<PAGE>   1

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             ---------------------

                                   FORM 10-K

(MARK ONE)

    [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934

               FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       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 000-25273


                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           FLORIDA                                              59-3422536
-------------------------------                           ----------------------
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                           Identification Number)


         360 CENTRAL AVENUE
       ST. PETERSBURG, FLORIDA                                     33701
----------------------------------                              ----------
(Address of registrant's principal                              (Zip Code)
         executive offices)


                                 (727) 803-2040
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


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

                                      NONE

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

                              TITLE OF EACH CLASS
                          COMMON STOCK, $.01 PAR VALUE

    Indicate by check mark whether this 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 [ ]

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

                                Yes [X]  No [ ]

    As of March 30, 2001, there were outstanding 12,800,261 shares of Common
Stock. The aggregate market value of the Common Stock held by non-affiliates of
the registrant as of March 30, 2001 was $1.3 million.

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                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.

                            FORM 10-K ANNUAL REPORT
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                        PAGE
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<S>       <C>                                                           <C>
                                   PART I
Item 1.   Business....................................................    1
Item 2.   Properties..................................................   16
Item 3.   Legal Proceedings...........................................   16
Item 4.   Submission of Matters to a Vote of Security Holders.........   18

                                  PART II
Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters.........................................   19
Item 6.   Selected Financial Data.....................................   20
Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...................................   21
Item 7A.  Quantitative and Qualitative Disclosures About Market
          Risk........................................................   28
Item 8.   Financial Statements and Supplementary Data.................   28
Item 9.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure....................................   28

                                  PART III
Item 10.  Directors and Executive Officers of Registrant..............   29
Item 11.  Executive Compensation......................................   32
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management..................................................   42
Item 13.  Certain Relationships and Related Transactions..............   43

                                  PART IV
Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
          8-K.........................................................   50
</TABLE>

     The statements contained in this report on Form 10-K that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding the Company's expectations, hopes, beliefs,
intentions, or strategies regarding the future. Forward-looking statements
include statements regarding, among other things: (i) the potential loss of
material customers; (ii) the failure to properly manage growth and successfully
integrate acquired businesses; (iii) the Company's financing plans; (iv) trends
affecting the Company's financial condition or results of operations; (v) the
Company's growth and operating strategies; (vi) the ability to attract and
retain qualified information services and management personnel; (vii) the impact
of competition from new and existing competitors; (viii) the financial condition
of the Company's clients; (ix) potential increases in the Company's costs; (x)
the declaration and payment of dividends; (xi) the potential for unfavorable
interpretation of existing government regulations or new government legislation;
(xii) the impact of general economic conditions and interest rate fluctuations
on the demand for the Company's services, including flood zone determination
services; (xiii) the outcome of certain litigation and administrative
proceedings involving the Company's principal customer; (xiv) uncertainties
regarding the market acceptance of the Company's new services; (xv) the ability
to develop new technological solutions for current and prospective customers;
(xvi) the ability to establish positive name recognition in the market place;
(xvii) changes in existing service agreements; (xviii) the ability to obtain new
customers and retain existing customers; (xix) the ability to obtain third-party
information technology outsourcing services on a timely basis and at reasonable
costs; and (xx) the ability to achieve expected expense reductions as a result
of management initiatives. Prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors. All forward-looking statements included in this document are based on
information available to the Company on the date hereof and the Company assumes
no obligation to update any such forward-looking statement. Among the factors
that could cause actual results to differ materially are the factors detailed in
Items 1 through 3 and 7 of this report and the risks discussed under the caption
"Risk Factors" included in the Company's Registration Statement on Form S-1, as
amended (Reg. No. 333-57747). Prospective investors should also consult the
risks described from time to time in the Company's Reports on Form 10-Q, 8-K and
10-K and Annual Reports to Shareholders.

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                                     PART I

ITEM 1.  BUSINESS

GENERAL

     Insurance Management Solutions Group, Inc. (collectively with its
subsidiaries, the "Company"), through its wholly-owned subsidiaries, Insurance
Management Solutions, Inc., Geotrac of America, Inc. ("Geotrac") and Colonial
Claims Corporation, provides (1) comprehensive policy and claims outsourcing
services to the property and casualty ("P&C") insurance industry, with an
emphasis on providing these services to the flood insurance market, and (2)
flood zone determinations to financial institutions, mortgage lenders and
insurance companies.

     Outsourcing Services.  The Company's outsourcing services, which are
offered on either a bundled or "a la carte" basis, include policy
administration, claims administration and information technology services.
During 1999 and 2000, the Company processed approximately 767,000 and 836,000
insurance policies, respectively, including approximately 616,000 and 675,000
flood insurance policies, respectively, making it a significant provider of
flood insurance outsourcing services. The Company currently provides flood
outsourcing services to approved write-your-own carriers including its
affiliate, Bankers Insurance Group, Inc. (together with its subsidiaries,
"BIG"), Farmers Insurance Group, Mobile USA Insurance Company, Inc. and AAA Auto
Club South Insurance Company, as well as to insurance companies that offer flood
insurance utilizing BIG as their private label servicing carrier, such as Armed
Forces Insurance Corporation and AMICA Mutual Insurance Company. In conjunction
with BIG, the Company is able to offer insurance companies the ability to create
a turnkey private label flood insurance product. The Company believes this
product is attractive to insurance companies that desire to offer flood
insurance but are not certified by the Federal Emergency Management Agency
("FEMA") to sell and service flood insurance. The Company anticipates continued
growth in the demand for flood insurance, and related flood outsourcing
services, over the next several years.

     The Company is a 65.2% owned subsidiary of BIG, a holding company chartered
in Florida in 1976. BIG provides multiple lines of P&C insurance, most notably
flood, homeowners and automobile insurance, to individuals and businesses
throughout the United States. From 1995 to 2000, BIG's premiums grew from $160
million to $323 million, representing annual growth rates of 46.8%, 10.4%,
13.8%, 7.3% and 2.1%, respectively, and a compound annual growth rate of 15.1%.
BIG is the largest underwriter of flood insurance policies through independent
agents (and the second largest overall) in the United States. BIG is also the
Company's principal customer, accounting for approximately 58.1% of the
Company's total revenues and 79.5% of the Company's outsourcing revenues in 1999
and approximately 60.2% of the Company's total revenues and 82.6% of the
Company's outsourcing revenues in 2000.

     Effective January 7, 1999, the Company acquired Colonial Claims Corporation
(formerly Colonial Catastrophe Claims Corporation) ("Colonial Claims"), a
Florida corporation. Colonial Claims contracts with P&C insurance carriers to
handle property and casualty claims on their behalf. Colonial Claims has
assembled a large network of independent claims adjusters who respond to
individually reported loss assignments from Colonial Claims and are compensated
based upon a set claims fee schedule. Colonial Claims reviews and approves
claims settlements, assures consistency and quality of settlement practices, and
transmits claims information to the insurance carriers. The insurers, in turn,
approve and remit claims payments to the insureds. During 1999 and 2000,
Colonial Claims accounted for approximately $7.6 million and $3.5 million,
respectively, of the Company's outsourcing revenues.

     Flood Zone Determination Operations.  Geotrac is a leading provider of
flood zone determination services. During 1999 and 2000, Geotrac processed
approximately 1.28 million and 1.29 million flood zone determinations,
respectively, for over 1,380 and 1,880 customers, respectively, including
mortgage lenders and P&C insurance companies. Flood insurance is required by
federal law in connection with virtually all residential mortgage loans,
including refinancing loans, covering properties located within federally
designated high-risk flood zones. A flood zone determination is necessary in
order to ascertain a property's flood zone classification. In addition, due to
more stringent underwriting criteria, P&C insurers increasingly require flood
zone determinations prior to issuing commercial property policies. Geotrac uses
its proprietary database,

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compiled and digitized from flood maps distributed by FEMA, to determine whether
a particular property or structure is located within a flood zone classification
that requires flood insurance. The Company estimates that over 95% of U.S.
households are in counties covered by its electronic database.

OVERVIEW OF THE FEDERAL FLOOD INSURANCE PROGRAM AND FLOOD INSURANCE MARKET

     The U.S. flood insurance market is regulated by FEMA, which launched the
National Flood Insurance Program (the "Flood Program") in 1968. FEMA created the
Flood Program to provide federally-backed flood insurance to residents in
designated floodplain communities, on the condition that such communities comply
with the Flood Program's floodplain management requirements. The Flood Program,
as it exists today, is administered by the Federal Insurance Administration
("FIA").

     The Flood Program was launched in 1968, and in 1983, FIA opened the flood
insurance market to private insurance companies by establishing the National
Flood Insurance Write Your Own ("WYO") program. The WYO program permits private
insurance companies who meet FEMA requirements to sell flood insurance
underwritten by the federal government and subject to federal regulation.

     In 1994, Congress passed the National Flood Insurance Reform Act of 1994
(the "1994 Reform Act"). The 1994 Reform Act clarified and strengthened the
obligations of mortgage lenders to oversee and ensure the purchase of flood
insurance by borrowers who obtain federally-insured residential mortgage loans
on properties located in federally designated high-risk flood zones. Under the
1994 Reform Act, mortgage lenders must notify borrowers when flood insurance is
required, require flood insurance as a condition to making certain loans, and
place flood insurance premiums in escrow when other payments are escrowed.
Lenders who fail to comply with the 1994 Reform Act are subject to substantial
monetary penalties.

     From 1995 through 2000, the U.S. flood insurance market has grown from $1.1
billion to $1.7 billion in total annual flood premiums, representing annual
growth rates of 8.5%, 15.0%, 15.1%, 4.2%, and (0.1)%, respectively, and a
compound annual growth rate of 8.4%. During that same period, the dollar amount
of annual flood premiums administered by the Company has grown from $80 million
in 1995 to $216 million in 2000, representing annual growth rates of 27.6%,
29.5%, 19.6%, 18.3%, and 15.4%, respectively, and a compound annual growth rate
of 22.0%. Currently, almost 19,000 communities participate in the Flood Program,
and approximately 100 insurance companies are registered to offer WYO flood
insurance.

TREND TOWARD OUTSOURCING IN THE P&C INDUSTRY

     The P&C industry provides financial protection for individuals, businesses
and others against losses of property or losses by third parties for which the
insured is liable. P&C insurers underwrite policies that cover various types of
risk, which can generally be divided into personal lines of insurance covering
individuals and commercial lines of insurance covering businesses. Personal
lines are comprised primarily of automobile and homeowners insurance. Commercial
lines cover a wide range of commercial risks that affect businesses.

     According to A.M. Best, premium revenues in the P&C industry have increased
by an average of 2.2% annually since 1995. The P&C industry is highly
competitive, with insurance companies competing primarily on the basis of price,
consumer satisfaction and the ability to pay claims. According to A.M. Best, as
of December 31, 1999, there were approximately 3,300 P&C insurance companies in
the United States. These companies generated approximately $287 billion in
annual P&C premium revenues in 1999, of which more than one-half related to
personal lines automobile, homeowners and flood insurance business, the core
markets serviced by the Company. The Company believes there are a significant
number of P&C insurance companies for which outsourcing is a viable alternative
to maintaining in-house processing capabilities. More specifically, the Company
believes it can offer many of these insurance companies the opportunity to
reduce their processing costs by outsourcing such functions to the Company.

     Over the past decade, many P&C insurance companies have begun using
third-party vendors to provide certain policy and claims administration services
that were traditionally performed in-house. This outsourcing of services allows
insurers to focus on their core competencies, reduce costs and eliminate capital
expenditures for the development, installation, operation and maintenance of
information management and automation

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systems. The Company believes that insurance companies will increase their
levels of outsourcing as they determine that policy and claims administration
and regulatory compliance are complicated and too costly to perform efficiently
in-house. The Company believes it will have opportunities to market its
outsourcing services for the following reasons:

     - Consolidation and Drive for Cost Efficiencies.  Providers of outsourcing
       services are able to consolidate large volumes of business into automated
       and effective processing systems, thereby creating significant cost
       efficiencies. The Company believes insurance companies typically
       outsource administrative services because outsource providers can provide
       better quality services at a lower cost.

     - Technological Challenges and Complexities.  The investment in the
       specialized technical knowledge required to develop, install and operate
       information systems necessary for P&C insurers to remain competitive is
       often cost prohibitive, particularly for smaller companies and new
       entrants to the market. Insurance companies can take advantage of the
       economies of technology created by an outsource provider's investment in
       information systems.

     - Development of Internet Based Solutions.  The Company believes that, in
       order to compete in an Internet economy, P&C companies will need to
       aggressively pursue Internet solutions for their business -- either
       directly to consumers or through their insurance agency (direct or
       independent) distribution channel. According to The Conning Commentary, a
       principal need of independent insurance agents is an effective electronic
       interface with insurance carriers. Until recently, most insurance company
       web sites provided information content only; however, the current trend
       is toward quoting, rating and issuing policies via the Internet. The
       Company believes that there are a substantial number of P&C companies
       that have targeted the Internet as their primary initiative in terms of
       providing a mechanism for their producers to quote, rate and issue
       insurance policies. The Company also believes many of these companies
       will need to outsource the development of an Internet insurance
       transaction solution because of the proprietary nature of their
       information technology ("IT") systems and the difficulty of connecting
       them to the Internet.

     - Changing Distribution Channels.  The Company believes that demand for
       outsourcing services will increase as banks, credit unions and other
       financial service companies enter the P&C market. These new entrants were
       generally precluded from selling insurance until the U.S. Supreme Court
       decision in Barnett Bank v. Nelson in 1996. The Company believes that,
       following this decision, and despite continuing restrictions and pressure
       from state regulators, banks and other financial institutions will enter
       the P&C market at an increasing rate, often forming joint ventures and
       other alliances with certain insurers to sell P&C insurance. Many new
       entrants lack the technology, expertise or desire to perform policy and
       claims processing in-house. These so-called "virtual insurance companies"
       often focus their resources on the core marketing, underwriting and
       financial aspects of the P&C business and seek to outsource their policy
       and claims administration to third-party vendors.

