<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the Quarterly Period Ended September 30, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from _________ to __________

Commission File Number 001-11462
                       ---------

                          DELPHI FINANCIAL GROUP, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
           Delaware                               (302) 478-5142                              13-3427277
-------------------------------           -------------------------------          -------------------------------
<S>                                       <C>                                      <C>
(State or other jurisdiction of           (Registrant's telephone number,          (I.R.S. Employer Identification
incorporation or organization)                 including area code)                             Number)
</TABLE>

<TABLE>
<CAPTION>
1105 North Market Street, Suite 1230, P.O. Box 8985, Wilmington, Delaware                         19899
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>
                (Address of principal executive offices)                                        (Zip Code)
</TABLE>

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to filing requirements
for the past 90 days:

                             Yes   X          No

     As of October 31, 2002, the Registrant had 17,318,184 shares of Class A
     Common Stock and 3,279,018 shares of Class B Common Stock outstanding.

<PAGE>
                          DELPHI FINANCIAL GROUP, INC.
                                    FORM 10-Q
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                              AND OTHER INFORMATION

<TABLE>
<CAPTION>
                                                                                                        Page
                                                                                                        ----
<S>            <C>                                                                                      <C>
PART I.        FINANCIAL INFORMATION (UNAUDITED)

               Consolidated Statements of Income for the Three and Nine
                   Months Ended September 30, 2002 and 2001............................................   3

               Consolidated Balance Sheets at September 30, 2002 and
                   December 31, 2001...................................................................   4

               Consolidated Statements of Shareholders' Equity for the
                   Nine Months Ended September 30, 2002 and 2001.......................................   5

               Consolidated Statements of Cash Flows for the
                   Nine Months Ended September 30, 2002 and 2001.......................................   6

               Notes to Consolidated Financial Statements..............................................   7

               Management's Discussion and Analysis of Financial
                   Condition and Results of Operations.................................................  10


PART II.       OTHER INFORMATION

               Item 5.  Other Information..............................................................  18

               Item 6.  Exhibits and Reports on Form 8-K...............................................  18

               Signatures..............................................................................  18

               Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002................  19
</TABLE>


                                     - 2 -
<PAGE>
                          PART I. FINANCIAL INFORMATION

                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  Three Months Ended              Nine Months Ended
                                                                     September 30,                  September 30,
                                                                ------------------------      ------------------------
                                                                   2002           2001           2002           2001
                                                                ---------      ---------      ---------      ---------
<S>                                                             <C>            <C>            <C>            <C>
Revenue:
   Premium and fee income .................................     $ 152,780      $ 127,068      $ 465,955      $ 372,886
   Net investment income ..................................        40,627         38,397        120,796        116,896
   Net realized investment losses .........................       (10,825)        (6,926)       (10,512)        (6,250)
                                                                ---------      ---------      ---------      ---------
                                                                  182,582        158,539        576,239        483,532
                                                                ---------      ---------      ---------      ---------
Benefits and expenses:
   Benefits, claims and interest credited to policyholders        115,450         96,972        352,586        276,841
   Commissions ............................................        10,691          9,595         32,534         29,561
   Amortization of cost of business acquired ..............        11,584          8,536         32,656         24,911
   Other operating expenses ...............................        24,326         23,172         74,314         68,578
                                                                ---------      ---------      ---------      ---------
                                                                  162,051        138,275        492,090        399,891
                                                                ---------      ---------      ---------      ---------
      Operating income ....................................        20,531         20,264         84,149         83,641
Interest expense:
   Corporate debt .........................................         2,115          2,539          6,873          9,013
   Dividends on Capital Securities of Delphi Funding L.L.C            839          1,072          2,517          4,737
                                                                ---------      ---------      ---------      ---------
                                                                    2,954          3,611          9,390         13,750
      Income before income tax expense and
       extraordinary gain (loss) ..........................        17,577         16,653         74,759         69,891
Income tax expense ........................................         4,784          5,081         22,664         22,219
                                                                ---------      ---------      ---------      ---------
      Income before extraordinary gain (loss) .............        12,793         11,572         52,095         47,672
Extraordinary gain (loss), net of income taxes ............          --            1,233           (216)         7,446
                                                                ---------      ---------      ---------      ---------
      Net income ..........................................     $  12,793      $  12,805      $  51,879      $  55,118
                                                                =========      =========      =========      =========
Basic results per share of common stock:
   Income before extraordinary gain (loss) ................     $    0.62      $    0.56      $    2.51      $    2.32
   Net income .............................................          0.62           0.62           2.50           2.68
Diluted results per share of common stock:
   Income before extraordinary gain (loss) ................     $    0.60      $    0.55      $    2.45      $    2.26
   Net income .............................................          0.60           0.61           2.44           2.61
Dividend paid per share of common stock ...................     $    0.07      $    0.07      $    0.21      $    0.21
</TABLE>

                 See notes to consolidated financial statements.


                                     - 3 -
<PAGE>
                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                    September 30,    December 31,
                                                                                                         2002             2001
                                                                                                     -----------      -----------
<S>                                                                                                 <C>              <C>
Assets:
   Investments:
      Fixed maturity securities, available for sale ............................................     $ 2,499,428      $ 2,223,789
      Short-term investments ...................................................................         154,930           92,862
      Other investments ........................................................................         127,961          110,563
                                                                                                     -----------      -----------
                                                                                                       2,782,319        2,427,214
   Cash ........................................................................................          33,881           11,682
   Cost of business acquired ...................................................................         170,478          168,894
   Reinsurance receivables .....................................................................         394,570          388,910
   Goodwill ....................................................................................          93,929           93,929
   Other assets ................................................................................         190,360          171,834
   Assets held in separate account .............................................................          70,398           73,683
                                                                                                     -----------      -----------
      Total assets .............................................................................     $ 3,735,935      $ 3,336,146
                                                                                                     ===========      ===========
Liabilities and Shareholders' Equity:
   Future policy benefits:
      Life .....................................................................................     $   231,774      $   222,363
      Accident and health ......................................................................         382,042          348,267
   Unpaid claims and claim expenses:
      Life .....................................................................................          41,525           34,616
      Accident and health ......................................................................         169,972          167,628
      Casualty .................................................................................         537,860          506,778
   Policyholder account balances ...............................................................         867,281          817,543
   Corporate debt ..............................................................................         111,145          125,675
   Other liabilities and policyholder funds ....................................................         611,883          431,871
   Liabilities related to separate account .....................................................          60,617           63,361
                                                                                                     -----------      -----------
      Total liabilities ........................................................................       3,014,099        2,718,102
                                                                                                     -----------      -----------
   Company-obligated mandatorily redeemable Capital Securities of Delphi
      Funding L.L.C. holding solely junior subordinated deferrable interest
      debentures of the Company ................................................................          36,050           36,050
                                                                                                     -----------      -----------
   Shareholders' equity:
      Preferred Stock, $.01 par; 10,000,000 shares authorized ..................................              --               --
      Class A Common Stock, $.01 par; 40,000,000 shares authorized;
         18,754,328 and 17,763,428 shares issued and outstanding, respectively .................             188              178
      Class B Common Stock, $.01 par; 20,000,000 shares authorized;
         3,279,018 and 4,132,688 shares issued and outstanding, respectively ...................              33               41
      Additional paid-in capital ...............................................................         372,677          369,385
      Accumulated other comprehensive income (loss) ............................................          41,937          (10,985)
      Retained earnings ........................................................................         322,450          274,874
      Treasury stock, at cost; 1,505,290 shares of Class A Common Stock ........................         (51,499)         (51,499)
                                                                                                     -----------      -----------
         Total shareholders' equity ............................................................         685,786          581,994
                                                                                                     -----------      -----------
             Total liabilities and shareholders' equity ........................................     $ 3,735,935      $ 3,336,146
                                                                                                     ===========      ===========
</TABLE>

                 See notes to consolidated financial statements.


