individuals.  During each of the past three years, sales
of FPDAs have accounted for over 95% of the Company's premiums received.

FPDAs begin with a specific initial premium deposit by the policyowner at the
time of issuance and allow additional contributions to the policy whenever the
policyowner wants to make them.  Following an accumulation period, the
policyowner is entitled to receive the accumulated value of the policy as a
lump-sum payment or through annuity payments over a certain period, or for
life.  Interest credited during the accumulation period generally is not
subject to federal or state income tax.

Investors currently sells several variations of FPDA products with different
benefits, interest rates and commission structures.  These products offer tax-
deferred accumulation of interest, one year interest rate guarantees,
guaranteed cash values, and a choice of guaranteed income options on the
selected maturity date.  The products are continuously reviewed and
modifications made to remain competitive within the target market.

The Company's operating earnings are derived from its coinsurance ceding
commission and the excess of its actual investment income, including realized
gains (losses), over interest credited to annuity contracts and expenses.  In
determining credited rates, Investors takes into account the profitability of
its annuity business and the relative competitive position of its products.
Credited rates during the initial and any renewal period are based on
assumptions and estimates relating principally to persistency, investment
yield and expenses as well as management's judgment with respect to market and
competitive conditions.








<PAGE>
<PAGE>39

Investors' FPDAs have an initial credited interest rate that is guaranteed for
one year.  Following the initial guarantee period, Investors may adjust the
credited interest rate annually, subject to the guaranteed minimum interest
rates specified in the contracts of 3.0% or 4.0% (minimum rates of 6.0% to
7.0% during the surrender charge period apply to a portion of the business).
At December 31, 1997, initial crediting rates ranged from 6.75% to 13.05%,
based on contract provisions; renewal crediting interest rates ranged from
4.0% to 7.0%.

The Company incorporates a number of features in its annuity products designed
to reduce the occurrence and adverse effect of premature termination of the
policy.  Premature termination of an annuity contract results in the loss of
the Company's anticipated future investment earnings related to the annuity
deposit and in the accelerated recognition of expenses related to policy
acquisition, principally commissions, which are otherwise recoverable over the
life of the policy.  However, if the policy were coinsured, premature
termination will accelerate recognition of the coinsurance ceding commission
(see Note 1 to the Financial Statements in Item 8).

The primary feature incorporated by the Company into its products to minimize
premature terminations is a surrender charge.  While the policyowner is
permitted to withdraw all, or a portion, of the accumulated value, such
withdrawals are generally subject to a declining surrender charge during the
first nine years of the policy's life.  The Company permits free annual
withdrawals following the first policy anniversary, but such withdrawals are
limited to 10% of the eligible accumulated value.  In addition, one of the
Company's annuity products has a mandatory five year payout feature which
requires that all policy withdrawals, except 10% free withdrawals, be paid out
over a period of no less than five years.  While the actual payout amount is
often commuted by the Company, this product feature provides the Company
protection from large withdrawal activity in rising interest rate scenarios as
policyholders move funds in search of higher interest rates.


                                  Investments

The Company's long term profitability is largely determined by its ability to
maintain a spread between its investment earnings and the interest credited on
its annuity products.  At December 31, 1997, the Company had $62 million of
cash and invested assets, of which $54 million or approximately 87.1%
represented cash or investments in fixed income securities.

The Company's fixed income investments are 99% comprised of securities issued
by the U.S. Government, or U.S. Government agencies and sponsored enterprises.
All investments are made in accordance with guidelines established by the
Board of Directors as to type, liquidity, maturity and duration of investment.
These guidelines were developed in order to match the cash flows of the
investments with the expected cash requirements of policy liabilities.  The
management of the Company's fixed income investments, in accordance with these
guidelines, is handled by Asset Allocation and Management Companies ("AAM") of
Chicago, Illinois.








<PAGE>
<PAGE>40
Approximately 51% of the Company's fixed income investments are collateralized
mortgage obligations ("CMOs").  Like all mortgage-backed investments, CMO
securities are subject to prepayment risk, especially in periods of declining
interest rates when the mortgages which collateralize the security are repaid
more rapidly than scheduled, as individuals refinance higher rate mortgages to
take advantage of the lower prevailing rates.  As a result, holders of CMOs
could receive prepayments on their investments which the holder may not be
able to reinvest at interest rates comparable to the rate on the prepaying
security.

The Company has reduced this risk of prepayment by investing its mortgage-
backed investment portfolio in planned amortization class ("PAC") and targeted
amortization class ("TAC") instruments.  These investments are designed to
amortize in a more predictable manner by shifting the primary risk of
prepayment of the underlying collateral to investors in other tranches
("support classes") of the CMO.  In the first quarter of 1996, the Company
began to redirect its investments away from CMOs and toward other types of
securities backed by the U. S. Government or its agencies.

The Company uses expected prepayment assumptions to account for its mortgage-
backed securities.  Accordingly, as prepayment rates on mortgage-backed
securities change, the Company adjusts its income realization on mortgage-
backed securities to reflect the best estimate of future cash flows and the
corresponding income resulting from the accretion of discounts and the
amortization of premiums.