     - Regulatory Reporting Requirements.  State insurance regulators closely
       regulate the product offerings, claims processes and premium rate
       structures of insurance companies. To comply with such regulations,
       companies must file annual and other reports relating to their financial
       condition. Third-party vendors with effective policy and claims
       administration systems can facilitate compliance with many regulatory
       requirements by automating statutory reporting and other compliance
       tasks.

THE IMSG SOLUTION

     The Company believes it is positioned to capitalize on the foregoing market
opportunities in the following ways:

     - Flood Insurance Experience.  The Company is one of the leading providers
       of flood insurance outsourcing services in the United States, currently
       servicing over 675,000 flood insurance policies. As a result, the Company
       has developed substantial expertise and scale in virtually all aspects of
       the flood insurance servicing business.

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     - Flexible, Comprehensive, Turnkey Solutions.  The Company offers a
       comprehensive range of outsourcing services, both individually and on a
       bundled basis, giving clients flexibility in selecting and matching
       services to their needs. The Company's turnkey solutions allow clients to
       focus on core competencies and better manage costs and allow new market
       entrants an opportunity to offer insurance products on a cost-effective
       basis by leveraging the Company's systems and business processes.

     - Insurance Industry Expertise.  Unlike certain of its competitors, the
       Company's senior management has substantial experience in the insurance
       industry. As a result of this core competence, management believes the
       Company is well-suited to understand and address its customers' needs.

     - Flood Zone Determination Services.  The Company offers a highly automated
       flood zone determination service based on its proprietary national
       database. This service provides an accurate, prompt and relatively low
       cost determination of a residential or commercial property's status with
       respect to national flood zones. Insurance companies, credit unions,
       banks and other financial institutions use this service to comply with
       federal laws requiring mortgage lenders to oversee and ensure the
       purchase of flood insurance by certain borrowers, create a competitive
       advantage in loan approval/insurance underwriting response time and
       generate additional fees from their borrowers.

     - Modular, Integrated and Real-time Systems.  The Company's information
       systems are table-driven and modular in design, enabling the Company to
       provide systems that address the specific needs of the client, such as
       distinct underwriting rules. The core system permits integration of a
       client's database, thereby eliminating the need for data re-entry for
       multiple applications. The system provides real-time processing of key
       functions, such as policy processing and endorsements, that enhances
       completeness and accuracy in processing. The Company's system also has a
       proven track record of reliability and low system "down-time." The
       Company is committed to upgrading and maintaining its systems in an
       effort to remain competitive.

     - Customer Service to Independent Agent Networks and
       Policyholders.  Because residential and commercial flood insurance rates
       are set by FEMA and therefore are not directly subject to competitive
       pressures, the Company believes customer service is a critical
       consideration for independent sales agents in determining which carrier's
       flood insurance policies to sell. BIG is the largest underwriter of flood
       insurance policies through independent agents in the United States, and
       the Company processes and services all of BIG's flood insurance policies.
       The Company believes that largely as a result of its affiliation with BIG
       it has developed a customer service-oriented culture that strengthens its
       clients' relationships with their independent sales agent networks and
       policyholders. The Company focuses on providing superior service, such as
       timely policy issuance and rapid and professional response to agent and
       policyholder inquiries. The Company maintains and monitors quality
       service standards and continually seeks to measure customer satisfaction.

     - Claims Services.  The Company believes it is positioned to capitalize on
       its significant experience in the area of claims adjusting and
       processing. The Company recently integrated the claims operations of its
       Colonial Claims subsidiary with its internal property claim division in
       order to offer independent property adjusting services in addition to
       catastrophe adjusting services.

GROWTH STRATEGY

     The Company's objectives are (1) to become a leading provider of
outsourcing services to the P&C industry and (2) to become the leading provider
of flood zone determinations to financial institutions, mortgage lenders and P&C
insurers. The Company's principal strategies for achieving these objectives are
as follows:

     - Expand Flood Outsourcing Business.  The Company has extensive experience
       and expertise in virtually all aspects of the flood insurance servicing
       business and occupies a leading position in that market. Key aspects of
       the Company's growth strategy include (1) marketing flood outsourcing
       services to existing WYO carriers that it believes will benefit for cost
       or infrastructure reasons from the Company's services, (2) offering its
       outsourcing services to new entrants that lack the infrastructure or

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       expertise necessary to service flood insurance customers, (3) marketing
       its ability, in conjunction with BIG, to provide and service a private
       label insurance product to insurance companies that desire to offer flood
       insurance but are not approved by FEMA to sell and service flood
       insurance, and (4) increasing the volume of flood outsourcing services
       business from the Company's existing customer base, which as of March 31,
       2001, consisted of twenty-three (23) customers under contract, either
       directly or through BIG.

     - Expand Relationships With Existing Customers.  The Company intends to
       continue to pursue efforts to capitalize on its existing outsourcing
       customer base by cross-marketing additional outsourcing services to
       certain of these existing customers.

     - Expand E-Solutions Focus.  The Company believes that it has the ability
       to assist P&C insurers in their challenge to provide Internet-based
       services. The Company also believes that its solution of connecting
       legacy systems with Internet browser-based functionality will be an
       attractive alternative to P&C companies attempting to develop a solution
       using their own resources. In 2000, the Company completed and fully
       integrated its Internet solution for its flood and homeowners products.
       Although the Company plans to continue its own development in this area,
       it may also use third-party software developers to assist in bringing on
       new clients requiring different connectivity solutions.

     - Focus on Maximizing Economies of Scale.  The Company believes that demand
       for P&C insurance outsourcing services will grow as such services become
       more affordable and cost effective. To achieve such affordability and
       cost effectiveness, a P&C outsourcing provider must develop certain
       economies of scale. The Company currently services over 836,000 insurance
       policies annually. As a result, it has developed a large number of
       efficiencies in many aspects of its operations, from the receipt of
       policy applications to billings and collections. By deploying internally
       developed applications software, rating disks for applications input,
       lockbox and cash office processing, automated voice response,
       computerized forms and automated policy assembly, the Company has
       attained expense efficiencies that management believes are characteristic
       of insurers processing substantially greater policy volumes. As a
       consequence, the Company believes it is well-positioned to capitalize on
       the growing trend toward outsourcing administrative functions in the P&C
       industry by offering insurers better quality and more cost-effective
       "back office" operations. Moreover, the Company intends to continue
       expanding these efficiencies by increasing the utilization of its
       existing infrastructure and databases.

     - Redirect Sales Efforts.  During 2000, the Company established separate
       marketing alliances with a large reinsurance company and a large
       reinsurance broker. The Company anticipates that these alliances will
       enable the Company to review potential clients brought to them by these
       alliance partners. In addition, the Company has eliminated its internal
       outsourcing sales force, thereby reducing its overall marketing expenses.

     - Generate Recurring Revenues.  The Company seeks to generate recurring
       revenues by entering into contractual relationships (typically three to
       five years) with its outsourcing customers and by offering services that
       are structured to generate revenues based on events that occur frequently
       in the normal course of a customer's business, such as claims, mortgage
       applications and insurance policy renewals.

SERVICES

     Outsourcing Services.  The Company's outsourcing services include policy
administration, claims administration and information technology services. The
Company works with each customer in an effort to ensure a seamless integration
of the customer's in-house and outsourced activities.

     Policy administration describes the range of services the Company offers
customers that are considering outsourcing their policy administration
functions. When policy administration is outsourced, the customer retains all
financial risk and works with the Company to set underwriting and rating
guidelines. The Company typically receives a percentage of premiums for
performing policy administration services. The Company's policy administration
menu includes the following services: policy processing and related data entry;
policy issuance and acceptance; premium management and distribution; accounting,
billing and collections; customer

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service phone center for policyholders and agents; and data collection,
statutory reporting and regulatory compliance.

     Claims administration describes the range of services the Company offers in
connection with the management of insurance claims. In reviewing a claim, the
Company performs a thorough claim analysis and, if warranted, prepares a check
for payment of the claim. The Company has a special investigative unit that
assists in detecting and deterring fraud in the claim review process. The
Company also offers a fully automated, stand-alone catastrophe claims operation,
distinguishing its outsourcing services in the P&C insurance market. The Company
is typically compensated for claims administration services on either a
percentage of earned premiums or claims-paid basis. The Company's claims
administration menu includes the following services: toll-free claim reporting;
initial coverage confirmation services; loss investigation and determination;
review and appraisal of claims; special investigation services, including fraud
detection; adjustment of claims and vendor management; litigation management;
and settlement and payment of claims.

     The Company also offers a range of information technology services to
assist customers in operating, maintaining and enhancing information systems.
Beginning June 1, 2001, the Company expects to provide these services primarily
through third-party vendors, including BIG. See "Item 13. Certain Relationships
and Related Transactions -- Letter Agreements." The Company integrates the
customer's system platform with the Company's processing platform, including the
installation of all necessary hardware components, depending on the customer's
needs. This integration allows the customer to administer its policies and
claims internally by using the Company's systems and software. The Company
typically receives a percentage of premiums as compensation, subject to a
minimum fee. The Company's information technology menu includes the following
services: information management via integrated, secure computer systems;
document imaging; Internet rating and underwriting services; monetary systems
services, including payment processing; automated printing, packaging and
distribution of documents; generation of agent commission statements and
production reports; security administration and access control; software
application enhancement and maintenance; problem resolution and reporting; and
data backup and disaster recovery functions.

     Because the Company is affiliated with and provides comprehensive
outsourcing services to BIG, an approved WYO carrier under the Flood Program, it
emphasizes to prospective customers its ability to provide third-party
administration outsourcing for flood insurance. The Company offers its flood
outsourcing services, including software and processing functions, policy
administration, claims administration and statistical reporting, on either a
bundled or "a la carte" basis. New market entrants and certain other insurers
may prefer to purchase unbundled services, allowing them to retain in-house
control over specific aspects of their businesses. The Company makes available
virtually any combination of outsourcing services required by the customer.

     The Company also offers flood outsourcing services to insurance companies
that seek to provide flood insurance, but do not want to become certified WYO
carriers. In this case, the services are provided in conjunction with a
proprietary flood product. An insurance company can establish a private label
insurance product written through BIG whereby the customer's name and logo
appear on the policy documents, while BIG acts as the servicing carrier. The
Company also intends to continue to market its outsourcing services to banks,
credit unions and other financial institutions as they become increasingly
involved in the sale of insurance.

     Flood Zone Determination Business.  For a fixed fee, the Company will
provide a customer -- typically a mortgage loan originator or an insurance
company -- with a determination as to whether a specified property is located
within a federally-designated flood zone classification. The Company uses its
proprietary national flood zone database to make flood zone determinations. This
database, which is continually updated, allows the Company to determine if a
particular structure is located within the special flood hazard areas
established by FEMA. These determinations assist mortgage lenders in complying
with federal regulations under which they must require borrowers to purchase the
appropriate level of flood insurance. Management estimates that over 95% of U.S.
households are located in counties covered by the Company's electronic flood
zone database. For approximately 80% of determinations requested, the Company is
able to perform automated flood zone determinations in a matter of seconds.
Determinations made on a fully-automated basis are significantly more

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cost effective than manual determinations. In some cases, particularly where a
property is not clearly within or outside a flood hazard area, the database
search will not produce an automatic determination, or "hit," and a manual
search becomes necessary. Manual searches require extra time and labor and are
not nearly as cost effective as fully-automated searches.

     The Company provides both one-time and life-of-loan flood zone
determinations. Under a "life-of-loan" determination, the Company is responsible
for updating the initial flood zone determination based on revisions to the
federal flood maps occurring during the term of the loan. The Company also
provides portfolio analyses and audits for mortgage service agencies by
reviewing blocks of loans that usually require between 100 and 50,000 flood zone
determinations.

     In addition to flood zone determinations, the Company provides
flood-related ancillary services. For example, the Company provides a standard
flood compliance packet to lenders which includes information on community
status, mapping, specific structure location, amount of flood insurance
required, secondary market and government program restrictions, and floodway and
coastal zone barrier restrictions. The life-of-loan product tracks both
community status and FEMA map changes on a daily basis for the life of the loan.
If changes occur that affect the subject property, a new report is automatically
generated for no additional charge. Certain ancillary services are transferable
if the mortgage loan for which the flood zone determination was done is sold or
transferred. Through its GeoCompass(R) service, the Company provides certain
CD-ROM services on-site at customer locations. The CD-ROM delivery system offers
customers the ability to perform certain flood zone determinations at their own
desktops. During 2000, the Company began offering Internet options for order and
delivery of flood zone determinations, as well as customized direct interfaces
that connect to the customer's system allowing electronic delivery of completed
flood zone determinations. The Company also has established Internet alliances
with providers of mortgage closing services for credit, title appraisal, tax,
electronic document transfer and tracking, reporting and closing process
management.

     The Company also actively seeks to leverage its expertise in mapping
technology by providing ancillary mapping services. For example, the Company has
been engaged by various municipalities or has partnered with software firms to
digitize manual property tax maps and then integrate these maps with appraisal
data. Most municipality property tax maps have not been digitized and the
Company believes there is a significant opportunity to penetrate this market.
The Company believes there are numerous other related opportunities to apply its
core mapping technology expertise.

     The Company has established a relationship with JDI Software Services Pvt.
Ltd. ("JDI"), located in India, which provides certain services that have
increased the efficiency and cost effectiveness of the Company's flood zone
determination business. JDI currently builds databases and creates digitized
maps that the Company uses in connection with its flood zone determination
business. In addition, Geotrac presently uses JDI to perform manual flood zone
determination searches at costs significantly below U.S. market rates. The
Company also has retained two JDI systems analysts on a consulting basis at its
Norwalk, Ohio headquarters to assist in the design and programming of new
technologies. Each of these consultants directs a team of programmers in
Bangalore, India.