                                     - 4 -

<PAGE>
                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              Accumulated
                                         Class A      Class B     Additional    Other
                                         Common       Common        Paid-in  Comprehensive    Retained     Treasury
                                          Stock        Stock        Capital  (Loss) Income    Earnings       Stock          Total
                                        ---------    ---------     --------- -------------    ---------     ---------     ---------
<S>                                     <C>          <C>          <C>        <C>              <C>          <C>            <C>
Balance, January 1, 2001 ...........    $     168    $      48     $ 366,834    $ (53,622)    $ 274,060     $ (49,295)    $ 538,193
                                                                                                                          ---------
Net income .........................           --           --            --           --        55,118            --        55,118
Other comprehensive income:
   Decrease in net unrealized
     depreciation on investments ...           --           --            --       33,001            --            --        33,001
                                                                                                                          ---------
Comprehensive income ...............                                                                                         88,119
Issuance of stock, exercise of stock
   options and share conversions ...            8           (7)        1,941           --            --            --         1,942
Acquisition of treasury stock ......           --           --            --           --            --        (1,914)       (1,914)
Cash dividends .....................           --           --            --           --        (4,264)           --        (4,264)
                                        ---------    ---------     ---------    ---------     ---------     ---------     ---------
Balance, September 30, 2001 ........    $     176    $      41     $ 368,775    $ (20,621)    $ 324,914     $ (51,209)    $ 622,076
                                        =========    =========     =========    =========     =========     =========     =========
Balance, January 1, 2002 ...........    $     178    $      41     $ 369,385    $ (10,985)    $ 274,874     $ (51,499)    $ 581,994
                                                                                                                          ---------
Net income .........................           --           --            --           --        51,879            --        51,879
Other comprehensive income:
   Increase in net unrealized
     appreciation on investments ...           --           --            --       56,875            --            --        56,875
   Net unrealized loss on cash
     flow hedge ....................           --           --            --       (3,953)           --            --        (3,953)
                                                                                                                          ---------
Comprehensive income ...............                                                                                        104,801
Issuance of stock, exercise of stock
   options and share conversions ...           10           (8)        3,292           --            --            --         3,294
Cash dividends .....................           --           --            --           --        (4,303)           --        (4,303)
                                        ---------    ---------     ---------    ---------     ---------     ---------     ---------
Balance, September 30, 2002 ........    $     188    $      33     $ 372,677    $  41,937     $ 322,450     $ (51,499)    $ 685,786
                                        =========    =========     =========    =========     =========     =========     =========
</TABLE>

                 See notes to consolidated financial statements.


                                     - 5 -

<PAGE>
                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                             Nine Months Ended
                                                                                                September 30,
                                                                                          ------------------------
                                                                                            2002           2001
                                                                                          ---------      ---------
<S>                                                                                       <C>            <C>
Operating activities:
   Net income .......................................................................     $  51,879      $  55,118
   Adjustments to reconcile net income to net cash provided by operating
        activities:
      Change in policy liabilities and policyholder accounts ........................       106,680         64,692
      Net change in reinsurance receivables and payables ............................       (13,398)       (32,498)
      Amortization, principally the cost of business acquired and investments .......        21,042         12,186
      Deferred costs of business acquired ...........................................       (51,864)       (37,572)
      Net realized losses on investments ............................................        10,512          6,250
      Net change in trading account securities ......................................         5,832         29,806
      Net change in federal income tax liability ....................................        15,071         45,990
      Extraordinary loss (gain) .....................................................           216         (7,446)
      Other .........................................................................         6,400        (12,434)
                                                                                          ---------      ---------
        Net cash provided by operating activities ...................................       152,370        124,092
                                                                                          ---------      ---------
Investing activities:
   Purchases of investments and loans made ..........................................      (805,701)      (516,205)
   Sales of investments and receipts from repayment of loans ........................       539,854        635,905
   Maturities of investments ........................................................       116,991         22,305
   Net change in short-term investments .............................................       (62,072)       (88,833)
   Business acquisitions ............................................................            --         (2,613)
   Change in deposit in separate account ............................................           541            118
                                                                                          ---------      ---------
        Net cash (used) provided by investing activities ............................      (210,387)        50,677
                                                                                          ---------      ---------
Financing activities:
   Deposits to policyholder accounts ................................................        86,128         67,157
   Withdrawals from policyholder accounts ...........................................       (43,107)       (48,564)
   Proceeds from issuance of common stock and exercise of stock options .............         3,294          1,942
   Dividends paid on common stock ...................................................        (4,303)        (4,264)
   Acquisition of treasury stock ....................................................            --         (1,914)
   Borrowings under Credit Agreements ...............................................        29,000         33,000
   Principal payments under Credit Agreements .......................................       (24,000)      (170,000)
   Principal payment under SIG Senior Notes .........................................        (9,000)        (9,000)
   Change in liability for Federal Home Loan Bank advances ..........................        45,000         (6,500)
   Repurchase of Capital Securities .................................................            --        (51,329)
   Repurchase of Senior Notes .......................................................       (10,874)        (8,284)
   Change in liability for securities loaned or sold under agreements to repurchase .         8,078         23,380
                                                                                          ---------      ---------
        Net cash provided (used) by financing activities ............................        80,216       (174,376)
                                                                                          ---------      ---------
Increase in cash ....................................................................        22,199            393
Cash at beginning of period .........................................................        11,682         12,344
                                                                                          ---------      ---------
      Cash at end of period .........................................................     $  33,881      $  12,737
                                                                                          =========      =========
</TABLE>

                 See notes to consolidated financial statements.


                                     - 6 -
<PAGE>
                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE A - SIGNIFICANT ACCOUNTING POLICIES

The financial statements included herein were prepared in conformity with
accounting principles generally accepted in the United States ("GAAP") for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by GAAP for complete financial statements. Such
principles were applied on a basis consistent with that reflected in the
Company's report on Form 10-K for the year ended December 31, 2001. The
information furnished includes all adjustments and accruals of a normal
recurring nature which are, in the opinion of management, necessary for a fair
presentation of results for the interim periods. Operating results for the nine
months ended September 30, 2002 are not necessarily indicative of the results
that may be expected for the year ended December 31, 2002. Certain
reclassifications have been made in the 2001 financial statements to conform to
the 2002 presentation. For further information refer to the consolidated
financial statements and footnotes thereto included in the Company's report on
Form 10-K for the year ended December 31, 2001. Capitalized terms used herein
without definition have the meanings ascribed to them in the Company's report on
Form 10-K for the year ended December 31, 2001.

Recently Adopted Accounting Standards. Effective January 1, 2002, the Company
adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill
and Other Intangible Assets." Under SFAS 142, goodwill and intangible assets
deemed to have indefinite lives are no longer amortized over a pre-determined
period, but are required to be periodically reviewed for impairment. Other
intangible assets with finite lives continue to be amortized over their useful
lives. An impairment loss resulting from the adoption of SFAS 142 must be
accounted for as a cumulative effect of a change in accounting principle and
recognized in the entity's first interim period financial statements following
the effective date regardless of the interim period in which the measurement is
completed. Any subsequent impairment losses will be reflected within operating
results in the income statement. At January 1, 2002, unamortized goodwill of
$60.9 million was attributable to the acquisition of SNCC, whose operations are
included in the group employee benefits segment, and $33.0 million was
attributable to the acquisition of Matrix, whose operations do not meet the
quantitative threshold for reportable segments and, therefore, are reported in
other segments. In accordance with SFAS 142, the Company during the first half
of 2002 completed its transitional tests for impairment of goodwill, and based
on these tests, the Company determined that no impairment of goodwill had
occurred.

