<PAGE>
 
                                   FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(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, 1998
                                       or
[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission file Number: 001-12099

                            THE CENTRIS GROUP, INC.
                            -----------------------
             (Exact name of Registrant as specified in its charter)

               DELAWARE                           33-0097221
               --------                           ----------
    (State or other jurisdiction of          (I.R.S. Employer
      incorporation or organization)          Identification Number)

          650 Town Center Drive, Suite 1600, Costa Mesa, CA   92626
          ------------------------------------------------------------
          (Address of principal executive offices)          (Zip code)

                                 (714) 549-1600
                                 --------------
              (Registrant's telephone number, including area code)

                                 Not applicable
                                 --------------
           (Former name, former address and former fiscal year, if 
                          changed since last report.)

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

YES    X                                NO
   ---------                              ---------
Number of shares outstanding of each class of the Registrant's Common Stock as
of November 12, 1998:
Common Stock, par value $.01 per share:  11,702,296
Common Stock Purchase Rights:            11,702,296

<PAGE>
 
                                     INDEX


Part I  FINANCIAL INFORMATION

     Item 1. FINANCIAL INFORMATION
               Condensed Consolidated Financial Statements:

             Balance Sheets as of September 30, 1998 and
               December 31, 1997..............................................3

             Income Statements for the Quarters  and Nine Months Ended
               September 30, 1998 and 1997....................................4

             Statements of Cash Flows for the Nine Months Ended
               September 30, 1998 and 1997....................................5

             Notes to Condensed Consolidated Financial Statements.............6

     Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
             OF FINANCIAL CONDITION AND RESULTS OF
             OPERATIONS.......................................................9

Part II  OTHER INFORMATION

     Item 6. EXHIBITS and REPORTS ON FORM 8-K................................17

SIGNATURES...................................................................19


                                       2
<PAGE>
 
                         PART I FINANCIAL INFORMATION

Item 1. FINANCIAL INFORMATION
        Condensed Consolidated Financial Statements:

                            THE CENTRIS GROUP, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                              (Dollars in Thousands)

ASSETS
                                          SEPTEMBER 30, 1998    DECEMBER 31,1997
                                          ------------------    ----------------
Investments, at market (amortized cost                            
 $231,376 at September 30,1998, $214,407                          
 at December 31,1997)                             $240,120              $223,824
Cash and invested cash                               2,219                11,122
Restricted cash and short term investments          31,001                27,947
Accrued investment income                            3,154                 3,196
Receivables:                                                      
    Reinsurance losses and reserves                 38,690                26,932
    Premiums                                        41,219                26,012
Prepaid reinsurance premiums                        13,099                 7,799
Deferred policy acquisition costs                    3,458                 4,495
Other assets                                        16,532                11,921
                                                  --------              --------

    Total assets                                  $389,492              $343,248
                                                  ========              ========

LIABILITIES AND STOCKHOLDERS' EQUITY       
                                           
LIABILITIES                                
  Insurance liabilities:                   
    Amounts due insurance companies               $ 54,935              $ 36,470
    Losses and loss adjustment expenses            146,716               116,801
    Unearned premiums                               35,565                30,249
  Note payable                                      29,850                32,500
  Accounts payable and accrued expenses              2,764                 9,638
                                                  --------              --------
                                                                   
    Total liabilities                              269,830               225,658
                                                                  
Stockholders' Equity                               119,662               117,590
                                                  --------              --------
                                                                   
    Total liabilities and stockholders'                            
    equity                                        $389,492              $343,248
                                                  ========              ========

                                                                                
See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>
 
                            THE CENTRIS GROUP, INC.
                   Condensed Consolidated Income Statements
                                        
                 (Dollars in Thousands, except per share data)

<TABLE>
<CAPTION>
                                                    QUARTER ENDED                 NINE MONTHS ENDED     
                                                    SEPTEMBER 30,                   SEPTEMBER 30,
                                                    -------------                   ------------- 
                                                1998            1997            1998            1997
                                                ----            ----            ----            ----
<S>                                           <C>              <C>            <C>             <C>
Revenues:                               
                                        
   Premiums earned                              $44,329         $38,733        $129,602        $116,119
                                        
   Commissions and fees                           8,948           7,728          26,781          23,910
                                        
   Net investment income                          3,202           2,711           9,611           8,114
                                        
   Realized investment gains                      3,909           9,767           6,505          10,022
                                                -------         -------        --------        --------
                                        