     The Company uses different pricing and contractual arrangements for
one-time and life-of-loan flood zone determinations. The Company performs flood
zone determinations for both residential and commercial properties, with
determinations for residential properties comprising approximately 85% of such
business.

CUSTOMER SUPPORT AND INSTALLATION

     The Company's outsourcing services are provided from three separate
customer service centers in St. Petersburg, Florida -- two for policy and claims
administration and one for catastrophic claims administration.

     The policy administration center has approximately 150 employees, most of
whom are trained customer service representatives. Customer service
representatives are responsible for the timely handling and resolution of
incoming phone calls related to underwriting, rating, billing, policy status and
other policy administration

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matters. While most calls come from insurance agents, the phone center also
handles calls from mortgage companies, policyholders and insureds.

     The claims administration customer service center is responsible primarily
for handling calls from claimants and insureds reporting property losses. The
center also handles calls from agents and others related to coverage of existing
claims. The center has approximately 150 employees, approximately half of whom
are licensed claims representatives responsible for the adjustment of claims.
Incoming calls are taken by approximately 10 customer service representatives
who are trained to handle all types of insurance claims. Unlike many other
claims administration centers, the Company's service center is able to
immediately assign each claim to a licensed adjuster for processing. The claims
administration switchboard is open weekdays from 7:30 a.m. to 9:00 p.m. (Eastern
Time), and customer service representatives and licensed adjusters are available
24 hours a day, seven days a week, to handle emergency claims. The Company's
Colonial Claims subsidiary operates in its own location and has a staff of
approximately 10 employees.

     The Company currently maintains a separate customer service center relating
exclusively to its flood zone determination business. This service center is
located in Norwalk, Ohio and houses a staff of approximately 140 employees. The
Company believes its service center is one of the largest flood zone
determination service centers in the industry. A team comprised of a senior
manager and up to four service representatives is assigned to each customer
account. The team advises the customer in all matters of flood compliance and
will train a customer's staff at their own or the Company's offices. The team
also provides direct support to their customers' independent direct sales agent
networks.

SALES AND MARKETING

     The Company seeks to market its outsourcing capabilities by leveraging its
existing expertise in flood insurance administration and by targeting
prospective customers, such as insurers with high expense ratios or limited
expertise in certain P&C lines. The Company's sales and marketing efforts are
overseen by its President, who works principally in concert with its reinsurance
brokers and reinsurer strategic partners to market its outsourcing services. The
Company also advertises in various trade publications and participates in
industry conventions and trade shows to enhance the penetration of its flood and
non-flood markets. In an effort to reduce expenses, the Company eliminated its
four-person marketing and sales division in February, 2001.

     The Company markets its flood zone determination services both directly
through its own sales personnel, consisting of 14 persons, and indirectly
through its alliances with other service providers.

INFORMATION SYSTEMS

     The Company utilizes fully-integrated, real-time, processing systems at its
St. Petersburg, Florida facilities to provide many of its outsourcing services.
These systems, which run on an IBM AS/400 platform coupled with a relational
database, enable the Company to provide on-line ratings and underwriting
information, issue required insurance forms to policyholders and agents, and
produce renewal and non-renewal notices. The processing systems interface with a
disbursement system which enables the Company to generate checks automatically.

     A separate IBM AS/400 is used to develop, enhance and test new and existing
systems. In the event of a power failure, the AS/400 site is supported by a
fully-functional backup system that provides additional processing time of one
hour under full load. Insurance policies and related documents are scanned to
optical disks, and are retrievable at most LAN workstations. The Company also
has an optical jukebox that can store approximately 10 million documents. The
Company's data center has controls to ensure security and a disaster recovery
plan which is tested regularly.

     The Company also utilizes computer systems at its Geotrac location,
including two IBM AS/400 processors. Geotrac also has several major production
systems, including GeoCompass(R) and life-of-loan tracking.

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<PAGE>   11

     The Company is capable of developing modifications or enhancements to its
licensed software to meet its outsourcing customers' particular needs. Business
analysts from the Company work with each customer to ensure that the Company
understands the customer's system requirements. Once the system requirements
have been documented, the Company dedicates a team of systems analysts and/or
contracts with a third-party provider to develop the appropriate modifications
or enhancements to its software system.

CUSTOMERS

     The Company currently provides outsourcing services to over 40 customers.
The Company's largest customer, BIG, accounted for approximately 57%, 58% and
60% of the Company's revenues in 1998, 1999 and 2000, respectively.
Consequently, any material decrease in the outsourcing business from BIG would
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company provides outsourcing services to other
WYO carriers, including Farmers Insurance Group, AAA Auto Club South Insurance
Company and Mobile USA Insurance Company, Inc. The Company also provides
outsourcing services to various insurance companies, such as Armed Forces
Insurance Corporation and AMICA Mutual Insurance Company, that utilize BIG as
their servicing carrier.

     The Company provides flood zone determination services to over 1,880 banks,
credit unions, mortgage lenders, insurance companies and, other financial
institutions. The Company's principal insurance company customers for such
services include FM Global and Wausau Underwriters Insurance Company. In
addition, the Company provides flood zone determination services to numerous
credit unions, a number of which became customers as a result of the Company's
alliance with CUNA Mutual Group, the nation's largest provider of insurance
products to credit unions. The Company also provides such services to mortgage
lenders such as ABN Amro North America, Inc. primarily through its alliance with
Equifax Mortgage Services, believed by the Company to be the largest mortgage
credit reporting agency in the U.S.

COMPETITION

     The Company competes principally in three markets: (1) the market for flood
insurance outsourcing services, (2) the market for other P&C insurance
outsourcing services and (3) the market for flood zone determination services.
The markets for these services are highly competitive.

     The market for flood insurance outsourcing services is dominated by the
Company and several principal competitors, including National Con-Serv, Inc. and
Electronic Data Systems, Inc. The Company competes for these outsourcing
customers largely on the basis of price, customer service and responsiveness.

     The market for other P&C insurance outsourcing services is fragmented. In
the policy administration services segment of this market, principal competitors
include Policy Management Services Corporation and INSpire Insurance Solutions,
Inc. In this segment of the market, the Company competes for customers on the
basis of customer service, performance and price. The claims administration
services segment of the P&C outsourcing market also is highly fragmented, with
competition from a large number of claims administration companies of varying
size, as well as independent contractors. Competition in this segment of the
outsourcing market is principally price driven. Competitors include Lindsey
Morden Claim Services, Inc., Crawford & Company, Inc. and INSpire Insurance
Solutions, Inc.

     The Company believes, however, that its most significant competition for
P&C insurance outsourcing services comes from policy and claims administration
performed in-house by insurance companies. Insurers that fulfill some or all of
their policy and claims administration needs in-house typically have made a
significant investment in their information processing systems and may be less
likely to utilize the Company's services. In addition, insurance company
personnel have a vested interest in maintaining these responsibilities in-house.

     The market for flood zone determination services is dominated by the
Company and several principal competitors, including First American Financial,
Transamerica, and Fidelity National. The Company believes that the principal
competitive factors in the market for flood zone determinations include price,
quality and variety of services, and response time.

                                        9
<PAGE>   12

     Certain of the Company's competitors in each of these markets have longer
operating histories and significantly greater financial, technical, marketing
and other resources than the Company, including name recognition with current
and potential customers. As a result, these competitors may devote more
resources to the development, promotion and sale of their services or products
than the Company and respond more quickly to emerging technologies and changes
in customer requirements. There can be no assurance that the Company will be
able to compete successfully against current and future competitors, or that
competitive pressure faced by the Company will not have a material adverse
effect on its business, financial condition and results of operations.

EMPLOYEES

     As of March 31, 2001, the Company had 586 full-time and 30 part-time
employees, consisting of 14 in sales and marketing, 405 in customer service and
support, 98 in technical support, and 99 in management, administration and
finance. None of the Company's employees is subject to a collective bargaining
agreement, and the Company considers its relations with its employees generally
to be good.

     On or about June 1, 2001, the effective date of many of the changes to the
various contractual arrangements between the Company and BIG set forth in a
Letter Agreement, dated April 13, 2001 (the "Letter Agreement"), described in
"Item 13. Certain Relationships and Related Transactions -- Letter Agreements,"
the Company expects to terminate approximately 70 technical support employees.
It is anticipated that most, if not all, of these persons will become employees
of BIG immediately thereafter, and will provide technical support services to
the Company pursuant to a new Technical Support Services Agreement expected to
be executed between the Company and BIG on or before June 1, 2001.

RISK FACTORS

     The Company's financial condition and results of operations may be impacted
by a number of factors, including, but not limited to the following risk
factors, any of which could cause actual results to materially differ from
historical or anticipated future results.

  Reliance on Key Customer

     The Company derives a substantial portion of its revenues from outsourcing
services provided to its principal shareholder, BIG. For the years ended
December 31, 1998, 1999 and 2000, revenues from services provided to BIG
accounted for approximately 57%, 58% and 60%, respectively, of the Company's
total revenues and approximately 95%, 80% and 83%, respectively, of the
Company's revenues from outsourcing services. The Company has contracts with BIG
pursuant to which it will continue to provide administrative services to BIG.
Pursuant to the Letter Agreement, these contracts will be amended, effective
June 1, 2001, to, among other things, extend their respective terms until
October 31, 2002 and modify their service fee schedules to more accurately
reflect current competitive rates, as well as the assumption by BIG of certain
data and technical support services previously provided by the Company. See
"Item 13. Certain Relationships and Related Transactions -- Letter Agreements."
The Company's future financial condition and results of operations will depend
to a significant extent upon the commercial success of BIG and its continued
willingness to utilize the Company's services. Any significant downturn in the
business of BIG or its commitment to utilize the Company's services could have a
material adverse effect on the Company's business, financial condition and
results of operations.

     Moreover, as a result of the significant changes to the contractual
arrangements between the Company and BIG contemplated by the Letter Agreement,
the Company will become, effective June 1, 2001, largely dependent upon BIG for
technical support, computer programming and systems analysis services which the
Company previously performed in-house. As a result, the Company will possess
less direct control over its ability to meet its customers' demands, which, in
turn, could have material adverse effect on the Company's business, financial
position and results of operations. In addition, certain current or potential
customers of the Company could be competitors of BIG, and, thus, the provision
of such services by BIG could have a material adverse effect on the Company's
relationship with such current or potential customers.

                                        10
<PAGE>   13

  Dependence on Economic and Other Factors; Fluctuations in Quarterly Operating
Results

     The Company's business is dependent upon various factors, such as general
economic conditions and weather patterns, that are beyond its control. For
example, the demand for flood zone determinations by lenders and their customers
is directly related to the affordability of mortgage financing and refinancing.
Higher interest rates are generally less conducive to a higher volume of
mortgage lending and flood zone determinations. Therefore, increases in interest
rates could have a negative impact on mortgage lending and consequently also on
the level of flood zone determinations requested. Fluctuations in interest rates
will likely produce fluctuations in the Company's quarterly earnings and
operating results. Likewise, natural disasters such as hurricanes, tornadoes,
and floods, all of which are unpredictable, directly impact the demand for both
the Company's outsourcing, particularly claims outsourcing, and flood zone
determination services.

  Class Action Litigation

     On September 28, 2000, October 25, 2000 and October 30, 2000, three alleged
shareholders of the Company filed three nearly identical lawsuits in the United
States District Court for the Middle District of Florida, each on behalf of a
putative class of all persons who purchased shares of the Company's Common Stock
pursuant and/or traceable to the registration statement for the Company's
February 1999 initial public offering (the "IPO"). The lawsuits were
consolidated on December 1, 2000, and the consolidated action is proceeding
under Case No. 8:00-CV-2013-T-26MAP. The plaintiff's Consolidated Amended Class
Action Complaint, filed February 7, 2001, names as defendants the following
parties: the Company; Geotrac; BIG; Venture Capital Corporation, a selling
shareholder in the IPO; the five inside directors of the Company at the time of
the IPO; and Raymond James & Associates, Inc. and Keefe, Bruyette & Woods, Inc.,
the underwriters for the IPO. (On April 5, 2001, the plaintiffs' filed a Notice
of Scrivener's Error notifying all parties to the litigation that Geotrac was
inadvertently named as a defendant in the complaint.) The complaint alleges,
among other things, that the defendants violated Sections 11, 12(a)(2) and 15 of
the Securities Act of 1933, as amended, by making certain false and misleading
statements in the roadshow presentations, registration statement and prospectus
relating to the IPO. More specifically, the complaint alleges that, in
connection with the IPO, the defendants made various material misrepresentations
and/or omissions relating to: (i) the Company's ability to integrate Geotrac's
flood zone determination business with the Company's own flood zone
determination business and with its insurance outsourcing services business;
(ii) actual and anticipated synergies between the Company's flood zone
determination and outsourcing services business lines; and (iii) the Company's
use of the IPO proceeds. The complaint seeks unspecified damages, including
interest, and equitable relief, including a rescission remedy. On March 26,
2001, the Company, BIG and the five inside director defendants filed a motion to
dismiss the plaintiffs' Consolidated Amended Class Action Complaint for, among
other things, failure to allege material misstatements and/or omissions in the
roadshow presentations, registration statement and/or prospectus relating to the
IPO. Management of the Company believes the material allegations of the
complaints are without merit and intends to vigorously defend the lawsuit. No
assurances can be given, however, with respect to the outcome of the litigation,
and an adverse result could have a material adverse effect on the Company's
business, financial condition and results of operations.