The Company attempts to manage its assets and liabilities so that income and
principal payments received from investments are adequate to meet the cash
flow requirements of its policyholder liabilities.  The estimated weighted
average duration of the Company's fixed income investment portfolio was 4.92
years as of December 31, 1997.  The relatively short nature of the
investment portfolio reflects the characteristics of the Company's
liabilities.  The majority of the Company's policy and deposit liabilities
represent reserves for FPDAs that may be partially or totally surrendered at
the policyholders' option, subject to surrender charges, when applicable.  The
cash flows of the Company's liabilities are affected by actual maturities,
surrender experience and credited interest rates.  The Company periodically
performs cash flow studies under various interest rate scenarios to evaluate
the adequacy of expected cash flows from its assets to meet the expected cash
requirements of its liabilities.  The Company utilizes these studies to
determine if it is necessary to lengthen or shorten the average life and
duration of its investment portfolio.


                                  Reinsurance

Under generally accepted accounting principles, amounts recoverable from the
reinsurer for future contract benefits are reflected as assets ("investment
contract benefits recoverable") and the related policy liability is presented
separately.  Under statutory accounting, the recoverable amounts are offset
against the related policy liabilities.









<PAGE>
<PAGE>41

In 1991, the Delaware Department of Insurance ("Delaware") expressed concern
over Investors' ratio of statutory policy liabilities to its capital and
surplus.  To address this concern, on October 1, 1991 Investors entered into a
coinsurance agreement with RVL.  Under the terms of this agreement 80% of all
new annuity contracts written by Investors were coinsured with RVL.  This
agreement enabled the Company to slow the growth of its policy liabilities
while at the same time adding additional capital and surplus from the profits
on the coinsured portion of the business.

By 1994, however, the growth of the unreinsured portion of the business had
raised the ratio of statutory policy liabilities to capital and surplus to a
level that brought renewed concern from Delaware.  To address this concern,
Investors increased the coinsurance rates for new business from 80% to 90% on
October 1, 1994 and to 100% on May 1, 1995 while at the same time it developed
plans to raise additional capital.  Raising the coinsurance rates stopped the
ratio from significantly increasing, but by late 1995 the ratio was still in
excess of twenty to one, well in excess of Delaware's target of fifteen to
one, and it became clear that additional capital could not be raised prior to
the end of 1995.  Therefore, in early 1996, Investors entered into an
agreement to cede a block of annuity policies with statutory policy reserves
of $76,306,929 to NEL.  This reinsurance agreement provides for an initial
coinsurance period (up to five years) followed by full assumption of the
specified policies (In early 1997, NEL began to fully assume these policies.).
Investors will continue to service these policies through December 31, 2000.
Under its terms, this agreement became effective on December 31, 1995 and,
with Delaware's approval, was reflected in Investors' 1995 statutory
statement.   (However, since the agreement did not actually close until 1996,
it was reflected as a 1996 transaction under generally accepted accounting
principles.)  This agreement was amended effective December 31, 1996 to cede
an additional statutory reserve of $6,986,644.  This reinsurance reduced the
ratio below Delaware's target.

Based on its improved financial position resulting from the reinsurance
agreements with NEL,  Investors' ceding ratio to RVL was reduced to 60% on
January 1, 1997.  However, as a result of its on-going discussion with the
Arizona Insurance Department ("Arizona Department") (see Regulatory Issues
below), Investors amended its quota share reinsurance contract with RVL to
cede all its current and future Arizona business to RVL on a 100% quota share
basis.

During 1998, the Company plans to continue its efforts to raise additional
capital (see discussion below under Regulations and Licensing) to enable
Investors to continue to reduce its level of reinsurance.  As an alternative,
IIG has also been trying to sell Investors.  However, there can be no
assurance these plans will be successful.


                     Employees and Independent Contractors

As of December 31, 1997, the Company had 25 full-time employees and 3 part-
time employees.  As of the same date, Investors had approximately 949
independent insurance agents licensed directly to it.  All of these agents are
independent contractors who also represent other insurance companies and are
not employees of Investors.





<PAGE>
<PAGE>42

                                  Competition

The life insurance industry is highly competitive with many life insurance
companies offering diverse products with many alternative marketing or
distribution systems.  Many of these life insurance companies have been in
business for a longer time, are more widely known by reason of such factors a
age and size and have greater financial resources than the Company.  However,
due to the specialized nature of Investors' products, the Company competes
directly with a relatively small number of other insurance companies
nationwide and in regional and state markets.  Management believes that
Investors has been able to attract and will continue to be able to attract,
motivate and retain productive independent agents by providing quality
products and service.

Currently, banks and bank holding companies are entering the insurance and
securities businesses resulting in increased competition for the Company's
products.  The banking industry can be expected to continue to seek expanded
powers to sell insurance and annuities through both changes in the law or
interpretation of current laws. The ultimate outcome and timing of such
changes are not easily anticipated, but the Company will continue to monitor
developments in order to respond quickly to new opportunities or increased
competition.


                           Regulation and Licensing

As an insurance company, Investors is subject to regulation and supervision in
the states in which it is authorized to do business.  This regulation is
designed primarily to protect policyholders.  Although the extent of
regulation varies from state to state, in general the insurance laws of the
states establish supervisory agencies with broad administrative powers.  These
powers include the granting and revocation of licenses to transact business,
licensing of agents, approval of products and policy forms, determination of
permissible investments, and establishment of minimum reserve requirements an
capital and surplus levels.