Income before extraordinary loss was $52.1 million, or $2.51 per share ($2.45
per share assuming dilution), for the first nine months of 2002, and $12.8
million, or $0.62 per share ($0.60 per share assuming dilution), for the third
quarter of 2002. Income before extraordinary gain, excluding the effects of
goodwill amortization, would have been $50.1 million, or $2.44 per share ($2.37
per share assuming dilution), for the first nine months of 2001, and $12.4
million, or $0.60 per share ($0.59 per share assuming dilution), for the third
quarter of 2001. The following table provides a reconciliation of reported net
income to adjusted net income and the related earnings per share data as if the
provisions of SFAS 142 related to goodwill had been adopted as of January 1,
2001:

<TABLE>
<CAPTION>
                                                   Three Months Ended            Nine Months Ended
                                                      September 30,                September 30,
                                               -------------------------     -------------------------
                                                  2002           2001            2002          2001
                                               ----------     ----------     ----------     ----------
                                                     (dollars in thousands, except per share data)
<S>                                            <C>            <C>            <C>            <C>
Net income, as reported ..................     $   12,793     $   12,805     $   51,879     $   55,118
Add back: goodwill amortization ..........             --            799             --          2,397
                                               ----------     ----------     ----------     ----------
     Adjusted net income .................     $   12,793     $   13,604     $   51,879     $   57,515
                                               ==========     ==========     ==========     ==========
Basic results per share of common stock:
Net income, as reported ..................     $     0.62     $     0.62     $     2.50     $     2.68
Add back: goodwill amortization ..........             --           0.04             --           0.12
                                               ----------     ----------     ----------     ----------
         Adjusted net income .............     $     0.62     $     0.66     $     2.50     $     2.80
                                               ==========     ==========     ==========     ==========
Diluted results per share of common stock:
Net income, as reported ..................     $     0.60     $     0.61     $     2.44     $     2.61
Add back: goodwill amortization ..........             --           0.04             --           0.12
                                               ----------     ----------     ----------     ----------
         Adjusted net income .............     $     0.60     $     0.65     $     2.44     $     2.73
                                               ==========     ==========     ==========     ==========
</TABLE>


                                     - 7 -

<PAGE>




                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

NOTE A - SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

In April 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No.
145, "Rescission of FASB Statements No. 4, 44, and 62, Amendment of FASB
Statement No. 13, and Technical Corrections." SFAS 145 is required to be adopted
for fiscal years beginning after May 15, 2002. SFAS 145 rescinds SFAS 4, which
required all gains and losses from extinguishment of debt to be aggregated and,
if material, classified as an extraordinary item, net of the related income tax
effect. Accordingly, gains or losses from extinguishment of debt will be
classified as income or loss from continuing operations in the income statement
unless the extinguishment qualifies as an extraordinary item under the
provisions of Accounting Principles Board Opinion No. 30 ("APB 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." Events or transactions that are both unusual in nature and
infrequent in occurrence are classified as extraordinary items under APB 30.
Upon adoption, any gain or loss on extinguishment of debt previously classified
as an extraordinary item in prior periods presented that does not meet the
criteria of APB 30 for such classification will be reclassified as required by
SFAS 145. For the nine month period ending September 30, 2002 and 2001, the
Company had an extraordinary (loss) gain, net of the related income tax effect,
of $(0.2) million, or $(0.01) per diluted share, and $7.4 million, or $0.35 per
diluted share, respectively, that would be reclassified to ongoing operations if
SFAS 145 were adopted early.

NOTE B - INVESTMENTS

At September 30, 2002, the Company had fixed maturity securities available for
sale with a carrying value and a fair value of $2,499.4 million and an amortized
cost of $2,421.1 million. At December 31, 2001, the Company had fixed maturity
securities available for sale with a carrying value and a fair value of $2,223.8
million and an amortized cost of $2,249.3 million.

NOTE C - REPURCHASE OF SENIOR NOTES

The Company repurchased $10.5 million aggregate principal amount of its 8%
Senior Notes due 2003 at various times during the second quarter of 2002. The
Company recognized an extraordinary loss of $0.2 million, net of an income tax
benefit of $0.1 million, in connection with these repurchases.

NOTE D - SEGMENT INFORMATION

<TABLE>
<CAPTION>
                                                           Three Months Ended            Nine Months Ended
                                                              September 30,                 September 30,
                                                       ------------------------      ------------------------
                                                         2002           2001           2002           2001
                                                       ---------      ---------      ---------      ---------
                                                                        (dollars in thousands)
<S>                                                    <C>            <C>            <C>            <C>
Revenues excluding net realized investment losses:
   Group employee benefit products ...............     $ 170,715      $ 142,718      $ 519,089      $ 420,208
   Asset accumulation products ...................        17,494         17,604         51,873         54,129
   Other (1) .....................................         5,198          5,143         15,789         15,445
                                                       ---------      ---------      ---------      ---------
                                                       $ 193,407      $ 165,465      $ 586,751      $ 489,782
                                                       =========      =========      =========      =========
Operating income (2):
   Group employee benefit products (3) ...........       $30,287        $25,659      $  91,320      $  84,137
   Asset accumulation products ...................         2,255          2,776          7,106          9,497
   Other (1) (3) .................................        (1,186)        (1,245)        (3,765)        (3,743)
                                                       ---------      ---------      ---------      ---------
                                                       $  31,356      $  27,190      $  94,661      $  89,891
                                                       =========      =========      =========      =========
</TABLE>

(1)   Consists of operations that do not meet the quantitative thresholds for
      determining reportable segments and includes integrated disability and
      absence management services and certain corporate activities.

(2)   Income excluding net realized investment losses and before interest and
      income tax expense and extraordinary gain (loss).

(3)   Operating income for group employee benefits and other operations includes
      amortization of goodwill of $0.4 million and $0.4 million, respectively,
      for the third quarter of 2001, and $1.3 million and $1.1 million,
      respectively, for the first nine months of 2001.


                                     - 8 -

<PAGE>
                  DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

NOTE E - COMPREHENSIVE INCOME

Total comprehensive income is comprised of net income and other comprehensive
income, which includes the change in unrealized gains and losses on securities
available for sale and an unrealized loss on a cash flow hedge. Total
comprehensive income was $104.8 million and $88.1 million for the first nine
months of 2002 and 2001, respectively, and $57.7 million and $37.3 million for
the third quarter of 2002 and 2001, respectively.

NOTE F - COMPUTATION OF RESULTS PER SHARE

The following table sets forth the calculation of basic and diluted results per
share:

<TABLE>
<CAPTION>
                                                            Three Months Ended             Nine Months Ended
                                                               September 30,                  September 30,
                                                         -------------------------     --------------------------
                                                            2002          2001            2002            2001
                                                         ----------     ----------     ----------      ----------
                                                               (dollars in thousands, except per share data)
<S>                                                      <C>            <C>            <C>             <C>
Numerator:
   Income before extraordinary gain (loss) .........     $   12,793     $   11,572     $   52,095      $   47,672
   Extraordinary gain (loss), net of income taxes ..             --          1,233           (216)          7,446
                                                         ----------     ----------     ----------      ----------
       Net income ..................................     $   12,793     $   12,805     $   51,879      $   55,118
                                                         ==========     ==========     ==========      ==========
Denominator:
   Weighted average common shares outstanding ......         20,767         20,564         20,728          20,542
   Effect of dilutive securities ...................            512            585            523             564
                                                         ----------     ----------     ----------      ----------
   Weighted average common shares outstanding,
     assuming dilution .............................         21,279         21,149         21,251          21,106
                                                         ==========     ==========     ==========      ==========
Basic results per share of common stock:
   Income before extraordinary gain (loss) .........     $     0.62     $     0.56     $     2.51      $     2.32
Extraordinary gain (loss), net of income taxes .....             --           0.06          (0.01)           0.36
                                                         ----------     ----------     ----------      ----------
         Net income ................................     $     0.62     $     0.62     $     2.50      $     2.68
                                                         ==========     ==========     ==========      ==========
Diluted results per share of common stock:
   Income before extraordinary gain (loss) .........     $     0.60     $     0.55     $     2.45      $     2.26
   Extraordinary gain (loss), net of income taxes ..             --           0.06          (0.01)           0.35
                                                         ----------     ----------     ----------      ----------
         Net income ................................     $     0.60     $     0.61     $     2.44      $     2.61
                                                         ==========     ==========     ==========      ==========
</TABLE>

NOTE G - CONTINGENCIES

In the course of its business, the Company is a party to litigation and other
proceedings, primarily involving its insurance operations. In some cases, these
proceedings entail claims against the Company for punitive damages and similar
types of relief. The ultimate disposition of such pending litigation and
proceedings is not expected to have a material adverse effect on the Company's
consolidated financial position. In addition, incident to certain of its
discontinued products, the Company is currently a party to two separate
arbitrations arising out of two accident and health reinsurance arrangements in
which it and other companies formerly were participating reinsurers. At issue in
both arbitrations, among other things, is whether certain reinsurance risks were
validly ceded to the Company. These arbitrations are in their early stages,
and their ultimate resolutions are likely to require extended periods of time.
While management believes that in both cases the Company has substantial legal
grounds for avoiding the reinsurance risks at issue, it is not at this time
possible to predict the ultimate outcome of these arbitrations, nor is it
feasible to provide reasonable ranges of potential losses. In the opinion of
management, such arbitrations, when ultimately resolved, will not individually
or collectively have a material adverse effect on the Company's consolidated
financial position.