                                                 60,388          58,939         172,499         158,165
     Total revenues                             -------         -------        --------        --------
                                                
                                        
Operating Expenses:                     
                                        
   Losses and loss adjustment expenses  
     incurred                                    43,476          36,698         107,593          92,220
   Policy acquisition expenses                   13,342          10,962          37,389          33,954
                                        
   General and administrative expenses            5,178           4,819          15,148          13,720
                                        
   Interest                                         524             615           1,626           1,843
                                                -------         -------        --------        --------
     Total operating expenses                    62,520          53,094         161,756         141,737
                                                -------         -------        --------        --------
                                        
(Loss) Income before income taxes                (2,132)          5,845          10,743          16,428
                                        
     Income tax (benefit) expense                  (948)          1,819           3,192           4,994
                                                -------         -------        --------        -------- 
                                                $(1,184)        $ 4,026        $  7,551        $ 11,434
Net (loss) income                               =======         =======        ========        ========
                                                
Basic (loss) earnings per share                 $ (0.10)        $  0.33        $   0.62        $   0.96
                                                =======         =======        ========        ========
                                        
Diluted (loss) earnings per share               $ (0.10)        $  0.33        $   0.61        $   0.94
                                                =======         =======        ========        ========
</TABLE>
                                                                                

 See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>
 
                            THE CENTRIS GROUP, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)

                                                NINE MONTHS ENDED SEPTEMBER 30,
                                                -------------------------------
                                                     1998             1997
                                                     ----             ----

Cash provided by operating activities              $ 10,567          $ 13,792
                                                   --------          --------
                                                              
Cash flows from investing activities:                         
                                                              
    Purchases of fixed maturity investments         (58,920)          (44,927)

    Purchases of equity securities                  (14,226)          (13,976)

    Proceeds from sales of investment securities     64,428            48,990

    Net purchases of short term                               
    investments                                      (1,847)              197
    Purchases of property and equipment              (1,214)             (916)
                                                   --------          --------
                                                              
Cash used in investing activities                   (11,779)          (10,632)
                                                   --------          --------
                                                              
Cash flows from financing activities:                         
    Payment on note payable                          (2,650)           (1,875)

    Dividends paid                                   (1,105)           (1,076)
    Repurchase of shares and exercise                         
       of stock options                              (3,936)              486
                                                   --------          --------
                                                              
Cash (used in) provided by financing activities      (7,691)           (2,465)
                                                   --------          --------
                                                              
Net (decrease) increase in cash and invested cash    (8,903)              695
                                                              
Cash and invested cash at beginning of period        11,122            11,132
                                                   --------          --------
                                                              
Cash and invested cash at end of period            $  2,219          $ 11,827
                                                   ========          ========
 
Supplemental disclosure of cash flow information:
 
Interest paid                                      $  1,602          $  1,747
                                                   ========          ========

Income taxes paid, net                             $  6,674          $  4,001
                                                   ========          ======== 

See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>
 
                            THE CENTRIS GROUP, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and the
instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management all adjustments
(consisting only of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for the quarter and
nine months ended September 30, 1998 are not necessarily indicative of the
results to be expected for the full year. For further information, refer to the
consolidated financial statements and footnotes thereto for the year ended
December 31, 1997 included in the 1997 Annual Report to Stockholders of The
Centris Group, Inc. (the "Company").

2. SEGMENT DISCLOSURE
SFAS 131, "Disclosures about Segments of an Enterprise and Related Information"
will be adopted by the Company for the year ended December 31, 1998.
Historically, the Company has reported segment information which conforms to the
requirements of SFAS 131. Accordingly, adoption of this standard is not expected
to result in a significant change to the Company's financial disclosures.

3. CHANGES IN CAPITAL STRUCTURE
On February 3, 1998, the Company announced that its Board of Directors had
authorized a two-for-one split of its common stock in the form of a 100% stock
dividend to stockholders of record as of February 18, 1998. Certificates
reflecting the stock split were issued February 27, 1998. All references in the
financial statements to number of shares, per share amounts and market prices of
the Company's common stock have been adjusted retroactively for all periods
presented to reflect this change in capital structure.

On September 3, 1998, the Company announced that its Board of Directors had
authorized up to $5,000,000 for the repurchase of shares of the Company's stock.
Through September 30, 1998 the Company acquired 417,800 common shares. On
October 13, 1998 the Company announced that the Board of Directors had
authorized the repurchase of an additional $5,000,000 of its common stock under
its existing repurchase program.