The state regulations require Investors to file detailed periodic financial
reports with the supervisory authorities in each of the states in which it
does business.  These reports are prepared based on what is known as the
statutory accounting principles, which differs from the generally accepted
accounting principles ("GAAP").  The primary differences between these two
sets of accounting principles are:



        -Investment Market Value Adjustment.  All fixed maturity
         securities are reported at amortized cost for statutory
         purposes, while GAAP requires the fixed maturities classified as
         "available for sale" to be reported at market value;

        -Prepaid Coinsurance Allowances.  On a GAAP basis, if the present
         value of coinsurance allowances is an asset, any amounts paid are
         treated as deposits until realization of any profit is assured.
         Under statutory accounting, the present value of prospective payouts
         are recognized as a liability while the present value of any
         recoveries is ignored.



<PAGE>
<PAGE>43

        -Deferred Acquisition Costs.  These costs are treated as a period
         expense on a statutory basis, but are amortized over the expected
         gross profits under GAAP;

        -Goodwill.  The excess of the purchase price of Investors over its
         identifiable assets and liabilities is deferred and amortized for
         GAAP.  These costs are not recognized under statutory accounting.

        -Non-Admitted Assets.  Certain designated assets are not recognized
         under statutory accounting;

        -Policy Liabilities.  The calculation of the liability for future
         policy benefits is based on different assumptions for statutory
         purposes than for GAAP and is reported net of reinsurance;

        -Unearned Ceding Commission.  The reinsurance ceding commission is
         treated as a period revenue on a statutory basis, but is deferred and
         amortized based on the expected gross profit of the related annuity
         contracts under GAAP.

        -Interest Maintenance and Asset Valuation Reserves.  These reserves
         are treated as liabilities for statutory purposes, but are restored
         to capital and surplus for GAAP;

        -Deferred Income Taxes.  Under certain conditions, the impact of
         certain variances from taxable income is recognized as an adjustment
         to income tax expense for GAAP, but not for statutory accounting
         purposes; and

        -Premium Revenue.  Under GAAP, premiums related to certain interest
         sensitive products are excluded from revenue.

In addition to these differences, from time to time, insurance companies may
record transactions in different periods for regulatory purposes than under
generally accepted accounting principles.  The NEL reinsurance agreement was
recorded in 1995 for statutory accounting but in 1996 under generally accepted
accounting principles.

Since Investors is incorporated in the state of  Delaware, Delaware is the
primary regulatory body which supervises Investors' operations.  However,
other states' insurance regulatory agencies (such as Florida and Arizona)
exercise regulatory authority over Investors where the majority of its
products are sold.  Under the rules of the National Association of Insurance
Commissioners ("NAIC"), one or more of the supervisory agencies will examine
Investors periodically (usually at three year intervals) on behalf of all the
states in which it is licensed to conduct business.  Delaware finished its
last examination as of December 31, 1995.  This examination did not result in
any issues or recommendations that would be material individually or in the
aggregate.










<PAGE>
<PAGE>44


The NAIC has established risk-based capital standards to determine the capital
adequacy of a life insurance company based on the type and mixture of risks
inherent in its operations.  These standards require the computation of a
risk-based capital amount which is then compared to a company's actual total
adjusted capital.  The computation involves applying factors to various
statutory financial data to address four primary risks: asset default, adverse
insurance experience, interest rate risk and external events.  These standard
provide for regulatory attention when the percentage of total adjusted capital
to authorized control level risk-based capital is below certain levels.  At
December 31, 1997, Investors' percentage of total adjusted capital is well in
excess of ratios which would require regulatory action.

The NAIC has formulated twelve ratios which are referred to as the Insurance
Regulatory Information System ("IRIS") ratios.  The IRIS ratios are used to
help evaluate each life insurance company's financial performance.  Companies
which have four or more ratios falling outside of the "expected" ranges may be
subject to additional regulatory review.  In 1997, Investors had three IRIS
ratios falling outside the expected ranges.  Investors will furnish an
explanation of the exceptions to the Delaware Department of Insurance, which
may then disseminate the information to other insurance departments.
Investors may experience future IRIS ratios outside of industry standards due
to continued growth and extensive use of reinsurance, but management does not
anticipate any substantial regulatory issues to result.

During 1995, Delaware expressed increased concern over Investors' high ratio
of statutory policy liabilities to capital and surplus.  In December 1995, the
IIG signed a definitive agreement to sell Investors to Standard Management
Corporation ("SMC") in exchange for stock of SMC and relief from IIG's $8
million note.  However, in the first quarter of 1996, the agreement was
terminated and a controversy ensued between IIG and SMC regarding the basis of
this termination.  In April 1996, IIG agreed to settle all the disputes
arising from this agreement and its termination by paying SMC $8,000 in cash
and 72,000 restricted shares of IIG stock.

Simultaneously with IIG's search for additional capital, Investors responded
directly to Delaware's concern by structuring a reinsurance agreement for a
significant block of its business.  As described above and in Note 5 of the
Company's financial statements, in the first quarter of 1996, Investors closed
a reinsurance agreement with NEL.  This agreement was effective December 31,
1995 and, based on Delaware's approval, was recorded in Investors' statutory
financial statements for 1995 (under generally accepted accounting principles
this transaction was recorded in 1996).  As a result, Investors' ratio of
statutory liabilities to capital and surplus was reduced below Delaware's
target.  However, Delaware continues to monitor Investors closely, including
reviewing and approving certain expenditures.