  Regulatory Matters

     Bankers Insurance Company ("BIC"), a subsidiary of BIG, and Bankers Life
Insurance Company ("BLIC") and Bankers Security Insurance Company ("BSIC"),
subsidiaries of BIC, have been subject to an investigation by the Florida
Department of Insurance (the "DOI"), the principal regulator of insurance
activities in the State of Florida, stemming from their use of a private
investigator to gather information on a DOI employee and the private
investigator's unauthorized use of illegal wiretaps in connection therewith. On
March 23, 2000, the Treasurer and Insurance Commissioner of the State of
Florida, as head of the DOI, filed an administrative complaint against BIC, BLIC
and BSIC based upon the results of such investigation. The administrative
complaint charges BIC, BLIC and BSIC with violating various provisions of the
Florida Insurance Code including, among other things, a provision requiring
insurance companies to have management, officers or directors that are, among
other things, trustworthy. The complaint further notifies BIC, BLIC

                                        11
<PAGE>   14

and BSIC that the Insurance Commissioner intends to impose such penalties or
take such other administrative actions as may be proper or appropriate under
applicable law, including possibly entering an order suspending or revoking the
certificates of authority of BIC, BLIC and BSIC to conduct business as insurance
companies in the State of Florida. On February 19, 2001, the DOI filed a Motion
for Leave to File Amended Complaint. On March 29, 2001, the court issued an
order granting the DOI's motion.

     BIC, BLIC and BSIC have informed the Company that they intend to vigorously
defend against such action, but no assurances can be given as to the outcome
thereof. In the event the DOI were to enter an order suspending or revoking the
certificates of authority of BIC, BLIC and BSIC to conduct business as insurance
companies in the State of Florida, or impose other significant penalties on any
of them, it would materially adversely affect the business and/or operations of
BIG and, in turn, could result in the loss of or material decrease in the
Company's business from BIG, which would have a material adverse effect on the
Company's business, financial condition and results of operations.

     On November 19, 1999, the United States, on behalf of the Federal Emergency
Management Agency ("FEMA"), filed a civil action against BIC in the United
States District Court for the District of Maryland stemming from FEMA's
investigation of certain cash management and claims processing practices of BIC
in connection with its participation in the National Flood Insurance Program
("NFIP"). The complaint alleges, among other things, that BIC knowingly failed
to report and pay interest income it had earned on NFIP funds to the United
States in violation of the False Claims Act. The complaint further alleges
various common law theories, including fraud, breach of contract, unjust
enrichment and negligent misrepresentation. The complaint seeks civil penalties
of $1.08 million and actual damages of approximately $1.1 million as well as
treble, punitive and consequential damages, costs and interest. The suit is
currently stayed pending arbitration following a decision by the United States
Court of Appeals for the Fourth Circuit in favor of BIC on its motion to stay
the litigation pending arbitration. BIC has informed the Company that BIC is not
aware of the government's intentions for further appeal of the order regarding
arbitration. BIC has further informed the Company that it intends to vigorously
defend against the action, but no assurances can be given as to the outcome
thereof. However, BIG has advised the Company that an adverse judgment in this
action should not have a material adverse affect on the business and/or
operations of BIC, although no assurances can be given in this regard.

     FEMA's investigation of certain claims processing practices of BIC in
connection with its participation in the NFIP is continuing, and BIC has
produced documentation in connection therewith. If the parties are either unable
to reach agreement in these matters or resolve their disagreement in
arbitration, the United States could amend its complaint against BIC to add
additional claims under the False Claims Act and/or various common law and
equitable theories relating to such matters. In the event such continuing
investigation or any consequence thereof materially adversely affects the
business or operations of BIC, it could result in the loss of or material
decrease in the Company's business from BIC, which would have a material adverse
effect on the Company's business, financial condition and results of operations.

     The Company is involved in various other legal actions arising in the
ordinary course of business. Management believes that the ultimate resolution of
these actions will not have a material adverse effect on the Company's financial
position, results of operations, or liquidity, although no assurances can be
given in this regard.

  Government Regulation

     As a provider of policy and claims processing to the flood insurance
industry, the Company is subject to extensive and continuously changing
guidelines of the Federal Insurance Administration. No assurance can be given
with respect to the extent to which the Company may become subject to regulation
in the future, the ability of the Company to comply with any such regulation,
the cost of compliance or an abrupt change in the overall concept or delivery of
the flood insurance product on behalf of the federal government. Moreover, if
the federal government were to curtail the current federal flood program, it
could have a material adverse effect on the Company's business, financial
condition and results of operations.

                                        12
<PAGE>   15

     The P&C insurance industry is subject to extensive regulation by state
governments. Because the Company markets and sells its services to P&C insurers,
certain aspects of the Company's business are affected by such regulation. The
Company must continuously update its software to reflect changes in regulations.
In addition, changes in regulations that adversely affect the Company's existing
and potential customers could have a material adverse effect on the Company's
business, financial condition and results of operations. Although the Company's
services are not directly subject to insurance regulations in the states where
the Company currently provides such services, the Company's outsourcing services
may be subject to insurance regulations in states where the Company may do
business in the future. Such regulations could require the Company to obtain a
license as a managing general agent or third-party administrator. Failure to
perform in accordance with state regulations could result in the loss of
significant insurance clients. No assurance can be given with respect to the
extent to which the Company may become subject to regulation in the future, the
ability of the Company to comply with any such regulation, or the cost of
compliance.

  Control by Principal Shareholder; Conflicts of Interest

     BIG currently owns approximately 65.2% of the outstanding shares of the
Company's Common Stock. As a result, BIG is able to elect the Company's
directors and determine the outcome of other matters requiring shareholder
approval. BIG's ultimate parent, Bankers International Financial Corporation,
Ltd., is wholly-owned by a discretionary charitable trust. David K. Meehan, the
Company's Chairman of the Board, and Robert M. Menke and Robert G. Menke,
directors of the Company, presently serve on the board of directors of a
corporation that possesses discretionary power with respect to this trust to (i)
direct the trustee to appoint the trust fund to another trust for the benefit of
one or more of the beneficiaries of the trust and (ii) remove the trustee and
appoint one or more new trustees.

     The ownership of BIG of shares of Common Stock may discourage or prevent
unsolicited mergers, acquisitions, tender offers, proxy contests or changes of
incumbent management, even when shareholders other than BIG consider such a
transaction or event to be in their best interests. Accordingly, holders of
Common Stock may be deprived of an opportunity to sell their shares at a premium
over the trading price of the shares.

     Certain officers and directors of the Company, including David K. Meehan,
the Company's Chairman of the Board, also serve as officers and directors of
BIG. Mr. Meehan serves as Vice Chairman of the Board of Directors of BIG, Robert
M. Menke serves as a director of BIG, and Robert G. Menke serves as President,
Chief Executive Officer and a director of BIG. In addition, as described below,
the Company will continue to have a variety of contractual relationships with
BIG. As the interests of the Company and BIG may differ, Messrs. Meehan, Robert
M. Menke and Robert G. Menke may face certain conflicts of interest.

     The Company's relationship with BIG is governed by various agreements,
including (i) an administration services agreement pursuant to which BIG
provides benefits administration, cash management, and certain limited
accounting and legal services to the Company, (ii) service agreements pursuant
to which the Company provides policy and claims administration services for BIG,
(iii) a technical support services agreement pursuant to which the Company
provides certain systems development services to BIG and (iv) lease agreements
pursuant to which BIG leases certain facilities to the Company. On April 13,
2001, the Company and BIG and entered into the Letter Agreement. Pursuant to the
Letter Agreement: (a) the administration agreement was terminated effective
April 1, 2001 and will be replaced, effective June 1, 2001, with a new corporate
services agreement pursuant to which BIG will provide the Company with various
marketing and training services at fixed hourly rates; (b) the services
agreements will be amended effective June 1, 2001 to, among other things, extend
the term of each agreement and modify certain of the service fees payable
thereunder to reflect current competitive rates and the elimination of data and
technical support services from the administration services to be provided by
the Company thereunder; and (c) the technical support services agreement was
terminated effective April 1, 2001 and will be replaced, effective June 1, 2001,
with a new Technical Support Services Agreement pursuant to which BIG will
provide certain technical support services to the Company. None of the foregoing
agreements resulted from arm's-length negotiations. Nevertheless, the Audit
Committee of the Board of Directors has approved the Letter Agreement, and the

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Company believes that the transactions provided for therein are on terms no less
favorable than those that could be obtained on an arm's-length basis from
independent third parties.

  Rights of Former Geotrac Shareholder; Restricted Retained Earnings

     The Company has entered into a Corporate Governance Agreement with Geotrac
and Daniel J. White setting forth certain terms and conditions pertaining to the
operation of Geotrac following the acquisition of the remaining 51% interest in
Geotrac in July, 1998. The Corporate Governance Agreement provides, in part,
that for so long as Mr. White is a shareholder of the Company or Geotrac or has
an option to purchase Geotrac stock, (i) the Company will vote all of its shares
of Geotrac stock to fix and maintain the number of Geotrac directors at five,
(ii) the Company will vote its shares of Geotrac stock to elect as directors of
Geotrac two persons designated by Mr. White, (iii) Mr. White's termination as a
Geotrac employee will require the vote of four out of five members of the Board
of Directors, and (iv) certain actions by Geotrac will require the unanimous
approval of the Geotrac Board of Directors. Among the actions requiring such
unanimous board approval under the Corporate Governance Agreement is the making
of cash distributions to the Company, whether by dividend or otherwise.
Therefore, pursuant to the Corporate Governance Agreement, Mr. White may impede
the Company's ability to access excess cash balances retained by its Geotrac
subsidiary, even if all of the other directors of Geotrac were to approve the
distribution thereof to the Company. To date, the Company has been able to
access Geotrac's excess cash when necessary, primarily through the prepayment of
outstanding intercompany indebtedness. No assurances can be given, however, that
the Company will be able to obtain available cash from Geotrac. If the Company
is unable to do so, it could have a material adverse effect on the Company's
business, financial condition and results of operations. Other actions requiring
the unanimous approval of the Geotrac Board of Directors include any merger or
consolidation, the payment of management or similar fees to the Company, or its
subsidiaries or affiliates, the sale or issuance of Geotrac stock, and the sale
of Geotrac assets outside the ordinary course of business to anyone other than
an affiliate of Geotrac. Mr. White also has a right of first refusal to purchase
the assets of Geotrac in the event such assets are to be sold. Mr. White is
presently a director and shareholder of the Company.

  Dependence on Senior Management

     The success of the Company is largely dependent upon the efforts, direction
and guidance of its senior management, and in particular David K. Meehan, the
Company's Chairman of the Board, David M. Howard, the Company's President and
Chief Executive Officer, Robert G. Gantley, the Company's Senior Vice President
and Chief Operating Officer, and Daniel J. White, Geotrac's President and Chief
Executive Officer. The Company's continued growth and success depends in part on
its ability to attract and retain qualified managers, and on the ability of its
executive officers and key employees to manage its operations successfully. The
loss of any of the Company's senior management or key personnel, or its
inability to attract and retain key management personnel in the future, could
have a material adverse effect on the Company's business, financial condition
and results of operations.

  Limited Operating History in Third-Party Outsourcing

     Since its inception, the Company has provided outsourcing services to BIG,
the largest underwriter of flood insurance policies through independent agents
(and the second largest overall) in the United States. As BIG's outsourcing
provider, the Company has become a significant provider of flood insurance
outsourcing services; however, to date it has not derived significant revenue
from unaffiliated third-party outsourcing customers. A key element of the
Company's growth strategy has been to leverage its experience and expertise in
servicing BIG's flood, homeowners and automobile business to market its
outsourcing capabilities in various P&C lines, including flood, homeowners and
automobile insurance, to other insurance companies and financial institutions.
To date, the Company has not been successful in implementing this growth
strategy. While the Company will continue to seek to implement this growth
strategy, there can be no assurance that the Company will be successful in doing
so, and the failure to do so could have a material adverse effect on the
business, financial condition and results of operations of the Company.

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  Existence of Well-Positioned Competitors

     The Company competes principally in three markets -- the market for flood
insurance outsourcing services, the market for other P&C insurance outsourcing
services and the market for flood zone determinations and related services. The
markets for these services are highly competitive. Management believes the
market for flood insurance outsourcing services is dominated by several
principal competitors. The Company competes for flood insurance outsourcing
customers largely on the basis of price, customer service and responsiveness.
The market for other P&C insurance outsourcing services is fragmented. In the
policy administration services segment of this market, the Company competes for
customers on the basis of customer service, performance and price. The claims
administration services segment of the outsourcing market is also highly
fragmented, with competition from a large number of claims administration
companies of varying size as well as independent contractors. Competition in
this segment of the outsourcing market is principally price driven. The Company
believes, however, that its most significant competition for outsourcing
services comes from policy and claims administration performed in-house by
insurance companies. Insurers that fulfill some or all of their policy and
claims administration needs in-house typically have made a significant
investment in their information processing systems and may be less likely to
utilize the Company's services. In addition, insurance company personnel may
have a vested interest in maintaining these responsibilities in-house.
Management believes the market for flood zone determination services is
dominated by several principal competitors. The Company believes that the
principal competitive factors in the market for flood zone determinations
include quality and reliability of services, response time and price.

     Certain of the Company's competitors in each of these markets have longer
operating histories and significantly greater financial, technical, marketing
and other resources than the Company, including name recognition with current
and potential customers. As a result, these competitors may devote more
resources to the development, promotion and sale of their services or products
than the Company and respond more quickly to emerging technologies and changes
in customer requirements. In addition, current and potential competitors may
establish cooperative relationships among themselves or with third parties to
increase the ability of their services and products to address customer needs.
Accordingly, new competitors or alliances among competitors may emerge and
rapidly acquire significant market share. There can be no assurance that the
Company will be able to compete successfully against current and future
competitors, or that competitive pressure faced by the Company will not have a
material adverse effect on its business, financial condition and results of
operations.