4. ACQUISITION
On August 29,1998, the Company announced that it had signed a definitive
agreement to acquire VASA North America, Inc. and its subsidiaries ("VNA") and
Seaboard Life Insurance Company (USA) from Seaboard Life Insurance Company
(Canada) and its parent Seaboard North America Holdings, Inc., a Canadian
company owned by Eureko, B.V. of the Netherlands. The operations of VNA include
VASA Brougher, Inc., a medical stop-loss managing general underwriter and VASA
North Atlantic Insurance Company, a property/casualty insurer. The majority of
the acquired group's

                                       6
<PAGE>
 
business is medical stop-loss and group term life insurance for self-insured
employers. The purchase price of the group will approximate the statutory book
value as of the closing date of the insurance companies being acquired.
Financing will be provided by the Company's primary lender through its' current
credit agreement and additional short term financing. This acquisition
transaction is expected to close during the fourth quarter of 1998 following the
receipt of applicable regulatory approvals and will be accounted for as a
purchase.

5. NOTE PAYABLE
On October 26, 1998, the Company amended its bank credit agreement to increase
its revolving loan to $50,000,000. Under this amendment, principal amounts
outstanding bear interest at LIBOR plus a margin of 0.75 percent, and principal
reductions were rescheduled to commence in March, 2000 at $2,500,000 per quarter
through December, 2003. In connection with negotiation of this amendment, the
Company rescheduled its third quarter 1998 principal payment to December 31,
2002. The additional funds available under the amended credit agreement will be
utilized for general corporate purposes, including stock buybacks and
acquisition financing.

6. INCOME PER SHARE
Reconciliation of income and outstanding shares and related per share amounts
adjusted to reflect the February 27, 1998 two-for-one stock split, is presented
below (in thousands of dollars, except per share data):

 
                                         Quarter Ended     Nine Months Ended
                                         September 30,       September 30,
                                        1998      1997      1998       1997
                                        ------------------------------------
 
(Loss) Income(Numerator)
   Income available to Common 
   Stockholders for Basic and 
   Diluted income per share            $(1,184)  $4,026    $7,551    $11,434
 
Weighted Average Shares (Denominator)
   Basic Shares                         12,111   11,980    12,165     11,944
Effect of dilutive securities
     Common Stock Equivalents                -      292       281        252
                                       -------   ------    ------    -------
   Diluted Shares                       12,111   12,272    12,446     12,196
                                       =======   ======    ======    ======= 
Per Share Amounts
   Basic Income per Share              $ (0.10)  $ 0.33    $ 0.62    $  0.96
   Diluted Income per Share            $ (0.10)  $ 0.33    $ 0.61    $  0.94


                                       7
<PAGE>
 
7. COMPREHENSIVE INCOME
SFAS No. 130, "Reporting Comprehensive Income" was adopted by the Company
effective January 1, 1998. Comprehensive income represents a measure of all
changes in equity of an enterprise that result from recognized transactions and
other economic events of the period other than transactions with owners in their
capacity as owners. Comprehensive income for the quarterly periods ended
September 30, 1998 and 1997 was $(1,653,000) and $237,000, respectively.
Comprehensive income for the nine-month periods ended September 30, 1998 and
1997 was $7,114,000 and $9,744,000, respectively. The Company's Comprehensive
Income is comprised of net income for the period plus the tax effected increase
or decrease in unrealized gains occurring during the period.

                                       8
<PAGE>
 
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

Results Of Operations
---------------------

Consolidated revenues of The Centris Group, Inc. (the "Company") increased 2% to
$60,388,000 for the third quarter ended September 30, 1998 from $58,939,000 in
the 1997 third quarter, and increased 9% to $172,499,000 for the first nine
months of 1998 from $158,165,000 for the 1997 nine month period. Premiums earned
in the 1998 periods as compared to 1997 primarily reflect growth in the provider
excess product line combined with business from the USF RE east coast treaty
reinsurance branch, acquired in September 1997. Net investment income reflects a
18% increase over the 1997 nine month period as a result of higher levels of
invested assets arising from higher production levels in each business segment.
Changes in realized gains in the 1998 periods as compared to the 1997 periods
arise from the continuous evaluation of the investment portfolio and actions
taken to enhance and maintain yields and total return consistent with the
Company's investment guidelines and prevailing capital market conditions.