In early 1996, Investors agreed to arrange a capital infusion that would raise
its statutory capital and surplus to $11 million in order to continue to write
new business in California.  In the second quarter of 1996, IIG announced an
agreement to sell preferred stock valued at $7 million to AAM Capital Partner
("AAMC").  However, AAMC was unable to arrange the necessary financing, and
the agreement has been canceled.






<PAGE>
<PAGE>45

Since Investors was not been successful in attracting this capital, it
suspended writing new business in California on November 15, 1996.  During
1996, 30% of Investors' new business was written in California.  In order to
protect the value of its California agent network, IMG is acting as a third-
party administrator for RVL marketing its Vanguard Annuity.  Under this
arrangement, IMG will receive override commissions and servicing fees for the
business it generates through its agent network.

Representing 42% of its new business in 1997, Arizona is a very important
market for Investors.  The Arizona Department has expressed its concern about
Investors financial position and has engaged the Company in an on-going
dialogue over the past few years.  To address this concern, in addition to the
reinsurance agreement (see Note 5 to the financial statements), Investors
agreed to reinsure either (a) all its current and prospective business on a
100% quota share basis or (b) all its current and prospective Arizona business
on a full assumption basis upon the earliest of the following events:

               1. Investors' statutory capital and surplus falls
                  below $4.5 million, or

               2. Investors' Risk Based Capital falls to less
                  than 225% of its Authorized Control Level, or

               3. Investors' ratio of policyholder liabilities
                  to statutory capital and surplus exceeds 16:1, or

               4. Investors' statutory capital and surplus is
                  less than $10 million on December 15, 1997.

While Investors continues to meet the first three provisions, it has not been
able to raise the capital required to meet the fourth provision.  Although
there can be no assurance that the Arizona Department will continue to defer
enforcement of the fourth provision, the Arizona Department has not yet
attempted to force compliance.

To meet the conditions imposed by this agreement, IIG is currently seeking a
buyer for Investors.


Item 2.  Description of Property

The Company leases approximately 1,300 square feet of office space on the
second floor of a building at 7200 West Camino Real, Boca Raton, Florida
33433.  This lease expires on September 30, 1998.

Investors leases approximately 6,700 square feet of office space on the third
floor of a building at 3030 Hartley Road, Jacksonville, Florida 32257.  This
lease expires on October 31, 1999.

Neither the Company or its subsidiaries own any commercial real estate.


Item 6.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations





<PAGE>
<PAGE>46
                     Caution on Forward-Looking Statements

Statements other than historical information contained in this Report are
considered forward-looking and involve a number of risks and uncertainties due
to the following important factors, among other risks and uncertainties
inherent in the Company's business:

      Changes resulting from the current legal actions and negotiations
      related to the Investors Insurance Group, Inc. Note Payable ("IIG
      Note").

      The parent company's access to sufficient funds to pay its obligations
      as they become due.

      The Company's ability to retain its agent network and key personnel.

      Regulatory requirements from any of the states in which Investors is
      authorized to sell insurance.

      Prevailing interest rate levels, which may affect the ability of the
      Company to sell its products, the market value of the Company's
      investments or the lapse rate of the Company's policies, notwithstanding
      product design features intentioned to enhance persistency of the
      Company's products.

      Changes in the federal income tax laws and regulations which may affect
      the relative tax advantage of the Company's products.

      Changes in the regulation of financial services, including bank sales of
      insurance products, which may affect the competitive environment for the
      Company's products.


                                    General

The following analysis discusses the results of operations and financial
condition of Investors Insurance Group, Inc. ("IIG") and its wholly-owned
subsidiaries ("the Company"), primarily Investors Insurance Corporation
("Investors") and Investors Marketing Group, Inc. ("IMG"), and should be read
in conjunction with the Company's consolidated financial statements and notes
thereto included elsewhere in this report.

The Company has been actively trying to raise additional capital to provide
liquidity for IIG and to enable Investors to reduce its level of reinsurance.
As an alternative, IIG has also been trying to sell Investors.  These efforts
have yet to be successful and, as discussed below,  the resulting uncertainty
has had a detrimental effect on the Company's marketing efforts.


Primary Product

The Company, through its subsidiary Investors, specializes in the sale of
flexible premium deferred annuity products ("FPDA") as a retirement savings
vehicle for individuals.  During the past two years, sales of FPDAs have
accounted for over 95% of the Company's total premiums received.





<PAGE>
<PAGE>47

Under generally accepted accounting principles ("GAAP"), premiums received on
FPDAs are not recognized as revenue at the time of sale but rather are
reflected as future policy liabilities.  Similarly, policy acquisition costs
(primarily commissions) related to such sales are not recognized as expenses
but rather are capitalized as deferred acquisition costs ("DAC").  As a result
of this process, no profit or loss is realized at the time of sale.

The Company's operating earnings from this product are derived from the excess
of investment income (including interest and investment gains (losses)) and
surrender fees over the sum of interest credited to annuity contracts and
acquisition and maintenance expenses.  Over the life of an annuity, net
investment income, net investment gains (losses) and policy fees are
recognized as revenue and DAC is amortized as an expense.  The timing of the
DAC amortization is based on the estimated gross profits which is adjusted
based on actual experience.  The Company's earnings depend, in large part,
upon persistency of its annuities to enable it to recover the unamortized
portion of its DAC.  The Company uses surrender charges in annuity policies
both to discourage, and to mitigate, the effect of premature withdrawals.