  Potential Liability to Clients

     Many of the Company's contractual engagements involved projects that are
critical to the operations of its clients' business and provide benefits that
may be difficult to quantify. Any failure in a client's system could result in a
claim for substantial damages against the Company, regardless of the Company's
responsibility for such failure. Although the Company may attempt to limit
contractually its liability for damages arising from negligent acts, errors,
mistakes or omissions in rendering its services, there can be no assurance that
the limitations of liability, if any, set forth in its service contracts will be
enforceable in all instances or would otherwise protect the Company from
liability for damages. Although the Company maintains general liability
insurance coverage, including coverage for errors or omissions, there can be no
assurance that such coverage will continue to be available on reasonable terms
or in sufficient amounts to cover one or more large claims, or that the insurer
will not disclaim coverage as to any future claim. The successful assertion of
one or more large claims against the Company that exceed available insurance
coverage, or changes in the Company's insurance policies, including premium
increases or the imposition of large deductible or co-insurance requirements,
could have a material adverse effect on the Company's business, financial
condition and results of operations.

  Dependence on Trend Toward Outsourcing

     The Company's business and growth depend in large part on the insurance
industry's trend toward outsourcing administration and information technology
services. There can be no assurance that this trend will continue, as
organizations may elect to perform such services in-house. A significant change
in the direction of

                                        15
<PAGE>   18

this trend could have a material adverse effect on the Company's business,
financial condition and results of operations.

  Volatility of Stock Price; Impact of Delisting

     The Company believes that various factors such as general economic
conditions and changes or volatility in the financial markets, changing market
conditions, and quarterly or annual variations in the Company's financial
results, some of which are unrelated to the Company's performance, could cause
the market price of the Common Stock to fluctuate substantially.

     Effective the close of business on February 21, 2001, the Company's Common
Stock was delisted from trading on the Nasdaq National Market due to the
Company's inability to remain in compliance with certain maintenance standards
required for continued listing on the Nasdaq National Market. Since that time,
the Common Stock has been eligible to trade on the OTC Bulletin Board. The
Common Stock does not now, and may never, meet the requirements for re-listing
on the Nasdaq National Market. The Company's inability to list its Common Stock
on the Nasdaq National Market substantially reduces the liquidity of, and market
for, the Common Stock.

ITEM 2.  PROPERTIES

     The following table sets forth certain information with respect to the
principal facilities used in the Company's operations:

<TABLE>
<CAPTION>
                               SQUARE                                      LEASE
LOCATION                        FEET            FUNCTIONS               EXPIRATION
--------                       ------           ---------               ----------
<S>                            <C>       <C>                         <C>
St. Petersburg, Florida(1)...  76,700    Corporate Headquarters      December, 2001
                                         and Outsourcing
St. Petersburg, Florida(1)...   4,500    Outsourcing                 December, 2001
St. Petersburg, Florida......  12,740    Outsourcing                 November, 2005(2)
St. Petersburg, Florida......  35,500    Outsourcing                 February, 2005(2)
Dunedin, Florida.............   5,200    Outsourcing                 February, 2004
Norwalk, Ohio................  12,400    Flood Zone Determination    August, 2004(2)
Norwalk, Ohio................  21,000    Flood Zone Determination    November, 2002(2)
</TABLE>

---------------

(1) Each of these facilities is leased from BIG.
(2) The Company has the option to renew each of these leases for an additional
    five-year period.

     The Company believes that its existing facilities and additional or
alternate space available to it are adequate to meet its requirements for the
foreseeable future.

ITEM 3.  LEGAL PROCEEDINGS

     On September 28, 2000, October 25, 2000 and October 30, 2000, three alleged
shareholders of the Company filed three nearly identical lawsuits in the United
States District Court for the Middle District of Florida, each on behalf of a
putative class of all persons who purchased shares of the Company's Common Stock
pursuant and/or traceable to the registration statement for the Company's
February 1999 initial public offering (the "IPO"). The lawsuits were
consolidated on December 1, 2000, and the consolidated action is proceeding
under Case No. 8:00-CV-2013-T-26MAP. The plaintiffs' Consolidated Amended Class
Action Complaint, filed February 7, 2001, names as defendants the following
parties: the Company; Geotrac; BIG; Venture Capital Corporation, a selling
shareholder in the IPO; the five inside directors of the Company at the time of
the IPO; and Raymond James & Associates, Inc. and Keefe, Bruyette & Woods, Inc.,
the underwriters for the IPO. (On April 5, 2001, the Plaintiffs' filed a Notice
of Scrivener's Error notifying all parties to the litigation that Geotrac was
inadvertently named as a defendant in the complaint). The complaint alleges,
among other things, that the defendants violated Sections 11, 12(a)(2) and 15 of
the Securities Act of 1933, as amended, by making certain false and misleading
statements in the roadshow presentations, registration statement and prospectus
relating to the IPO. More specifically, the complaint alleges that, in
connection with

                                        16
<PAGE>   19

the IPO, the defendants made various material misrepresentations and/or
omissions relating to: (i) the Company's ability to integrate Geotrac's flood
zone determination business with the Company's own flood zone determination
business and with its insurance outsourcing services business; (ii) actual and
anticipated synergies between the Company's flood zone determination and
outsourcing services business lines; and (iii) the Company's use of the IPO
proceeds. The complaint seeks unspecified damages, including interest, and
equitable relief, including a rescission remedy. On March 26, 2001, the Company,
BIG and the five inside director defendants filed a motion to dismiss the
plaintiffs' Consolidated Amended Class Action Complaint for, among other things,
failure to allege material misstatements and/or omissions in the roadshow
presentations, registration statement and/or prospectus relating to the IPO.
Management of the Company believes the material allegations of the complaint are
without merit and intends to vigorously defend the lawsuit. No assurances can be
given, however, with respect to the outcome of the litigation, and an adverse
result could have a material adverse effect on the Company's business, financial
condition and results of operations.

     Bankers Insurance Company ("BIC"), a subsidiary of BIG, and Bankers Life
Insurance Company ("BLIC") and Bankers Security Insurance Company ("BSIC"),
subsidiaries of BIC, have been subject to an investigation by the Florida
Department of Insurance (the "DOI"), the principal regulator of insurance
activities in the State of Florida, stemming from their use of a private
investigator to gather information on a DOI employee and the private
investigator's unauthorized use of illegal wiretaps in connection therewith. On
March 23, 2000, the Treasurer and Insurance Commissioner of the State of
Florida, as head of the DOI, filed an administrative complaint against BIC, BLIC
and BSIC based upon the results of such investigation. The administrative
complaint charges BIC, BLIC and BSIC with violating various provisions of the
Florida Insurance Code including, among other things, a provision requiring
insurance companies to have management, officers or directors that are, among
other things, trustworthy. The complaint further notifies BIC, BLIC and BSIC
that the Insurance Commissioner intends to impose such penalties or take such
other administrative actions as may be proper or appropriate under applicable
law, including possibly entering an order suspending or revoking the
certificates of authority of BIC, BLIC and BSIC to conduct business as insurance
companies in the State of Florida. On February 19, 2001, the DOI filed a Motion
for Leave to File Amended Complaint. On March 29, 2001, the court issued an
order granting the DOI's motion.

     BIC, BLIC and BSIC have informed the Company that they intend to vigorously
defend against such action, but no assurances can be given as to the outcome
thereof. In the event the DOI were to enter an order suspending or revoking the
certificates of authority of BIC, BLIC and BSIC to conduct business as insurance
companies in the State of Florida, or impose other significant penalties on any
of them, it would materially adversely affect the business and/or operations of
BIG and, in turn, could result in the loss of or material decrease in the
Company's business from BIG, which would have a material adverse effect on the
Company's business, financial condition and results of operations.

     On November 19, 1999, the United States, on behalf of the Federal Emergency
Management Agency ("FEMA"), filed a civil action against BIC in the United
States District Court for the District of Maryland stemming from FEMA's
investigation of certain cash management and claims processing practices of BIC
in connection with its participation in the National Flood Insurance Program
("NFIP"). The complaint alleges, among other things, that BIC knowingly failed
to report and pay interest income it had earned on NFIP funds to the United
States in violation of the False Claims Act. The complaint further alleges
various common law theories, including fraud, breach of contract, unjust
enrichment and negligent misrepresentation. The complaint seeks civil penalties
of $1.08 million and actual damages of approximately $1.1 million as well as
treble, punitive and consequential damages, costs and interest. The suit is
currently stayed pending arbitration following a decision by the United States
Court of Appeals for the Fourth Circuit in favor of BIC on its motion to stay
the litigation pending arbitration. BIC has informed the Company that BIC is not
aware of the government's intentions for further appeal of the order regarding
arbitration. BIC has further informed the Company that it intends to vigorously
defend against the action, but no assurances can be given as to the outcome
thereof. However, BIG has advised the Company that an adverse judgment in this
action should not have a material adverse affect on the business and/or
operations of BIC, although no assurances can be given in this regard.

                                        17
<PAGE>   20

     FEMA's investigation of certain claims processing practices of BIC in
connection with its participation in the NFIP is continuing, and BIC has
produced documentation in connection therewith. If the parties are either unable
to reach agreement in these matters or resolve their disagreement in
arbitration, the United States could amend its complaint against BIC to add
additional claims under the False Claims Act and/or various common law and
equitable theories relating to such matters. In the event such continuing
investigation or any consequence thereof materially adversely affects the
business or operations of BIC, it could result in the loss of or material
decrease in the Company's business from BIC, which would have a material adverse
effect on the Company's business, financial condition and results of operations.

     The Company is involved in various other legal proceedings arising in the
ordinary course of business. Management believes that the ultimate resolution of
these proceedings will not have a material adverse effect on the Company's
financial position, results of operations, or liquidity, although no assurances
can be given in this regard.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders during the fourth
quarter of 2000.

                                        18
<PAGE>   21

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     In February, 1999, the Company completed an initial public offering of its
Common Stock at an initial price of $11.00 per share. Until February 21, 2001,
the Company's Common Stock was traded on the Nasdaq National Market under the
symbol "INMG". The following table sets forth the high and low closing sales
prices per share as reported by the Nasdaq National Stock Market for the Common
Stock for the periods indicated.

<TABLE>
<CAPTION>
                                                               HIGH     LOW
                                                               ----     ---
<S>                                                           <C>      <C>
YEAR ENDED DECEMBER 31, 1999
  First quarter ended March 31, 1999........................  $11.88   $8.25
  Second quarter ended June 30, 1999........................   11.19    8.00
  Third quarter ended September 30, 1999....................    9.75    2.88
  Fourth quarter ended December 31, 1999....................    3.56    1.88
YEAR ENDED DECEMBER 31, 2000
  First quarter ended March 31, 2000........................    3.75    2.00
  Second quarter ended June 30, 2000........................    2.75    1.13
  Third quarter ended September 30, 2000....................    1.94    1.16
  Fourth quarter ended December 31, 2000....................    1.28    0.41
</TABLE>

     Effective the close of business on February 21, 2001, the Company's Common
Stock was delisted from trading on the Nasdaq National Market due to the
Company's inability to remain in compliance with certain maintenance standards
required for continued listing on the Nasdaq National Market. Since that time,
the Common Stock has been eligible to trade on the OTC Bulletin Board. The OTC
Bulletin Board is operated by the National Association of Securities Dealers,
Inc. as a forum for electronic trading and quotation. On March 30, 2001, the
closing bid price for a share of Common Stock as reported by the OTC Bulletin
Board was $0.375. The over-the-counter market quotations reflect inter-dealer
prices, without retail markup, markdown or commission and may not necessarily
represent actual transactions.

     As of March 30, 2001, there were 22 record holders of the Common Stock.

     In conjunction with the Company's acquisition of Geotrac, it entered into a
Corporate Governance Agreement, dated July 31, 1998, with Geotrac and Daniel J.
White ("Mr. White"), the corporation's president and then majority shareholder,
setting forth certain terms and conditions pertaining to the operation of
Geotrac. The Corporate Governance Agreement provides, among other things, that
for so long as Mr. White owns stock in the Company or Geotrac, or has an option
to purchase stock in Geotrac, certain actions by Geotrac will require the
unanimous approval of the Geotrac Board of Directors, including any merger or
consolidation, the payment of management or similar fees to the Company or its
subsidiaries and affiliates, the sale or issuance of Geotrac stock, and the sale
of Geotrac assets outside the ordinary course of business to anyone other than
an affiliate of Geotrac. Among the actions requiring such unanimous board
approval under the Corporate Governance Agreement is the making of cash
distributions to the Company, whether by dividend or otherwise. Therefore,
pursuant to the Corporate Governance Agreement, Mr. White may impede the
Company's ability to access excess cash balances retained by its Geotrac
subsidiary, which could impact the Company's ability to declare and pay
dividends in the foreseeable future.

     The Company did not pay any dividends in either 1999 or 2000. The Company
currently anticipates that any future earnings will be retained for development
and expansion of the Company's business and does not anticipate declaring or
paying any cash dividends in the foreseeable future.

                                        19
<PAGE>   22

ITEM 6.  SELECTED FINANCIAL DATA

     The following selected consolidated financial data should be read in
conjunction with the Consolidated Financial Statements of the Company and Notes
thereto and "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company." The following selected consolidated
financial data of the Company as of and for the years ended December 31, 1996,
1997, 1998, 1999, and 2000 has been derived from the Company's audited
consolidated financial statements. The results of operations presented below are
not necessarily indicative of the results of operations that may be achieved in
the future.