Insurance and reinsurance companies establish reserves for losses incurred, but
not yet paid or reported, in order to match such losses with the related
premiums earned. The process of establishing loss reserves is subject to
uncertainties that are a normal, recurring aspect of the insurance business
which requires the use of informed judgments and estimates. Loss and loss
adjustment expense("LAE") reserve development is reviewed on a regular basis,
incorporating analysis of current trends, market changes in the Company's
business segments and historical experience to analyze the Company's actuarial
assumptions. As additional experience and other data becomes available, the
Company's actuarial estimates may be revised. Such revisions may impact
earnings.

In the 1998 nine month period losses and LAE increased 17% to $107,593,000 from
$92,220,000 in the 1997 period, and increased 18% to $43,476,000 in the third
quarter of 1998 from $36,698,000 in the 1997 third quarter. These increases
reflect the effect of changes in loss experience in each business line,
including catastrophe losses in the property/casualty segment resulting from
Hurricane Georges during the third quarter of 1998 in addition to severe wind,
hail and tornado activity earlier in the year in the midwestern and southeastern
regions of the United States which resulted in catastrophe losses of $6,637,000
and $8,269,000 during the third quarter and nine-month periods in 1998,
respectively. See segment information contained herein for additional
disclosures on loss activity.

Increases in general and administrative expenses between the periods presented
reflect the additional operating expenses attributable to three acquisitions
completed during 1997. Policy acquisition expenses vary on the basis of market
conditions and mix of business.

                                       9
<PAGE>
 
The catastrophic claim activity previously noted combined with continued
competitive market conditions and changes in claim cost experience in each
business segment resulted in a 34% decline in consolidated net income to
$7,551,000 in the first nine months of 1998 as compared to $11,434,000 in the
1997 nine month period, and yielded a net loss of $1,184,000 in the third
quarter of 1998 as compared to net income of $4,026,000 in the third quarter of
1997.

Income taxes as a percentage of pre-tax income fluctuate depending on the
proportion of tax exempt investment income to total pre-tax income and the
proportion of total income subject to state income taxes.

The statutory combined ratio is the traditional indicator of the potential
underwriting profitability of an insurance company's business. The Company's
statutory combined ratios were 109.5 and 106.4 for the nine-month periods ended
September 30, 1998 and 1997, respectively.

BUSINESS SEGMENTS
-----------------

The Company conducts business in two segments:

MEDICAL LINES  includes the operations of three subsidiaries: medical stop-loss
-------------                                                                  
and provider excess coverages underwritten by USBenefits Insurance Services,
Inc. ("USBenefits") on behalf of The Continental Insurance Company
("Continental"), one of the CNA Insurance Companies; reinsurance of 50% of such
business by USF RE INSURANCE COMPANY ("USF RE"); and commissions from
catastrophic accident and health risks underwritten and managed nationally and
internationally by INTERRA, Inc. ("INTERRA"). USBenefits is the underwriting
manager and marketing organization for medical lines coverages issued on behalf
of Continental and for group life insurance coverage issued by an affiliate of
Continental. Medical stop-loss coverage is a form of excess insurance that
protects employers that self-fund their employee healthcare plans by capping
their exposure from the risk of loss. Provider excess coverage limits the
financial risks which healthcare providers face from medical plans that prepay
the providers fixed amounts per plan participant (capitated fees) or provide
specified rates for services. Medical lines products are marketed through a
network of unaffiliated third party administrators, insurance agents, brokers
and consultants.

PROPERTY/CASUALTY  reinsurance and insurance underwriting is conducted by USF RE
-----------------                                                               
and its wholly-owned subsidiary USF Insurance Company ("USFIC"). These
subsidiaries both carry an A (Excellent) rating from A.M. Best Company and USF
RE is assigned a claims paying ability rating of Aq (Good) by Standard & Poor's.
Insurance companies purchase reinsurance in order to control and manage the
risks they accept when they issue policies. USF RE assumes facultative and
treaty reinsurance from unaffiliated insurance companies, primarily through
reinsurance intermediaries. Facultative is reinsurance of one risk at a time,
while reinsurance treaties cover a portion of all policies written by another
insurer in a particular risk category. USF RE concentrates its casualty writings
in

                                       10
<PAGE>
 
commercial auto liability, general liability and products liability. It also
provides a broad range of coverages for most types of property exposures which
include wind and storm coverages. USFIC writes surplus lines insurance on
commercial property/casualty risks which are marketed through excess and surplus
lines brokers.