Third-Party Administration

In late 1996, Investors suspended new direct sales in California (see
discussion below under Regulatory Issues) and the Company began using IMG as a
third-party administrator ("TPA") to market and service new business in
California for its primary reinsurer, Republic-Vanguard Life Insurance Company
("RVL") and to service the business included in New Era Life Insurance Company
("NEL") novation.  Under this TPA agreement, IMG receives an override
commission and servicing fees for the business IMG generates through its agent
network.


Reinsurance

Under GAAP, amounts recoverable from the reinsurer for future contract
benefits are reflected as assets ("investment contract benefits recoverable")
and the related policy liability is presented on a gross basis.  Under
statutory accounting, the amounts are off-set against the related policy
liabilities.  While reinsurance ceding commission income is recognized
immediately under statutory accounting, it is recognized over the life of the
related insurance policy under GAAP.

In 1991, the Delaware Department of Insurance ("Delaware") expressed concern
over Investors' ratio of statutory policy liabilities to its capital and
surplus.  To address this concern, on October 1, 1991 Investors entered into a
coinsurance agreement with RVL, a member of Winterthur Swiss Insurance Group,
one of the largest Swiss insurance companies.  Under the terms of this
agreement 80% of all new annuity contracts written by Investors was coinsured
with RVL.  This agreement enabled the Company to slow the growth of its
statutory policy liabilities while at the same time adding additional
statutory capital and surplus from the profits on the coinsured portion of the
business.







<PAGE>
<PAGE>48

By 1994, however, the growth of the unreinsured portion of the business had
raised the ratio of statutory policy liabilities to capital and surplus to a
level that brought renewed interest from Delaware.  To address this concern,
Investors increased the coinsurance rates for new business from 80% to 90% on
October 1, 1994 and to 100% on May 1, 1995 while at the same time it developed
plans to raise additional capital.  Raising the coinsurance rates stopped the
ratio from significantly increasing, but by late 1995 the ratio was still in
excess of twenty to one, well in excess of Delaware's target of fifteen to
one, and it became clear that additional capital could not be raised prior to
the end of 1995.  Therefore, Investors began working on an additional
reinsurance arrangement.

In early 1996, Investors entered into an agreement to cede a block of annuity
policies with statutory policy reserves of $76.3 million to NEL.  This
reinsurance agreement provides for an initial coinsurance period (up to five
years) followed by full assumption of the specified policies.  Investors will
continue to service these policies through December 31, 2000.  Since under its
terms, this agreement became effective on December 31, 1995 and, based on
Delaware's approval, was reflected in Investors' 1995 statutory statement,
Investors' ratio of statutory policy liabilities to capital and surplus the
ratio was reduced below Delaware's target.  (Since this transaction was closed
on March 1, 1996, it is treated as a 1996 event under generally accepted
accounting principles.)  This agreement was amended effective December 31,
1996 to cede an additional statutory reserve of $7.0 million.

In 1997, NEL began to assume sole liability for the policies that were ceded
to it in 1996.  As this occurs, the Company removes its liability for
Investment contracts, its related assets (Investment contract benefits
recoverable and Deferred acquisition costs) and its Unearned ceding
commissions from its balance sheet and recognizes the related profit portion
of the Unearned ceding commission as Commission income and other income.  See
Consolidated Operating Results below.

Based on its improved financial position resulting from the reinsurance
agreements with NEL,  Investors' ceding ratio to RVL was reduced to 60% on
January 1, 1997.  However, as a result of its on-going discussion with the
Arizona Insurance Department ("Arizona Department") (see Regulatory Issues
below), Investors amended its quota share reinsurance contract with RVL to
cede all its current and future Arizona business to RVL on a 100% quota share
basis.


Regulatory Issues

In early 1996, Investors agreed to arrange a capital infusion that would raise
its statutory capital and surplus to $11 million in order to continue to write
new business in California.  Investors was not successful in attracting this
capital and, as a result, it suspended writing new business in California on
November 15, 1996.  In 1996, 30% of Investors' new business was written in
California.  In order to protect the value of the Company's California agent
network, IMG began acting as a third-party administrator for RVL in California
as of January 1, 1997.







<PAGE>
<PAGE>49
Representing 42% of its new business in 1997, Arizona is a very important
market for Investors.  The Arizona Department has expressed its concern about
Investors financial position and has engaged the Company in an on-going
dialogue over the past few years.  To address this concern, in addition to the
reinsurance agreement (see Note 5 to the Company's financial statements),
Investors agreed to reinsure either (a) all its current and prospective
business on a 100% quota share basis or (b) all its current and prospective
Arizona business on a full assumption basis upon the earliest of the following
events:

               1. Investors' statutory capital and surplus falls below $4.5
                  million, or

               2. Investors' Risk Based Capital falls to less than 225% of its
                  Authorized Control Level, or

               3. Investors' ratio of policyholder liabilities to statutory
                  capital and surplus exceeds 16:1, or

               4. Investors' statutory capital and surplus is less than $10
                  million on December 15, 1997.

While Investors continues to meet the first three provisions, it has not been
able to raise the capital required to meet the fourth provision.  Although
there can be no assurance that the Arizona Department will continue to defer
enforcement of the fourth provision, the Arizona Department has not yet
attempted to force compliance.