                                     - 9 -
<PAGE>
                          DELPHI FINANCIAL GROUP, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The following is an analysis of the results of operations and financial
condition of Delphi Financial Group, Inc. (the "Company," which term includes
the Company and its consolidated subsidiaries unless the context indicates
otherwise). This analysis should be read in conjunction with the Consolidated
Financial Statements and related notes included in this document, as well as the
Company's annual report on Form 10-K for the year ended December 31, 2001.
Capitalized terms used herein without definition have the meanings ascribed to
them in the Company's annual report on Form 10-K for the year ended December 31,
2001.

RESULTS OF OPERATIONS

Nine Months Ended September 30, 2002 Compared to
Nine Months Ended September 30, 2001

Premium and Fee Income. Premium and fee income for the first nine months of 2002
was $466.0 million as compared to $372.9 million for the first nine months of
2001, an increase of 25%. Premiums from core group employee benefit products
increased 22% to $407.6 million in the first nine months of 2002 from $333.3
million in the first nine months of 2001. This increase reflects normal growth
in employment and salary levels for the Company's existing customer base, price
increases and strong production of new business. Within core group employee
benefit products, excess workers' compensation premiums increased 38% to $73.7
million in the first nine months of 2002 from $53.3 million in the first nine
months of 2001 primarily due to improvements in the pricing environment in this
market sector and increased demand due to higher primary workers' compensation
rates. SNCC has been able to obtain significant price increases in connection
with its renewals of insurance coverage during 2002. As to a substantial portion
of such renewals, such price increases exceeded 20%. SNCC has also been
obtaining significant improvements in contract terms, in particular higher
self-insured retention levels, in connection with these renewals. In addition,
new business production for excess workers' compensation products increased 97%
to $25.2 million in the first nine months of 2002 from $12.8 million in the
first nine months of 2001 and the retention of existing customers has been
satisfactory. New business production for the Company's other core group
employee benefit products increased 47% to $123.6 million in the first nine
months of 2002 from $84.0 million in the first nine months of 2001 primarily due
to the expansion of the Company's sales force during 2001 and the opening of
three new sales offices in the first nine months of 2002. Retention of existing
customers for these products also improved during the first nine months of 2002
and price increases continue to be implemented for certain disability customers.
Premiums from non-core group employee benefit products increased 68% to $44.2
million in the first nine months of 2002 from $26.3 million in the first nine
months of 2001 primarily due to a higher level of premium from loss portfolio
transfers, which are episodic in nature. Deposits from the Company's asset
accumulation products increased 26% to $82.0 million in the first nine months of
2002 from $64.8 million in the first nine months of 2001. Deposits for these
products, which are long-term in nature, are not recorded as premiums; instead,
the deposits are recorded as a liability. The Company has maintained its
disciplined approach to setting the crediting rates offered on its asset
accumulation products since market interest rates and the resulting interest
rate spreads available to the Company on these products remained less favorable
throughout 2001 and the first nine months of 2002. The increase in deposits from
the Company's asset accumulation products in the first nine months of 2002 was
higher than expected primarily due to heightened demand for fixed annuity
products during the third quarter of 2002 as a result of adverse conditions in
the equity markets.

Net Investment Income. Net investment income for the first nine months of 2002
was $120.8 million as compared to $116.9 million for the first nine months of
2001, an increase of 3%. This increase primarily reflects an increase in average
invested assets in 2002, partially offset by a decrease in the tax equivalent
weighted average annualized yield. The tax equivalent weighted average
annualized yield on invested assets was 6.6% on average invested assets of
$2,533.6 million in the first nine months of 2002 and 6.9% on average invested
assets of $2,325.7 million in the first nine months of 2001.

Net Realized Investment Losses. Net realized investment losses were $10.5
million in the first nine months of 2002 as compared to $6.3 million in the
first nine months of 2001. The Company's investment strategy results in periodic
sales of securities and the recognition of realized investment gains and losses.
The Company monitors its investments on an ongoing basis. When the market value
of a security declines below its cost, and such decline is determined in the
judgment of management to be other than temporary, the security is written down
to fair value, and the decline is reported as a realized investment loss, even
though the security has not been sold. In the first nine months of 2002 and
2001, the Company recognized $29.5 million and $13.1 million, respectively, of
losses due to the other than temporary declines in the market values of certain
fixed maturity securities. During the same periods, the Company recognized $19.8
million and $6.8 million, respectively, of net gains on sales of securities.


                                     - 10 -
<PAGE>
The losses due to the other than temporary declines in the market values of
fixed maturity securities recognized during 2002, which totaled $19.2 million on
an after-tax basis, resulted primarily from credit quality-related deterioration
in the corporate debt markets, and the Company may recognize additional losses
of this type in the future. The Company anticipates that, if certain other
existing declines in security values are determined to be other than temporary,
it may recognize additional investment losses in the range of $10 to $15
million, on an after-tax basis, with respect to the relevant securities.
However, the extent of any such losses will depend on future market developments
and changes in security values, and such losses may exceed or be lower than such
range. The Company continuously monitors the affected securities pursuant to its
procedures for evaluation for other than temporary impairment in valuation. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Forward-Looking Statements and Cautionary Statements Regarding
Certain Factors That May Affect Future Results" for a description of these
procedures, which take into account a number of factors. It is not possible to
predict the extent of any future changes in value, positive or negative, or the
results of the future application of these procedures, with respect to these
securities. There can be no assurance that the Company will realize investment
gains in the future in an amount sufficient to offset any such losses.

Benefits and Expenses. Policyholder benefits and expenses for the first nine
months of 2002 were $492.1 million as compared to $399.9 million in the first
nine months of 2001, an increase of 23%. This increase primarily reflects the
increase in premiums from the Company's group employee benefit products
discussed above. Policyholder benefits for the first nine months of 2001
included losses of $3.8 million, net of reinsurance coverages, as a result of
the World Trade Center attacks. The combined ratio (loss ratio plus expense
ratio) for the Company's group employee benefits segment was 94.7% in the first
nine months of 2002 and 93.5% for the comparable period of 2001. This increase
was primarily due to a higher combined ratio in the Company's excess workers'
compensation business and a higher level of premium from loss portfolio
transfers, which carry a higher loss ratio.

Interest Expense and Extraordinary (Loss) Gain. Interest expense was $9.4
million in the first nine months of 2002 as compared to $13.8 million in the
first nine months of 2001, a decrease of $4.4 million. This decrease was
primarily a result of the Company's repurchase of $64.0 million liquidation
amount of the Capital Securities in the open market, which occurred on various
dates during the first nine months of 2001, and a lower weighted average
borrowing rate under the Company's revolving credit facilities during the first
nine months of 2002. In addition, the Company had a lower amount of borrowings
outstanding under its Senior Notes and SIG Senior Notes during the first nine
months of 2002. In June 2001, the Company also repurchased $8.0 million
aggregate principal amount of the Senior Notes. The Company recognized an
extraordinary gain of $7.4 million, net of income tax expense of $4.0 million,
in connection with the repurchases of the Capital Securities and Senior Notes in
the first nine months of 2001. In the second quarter of 2002, the Company
repurchased $10.5 million aggregate principal amount of the Senior Notes,
resulting in an extraordinary loss of $0.2 million, net of an income tax benefit
of $0.1 million.