The tables set forth below present pre-tax operating information by business
segment and holding company operations (including realized gains) for the
quarters and nine month periods ended September 30, 1998 and 1997, respectively.

MEDICAL LINES
-------------

(Dollars in Thousands)
<TABLE>
<CAPTION>
                                                     QUARTER ENDED                       NINE MONTHS ENDED
                                                     SEPTEMBER 30,                         SEPTEMBER 30,
                                         -------------------------------------  ------------------------------------
                                            1998         1997        % CHANGE      1998        1997       % CHANGE
                                         ----------  ------------  -----------  ----------  ----------  ------------
<S>                                      <C>         <C>           <C>          <C>         <C>         <C>
Revenues:
    Premiums earned                         $26,855      $24,076         12%      $ 79,973    $ 74,646        7%
                                                                                                           
    Commissions and fees                      8,792        7,728         14%        26,312      23,910       10%
                                                                                                           
    Investment income                         1,033          900         15%         3,094       2,651       17%
                                            -------      -------                  --------    --------     
                                                                                                           
    Total revenues                           36,680       32,704         12%       109,379     101,207        8%
                                            -------      -------                  --------    --------     
                                                                                                           
Expenses:                                                                                                  
    Losses and loss adjustment               21,434       25,372       (16)%        60,428      61,482      (2)%
                                                                                                           
    Policy acquisition                        9,046        8,075         12%        27,219      25,644        6%
                                                                                                           
    General and  administrative               3,523        3,443          2%        10,202      10,036        2%
                                            -------      -------                  --------    --------     
                                                                                                           
    Total expenses                           34,003       36,890        (8)%        97,849      97,162        -
                                            -------      -------                  --------    --------
                                                                               
Income before income taxes                  $ 2,677      $(4,186)                 $ 11,530    $  4,045
                                            =======      =======                  ========    ========
</TABLE>
                                        
In medical lines, total revenues in the 1998 periods advanced primarily as a
result of increases in premiums earned, which reflects 1998 year-to-date growth
of 2% in the Company's medical stop-loss business and growth of 66% in its
provider excess business.

Loss and LAE in the 1998 periods includes runoff of certain business acquired as
part of the Company's 1997 purchase of Global Excess Re and strengthening of
medical stop loss formula reserves. Loss and LAE experience in the 1997 periods
included third quarter additions of $8 million to medical lines reserves as a
result of additional development on business written during the second half of
1996 and first half of 1997 combined with increases in the severity and
frequency of specific and aggregate claims during the 1997 periods.

                                       11
<PAGE>
 
Policy acquisition expenses vary due to the level of production activity, mix of
business and market conditions. Increases in general and administrative expenses
in the 1998 quarter and year-to-date periods primarily result from the 1997
acquisition of INTERRA.

On August 29,1998, the Company announced that it had signed a definitive
agreement to acquire VASA North America, Inc. and its subsidiaries and Seaboard
Life Insurance Company (USA) ("VASA") from Seaboard Life Insurance Company
(Canada) and its parent Seaboard North America Holdings, Inc., a Canadian
company owned by Eureko, B.V. of the Netherlands.  The majority of the acquired
group's business is medical stop-loss and group term life insurance for self-
insured employers. The transaction is expected to close during the fourth
quarter of 1998 following the receipt of applicable regulatory approvals.  This
strategic acquisition is expected to produce additional medical lines revenues
of 15% to 20% when integrated with the Company's medical stop loss business in
1999.

PROPERTY/CASUALTY
-----------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
                                                    QUARTER ENDED                        NINE MONTHS ENDED
                                                    SEPTEMBER 30,                          SEPTEMBER 30,
                                        -------------------------------------  --------------------------------------
                                           1998        1997        % CHANGE       1998         1997       % CHANGE
                                        ----------  -----------  ------------  -----------  ----------  -------------
<S>                                     <C>         <C>          <C>           <C>          <C>         <C>
Revenues:
    Premiums earned                       $17,474       $14,657           19%     $49,629      $41,473            20%

    Commissions and fees                      156             -                       469            -

    Investment income                       2,144         1,801           19%       6,432        5,427            19%
                                          -------       -------                   -------      -------

    Total revenues                         19,774        16,458           20%      56,530       46,900            21%
                                          -------       -------                   -------      -------
 
Expenses:
    Losses and loss adjustment             22,042        11,326           95%      47,165       30,738            53%

    Policy acquisition                      4,296         2,887           49%      10,170        8,310            22%

    General and administrative              1,383         1,111           24%       4,184        2,922            43%
                                          -------       -------                   -------      -------

    Total expenses                         27,721        15,324           81%      61,519       41,970            47%
                                          -------       -------                   -------      -------

Income before income taxes                $(7,947)      $ 1,134                   $(4,989)     $ 4,930
                                          =======       =======                   =======      =======
</TABLE>
                                                                                
Within the property/casualty sector, strong competition in treaty and
facultative lines continues to impact pricing and contract terms. Increased
revenues in the 1998 periods are primarily attributable to business from the
east coast treaty branch, acquired in September 1997.