To meet the conditions imposed by this agreement, IIG is currently seeking a
buyer for Investors.

The insurance laws of the various states require life insurance companies to
file detailed periodic reports with the state's regulatory agencies and these
agencies may examine the life insurance companies' business and accounts at
any time.  Under NAIC rules, one or more of the regulatory agencies will
periodically examine Investors, normally at three-year intervals, on behalf of
the states in which Investors is licensed.  Delaware finished its last
examination as of December 31, 1995.  This examination did not result in any
issues or recommendations that would be material individually or in the
aggregate.


Year 2000 Issue

Many existing computer programs use only two digits to identify a year in a
date field.  These programs were designed and developed without considering
the impact of the upcoming change in the century.   If not corrected, many
computer applications could fail or create erroneous results by a or at the
year 2000.  This is referred to as the "Year 2000 Issue."

The Company has performed a risk analysis of its exposure to potential
problems resulting from the change to the new millennium.  Based on its
analysis, the Management believes the tasks required to address these issues
can and will be handled by its existing staff with no material additional
costs.





<PAGE>
<PAGE>50
                             Results of Operations

In order to clarify the liquidity issues, IIG's results will be discussed
separately from the consolidated results.


IIG's Results of Operations

IIG's basic financial statements are presented in Note 10 of the Company's
financial statements.

Management Fees declined to $139,000 in 1997 from $580,000 in 1996.  These
fees principally consist of override commissions on Investor's new business.
Based on the reduced productivity of its National Marketing Agency ("NMA")
operation in 1997 and the poor prospects for near term profitability, the NMA
contract was terminated at the end of 1997.  Therefore, this will not be a
source of future revenue.

Investment Gains of $12,000 were created in 1997 when IIG liquidated its
remaining investments to generate operating funds.  There were no investment
gains or losses in 1996.

As a result of its funds shortage, IIG was unable to supply the working
capital required by IMG in 1996.  To address this problem, IIG forgave all its
intercompany debt due from IMG on December 31, 1996 (as requested by Delaware)
then contributed all of its IMG stock to Investors on January 1, 1997.
Thereafter, Investors advanced the required working capital to IMG.  This
resulted in the $176,000 Forgiveness of Debt from IMG in 1996.

General and Administrative Expenses dropped significantly in 1997.  This
reduction reflects both a substantial reduction in personnel and consulting
expenses and the termination of the NMA agreement with Investors.  Under the
provisions of the termination agreement, IIG gave up its rights to certain
unpaid and future override commissions and Investors gave up its rights to
uncollected service fees.  As a result, the NMA service fee expense dropped to
$90,000 in 1997 from $360,000 in 1996.

The IIG Note (see Note 6 to the Company's financial statements), was due on
March 31, 1997 and is currently in default.  Since there is no provision in
the IIG Note agreement for interest subsequent to maturity, IIG has not
accrued interest after March 31, 1997.  The accrued interest at the end of
1997 was $960,000 compared to $800,000 as of the end of 1996.  See discussion
of IIG liquidity below.
<PAGE> 17

As a result of IIG's decision during 1997 to include Investors in its
consolidated tax return for 1996, IIG was able to use a portion of its tax
losses to reduce the amount of consolidated tax below the amount Investors
would have paid under a separate return.  The 1997 cash flow from the benefit
of the 1996 tax loss ($64,000) was used to fund IIG's 1997 operations.  The
1997 tax return is expected to result in an additional tax refund.  However,
on a separate return basis, the refund due Investors is expected to exceed the
consolidated refund by approximately $41,000 and it is not clear how this
shortage will be paid to Investors.






<PAGE>
<PAGE>51

Consolidated Results of Operations

Investors' new business production declined to $24.3 million in 1997 from
$63.2 million in 1996.  Management believes the decline in written premium is a
reflection of the current low interest rate environment and the marketing
difficulties resulting from the issues surrounding its agreement with the
Arizona Department (see Note 9 to the Company's financial statements and
discussion below) and the IIG Note (see Note 6 to the Company's financial
statements and discussion below under Liquidity and Capital Resources).
Despite these marketing problems, the Company's operating results continue to
be positive primarily due to the increase in reinsurance ceding commission
income and realized investment gains.  The major transactions effecting the
financial statements impact several different line items.  These transactions
will be discussed below together with their impacts; thereafter, the remaining
significant changes in the financial statements are discussed by line item.

As a result of its on-going discussion with the Arizona Department, Investors
amended its quota share reinsurance contract with RVL to cede all its current
and future Arizona business to RVL on a quota share basis.  Under the terms of
this amendment, which was effective August 1, 1997, Investors transferred
statutory reserves of approximately $8.5 million.  The impact of this
transaction was to increase Investors' statutory capital and surplus by
approximately $254,000 and to increase the Company's GAAP basis pre-tax income
by approximately $214,000 (the Realized investment gains, approximately
$513,000, result from the disposal of the investments supporting the ceded
policies.  Realization of investment gains and losses changes the pattern of
expected future profits which forms the basis for the amortization of deferred
acquisition costs.  As a result of this gain, the amortization of deferred
acquisition costs increased by approximately $299,000 and this increase is
reflected in Underwriting, acquisition and insurance expenses).  This
transaction also increased Investment contract benefits recoverable
approximately $9.7 million and Unearned ceding commissions approximately $0.7
million.