Income before Extraordinary (Loss) Gain. Management believes that the
calculation of "operating earnings" is informative when analyzing the Company's
operating trends and in comparing the Company's performance with that of other
companies in its industry. Operating earnings exclude discretionary or
nonrecurring items of income or loss such as realized investment gains and
losses and extraordinary items. Investment gains and losses may be realized
based on management's decision to dispose of an investment or management's
judgment that a decline in the market value of an investment is other than
temporary. Therefore, realized investment gains and losses do not represent
elements of the Company's ongoing earnings capacity. However, operating earnings
should not be considered a substitute for net income as an indication of the
Company's overall performance and may not be calculated in the same manner as
similarly titled captions in other companies' financial statements. Operating
earnings for the Company, consisting of income before extraordinary (loss) gain
adjusted to exclude realized investment losses (net of the related income tax
benefit), were $58.9 million, or $2.77 per diluted share, in the first nine
months of 2002 as compared to $51.7 million, or $2.45 per diluted share, in the
first nine months of 2001. The increase in operating earnings in the current
period is attributable to decreased interest expense ($2.8 million after taxes)
and to charges in the 2001 period for goodwill amortization ($2.4 million after
taxes) and World Trade Center losses ($2.5 million after taxes).

Three Months Ended September 30, 2002 Compared to
Three Months Ended September 30, 2001

Premium and Fee Income. Premium and fee income for the third quarter of 2002 was
$152.8 million as compared to $127.1 million for the third quarter of 2001, an
increase of 20%. Premiums from core group employee benefit products increased
24% to $142.0 million in the third quarter of 2002 from $114.2 million in the
third quarter of 2001. This increase reflects normal growth in employment and
salary levels for the Company's existing customer base, price increases and
strong production of new business. Within core group employee benefit products,
excess workers' compensation premiums increased 46% to $27.5 million in the
third quarter of 2002 from $18.9 million in the third quarter of 2001 primarily
due to improvements in the pricing environment in this market sector and
increased demand due to higher primary workers' compensation rates. SNCC has
been


                                     - 11 -
<PAGE>
able to obtain significant price increases in connection with its renewals of
insurance coverage during 2002. As to a substantial portion of such renewals,
such price increases exceeded 20%. SNCC has also been obtaining significant
improvements in contract terms, in particular higher self-insured retention
levels, in connection with these renewals. In addition, new business production
for excess workers' compensation products increased 56% to $9.8 million in the
third quarter of 2002 from $6.3 million in the third quarter of 2001 and the
retention of existing customers has been satisfactory. New business production
for the Company's other core group employee benefit products increased 17% to
$33.1 million in the third quarter of 2002 from $28.2 million in the third
quarter of 2001 primarily due to the expansion of the Company's sales force
during 2001 and the opening of three new sales offices in 2002. Retention of
existing customers for these products also improved during the third quarter of
2002 and price increases continue to be implemented for certain disability
customers. Premiums from non-core group employee benefit products decreased to
$5.7 million in the third quarter of 2002 from $8.2 million in the third quarter
of 2001. The Company did not have significant sales of loss portfolio transfers
during the third quarter of 2002 or 2001. Deposits from the Company's asset
accumulation products increased 98% to $44.9 million in the third quarter of
2002 from $22.7 million in the third quarter of 2001. Deposits for these
products, which are long-term in nature, are not recorded as premiums; instead,
the deposits are recorded as a liability. The Company has maintained its
disciplined approach to setting the crediting rates offered on its asset
accumulation products since market interest rates and the resulting interest
rate spreads available to the Company on these products remained less favorable
throughout 2001 and the first nine months of 2002. The increase in deposits from
the Company's asset accumulation products in the third quarter of 2002 was
higher than expected primarily due to heightened demand for fixed annuity
products as a result of adverse conditions in the equity markets.

Net Investment Income. Net investment income for the third quarter of 2002 was
$40.6 million as compared to $38.4 million for the third quarter of 2001, an
increase of 6%. This increase primarily reflects an increase in average invested
assets in third quarter 2002, partially offset by a decrease in the tax
equivalent weighted average annualized yield. The tax equivalent weighted
average annualized yield on invested assets was 6.3% on average invested assets
of $2,683.2 million in the third quarter of 2002 and 6.8% on average invested
assets of $2,326.6 million in the third quarter of 2001.

Net Realized Investment Losses. Net realized investment losses for the third
quarter of 2002 were $10.8 million as compared to $6.9 million in the comparable
period of 2001. The Company's investment strategy results in periodic sales of
securities and the recognition of realized investment gains and losses. The
Company monitors its investments on an ongoing basis. When the market value of a
security declines below its cost, and such decline is determined in the judgment
of management to be other than temporary, the security is written down to fair
value, and the decline is reported as a realized investment loss, even though
the security has not been sold. In the third quarter of 2002 and 2001, the
Company recognized $20.0 million and $12.5 million, respectively, of losses due
to the other than temporary declines in the market values of certain fixed
maturity securities. During the same periods, the Company recognized $10.0
million and $5.6 million, respectively, of net gains on sales of securities.

The losses due to the other than temporary declines in the market values of
fixed maturity securities recognized during the third quarter of 2002, which
totaled $13.0 million on an after-tax basis, resulted primarily from credit
quality-related deterioration in the corporate debt markets, and the Company may
recognize additional losses of this type in the future. The Company anticipates
that, if certain other existing declines in security values are determined to be
other than temporary, it may recognize additional investment losses in the range
of $10 to $15 million, on an after-tax basis, with respect to the relevant
securities. However, the extent of any such losses will depend on future market
developments and changes in security values, and such losses may exceed or be
lower than such range. The Company continuously monitors the affected securities
pursuant to its procedures for evaluation for other than temporary impairment in
valuation. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Forward-Looking Statements and Cautionary Statements
Regarding Certain Factors That May Affect Future Results" for a description of
these procedures, which take into account a number of factors. It is not
possible to predict the extent of any future changes in value, positive or
negative, or the results of the future application of these procedures, with
respect to these securities. There can be no assurance that the Company will
realize investment gains in the future in an amount sufficient to offset any
such losses.

Benefits and Expenses. Policyholder benefits and expenses for the third quarter
of 2002 were $162.1 million as compared to $138.3 million in the third quarter
of 2001, an increase of 17%. This increase primarily reflects the increase in
premiums from the Company's group employee benefit products discussed above.
Policyholder benefits for the third quarter of 2001 included losses of $3.8
million, net of reinsurance coverages, as a result of the World Trade Center
attacks. The combined ratio (loss ratio plus expense ratio) for the Company's
group employee benefits segment was 95.1% in the third quarter of 2002 and 95.6%
for the comparable period of 2001. The Company's combined ratio for the third
quarter of 2002 reflects a higher combined ratio in the Company's excess
workers' compensation business.

Interest Expense and Extraordinary Gain. Interest expense was $3.0 million in
the third quarter of 2002 as compared to $3.6 million in the third quarter of
2001, a decrease of $0.6 million. This decrease resulted from the Company's
repurchase of $64.0 million liquidation amount of the Capital Securities in the
open market, which occurred on various dates during the first nine months of
2001 and a lower amount of borrowings outstanding under its Senior


                                     - 12 -
<PAGE>
Notes and SIG Senior Notes due to repurchases and scheduled principal repayments
during 2001 and 2002. At the end of the third quarter of 2001, the Company
repurchased an additional $10.0 million liquidation amount of the Capital
Securities in the open market. The Company recognized an extraordinary gain of
$1.2 million, net of income tax expense of $0.7 million, in connection with this
repurchase.