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                   -----------------------------------------------
                                                    1996      1997      1998      1999      2000
                                                   -------   -------   -------   -------   -------
                                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                <C>       <C>       <C>       <C>       <C>
STATEMENT OF OPERATIONS DATA:
Revenues
  Outsourcing services...........................  $ 5,125   $29,714   $38,058   $52,168   $45,917
  Flood zone determination services..............    7,705     8,792    25,734    19,161    17,067
                                                   -------   -------   -------   -------   -------
          Total revenues.........................   12,830    38,506    63,792    71,329    62,984
                                                   -------   -------   -------   -------   -------
Expenses
  Cost of outsourcing services...................    3,896    21,989    26,875    37,428    36,766
  Cost of flood zone determination services......    5,362     4,764    11,131     8,102     7,664
  Selling, general and administrative............    1,121     3,026     8,381    11,857    11,205
  Management services from Parent................    1,054     2,344     3,260     2,256     1,885
  Deferred compensation (non-recurring item).....       --        --       728        --        --
  Depreciation and amortization..................      309       684     4,311     5,498     5,342
                                                   -------   -------   -------   -------   -------
          Total expenses.........................   11,742    32,807    54,686    65,141    62,862
                                                   -------   -------   -------   -------   -------
Operating income (loss)..........................    1,088     5,699     9,106     6,188       122
Equity in earnings of Geotrac, Inc. (1)..........       --       201        --        --        --
Minority interest (1)............................       --        --      (473)       --        --
Interest income..................................       --        --       456       350       288
Interest expense (2).............................      (75)     (378)   (2,194)     (809)      (70)
                                                   -------   -------   -------   -------   -------
Income before income taxes.......................    1,013     5,522     6,895     5,729       340
Provision for income taxes.......................      396     2,112     3,042     2,534       849
                                                   -------   -------   -------   -------   -------
Net income (loss)................................  $   617   $ 3,410   $ 3,853   $ 3,195   $  (509)
                                                   =======   =======   =======   =======   =======
Net income (loss) per common share...............  $   .06   $   .34   $   .38   $   .26   $  (.04)
                                                   =======   =======   =======   =======   =======
Weighted average common shares outstanding (3)...   10,000    10,000    10,264    12,448    12,794
                                                   =======   =======   =======   =======   =======
Dividends declared on common stock(4)............  $ 1,000   $ 3,500   $ 1,100   $    --   $    --
                                                   =======   =======   =======   =======   =======
</TABLE>

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                   -----------------------------------------------
                                                    1996      1997      1998      1999      2000
                                                   -------   -------   -------   -------   -------
                                                                   (IN THOUSANDS)
<S>                                                <C>       <C>       <C>       <C>       <C>
BALANCE SHEET DATA:
Working capital (deficiency).....................  $  (425)  $  (148)  $(4,295)  $ 7,117   $ 6,319
          Total assets...........................    3,441    19,532    39,902    39,491    40,765
Long-term debt, less current portion.............      894     2,187     7,471       220        --
Notes payable-affiliates, less current portion...       --        --     5,528        --        --
Preferred stock of subsidiary....................       --     6,750        --        --        --
          Total shareholders' equity.............      260       170     8,689    32,885    33,113
</TABLE>

---------------

(1) In 1997, the Company's investment in Geotrac was accounted for using the
    equity method of accounting, since the Company owned less than 50% and had a
    significant but not controlling influence. In July, 1998, the Company
    acquired the remaining 51% of Geotrac. As a result, the operations of
    Geotrac for the year ended December 31, 1998 are consolidated with that of
    the Company, with the portion of Geotrac's net

                                        20
<PAGE>   23

    income allocable to the 51% interest held by the majority stockholders prior
    to June 30, 1998 reflected as a minority interest.
(2) Dividends declared on Preferred Stock for the years ended December 31, 1997
    and 1998 were $229,315 and $189,370, respectively, and are included in
    interest expense.
(3) In February, 1999, the Company completed an initial public offering ("IPO")
    of 3,350,000 shares of Common Stock at a price of $11 per share. Of the
    3,350,000 shares sold in the IPO, 1,350,000 were sold by Venture Capital
    Corporation, a Cayman Islands company, and the remaining 2,000,000 shares
    were sold by the Company. The offering generated net proceeds to the Company
    of $19,164,000, after deducting offering expenses of approximately
    $1,296,000 paid by the Company.
(4) In December, 1996, December, 1997, and June, 1998, the Company paid
    dividends of $1.0 million, $3.5 million, and $1.1 million, respectively, to
    BIG. The Company currently anticipates that all of its earnings will be
    retained for development and expansion of the Company's business and does
    not anticipate declaring or paying any cash dividends in the foreseeable
    future.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     The following discussion and analysis should be read in conjunction with
the Company's Consolidated Financial Statements and the Notes thereto.

OVERVIEW

     Insurance Management Solutions Group, Inc. (together with its subsidiaries,
the "Company") is a holding company that was incorporated in the State of
Florida in December, 1996 by Bankers Insurance Group, Inc. (together with its
subsidiaries, "BIG"), which contributed to the Company two of its wholly-owned
operating subsidiaries, Insurance Management Solutions, Inc. ("IMS") and Bankers
Hazard Determination Services, Inc. ("BHDS"), that were previously formed in
August, 1991 and June, 1988, respectively. In July, 1997, the Company acquired a
49% interest in Geotrac, Inc. and, in July, 1998, acquired the remaining 51%
interest. Geotrac was subsequently merged into BHDS with the surviving company
being known as Geotrac of America, Inc. In January, 1999, the Company acquired
Colonial Claims. BIG is a diversified group of P&C insurance companies with
premium writings in all fifty states. BIG's principal lines of business include
flood, homeowners and automobile insurance lines. From 1996 to 2000, BIG
experienced substantial growth in total written premiums from $235 million to
$323 million.

     Prior to 1997, the Company's outsourcing services principally related to
information technology services provided to BIG on a cost reimbursement basis.
In 1997, the Company entered into service arrangements with BIG to provide a
broader menu of outsourcing services. These services primarily consisted of
policy and claims administration (including policy issuance, billing and
collection functions, claims adjusting and processing) and information
technology services provided for BIG's flood and homeowners insurance lines of
business. Revenues for these services were derived based on a percentage of
direct written premiums for policy administration services and direct paid
claims for claims administration services. The Company also provided claims
administration services for BIG's other insurance lines, excluding flood and
homeowners, on a cost reimbursement basis in 1997.

     Effective January 1, 1998, the Company entered into written service
agreements with BIG which modified the existing arrangements to (i) expand the
services provided by the Company to include policy administration for certain
automobile lines of business, (ii) recognize claims outsourcing revenue based
not on a cost reimbursement basis, but rather on a percentage of earned premiums
and, with respect to certain types of claims, a percentage of incurred losses,
and (iii) implement a change in fee structure from a percentage of incurred loss
to a percentage of earned premiums with respect to homeowners claims services.
These changes were negotiated in order to effect more uniform revenue
recognition. To obtain BIG's agreement to such changes, the Company, in turn,
agreed to the revised fee structure with respect to homeowners claims services.
BIG presently accounts for approximately 83% of the Company's outsourcing
services revenues and is expected to continue to account for a significant
majority of the Company's outsourcing revenues in the foreseeable future.

                                        21
<PAGE>   24

     On April 13, 2001 the Company entered into the Letter Agreement with BIG.
Pursuant to the Letter Agreement, the parties agreed to extend the term of each
of the service agreements until December 1, 2002. To obtain BIG's agreement to
such extensions, the Company, in turn, agreed to certain service fee
modifications. Under the service agreements, as amended, BIG will pay the
Company (1) a monthly fee based upon direct written premiums for policy
administration services relating to its flood, homeowners and commercial lines
of business and (2) a monthly fee based upon net claims (after deductibles) for
claims administration services relating to its flood line of business. The
service fees payable under the service agreements with respect to (a) policy
administration services relating to the automobile line of business, and (b)
claim administration services relating to all lines of business other than
flood, shall remain unchanged. If such amendments to the service agreements had
been in effect for the fiscal year ended December 31, 2000, the Company's
affiliated outsourcing revenues, which totalled approximately $38 million on an
actual basis, would have been approximately $30 million on a pro forma basis.
The Company believes that any anticipated reduction in affiliated outsourcing
revenues resulting from the implementation of such service fee changes will be
largely offset by a corresponding reduction in operating costs as a result of,
among other things, the elimination of data and technical support services from
the administration services to be provided by the Company to BIG under the
service agreements, although no assurances can be given in this regard.

     Outsourcing service revenues are principally derived from written and
earned insurance premiums. Such premiums are affected by seasonal fluctuations
in volume of new and renewal policies received. Outsourcing service revenues
generated from the flood and homeowners lines of business increase in the late
second quarter and peak during the third quarter in conjunction with home sales.
In the Company's experience, increased levels of flood insurance purchases occur
in the Southeastern United States during the second and third quarters in
anticipation of the onset of the hurricane season.

     Federal residential flood insurance rates are set by FEMA and are the same
for all flood insurance carriers. Consequently, policyholder retention is
typically dependent upon the quality of customer service being offered. Higher
retention or renewal rates provide more consistent recurring revenues. Flood
insurance carriers often utilize independent agents to sell their product.
Competing flood insurance carriers offering more attractive commissions to such
agents pose a significant risk for declines in business.

     During periods of peak demand for flood and homeowners insurance, the
number of policies waiting to be issued increases. This backlog represents
future service fee income to be earned, generally within one month.

     Flood zone determination revenues, which are recognized as services are
performed, are cyclically impacted by both changes in mortgage interest rates
and trends in home sales.

     The cost of outsourcing services primarily includes wages and related
benefits associated with personnel who perform policy and claims administration
services, as well as postage and telephone charges, data processing and other
direct costs associated with providing service to customers.

     Cost of flood zone determination services primarily includes wages and
related benefits associated with personnel who perform flood zone determination
services, telephone expenses, general liability insurance, data processing and
other direct costs associated with providing service to customers. Due to the
ongoing automation of the Company's flood zone database, a gradual increase in
the number of automated flood zone determinations, versus manually determined
flood zones, has occurred. Automated flood zone determinations cost less for the
Company to perform than manually generated determinations.

     Selling, general and administrative expenses include the wages and related
benefits of sales and marketing, executive, finance and accounting personnel, as
well as other general operating costs. In addition, wages and related benefits
of the management staff of each processing department (i.e. Customer Service,
Claims, and Information Services) are included in selling, general and
administrative expenses.

     Management services from Parent were previously charged to the Company
under an administration agreement with BIG for common costs that were incurred
by BIG. These common costs included human resources, legal, corporate planning
and communications, cash management, certain executive management and rent. On
April 13, 2001, the Company and BIG entered into the Letter Agreement. Pursuant
to the Letter Agreement, the administration agreement was terminated effective
April 1, 2001 and will be replaced,

                                        22
<PAGE>   25

effective June 1, 2001, with a new corporate services agreement pursuant to
which BIG will provide the Company with various marketing and training services
at fixed hourly rates.

     In 1997, the Company's investment in Geotrac was accounted for using the
equity method of accounting, since the Company owned less than 50% and had a
significant but not controlling influence. In July, 1998, the Company acquired
the remaining 51% of Geotrac. As a result, the operations of Geotrac for the
year ended December 31, 1998 are consolidated with that of the Company, with the
portion of Geotrac's net income allocable to the 51% interest held by the
majority stockholder prior to June 30, 1998 reflected as a minority interest.

     During the year ended December 31, 2000, the Company's outsourcing services
business segment incurred an operating loss of approximately $3.2 million. This
operating loss was partially due to a decrease in revenue from the
administration of property damage claims resulting from flood and wind claims,
as well as an increase in personnel and contractor costs incurred to bring on
new unaffiliated contracts, which contracts were subsequently terminated. In an
effort to improve the operating results of its outsourcing services business
segment, the Company completed a workforce reduction of approximately 10%, or 53
employees on February 13, 2001. In addition, on April 13, 2001, the Company
entered into a Letter Agreement with BIG, BIC, BSIC and FCIC providing for
various changes to the Company's existing contractual arrangements with such
affiliated entities. See "Item 13. Certain Relationships and Related
Transactions."

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, certain selected
operating results of the Company as a percentage of total revenues:

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                               ------------------------
                                                                1998     1999     2000
                                                               ------   ------   ------
<S>                                                            <C>      <C>      <C>
REVENUES:
  Outsourcing services......................................    59.7%    73.1%    72.9%
  Flood zone determination services.........................    40.3     26.9     27.1
                                                               -----    -----    -----
          Total revenues....................................   100.0    100.0    100.0
                                                               -----    -----    -----
EXPENSES:
  Cost of outsourcing services..............................    42.2     52.5     58.4
  Cost of flood zone determination services.................    17.4     11.3     12.2
  Selling, general and administrative.......................    13.1     16.6     17.8
  Management services from Parent...........................     5.1      3.2      3.0
  Deferred compensation (non-recurring item)................     1.1       --       --
  Depreciation and amortization.............................     6.8      7.7      8.4
                                                               -----    -----    -----
          Total expenses....................................    85.7     91.3     99.8
                                                               -----    -----    -----
Operating income............................................    14.3      8.7      0.2
Minority interest...........................................    (0.7)      --       --
Interest income.............................................     0.7      0.5      0.4
Interest expense............................................    (3.5)    (1.1)    (0.1)
                                                               -----    -----    -----
Income before income taxes..................................    10.8      8.1      0.5
Provision for income taxes..................................     4.8      3.6      1.3
                                                               -----    -----    -----
     Net income (loss)......................................     6.0%     4.5%    (0.8%)
                                                               =====    =====    =====
</TABLE>

COMPARISON OF THE YEARS ENDED DECEMBER 31, 2000 AND 1999

     Outsourcing Services Revenues.  Outsourcing services revenues decreased
12.0% to $45.9 million in 2000 from $52.2 million in 1999. The decrease was
attributable in part to the fact that revenue generated under an affiliated
technical support services arrangement decreased to $0 in 2000 from $1.3 million
in 1999. The decrease in outsourcing services revenues also was attributable to
the expiration as of December 31, 1999 of

                                        23
<PAGE>   26

certain minimum service fee arrangements established effective April 1, 1999
with affiliated insurers to compensate the Company for maintaining an
infrastructure to process certain lines of business of affiliated insurers that
had not grown as rapidly as originally anticipated. If such minimum service fee
requirements with respect to said lines of business had not been implemented as
of April 1, 1999, aggregate affiliated outsourcing services revenues, which
totaled $41.5 million in 1999, would have been $39.7 million in accordance with
the terms of the affiliated service agreements as in effect prior to April 1,
1999.