Changes in losses and LAE between periods result from a change in the mix of
business to a higher proportion of casualty business, which carries a higher
formula loss ratio than property business, combined with higher 1998 claims cost
experience in domestic and international property treaty reinsurance as a result
of hurricane and

                                       12
<PAGE>
 
storm activity. Catastrophe losses resulting from Hurricane Georges during the
third quarter of 1998 in addition to severe wind, hail and tornado activity
earlier in the year in the midwestern and southeastern regions of the United
States resulted in catastrophe losses of $6,637,000 and $8,269,000 during the
third quarter and nine-month periods of 1998, respectively. There were no
catastrophic losses experienced during the 1997 periods.

Policy acquisition expenses in 1998 as compared to 1997 vary based upon the mix
of business.

In August 1998 the Company announced that it had retained an investment banker
to act as financial advisor in identifying strategic opportunities related to
its property/casualty operations.  Presently, the Company has held preliminary
discussions with potential acquirers of its property/casualty reinsurance
operations and expects to continue evaluation of opportunities to enhance
utilization of capital.


HOLDING COMPANY
---------------

(Dollars in Thousands)
<TABLE>
<CAPTION>
                                                     QUARTER ENDED                         NINE MONTHS ENDED
                                                     SEPTEMBER 30,                           SEPTEMBER 30,
                                         --------------------------------------  --------------------------------------
                                            1998         1997        % CHANGE       1998        1997         % CHANGE
                                         ----------  ------------  ------------  ----------  -----------  -------------
<S>                                      <C>         <C>           <C>           <C>         <C>          <C>
Revenues:

    Investment income                        $   25        $   10          150%      $   85      $    36           136%

    Realized gains                            3,909         9,767         (60)%       6,505       10,022          (35)%
                                             ------        ------                    ------      -------
    Total revenues                            3,934         9,777         (60)%       6,590       10,058          (34)%
                                             ------        ------                    ------      -------
 
Expenses:
    General and administrative                  272           265            3%         762          762

    Interest                                    524           615         (15)%       1,626        1,843          (12)%
                                             ------        ------                    ------      -------
    Total expenses                              796           880         (10)%       2,388        2,605           (8)%
                                             ------        ------                    ------      -------
Income before income taxes                   $3,138        $8,897         (65)%      $4,202      $ 7,453          (44)%
                                             ======        ======                    ======      =======
</TABLE>
Changes in realized gains in the 1998 period as compared to the 1997 period
arise from the continuous evaluation of the investment portfolio and actions
taken to enhance and maintain yields and total return consistent with the
Company's investment guidelines and prevailing capital market conditions.
Declines in interest expense in the 1998 period reflect quarterly reductions in
the outstanding balance of bank debt under the Company's Credit Agreement,
principal payments on which commenced in March 1997, and changes in the variable
interest rate charged on the outstanding balance. See also "Liquidity and
Capital Resources" for further information.

                                       13
<PAGE>
 
INFLATION
---------

The healthcare marketplace has long been subject to the effects of increases in
costs of services. Inflation in the costs of healthcare tends to generate
increases in premiums for medical lines coverage, resulting in greater revenues.
Inflation can also negatively impact insurance and reinsurance operations by
causing higher claims settlements than may have originally been estimated, while
not necessarily allowing an immediate increase in premiums to a level necessary
to maintain profit margins. Historically the Company has made no explicit
provisions for inflation, but economic trends are considered when setting
underwriting terms and claim reserves. Such reserves are subjected to a
continual internal and external review processes to assess their adequacy and
are adjusted as deemed appropriate. Overall economic trends also affect interest
rates, which in turn affect investment income and the market value of the
Company's investment portfolio.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

Primary sources of cash from operations include premium collections, investment
income and commissions and fees. The principal uses of cash from operations are
for premium payments to insurance companies, payments of claims under USF RE's
and USFIC's reinsurance and insurance contracts, debt reduction, and operating
expenses such as salaries, commissions, taxes and general overhead. Cash
available from operations varies between periods primarily due to the timing of
collections on ceding contracts with retrocessionaires and the payment of claims
on these contracts.