Income before Extraordinary Gain. Management believes that the calculation of
"operating earnings" is informative when analyzing the Company's operating
trends and in comparing the Company's performance with that of other companies
in its industry. Operating earnings exclude discretionary or nonrecurring items
of income or loss such as realized investment gains and losses and extraordinary
items. Investment gains and losses may be realized based on management's
decision to dispose of an investment or management's judgment that a decline in
the market value of an investment is other than temporary. Therefore, realized
investment gains and losses do not represent elements of the Company's ongoing
earnings capacity. However, operating earnings should not be considered a
substitute for net income as an indication of the Company's overall performance
and may not be calculated in the same manner as similarly titled captions in
other companies' financial statements. Operating earnings for the Company,
consisting of income before extraordinary gain adjusted to exclude realized
investment losses (net of the related income tax benefit), were $19.8 million,
or $0.93 per diluted share, in the third quarter of 2002 as compared to $16.1
million, or $0.76 per diluted share, in the third quarter of 2001. The increase
in operating earnings in the current period is attributable to decreased
interest expense ($0.4 million after taxes) and to charges in the 2001 period
for goodwill amortization ($0.8 million after taxes) and World Trade Center
losses ($2.5 million after taxes).

LIQUIDITY AND CAPITAL RESOURCES

General. The Company had approximately $58.5 million of financial resources
available at the holding company level at September 30, 2002, which was
primarily comprised of investments in the common stock of its investment
subsidiaries. The assets of the investment subsidiaries are primarily invested
in fixed maturity securities and balances with independent investment managers.
Other sources of liquidity at the holding company level include dividends paid
from subsidiaries, primarily generated from operating cash flows and
investments. The Company's insurance subsidiaries are permitted, without prior
regulatory or other approval, to make dividend payments of $44.1 million during
2002, of which $20.0 million has been paid during the first nine months of 2002.
In general, dividends from the Company's non-insurance subsidiaries are not
subject to regulatory or other restrictions. The Company had $110.0 million of
borrowings available to it under its revolving credit facilities as of October
1, 2002.

The Company's current liquidity needs, in addition to funding lease commitments
and other operating expenses, include principal and interest payments on
outstanding borrowings under its revolving credit facilities, the Senior Notes,
the SIG Senior Notes and the Subordinated Notes, all of which mature during
2003, and distributions on the Capital Securities. As of October 1, 2002, the
maximum amount of borrowings available under the Company's revolving credit
facilities, which expire in April 2003, is $140.0 million. During the second
quarter of 2002, the Company repurchased $10.5 million aggregate principal
amount of the Senior Notes. The Senior Notes mature in their entirety in October
2003 and are not subject to any sinking fund requirements nor are they
redeemable prior to maturity. A $9.0 million annual principal installment was
paid on the SIG Senior Notes in May 2002, and the remaining $9.0 million of such
notes will mature in their entirety in May 2003. The Subordinated Notes mature
in their entirety in June 2003. The junior subordinated debentures underlying
the Capital Securities are not redeemable prior to March 25, 2007.

The Company's shelf registration statement for the sale, from time to
time, of securities was declared effective by the Securities and Exchange
Commission on May 6, 2002. This shelf registration increased the Company's
existing $49.2 million shelf registration to an amount of up to $250.0 million
of proceeds. In addition, the Company is currently negotiating the replacement
of its revolving credit facilities with another credit facility in the range of
$125.0 million to $150.0 million. However, no assurance can be given that these
negotiations will result in the Company's obtaining a new credit facility or
that the amount of any such facility will be in the aforementioned range.
Subject to market conditions, the Company may refinance its existing credit
facilities or any new credit facility and its Senior Notes prior to maturity
through the issuance of debt securities covered by the shelf registration.
However, no assurance can be given that such an offering will be commenced. To
mitigate the risk that interest rates rise before such refinancing is
completed, the Company entered into a treasury rate lock agreement, with a
notional amount of $150.0 million, pursuant to which the Company will receive
(or make) a single payment at the conclusion of the agreement, depending on the
amount by which the market yield on the specified U.S. Treasury security rises
(or falls), and the extent of such change, over the term of the agreement. The
agreement was entered into in September 2002 with a term of one year. Any


                                     - 13 -
<PAGE>
gains or losses on the treasury rate lock agreement would be deferred and
amortized as a component of interest expense over the term of any debt
securities issued in the refinancing; or recognized in income if, and at the
time, the Company concludes the refinancing is improbable.

Sources of liquidity available to the Company and its subsidiaries are expected
to exceed their current and long-term cash requirements.

Investments. The Company's overall investment strategy emphasizes safety and
liquidity, while seeking the best available return, by focusing on, among other
things, managing the Company's interest-sensitive assets and liabilities and
seeking to minimize the Company's exposure to fluctuations in interest rates.
The Company's investment portfolio, which totaled $2.8 billion at September 30,
2002, primarily consists of investments in fixed maturity securities and
short-term investments. The market value of the Company's investment portfolio,
in relation to its amortized cost, improved by $105.1 million during the first
nine months of 2002, before related changes in the cost of business acquired of
$17.6 million and the income tax provision of $30.6 million. The net investment
losses recognized during the first nine months of 2002, which are discussed
above, contributed to the improvement in the net unrealized appreciation in the
investment portfolio. The weighted average credit rating of the Company's fixed
maturity portfolio as rated by Standard & Poor's Corporation was "AA" at
September 30, 2002. While the investment grade rating of the Company's fixed
maturity portfolio addresses credit risk, it does not address other risks, such
as prepayment and extension risks. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Forward-Looking Statements and
Cautionary Statements Regarding Certain Factors That May Affect Future Results"
for a discussion of these and certain other risks relating to the Company's
investment portfolio.

MARKET RISK

There have been no material changes in the Company's exposure to market risk or
its management of such risk since December 31, 2001.

DISCLOSURE CONTROLS AND PROCEDURES

Within the 90-day period preceding the date of this report, an evaluation was
performed under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer ("CEO") and Vice
President and Treasurer (the individual who acts in the capacity of the Chief
Financial Officer), of the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in Rule 13a-14(c) under
the Securities Exchange Act of 1934). Based on that evaluation, the Company's
management, including the CEO and Vice President and Treasurer, concluded that
the Company's disclosure controls and procedures were effective. There have been
no significant changes in the Company's internal controls or in other factors
that could significantly affect internal controls subsequent to the date of such
evaluation.

FORWARD-LOOKING STATEMENTS AND CAUTIONARY STATEMENTS REGARDING CERTAIN FACTORS
THAT MAY AFFECT FUTURE RESULTS

In connection with, and because it desires to take advantage of, the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995, the
Company cautions readers regarding certain forward-looking statements in the
above "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and elsewhere in this Form 10-Q and in any other statement made
by, or on behalf of, the Company, whether in future filings with the Securities
and Exchange Commission or otherwise. Forward-looking statements are statements
not based on historical information and which relate to future operations,
strategies, financial results, prospects, outlooks or other developments. Some
forward-looking statements may be identified by the use of terms such as
"expects," "believes," "anticipates," "intends," "judgment" or other similar
expressions. Forward-looking statements are necessarily based upon estimates and
assumptions that are inherently subject to significant business, economic,
competitive and other uncertainties and contingencies, many of which are beyond
the Company's control and many of which, with respect to future business
decisions, are subject to change. Examples of such uncertainties and
contingencies include, among other important factors, those affecting the
insurance industry generally, such as the economic and interest rate
environment, federal and state legislative and regulatory developments,
including but not limited to changes in financial services and tax laws and
regulations, market pricing and competitive trends relating to insurance
products and services, acts of terrorism, and the availability and cost of
reinsurance, and those relating specifically to the Company's business, such as
the level of its insurance premiums and fee income, the claims experience,
persistency and other factors affecting the profitability of its insurance
products, the performance of its investment portfolio and changes in the
Company's investment strategy, acquisitions


                                     - 14 -
<PAGE>
of companies or blocks of business, and ratings by major rating organizations of
its insurance subsidiaries. These uncertainties and contingencies can affect
actual results and could cause actual results to differ materially from those
expressed in any forward-looking statements made by, or on behalf of, the
Company. Certain of these uncertainties and contingencies are described in more
detail in the remainder of this section. The Company disclaims any obligation to
update forward-looking information.