As described in the Company's prior year financial statements, Investors
closed a large reinsurance agreement with NEL in 1996.  This transaction
substantially accounts for many of the changes in the Company's Consolidated
Statements of Operations.  Specifically, the 1996 Realized investment gains is
substantially due to the disposal of the investments supporting the ceded
policies.  As a result of this gain, the amortization of deferred acquisition
costs increased approximately $2.3 million which is included in Underwriting,
acquisition and insurance expenses.  Since the assets related to the
reinsurance agreement were transferred to NEL on March 1, 1996, both the
related income (Net investment income) and expense (Interest on investment
contracts) have declined from the levels reflected in 1996.

During 1997 NEL assumed sole liability for investment contract liabilities of
approximately $78.8 million.  This assumption reduced both the Company's
liability for Investment contracts and its Investment contract benefits
recoverable by $78.8 million.  Further, it reduced the Company's Deferred
acquisition costs and Unearned ceding commissions by $2.7 million and $3.2
million and increased its Commission and other income by $0.6 million.  There
was no impact on either investment income or interest credited since the
supporting investments were transferred previously and interest credited is
presented net of reinsurance.




<PAGE>
<PAGE>52
In addition to the impact of the 1997 novation discussed above, the 1997
balance of Commission and other income increased approximately $173,000 as a
result of IMG's new TPA operation and approximately $729,000 as a result of an
acceleration in the amortization of deferred ceding commissions.  This
acceleration reflects the combined impact of higher levels of current and
expected surrender rates.

The year-to-year reduction in Underwriting, acquisition and insurance expenses
is primarily the result of the high level of 1996 expenses related to the NEL
reinsurance transaction (see discussion  on DAC amortization above).  In
Addition, management has also attempted to reduce its current operating
expenses and defer certain promotional expenses until the issues surrounding
the IIG Note are resolved.

The IIG Note was due on March 31,1997, but is still outstanding.  Since the
IIG Note does not provide for interest after maturity, no further interest has
been recognized (see Note 6 to the Company's financial statements).  The
reduction in Other expenses reflects this change.

The 1996 NEL reinsurance agreement significantly reduced Investors' ratio of
statutory liabilities to statutory capital and surplus.  In recognition of its
improved statutory financial position, effective January 1, 1997, Investors
reduced its ceding rate under its quota share agreement from 100% to 60%
(however, see discussion above on Arizona reinsurance).  As a result of the
lower ceding rate and the lower volume of new business, Investors now receives
more from its reinsurer for reimbursement of benefits than it pays on new
premium.  The new asset line Reinsurance benefits receivable accompanies the
reduction in the liability Amounts due to reinsurer.

The calculation of Income tax benefit results in a deferred tax asset that is
fully reserved.  As a result, the income tax benefit reflected in the
Company's financial statements represents the Company's estimate of the amount
it expects to recover  in the current period.  The Company included Investors
in its consolidated tax return for the first time in 1996 and, as a result, it
received partial tax benefits related to the 1996 tax losses of the non-life
companies.  This benefit (approximately $23,000) is reflected in 1997.  For
1996, The Company expected to pay approximately $248,000 related to its 1996
tax return and has recovered approximately $423,000 related to prior years
returns in excess of its 1995 estimate.

In addition to the reinsurance transactions discussed above, the value of the
Company's investments changed significantly due to changes in the market
interest rates.  The carrying value of investments in affiliates and
available-for-sale includes a net unrealized investment gain of $1,785,000 in
1997 and a net unrealized investment loss of $577,000 in 1996.  This change in
the unrealized gains and losses caused a decrease of $573,000 in Deferred
acquisitions costs and $618,000 in Unearned ceding commissions and an increase
of $2,407,000 in the Net unrealized investment gains and (losses) component of
shareholders' equity.











<PAGE>
<PAGE>53

                        Liquidity and Capital Resources

IIG's Liquidity and Capital Resources

IIG is an insurance holding company whose principal asset is the common stock
of IIC, Inc. which owns all the outstanding shares of Investors.  IIG's
primary cash requirements are to meet debt service and to pay operating
expenses.  To meet the cash requirements, IIG has relied primarily on the
funds it received under the NMA agreement with Investors.  However, the NMA
agreement was terminated on December 31, 1997.  The insurance laws of the
State of Delaware generally limit the ability of Investors to pay cash
dividends in excess of certain amounts without prior regulatory approval and
also require that certain agreements relating to the payment of fees and
charges to the Company by Investors be approved by the Delaware Insurance
Department.  As reflected in the parent only statement of cash flows in Note
10 to the Company's financial statements, IIG's cash flow from operations has
been insufficient to meet its operating needs for several years.  In the past
IIG met this cash drain by liquidating its other investments.  Beginning in
1996, the cash drain was partially met by withholding interest payments on the
IIG Note (see Note 6 to the Company's financial statements).  In 1997, IIG
partially funded its operations with a $64,000 tax benefit from its 1996 tax
return.