     The decrease in outsourcing services revenues was also due to a decrease in
the volume of flood and wind damage claims administered by the Company's
outsourcing operations during the year ended December 31, 2000 as compared to
the year ended December 31, 1999. During 2000, the Company recognized revenues
of approximately $4.6 million primarily from the administration of property
damage claims resulting from a tropical depression that caused extensive
flooding, which storm occurred during the fourth quarter of 2000. In comparison,
the Company recognized revenues totaling approximately $9.6 million during 1999
from the administration of property damage claims resulting from Hurricane
Georges, which storm occurred in September 1998, and from Hurricanes Floyd and
Irene, which storms occurred during the fourth quarter of 1999. Additionally, a
decline in the volume of automobile premium processed on behalf of the Company's
affiliated customers contributed to the decrease in outsourcing services
revenues during 2000. These decreases in outsourcing services revenues were
partially offset by (i) an increase in outsourcing services revenues generated
under an automobile claims processing agreement, entered into April, 2000, with
an unaffiliated customer, (ii) an increase in flood premium processed on behalf
of the Company's unaffiliated customers, and (iii) an increase in flood,
homeowners and commercial premium processed on behalf of the Company's
affiliated customers.

     Flood Zone Determination Services Revenues.  Flood zone determination
services revenues decreased 10.9% to $17.1 million in 2000 from $19.2 million in
1999. This decrease was primarily attributable to the termination of the
Company's "life-of-loan" insurance policy, effective April 1, 1999, under which,
prior to the termination of the policy, the Company was compensated for
performing flood zone re-determinations for certain existing customers. Prior to
the termination of the life-of-loan policy, the Company paid an insurance
premium for every flood zone determination issued which required life-of-loan
tracking. In exchange for the premium, the Company received a fixed amount for
every flood zone determination that had to be reissued as a result of a change
in the underlying flood zone classification of a property. Additionally, a
decrease in the average selling price per flood zone determination, resulting
from (i) increased pricing pressures and (ii) an increase in the number of
automated flood zone determinations processed by the Company on behalf of other
flood zone vendors at reduced rates, contributed to the decrease in flood zone
determination services revenues during 2000. These decreases in flood zone
determination services revenues were partially offset by an increase in number
of flood zone determinations processed during 2000 as compared to 1999.

     Cost of Outsourcing Services.  Cost of outsourcing services decreased 1.8%
to $36.8 million in 2000 from $37.4 million in 1999. As a percentage of
outsourcing services revenues, however, cost of outsourcing services increased
to 80.1% in 2000 from 71.7% for the corresponding period in 1999 primarily as a
result of the decrease in the dollar amount of outsourcing services revenues in
2000 as compared to 1999. The decrease in the dollar amount of cost of
outsourcing services was primarily attributable to a decrease in revenue from
the Company's claims catastrophe subsidiary, which pays approximately 70% of
each dollar of revenue received to the independent adjusters who adjust the
claims on such subsidiary's behalf. The decrease in the dollar amount of
expenses from the Company's claims catastrophe subsidiary was partially offset
by (i) increases in the Company's personnel costs due to staff additions and the
use of contract programmers to develop and staff new unaffiliated programs and
(ii) an increase in facilities costs due to the occupancy of the Company's new
operating and call center facility.

     Cost of Flood Zone Determination Services.  Cost of flood zone
determination services decreased 5.4% to $7.7 million in 2000 from $8.1 million
in 1999. As a percentage of flood zone determination services revenues, cost of
flood zone determination services increased to 44.9% in 2000 from 42.3% in 1999.
The increase resulted primarily from the decrease in the dollar amount of flood
zone determination services revenues during 2000 as compared to 1999, partially
offset by (i) various production workflow changes made during 1999 that enabled
the Company to increase employee productivity and reduce operating expenses,

                                        24
<PAGE>   27

primarily personnel related costs, and (ii) increased utilization of a flood
zone determination vendor, located in India, which has been able to perform
manual flood zone determinations at costs significantly below U.S. market rates.

     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses decreased 5.5% to $11.2 million in 2000 from $11.9
million in 1999. The decrease in selling, general and administrative expenses
was primarily attributable to the impact of various severance arrangements
recorded during 1999, partially offset by (i) the continued assumption of
certain administrative services, including human resource, agency accounting,
cash management and legal services, that were previously provided to the Company
under the management service agreement with BIG, and (ii) the recognition of
$338,000 in additional compensation expense (of which approximately $102,000
relates to 1999) resulting from the vesting of benefits payable to certain
current and former officers and directors of the Company under the Amended and
Completely Restated Phantom Stock Plan (the "BFC Plan") of Bankers Financial
Corporation ("BFC"), the parent corporation of BIG, and the Amended and Restated
Phantom Stock Plan (the "VCC Plan") of Venture Capital Corporation ("VCC"). The
foregoing compensation charge is a non-recurring, non-cash item to the Company,
as all such benefits under such plans were fully vested as of September 30, 2000
and constitute the respective obligations of BFC and VCC, not the Company. In
addition, the offset to such compensation expense is an increase to additional
paid-in capital, since the ultimate cash obligations under these plans are that
of BFC and VCC, respectively, and not of the Company.

     Management Services from Parent.  Management services from Parent decreased
16.4% to $1.9 million in 2000 from $2.3 million in 1999. This decrease was
primarily related to the continued assumption by the Company of certain
administrative services, including human resources, agency accounting, cash
management and legal services, that were previously provided to the Company
under the management service agreement with BIG. Such decrease was partially
offset by both an increase in rent expense from BIG as a result of an annual
rent escalation and an increase in the square footage being leased.

     Interest Expense.  Interest expense decreased 91.3% to $70,000 in 2000 from
$809,000 in 1999. This decrease was primarily related to the early repayment of
most of the Company's debt obligations during 1999 from the net proceeds
received by the Company from its initial public offering in February, 1999.

     Provision (Benefit) for Income Taxes.  The Company's effective income tax
rates were 249.8% and 44.2% in 2000 and 1999, respectively. The increase in the
effective tax rate during 2000 reflects lower pretax income as well as various
non-deductible items, including goodwill recognized in connection with the
acquisitions of Geotrac in July, 1998 and Colonial Claims in January, 1999.

COMPARISON OF THE YEARS ENDED DECEMBER 31, 1999 AND 1998

     Outsourcing Services Revenues.  Outsourcing services revenues increased
37.1% to $52.2 million in 1999 from $38.1 million in 1998. The increase was
primarily attributable to (i) incremental revenues from Colonial Claims, which
was acquired in January, 1999, (ii) revenue generated under an affiliated
technical support services arrangement for both personal and commercial lines of
insurance entered into on April 1, 1999, (iii) claims fee income recognized
during 1999 associated with the settlement of flood and wind damage claims
resulting from Hurricane Georges in late September, 1998, and from Hurricanes
Floyd and Irene during 1999 and, (iv) incremental revenues from the Company's
direct marketing subsidiary, which was formed in August, 1998. Effective April
1, 1999, the Company amended its existing service agreements with affiliated
insurers to provide for minimum aggregate quarterly service fee payments through
December 31, 1999 with respect to certain lines of business. If such minimum
service fee requirements with respect to said lines of business under the
agreements had not been implemented as of April 1, 1999, aggregate affiliated
outsourcing services revenues, which totaled $41.5 million in 1999, would have
been $39.7 million in accordance with the terms of the affiliated service
agreements as in effect prior to April 1, 1999. For the year ended December 31,
1999, the Company will not recognize approximately $500,000 of additional
affiliated service fees under the minimum service fee agreement as the Company
did not meet certain specified milestones on a timely basis. Such minimums were
established to compensate the Company for maintaining

                                        25
<PAGE>   28

an infrastructure to process certain lines of business of affiliated insurers
that have not grown as rapidly as originally forecasted.

     Flood Zone Determination Services Revenues.  Flood zone determination
services revenues decreased 25.5% to $19.2 million in 1999 from $25.7 in 1998.
The decrease in flood zone determination services revenues was primarily
attributable to increases in interest rates from the corresponding period of the
prior year and a resulting decline in loan originations and mortgage
refinancings, which fuel the demand for flood zone determinations. Additionally,
during 1999, the Company experienced a reduction in flood zone determination
revenue from several large customers that are experiencing financial
difficulties. The decrease in flood zone determination services revenues in 1999
was partially offset by a novation of the Company's life-of-loan insurance
policy in which an estimate of the present value of future losses to be claimed
under the policy (approximately $500,000) was paid to the Company in exchange
for a release of liability for such future losses under the policy.

     Cost of Outsourcing Services.  Cost of outsourcing services increased 39.3%
to $37.4 million in 1999 from $26.9 million in 1998. The increase in cost of
outsourcing services was primarily attributable to (i) incremental expenses
incurred by the recently acquired Colonial Claims, (ii) increases in information
technology costs due to staff additions and use of contract programmers to
develop new unaffiliated programs, and (iii) incremental direct costs (primarily
personnel) incurred to service the growth of both affiliated and unaffiliated
flood premium. These increases were partially offset by a decrease in the lease
cost of fixed assets that were purchased by the Company from BIG on April 1,
1998. Prior to April 1, 1998, the depreciation for such equipment, which totaled
$282,015 during the three months ended March 31, 1998, was charged to the
Company under an arrangement similar to an operating lease and is included in
cost of outsourcing services. Such costs are now included in depreciation and
amortization.

     Cost of Flood Zone Determination Services.  Cost of flood zone
determination services decreased 27.2% to $8.1 million in 1999 from $11.1
million in 1998. The decrease in cost of flood zone determination services was
primarily due to (i) a decrease in flood zone determination services revenue
from the corresponding period in 1998, (ii) the merger of BHDS and Geotrac in
July, 1998 and a subsequent elimination of certain duplicated functions and
facilities, and (iii) a redesign of certain production workflows in April, 1999
that enabled the Company to increase employee productivity and reduce expenses.

     Selling General and Administrative Expense.  Selling, general and
administrative expenses increased 41.5% to $11.9 million in 1999 from $8.4
million in 1998. The increase in selling, general and administrative expenses
was primarily attributable to (i) additional wages and related benefits
associated with adding executive management, accounting, sales and marketing and
other administrative staff to support the Company's expanded operations, (ii)
incremental expenses incurred by a direct marketing subsidiary, which was formed
in August, 1998, (iii) incremental expenses incurred by Colonial Claims, which
was acquired in January, 1999, (iv) and severance costs relating to the
resignations of certain officers.

     Management Services from Parent.  Management services from Parent decreased
30.8% to $2.3 million in 1999 from $3.3 million in 1998. The decrease was
primarily related to an employment practices judgment that was settled during
the third quarter of 1998 on behalf of the Company and its affiliates. Also
contributing to the decrease in management services from Parent was an amendment
to the management service agreement, which became effective January 1, 1999,
pursuant to which certain accounting and internal audit functions are no longer
performed by the Parent (such functions are currently performed by the Company
directly).

     Depreciation and Amortization Expense.  Depreciation and amortization
expense increased 27.5% to $5.5 million in 1999 from $4.3 million in 1998. The
increase was primarily related to (i) additional goodwill amortization
recognized during 1999 as a result of the purchase of the remaining 51% of
Geotrac, Inc. in July, 1998, (ii) goodwill amortization resulting from the
purchase of Colonial Claims in January, 1999, (iii) amortization of software
costs capitalized in accordance with SOP 98-1, which the Company began
amortizing in January, 1999 and (iv) depreciation related to assets, consisting
of telephone equipment and computer hardware and software, that were purchased
by the Company from BIG in April, 1998 for use in its business. Prior to April
1, 1998, the depreciation for such equipment, which totaled $282,015 during the
three

                                        26
<PAGE>   29

months ended March 31, 1998, was charged to the Company under an arrangement
similar to an operating lease and was included in cost of outsourcing services.

     Minority Interest.  During July, 1998, the Company purchased the remaining
51% of Geotrac. However, the Company has elected to reflect the operations of
Geotrac prior to the July, 1998 acquisition on a consolidated basis with the
Company, with the net income of Geotrac allocable to the 51% interest held by
the prior majority stockholders reflected as minority interest.

     Interest Expense.  Interest expense decreased 63.1% to $809,000 in 1999
from $2.2 million in 1998. The decrease was primarily related to the early
repayment of most of the Company's debt obligations from net proceeds received
by the Company from its initial public offering in February, 1999, partially
offset by the write-off of deferred financing costs during 1999 as a result of
the early repayment of a term loan.

     Provision for Income Taxes.  The Company's effective income tax rates were
44.2% and 44.1% in 1999 and 1998, respectively. The effective tax rates reflect
non-deductible goodwill recognized in connection with the acquisition of Geotrac
in July, 1998 and Colonial Claims in January, 1999. Income before provision for
income taxes in 1998, excluding minority interest which is presented net of tax
in the accompanying consolidated financial statements, resulted in an effective
income tax rate of 41.3% in 1998.

LIQUIDITY AND CAPITAL RESOURCES

     During 2000, the Company's principal sources of liquidity consisted of cash
on-hand, cash flows from operations, and available borrowings under the
Company's revolving credit facility, which credit facility was terminated in
December, 2000, as described below. Prior to 2000, the Company funded its
operations through cash generated from operations, receipt of service fees
advanced from BIG and available borrowings under the Company's line of credit.
Bank borrowings were used to finance fixed asset purchases.