      RESERVES ESTABLISHED FOR FUTURE POLICY BENEFITS AND CLAIMS MAY PROVE
INADEQUATE.

The Company establishes reserves for future policy benefits and unpaid claims
and claim expenses relating to the Company's insurance products. These reserves
are calculated using various generally recognized actuarial methodologies and
are based upon assumptions that management believes are appropriate and which
vary by type of product. The estimation process is complex and involves
information obtained from company-specific and industry-wide data, as well as
general economic information. The most significant assumptions made in the
estimation process for future policy benefits relate to mortality, morbidity,
claim termination and interest rates. The reserves for unpaid claims and claim
expenses are determined on an individual basis for reported claims and estimates
of incurred but not reported losses are developed on the basis of past
experience. The most significant assumptions made in the estimation process for
unpaid claims and claim expenses are the trend in loss costs, the expected
frequency and severity of claims, changes in the timing of the reporting of
losses from the loss date to the notification date, and expected costs to settle
unpaid claims. The assumptions vary based on the year the claim is incurred.
Disability reserves for unpaid claims and claim expenses are discounted using
interest rate assumptions based upon projected portfolio yield rates for the
assets supporting the liabilities. The assets selected to support these
liabilities produce cash flows that are intended to match the timing and amount
of anticipated liability payments. Workers' compensation claim reserves are
discounted using interest rate assumptions based on the risk-free rate of return
for U.S. Government securities with a duration comparable to the expected
duration and payment pattern of the claims at the time the claims are settled.
The rates used to discount reserves are determined annually. The methods and
assumptions used to establish reserves for future policy benefits and unpaid
claims and claim expenses are continually reviewed and updated based on current
circumstances, and any resulting adjustments are reflected in earnings
currently.

The Company's projected ultimate insurance liabilities and associated reserves
are estimates. As estimates, these values are subject to variability. This
variability arises because the factors and events affecting the ultimate
liability for claim reserves have not all taken place, and thus cannot be
evaluated with certainty. Moreover, under the actuarial methodologies discussed
above, these estimates are subject to reevaluation based on developing trends
with respect to the Company's loss experience. Such trends may emerge over
longer periods of time, and changes in such trends cannot necessarily be
identified or predicted at any given time by reference to current claims
experience, whether favorable or unfavorable. If the Company's actual loss
experience is different from the Company's assumptions or estimates, the
Company's reserves could be inadequate. In such event, the Company's results of
operations, liquidity or financial condition could be materially adversely
affected.

      THE MARKET VALUES OF THE COMPANY'S INVESTMENTS FLUCTUATE.

The market values of the Company's investments vary depending on economic and
market conditions, including interest rates, and such values can decline as a
result of changes in such conditions. Increasing interest rates or a widening in
the spread between interest rates available on U.S. Treasury securities and
corporate debt, for example, will typically have an adverse impact on the market
values of the fixed maturity securities in the Company's investment portfolio.
If interest rates decline, the Company generally achieves a lower overall rate
of return on investments of cash generated from the Company's operations. In
addition, in the event that investments are called or mature in a declining
interest rate environment, the Company may be unable to reinvest the proceeds in
securities with comparable interest rates. The Company may also be required or
determine in the future to sell certain investments at a price and a time when
the market value of such investments is less than the book value of such
investments.

Declines in the fair value of investments that are considered in the judgment of
management to be other than temporary are reported as realized investment
losses, even though the investments are not sold. The Company evaluates, among
other things, the financial position and prospects of the issuer, conditions in
the issuer's industry and geographic area, liquidity of the investment, changes
in the amount or timing of expected future cash flows from the investment, and
recent downgrades of the issuer by a rating agency to determine if and when a
decline in the fair value of an investment below amortized cost is other than
temporary. The length of time and extent to which the fair value of the
investment is lower than its amortized cost and the Company's ability and intent
to retain the investment to allow for any anticipated recovery in the
investment's fair value are also considered. The Company has experienced and may
in the future experience losses from other than temporary declines in security
values. Such losses are recorded as realized investment losses in the income
statement. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Nine Months Ended September 30, 2002 Compared to Nine
Months Ended September 30, 2001."


                                     - 15 -
<PAGE>
      THE COMPANY'S INVESTMENT AND FINANCING STRATEGY EXPOSES THE COMPANY TO
DEFAULT, PREPAYMENT, EXTENSION AND OTHER RISKS.

The management of the Company's investment portfolio is an important component
of the Company's profitability since a substantial portion of the Company's
operating income is generated from the difference between the yield achieved on
invested assets and, in the case of asset accumulation products, the interest
credited on policyholder funds and, in the case of all of the Company's other
products, the discount rate used to calculate the related reserves.

The Company is subject to the risk that the issuers of the fixed maturity
securities the Company owns will default on principal and interest payments. A
major economic downturn or any of the various other factors that affect issuers'
ability to pay could result in issuer defaults. Because the Company's
investments consist primarily of fixed maturity securities and short-term
investments, such defaults could materially adversely affect the Company's
results of operations, liquidity or financial condition. The Company continually
monitors its investment portfolio and attempts to ensure that the risks
associated with concentrations of investments in either a particular sector of
the market or a single entity are limited.

At September 30, 2002, approximately 25% of the Company's total invested assets
were comprised of mortgage-backed securities, of which approximately 46% are
guaranteed by U.S. Government sponsored entities as to the full amount of
principal and interest and the remaining 54% consists of investments in trusts
created by banks and finance and mortgage companies. Mortgage-backed securities
subject the Company to a degree of interest rate risk, including prepayment and
extension risk, which is generally a function of the sensitivity of each
security's underlying collateral to prepayments under varying interest rate
environments and the repayment priority of the securities in the particular
securitization structure.

The Company maintains a program in which investments are financed using advances
from various Federal Home Loan Banks. At September 30, 2002, the Company had
outstanding advances of $207.0 million, of which $45.0 million were obtained
during 2002. These advances, of which $195.0 million were obtained at a fixed
rate and $12.0 million were obtained at a variable rate, have a weighted average
term to maturity of 5.8 years. In addition, the Company has utilized reverse
repurchase agreements, futures and option contracts and interest rate swap
contracts from time to time in connection with the Company's investment
strategy. These transactions require the Company to maintain securities or cash
on deposit with the applicable counterparty as collateral. As the market value
of the collateral or contracts changes, the Company may be required to deposit
additional collateral.

The ability of the Company's insurance subsidiaries to make investments is
subject to the insurance laws and regulations of their respective states of
domicile. Each of these states has comprehensive investment regulations. In
addition, the Company's revolving credit facilities and the SIG Senior Notes
also contain limitations on the composition of the Company's investment
portfolio.

      THE COMPANY'S FINANCIAL POSITION EXPOSES THE COMPANY TO INTEREST RATE
RISKS.

Because the Company's primary assets and liabilities are financial in nature,
the Company's consolidated financial position and earnings are subject to risks
resulting from changes in interest rates. The Company manages this risk by
active portfolio management focusing on minimizing its exposure to fluctuations
in interest rates by matching its invested assets and related liabilities and by
periodically adjusting the crediting rates on its annuity products.

      THE COMPANY'S ABILITY TO REDUCE ITS EXPOSURE TO RISKS DEPENDS ON THE
AVAILABILITY AND COST OF REINSURANCE.

The Company transfers its exposure to some risks through reinsurance
arrangements with other insurance and reinsurance companies. Under the Company's
reinsurance arrangements, another insurer assumes a specified portion of the
Company's losses and loss adjustment expenses in exchange for a specified
portion of policy premiums. The availability, amount, cost and terms of
reinsurance depend on market conditions and may vary significantly. Any decrease
in the amount of the Company's reinsurance will increase the Company's risk of
loss. Furthermore, the Company is subject to credit risk with respect to
reinsurance. The Company obtains reinsurance primarily through indemnity
reinsurance transactions in which the Company is still liable for the
transferred risks if the reinsurers fail to meet their financial obligations.
Such failures could materially affect the Company's results of operations,
liquidity or financial condition.