On October 26, 1998, the Company amended its bank credit agreement to increase
its credit line to $50,000,000. Under this amendment, principal amounts
outstanding bear interest at LIBOR plus a margin of 0.75 percent. Commitment
reductions were rescheduled to commence in March, 2000 at $2,500,000 per quarter
through December, 2003. In connection with negotiation of this amendment, the
Company rescheduled its third quarter 1998 principal payment to December 31,
2002. Additional funds available under this credit agreement will be utilized
for general corporate purposes, including stock buybacks and acquisition
financing. The Company's Credit Agreement contains certain covenants,
restrictions and dividend payment limitations with which the Company was in
compliance at September 30, 1998.

The Company expects to finance its acquisition of the VASA companies through its
amended credit agreement and an additional short-term credit arrangement from
its lender. The additional short-term agreement may involve revisions to current
covenants and collateral requirements as presently defined.

On September 3, 1998, the Company announced that its Board of Directors had
authorized up to $5,000,000 for the repurchase of shares of the company's stock.
Through September 30, 1998 the Company acquired 417,800 common shares at a cost
of $4,376,000. On October 13, 1998 the Company announced that the Board of
Directors

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<PAGE>
 
had authorized the repurchase of an additional $5,000,000 of its common stock
under its existing repurchase program. The Company continues to fund its share
repurchase program from operating capital as required.

The Company anticipates that it will continue to generate sufficient cash flow
from operations to cover its short-term (1-18 months) and long-term (18 months
to 3 years) liquidity needs. From time to time, the Company expects to continue
to evaluate acquisition opportunities that complement its business operations.

The Company's investment portfolio reflects a current allocation of
approximately 92% in fixed-income investments, both taxable and tax free, with
an "AA" average portfolio rating, and 8% in equities. All such securities are
carried at quoted market values at the latest balance sheet date. The portfolio
is not exposed to real estate investments, derivatives, high yield bonds,
private placements or mortgage loans.

Year 2000
---------

As the year 2000 approaches, the Company recognizes the need to ensure that its
operations will not be adversely affected by year 2000 computer software issues.
Such issues pertain to date sensitive software which could incorrectly recognize
a two digit date field. This could result in a system miscalculation or failure
and lead to a disruption of operations, including, among other things, a
temporary inability to process transactions, send invoices, make claims or other
payments or engage in similar activities. The Company has a formal plan in place
to evaluate and implement solutions to year 2000 computer software issues. The
evaluation phase of the plan, which was completed in December 1997, included an
analysis of the Company's software systems, identification of software
enhancements required to address year 2000 issues and identification of those
vendors and business partners that could have an impact on Company operations in
the event that their systems were not year 2000 compliant. The Company's
significant operational and financial software systems are provided by third
party vendors who the Company has confirmed have also been focusing on
addressing year 2000 issues. During 1998, the Company has implemented and tested
year 2000 compliant systems for its corporate financial reporting system, its
treaty reinsurance business and its medical lines operations. The Company is
presently installing software products for its facultative reinsurance
operations and expects to complete this phase of its plan, including testing
year 2000 changes, during the fourth quarter of 1998. The cost of the year 2000
remediation plan is not considered material to the Company's financial position.

In addition, the Company has solicited its trading partners including agents and
brokers, suppliers, financial institutions and others who could directly or
indirectly affect the Company's operations as to their year 2000 compliance
efforts. Presently, these trading partners are in various stages of completion
of their own year 2000 remediation efforts. Accordingly, it is not possible to
quantify the aggregate cost to the Company with respect to external year 2000
issues, if any, although the Company does not expect such matters

                                       15
<PAGE>
 
to have a material adverse effect on its operations. As the Company continues to
monitor the status of external year 2000 issues, it expects to develop
contingency plans for issues that may arise.