In addition to its normal operating expenses, the IIG Note is in default and,
as described in Note 6 to the Company's financial statements, resolution of
the related legal issues and IIG's ultimate liability under the IIG Notes is
uncertain at this time.  However, IIG will probably be required to fund the
on-going legal expenses related to resolution of this issue.  IIG is pursuing
several alternatives designed to re-establish the Company's liquidity.  These
alternatives include negotiation to sell Investors, renegotiating the terms
and ultimate liability on the Note and seeking funding from other parties.
There can be no assurance these efforts will be successful and there is
substantial doubt that IIG can continue to meet its on-going obligations on a
timely basis.

The Company's independent auditors have included an explanatory paragraph in
their report on the Company's financial statements stating that the Company's
significant operating losses, accumulated deficit and liquidity problems raise
substantial doubt about the Company's ability to continue as a going concern.
There is substantial doubt that IIG can continue to meet its obligations on a
timely basis without an additional source of funds.


Investors' Liquidity and Capital Resources

The liquidity needs of Investors are met by premiums received from annuity
sales, net investment income received, the proceeds from investments upon
maturity, sale or redemption, and commissions received from its coinsurer on
annuity contracts transferred.  The primary uses of funds by Investors are the
payment of surrenders, policy benefits, operating expenses and commissions,
and the purchase of assets for investment purposes.  No material capital
expenditures are planned.







<PAGE>
<PAGE>54

Investors tests the ability of its investment portfolio to fund its liability
to its policyholders under several possible future interest rate environments.
The results of these tests are used by the state regulatory authorities to
assess the adequacy of Investors' stated liabilities.  Based on the results of
these tests, in 1997, for the first time, Investors increased its statutory
reserves ($215,000).

The NAIC has established risk-based capital standards to determine the capital
requirements of a life insurance company based on the type and mixture of
risks inherent in its operations.  These standards require the computation of
a risk-based capital amount which is then compared to a company's actual total
adjusted capital.  The computation involves applying factors to various
statutory financial data to address four primary risks: asset default, adverse
insurance experience, interest rate risk and external events.  These standards
provide for regulatory attention when the percentage of total adjusted capital
to authorized control level risk-based capital is below certain levels.  At
December 31, 1997, Investors percentage of total adjusted capital is well in
excess of the ratios which would require regulatory action.

The Insurance Departments of both California and Arizona have expressed
concern over Investors' level of statutory capital.  Investors has suspended
writing new business in California and may suspend writing in Arizona to
address theses concerns.


                           New Accounting Standards

Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No 128, Earnings per Share.  Under this Statement, the
weighted average number of common shares outstanding during the year is used
to calculate the "Basic Earnings per Share".  The "Diluted Earnings per Share"
adjusts the Basic Earnings per Share calculation to include dilutive common
stock equivalents.  Since IIG's common stock equivalents are anti-dilutive as
of the end of 1997 and 1996, only the Basic Earnings per Share calculation is
presented and no prior period restatement is required.

The Company will adopt Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income ("SFAS 130"), effective January 1, 1998.  SFAS
130 provides standards for presenting the components and accumulated balances
of "Comprehensive Income" in a full set of general-purpose financial
statements.  Under SFAS 130, a new primary financial statement ("Comprehensive
Income") will present all changes in shareholder's equity (except for
transactions with the company's shareholders).   Since this information is
presently included in the Company's Consolidated Statements of Capital Deficit,
the Company does not believe SFAS 130 will be significant to its financial
statements.













<PAGE>
<PAGE>55

The Company will adopt Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS
131"), effective January 1, 1998.  SFAS 131 provides new standards for the way
public enterprises report information about operating segments in their annual
and interim financial statements.  SFAS 131 defines operating segments as
components of an enterprise that are regularly evaluated by the chief
operating decision maker in deciding the on-going allocation of corporate
resources and assessing personnel performance.  Since SFAS 131 was only
recently issued, the Company has not been able to fully evaluate the impact,
if any, it may have on future financial disclosures.


                         Inflation and Changing Prices

The Company does not believe that inflation has had a material effect on its
consolidated results of operations.

Interest rate changes may have temporary effects on the sales levels and
profitability of the annuity products offered by the Company.  For example,
regardless of whether interest rates rise or fall, competing investment
products (such as annuities offered by the Company's competitors, bank
certificates of deposit and mutual funds) may temporarily become more
attractive to potential customers.  The Company constantly monitors interest
rates with respect to a spectrum of durations and sells annuities that permit
flexible responses to interest rate changes as part of its management of
interest spreads.  As required, the Company adjusts the rate credited to its
policyholders to maintain its competitive position and to achieve its required
interest spread.

The Company manages its investment portfolio in part to reduce its exposure to
interest rate fluctuations.  In general, the market value of the Company's
fixed maturity portfolio increases or decreases in inverse relationship with
fluctuations in interest rates, and the Company's net investment income
increases or decreases in direct relationship to interest rate changes.  For
example, if interest rates decline, the Company's fixed maturity investments
generally will increase in market value, while net investment income will
decrease as fixed income investments mature or are sold and proceeds are
reinvested at the declining rates, and vice versa.

Interest rate changes significantly effect the market value of the Company's
investment portfolio.  Since the Company carries most of its investments at
market value, these changes, net of the related effects on the amortization of
deferred acquisition cost and unearned commission, and the related deferred
tax accounts, directly effect total shareholders' equity.

======================================
PLEASE REVIEW IIG'S 1997 FORM 10KSB FOR ADDITIONAL INFORMATION REGARDING
THE HISTORICAL ROLE OF IIG'S FORMER SUBSIDIARIES.