Some reinsurers experienced significant losses related to the terrorist events
of September 11, 2001. As a result, higher prices and less favorable terms and
conditions are presently being offered in the reinsurance market. Also, there
has been significantly reduced availability of reinsurance covering risks such
as terrorist and catastrophic events. Accordingly, substantially all of the
Company's coverages of this nature have been or, unless significant improvements
in availability of such coverages occur, will be discontinued during the present
year. There can be no assurance that the Company will be able to obtain such
coverages on


                                     - 16 -
<PAGE>
acceptable terms, if at all, in the future. In addition, while federal
legislation is presently being considered that would potentially provide
insurers with some degree of protection in the event of terrorism-related
losses, there can be no assurance that such legislation will be enacted or as to
its effect on the Company if enacted.

      THE INSURANCE BUSINESS IS A HEAVILY REGULATED INDUSTRY.

The Company's insurance subsidiaries, like other insurance companies, are highly
regulated by state insurance authorities in the states in which they are
domiciled and the other states in which they conduct business. Such regulations,
among other things, limit the amount of dividends and other payments that can be
made by such subsidiaries without prior regulatory approval and impose
restrictions on the amount and type of investments such subsidiaries may have.
These regulations also affect many other aspects of the Company's insurance
subsidiaries' businesses, including, for example, risk-based capital
requirements, various reserve requirements, the terms, conditions and manner of
sale and marketing of insurance products and the form and content of required
financial statements. These regulations are intended to protect policyholders
rather than investors. The ability of the Company's insurance subsidiaries to
continue to conduct their businesses is dependent upon the maintenance of their
licenses in these various states.

From time to time, increased scrutiny has been placed upon the insurance
regulatory framework, and a number of state legislatures have considered or
enacted legislative measures that alter, and in many cases increase, state
authority to regulate insurance companies. In addition to legislative
initiatives of this type, the National Association of Insurance Commissioners
and insurance regulators are continuously involved in a process of reexamining
existing laws and regulations and their application to insurance companies.
Furthermore, while the federal government currently does not directly regulate
the insurance business, federal legislation and administrative policies in a
number of areas, such as employee benefits regulation, age, sex and
disability-based discrimination, financial services regulation and federal
taxation, can significantly affect the insurance business. It is not possible to
predict the future impact of changing regulation on the operations of the
Company and those of its insurance subsidiaries.

The Company's insurance subsidiaries can also be required, under solvency or
guaranty laws of most states in which they do business, to pay assessments to
fund policyholder losses or liabilities of insurance companies that become
insolvent.

      THE FINANCIAL SERVICES INDUSTRY IS HIGHLY COMPETITIVE.

The Company competes with numerous other insurance and financial services
companies. Many of these organizations have substantially greater assets, higher
ratings from rating agencies, larger and more diversified portfolios of
insurance products and larger agency sales operations. Competition in asset
accumulation product markets is also encountered from the expanding number of
banks, securities brokerage firms and other financial intermediaries marketing
alternative savings products, such as mutual funds, traditional bank investments
and retirement funding alternatives.

      THE COMPANY MAY BE ADVERSELY IMPACTED BY A DECLINE IN THE RATINGS OF THE
COMPANY'S INSURANCE SUBSIDIARIES.

Ratings with respect to claims-paying ability and financial strength have become
an increasingly important factor impacting the competitive position of insurance
companies. Each of the rating agencies reviews its ratings of companies
periodically and there can be no assurance that current ratings will be
maintained in the future. Claims-paying and financial strength ratings are based
upon factors relevant to policyowners and are not directed toward protection of
investors. A downgrade in the ratings of the Company's insurance subsidiaries
could adversely affect sales of their products and could have a material adverse
effect on the results of the Company's operations.


                                     - 17 -
<PAGE>
                           PART II. OTHER INFORMATION

Item 5. Other Information

        Pursuant to Section 10A of the Securities Exchange Act of 1934, as
        amended, the Audit Committee of the Board of Directors of the Company
        approved the engagement of Ernst & Young LLP, the Company's independent
        auditor, to perform non-audit services for the Company consisting of
        actuarial attestation under statutory valuation laws and related
        advisory services.

Item 6. Exhibits and Reports on Form 8-K

      (a) Exhibits

            10.1  2002 Bonus Criteria for Chairman, President and Chief
                  Executive Officer of Delphi Financial Group, Inc.

            10.2  Second Amendment to the Delphi Capital Management, Inc.
                  Pension Plan for Robert Rosenkranz

            11    Computation of Results per Share of Common Stock (incorporated
                  by reference to Note F to the Consolidated Financial
                  Statements included elsewhere herein)

            99.1  Certification of Chief Executive Officer Pursuant to 18 U.S.C.
                  Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002

            99.2  Certification of Vice President and Treasurer Pursuant to 18
                  U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002

      (b) Reports on Form 8-K

            None.


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                  DELPHI FINANCIAL GROUP, INC. (Registrant)


                                  /s/      ROBERT ROSENKRANZ
                                  ----------------------------------------------
                                  Robert Rosenkranz
                                  Chairman of the Board, President and
                                  Chief Executive Officer
                                  (Principal Executive Officer)


                                  /s/      THOMAS W. BURGHART
                                  ----------------------------------------------
                                  Thomas W. Burghart
                                  Vice President and Treasurer
                                  (Principal Accounting and Financial Officer)


Date:  November 14, 2002


                                     - 18 -
<PAGE>
                          DELPHI FINANCIAL GROUP, INC.

                           CERTIFICATIONS PURSUANT TO
                                 SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

                                  CERTIFICATION

I, Robert Rosenkranz, certify that:

      1.    I have reviewed this quarterly report on Form 10-Q of Delphi
            Financial Group, Inc. (the "registrant").

      2.    Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the registrant as of, and for, the periods presented
            in this quarterly report;

      4.    The registrant's other certifying officers and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
            and we have:

            a.    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

            b.    evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

            c.    presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

      5.    The registrant's other certifying officers and I have disclosed,
            based on our most recent evaluation, to the registrant's auditors
            and the audit committee of registrant's board of directors (or
            persons performing the equivalent function):

            a.    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            b.    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

      6.    The registrant's other certifying officers and I have indicated in
            this quarterly report whether or not there were significant changes
            in internal controls or in other factors that could significantly
            affect internal controls subsequent to the date of our most recent
            evaluation, including any corrective actions with regard to
            significant deficiencies and material weaknesses.

Date: November 14, 2002

                                           /s/      ROBERT ROSENKRANZ
                                           -------------------------------------

                                           Robert Rosenkranz
                                           Chairman of the Board, President and
                                           Chief Executive Officer


                                     - 19 -
<PAGE>
                                  CERTIFICATION

I, Thomas W. Burghart, certify that:

      1.    I have reviewed this quarterly report on Form 10-Q of Delphi
            Financial Group, Inc. (the "registrant").

      2.    Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the registrant as of, and for, the periods presented
            in this quarterly report;

      4.    The registrant's other certifying officers and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
            and we have:

            a.    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

            b.    evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

            c.    presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

      5.    The registrant's other certifying officers and I have disclosed,
            based on our most recent evaluation, to the registrant's auditors
            and the audit committee of registrant's board of directors (or
            persons performing the equivalent function):

            d.    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            e.    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

      6.    The registrant's other certifying officers and I have indicated in
            this quarterly report whether or not there were significant changes
            in internal controls or in other factors that could significantly
            affect internal controls subsequent to the date of our most recent
            evaluation, including any corrective actions with regard to
            significant deficiencies and material weaknesses.

Date: November 14, 2002

                                                   /s/      THOMAS W. BURGHART
                                                   -----------------------------

                                                   Thomas W. Burghart
                                                   Vice President and Treasurer


                                     - 20 -