Forward Looking Statements
--------------------------

Some of the statements included within this quarterly report on Form 10-Q,
including but not limited to Management's Discussion and Analysis of Financial
Condition and Results of Operations, Condensed Consolidated Financial Statements
and related notes thereto, which are not historical facts may be considered to
be forward looking statements within the meaning of Section 29A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
and therefore are subject to certain risks and uncertainties which could cause
the actual results to differ materially from those suggested by such statements.
Such risks and uncertainties include, but are not limited to the following:
catastrophic losses or a material aggregation of such losses in the Company's
insurance lines; changes in federal or state law affecting an employer's ability
to self-insure or other adverse regulatory changes; the adequacy of the
Company's reinsurance program; general economic conditions in this country or
abroad; adverse developments in the securities markets and their impact on the
Company's investment portfolio; the effects of competitive market pressures
within the medical lines or property/casualty marketplaces; the effect of
changes required by generally accepted accounting practices or statutory
accounting practices; failure of the company's computer systems to perform in an
appropriate manner following year 2000 remediation efforts; failure of the
company's trading partners, customer or key vendors to make their computer
systems year 2000 compliant in a timely manner; and other risks which are
described from time to time in the company's filings with the Securities and
Exchange Commission. The words "believes", "anticipates", " expects" and similar
expressions are intended to identify forward looking statements.

                                       16
<PAGE>
 
                           PART II OTHER INFORMATION


Item 6. EXHIBITS and REPORTS ON FORM 8-K.
      (a)  The following is a list of exhibits required to be filed as part of
           this Form 10-Q by Item 601 of Regulation S-K:

       3.1, 4.1  The Company's Restated Certificate of Incorporation, as
                 amended, as presently in effect. Filed as Exhibits 3.1 and 4.1
                 to the Company's Annual Report on Form 10-K for the year ended
                 December 31, 1997, and incorporated herein by this reference.

       3.2, 4.2  The Bylaws of the Company, as amended, as presently in effect.
                 Filed as Exhibits 3.2 and 4.2 to the Company's Annual Report on
                 Form 10-K for the year ended December 31, 1997, and
                 incorporated herein by this reference.

            4.3  Stock Certificate of the Company. Filed as Exhibit 4.3 to the
                 Company's Quarterly report on Form 10-Q for the quarter ended
                 September 30, 1997, and incorporated herein by this reference.

            4.4  Rights Agreement. Filed as Exhibit 2 to the Company's Current
                 Report on Form 8-K dated May 24, 1990, and incorporated herein
                 by this reference.

            4.5  First Amendment to Rights Agreement. Filed as Exhibit 1 to the
                 Company's Current Report on Form 8-K dated January 16, 1992,
                 and incorporated herein by this reference.

            4.6  Third Amendment to Rights Agreement. Filed as Exhibit 10.1 to
                 the Company's Current Report on Form 8-K dated April 29, 1994,
                 and incorporated herein by this reference.

            4.7  Third Amendment to Rights Agreement. Filed as Exhibit 4 to the
                 Company's Current Report on Form 8-K dated September 28, 1995,
                 and incorporated herein by this reference.

            4.8  Fourth Amendment to Rights Agreement. Filed as Exhibit 1 to the
                 Company's Current Report on Form 8-K dated November 23, 1997,
                 and incorporated herein by this reference.
 
            4.9  Fifth Amendment to Rights Agreement. Filed as Exhibit 1 to the
                 Company's Current Report on Form 8-K dated January 28, 1998,
                 and incorporated herein by this reference.

                                      17
<PAGE>
 
         10.1/*/ Fourth Amendment to the Credit Agreement(amending and restating
                 the Credit Agreement) between The Centris Group, Inc. and Fleet
                 National Bank dated as of October 26, 1998.

         11/*/   The Centris Group, Inc. and Subsidiaries Computation of
                 Earnings Per Share.

         15/*/   Independent Auditors' letter regarding unaudited interim
                 financial information.

         27/*/   Financial Data Schedules

(b)  During the third quarter of 1998 the Company did not file any Current
Reports on Form 8-K with the Securities and Exchange Commission.

/*/  Describes exhibits filed with this Quarterly Report on Form 10-Q.






-------------------
/*/  Describes the exhibits filed with this Quarterly Report on Form 10-Q.

                                       18
<PAGE>
 
                                  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.

The Centris Group, Inc.




Date: November 12, 1998                By: /S/ DAVID L. CARGILE
                                          ---------------------
                                          DAVID L. CARGILE
                                          Chairman of the Board, President 
                                          and Chief Executive Officer



Date: November 12, 1998                By: /S/ CHARLES M. CAPORALE
                                          ------------------------
                                          CHARLES M. CAPORALE
                                          Senior Vice President, Chief Financial
                                          Officer and Treasurer (Principal 
                                          Financial and Accounting Officer)

                                      19