     In February, 1999, the Company completed an initial public offering ("IPO")
of 3,350,000 shares of Common Stock at a price of $11 per share. Of the
3,350,000 shares sold, 1,350,000 were sold by Venture Capital Corporation (the
"Selling Shareholder"), a Cayman Islands company. The offering generated net
proceeds to the Company of approximately $19.2 million after deducting offering
expenses paid by the Company of approximately $1.3 million. The Company used a
portion of the net proceeds from the offering, together with funds received from
BIG from proceeds made available to BIG by a subsidiary of the Selling
Shareholder, to repay all obligations with BIG and its affiliates. Additionally,
the Company used a portion of the IPO proceeds to repay certain debt
obligations.

     In June, 1999, the Company entered into a revolving line of credit
agreement ("LOC)" with a financial institution (the "Bank") that provided for
borrowings of up to two times the Company's rolling four quarter earnings before
interest, taxes, depreciation and amortization ("EBITDA"), but in no event more
than $12.0 million. In December, 2000, the Company received notification from
the Bank that it would no longer honor any requests by the Company for advances
under the LOC due to the fact that the Bank believed the Company had experienced
a material adverse change in its financial condition. To date, the Company has
been unable to secure a new LOC upon acceptable terms. Although management
continues to seek such an arrangement, no assurances can be given that the
Company will be able to secure a new LOC.

     In conjunction with the Company's acquisition of Geotrac, it entered into a
Corporate Governance Agreement, dated July 31, 1998, with Geotrac and Daniel J.
White ("Mr. White"), Geotrac's president and then majority shareholder, setting
forth certain terms and conditions pertaining to the operation of Geotrac. The
Corporate Governance Agreement provides, among other things, that for so long as
Mr. White owns stock in the Company or Geotrac, or has an option to purchase
stock in Geotrac, certain actions by Geotrac will require the unanimous approval
of the Geotrac Board of Directors, including any merger or consolidation, the
payment of management or similar fees to the Company or its subsidiaries and
affiliates, the sale or issuance of Geotrac stock, and the sale of Geotrac
assets outside the ordinary course of business to anyone other than an affiliate
of Geotrac. In addition, unanimous board approval under the Corporate Governance
Agreement is required in order to make cash distributions to the Company,
whether by dividend or otherwise. Therefore, pursuant to the Corporate
Governance Agreement, Mr. White may impede the Company's ability to access

                                        27
<PAGE>   30

excess cash balances retained by its Geotrac subsidiary, even if all of the
other directors of Geotrac were to approve the distribution thereof to the
Company. Mr. White is presently a director and shareholder of the Company. To
date, the Company has been able to access Geotrac's excess cash when necessary,
primarily through the prepayment of outstanding intercompany indebtedness. No
assurances can be given, however, that the Company will be able to obtain
available cash from Geotrac. If the Company is unable to do so, it could have a
material adverse effect on the Company's business, financial condition and
results of operations.

     On April 13, 2001, the Company entered into a Commitment Letter to advance
service fee payments (the "Commitment Letter") with BIG pursuant to which BIG
has agreed to advance to the Company up to $1.5 million per month as a
prepayment of service fees due by BIG and its affiliates under the Service
Agreements. Such advances are available to the Company beginning June 1, 2001
continuing through December 1, 2002 and shall be payable upon demand by the
Company. Any funds advanced by BIG to the Company under the Commitment Letter
shall constitute a prepayment of, and shall be credited toward, the service fees
charged to BIG by the Company during the month following such advance.

     The Company believes that cash on-hand, cash flows from operations and cash
advances from BIG, as described above, will be sufficient to satisfy currently
anticipated working capital and capital expenditure requirements for the next
twelve months. Unanticipated rapid expansion, business or systems development,
or potential acquisitions may cause the Company to require additional funds. The
Company identifies and assesses, in the normal course of business, potential
acquisitions of technologies which it believes to strategically fit its business
plan. The Company may enter into such transactions should opportunities present
themselves in the future.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company has not entered into any transactions using derivative
financial instruments or derivative commodity instruments and believes that its
exposure to market risk associated with other financial instruments (such as
variable rate debt) are not material.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The following financial statements of the Company and its independent
certified public accountants' report are set forth on pages 57 through 89 of
this report:

          Report of Independent Certified Public Accountants.

          Consolidated Balance Sheets as of December 31, 1999 and 2000.

          Consolidated Statements of Income for the years ended December 31,
     1998, 1999 and 2000.

        Consolidated Statement of Shareholders' Equity for the years ended
        December 31, 1998, 1999 and 2000.

          Consolidated Statements of Cash Flows for the years ended December 31,
     1998, 1999 and 2000.

          Notes to Consolidated Financial Statements.

          Report of Independent Certified Public Accountants on Schedule I.

          Schedule I -- Condensed Financial Information of Registrant.

        Notes to Condensed Financial Information of Registrant.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None.

                                        28
<PAGE>   31

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

     The Company's Board of Directors consists of ten members divided into three
classes, with the members of each class serving three-year terms expiring at the
third annual meeting of shareholders. The following table sets forth
information, as of March 31, 2001, regarding the directors and executive
officers of the Company.

<TABLE>
<CAPTION>
                                                                                           TERM AS
                                                                                           DIRECTOR
NAME                         AGE   POSITION                                                EXPIRES
----                         ---   --------                                                --------
<S>                          <C>   <C>                                                     <C>
David M. Howard............  39    President, Chief Executive Officer and Director           2001
David K. Meehan............  54    Chairman of the Board                                     2002
Christopher P. Breakiron...  34    Vice President, Treasurer, Chief Financial Officer and
                                     Secretary
Robert G. Gantley..........  46    Senior Vice President and Chief Operating Officer
Daniel J. White............  51    President and Chief Executive Officer of Geotrac          2002
                                     and Director
Robert M. Menke............  67    Director                                                  2003
Robert G. Menke............  38    Director                                                  2001
John A. Grant, Jr..........  57    Director                                                  2002
William D. Hussey..........  67    Director                                                  2003
E. Ray Solomon.............  70    Director                                                  2003
Alejandro M. Sanchez.......  43    Director                                                  2001
John S. McMullen...........  57    Director                                                  2001
</TABLE>

     David M. Howard  has served as a Director of the Company since June, 2000,
as President of the Company since August, 1999, and as Chief Executive Officer
of the Company since January, 2000. Prior to joining the Company, he spent
eleven years with BIG. From October 31, 1998 until assuming his duties with the
Company, Mr. Howard served as Senior Vice President of each of BIG's insurance
subsidiaries, namely Bankers Insurance Company ("BIC"), Bankers Life Insurance
Company ("BLIC"), Bankers Security Insurance Company ("BSIC") and First
Community Insurance Company ("FCIC"). From October, 1996 until assuming his
duties with the Company, he also served as Senior Vice President of BIG and
President of Bankers Insurance Services, Inc., a subsidiary of BIG. Mr. Howard
served as President of Bankers Hazard Determination Services, Inc., the flood
zone determination services subsidiary of the Company that was merged with
Geotrac, from October, 1995 to July, 1998, and as Executive Vice President of
Bankers Insurance Services, Inc. from December, 1991 to October, 1996. He also
has served as a director of Geotrac since July, 1998. Prior to joining BIG, Mr.
Howard spent several years as an officer in the United States military. He is
active in industry organizations and is a member of the Council of Company
Executive Officers.

     David K. Meehan  has served as the Chairman of the Board of Directors and
as a Director of the Company since December, 1996. He also served as President
and Chief Executive Officer of the Company from December, 1996 to August, 1999
and January, 2000, respectively. Mr. Meehan joined BIG in 1976 as Corporate
Secretary. He was appointed President of BIG in 1979 and served in such capacity
until February, 1999. He is currently Vice Chairman of the Board of BIG. Mr.
Meehan is also Vice Chairman of various direct and indirect subsidiaries of BIG
including BIC, BSIC, FCIC and BLIC. Mr. Meehan has served on the Board of
Governors of each of the Florida Joint Underwriting Association, the Florida
Property and Casualty Joint Underwriting Association and the Florida Residential
Property and Casualty Joint Underwriting Association. Mr. Meehan is
Director/Vice Chairman of the Florida Insurance Council and past Chairman and
President of the Florida Association of Domestic Insurance Companies.

                                        29
<PAGE>   32

     Christopher P. Breakiron  has served as Chief Financial Officer, Treasurer
and Secretary of the Company since October, 1999. Prior to that time, he served
as the acting Chief Financial Officer, Treasurer and Secretary of the Company
from August, 1999 through October, 1999. Mr. Breakiron is also a Vice President
of the Company and has served in such capacity since April, 1999. From July,
1997 to August, 1999, he served as Controller of the Company. Prior to joining
the Company, Mr. Breakiron worked as a senior auditor with Arthur Andersen LLP.
He is a certified public accountant. Effective April 17, 2001, Mr. Breakiron
will resign as Chief Financial Officer, Vice President, Secretary and Treasurer
of the Company. See "Item 11. Executive Compensation."

     Robert G. Gantley  has served as Chief Operating Officer and Senior Vice
President of the Company since January, 2000. Prior to that time, Mr. Gantley
served as Vice President -- Claims of Insurance Management Solutions, Inc., the
Company's principal outsourcing subsidiary, from August, 1997 to January, 2000.
From August, 1997 to June, 1998, he also served as Vice President -- Claims of
the Company. Mr. Gantley joined BIG in October, 1996 and served as Vice
President -- Claims of BIC until February, 1999. Prior to joining BIG, he was
Assistant Director of the Massachusetts State Lottery from 1993 to 1996 and
spent over fifteen years with Allstate Insurance Group, most recently as a
Territorial Claims Manager from 1989 to 1993. Mr. Gantley has over eighteen
years experience in the insurance industry.

     Daniel J. White  has served as a Director of the Company since May, 1998.
Mr. White founded the original predecessor to Geotrac of America, Inc., a
wholly-owned subsidiary of the Company ("Geotrac"), in 1987 and has served as
President of Geotrac (and its predecessors) since that time and as Chief
Executive Officer of Geotrac (and its predecessors) since September, 1994. Mr.
White also currently serves as a director of Independent Community Bank
Corporation.

     Robert M. Menke  has served as a Director of the Company since December,
1996. Mr. Menke founded BIG, a holding company chartered in Florida and the
Company's principal shareholder, in 1976 and served as its Chairman of the Board
from 1979 until December, 2000. He was honored as "Insurance Man Of The Year" in
1986 by the Florida Association of Domestic Insurance Companies. Mr. Menke is
also a member of the Florida Insurance Council. Mr. Menke is currently Chairman
of the Board of various direct and indirect subsidiaries of BIG including BIC,
BSIC, FCIC and BLIC, all affiliates of BIG and the Company. He is also a
director of the Florida Windstorm Association and First Community Bank of
America.

     Robert G. Menke  has served as a Director of the Company since December,
1996. Mr. Menke, the son of Robert M. Menke, joined BIG in 1985 and has held
positions as programmer, systems analyst, systems manager, manager of
information services, and Vice President and Senior Vice President of Corporate
Services. He is currently President and Chief Executive Officer of BIG and has
served in such capacity since October, 1999. From October, 1997 to October, 1999
Mr. Menke served as Executive Vice President and Chief Operating Officer of BIG.
Mr. Menke also serves as President, COO and a Director of various direct and
indirect subsidiaries of BIG including BIC, BSIC and FCIC.

     John A. Grant, Jr.  Mr. Grant, age 57, has been a Director of the Company
since December, 1996. Mr. Grant was formerly a partner with the law firm of
Harris, Barrett, Mann and Dew, retiring in 2000. Mr. Grant was managing partner
of the Tampa office and specialized in business and real property law. Mr. Grant
was a member of the Florida Legislature from 1980 until 2000, where he served in
a number of leadership positions, including chairman of the Banking and
Insurance, Judiciary and Education committees. Mr. Grant has been listed in
Who's Who in America and served as an advisor in the United States Department of
Education, during the Reagan administration. Mr. Grant has also served on the
Advisory Board of the United States Small Business Administration. Currently,
Mr. Grant serves as Executive Director of the State of Florida Office of Public
Guardian.

     William D. Hussey  has served as a Director of the Company since December,
1996. Mr. Hussey is a retired President and Chief Executive Officer of the
Florida League of Financial Institutions and is an advisor with the Florida
Bankers Association.

     E. Ray Solomon, Ph.D., CLU,  has served as a Director of the Company since
December, 1996. Dr. Solomon is a retired Professor and the former Dean of the
College of Business at Florida State University.

                                        30
<PAGE>   33

     Alejandro M. Sanchez  has served as a Director of the Company since July,
1998. Mr. Sanchez is also Chief Executive Officer of the Florida Bankers
Association and has served in such capacity since February, 1998. From November,
1993 to January, 1998, he served as Vice President for Government Affairs of the
Florida Bankers Association. He previously served as Senior Corporate Attorney
for GTE Information Services in Tampa, Florida.

     John S. McMullen  has served as a Director of the Company since January,
2001. Mr. McMullen is a retired President and Chief Executive Officer of Florida
Bank of Tampa (including its predecessor, First National Bank of Tampa (fka
Enterprise National Bank of Tampa)), having served in such capacity from 1992
until 1999. He also served as a director of Florida Banks, Inc., a
publicly-traded bank holding company and the parent company of Florida Bank of
Tampa, from August, 1998 to March, 1999. Prior to joining First National Bank of
Tampa in 1992, Mr. McMullen spent 22 years with First Florida Bank, N.A. serving
in various capacities, including Senior Vice President/Hillsborough Commercial
Banking Group from 1990 to 1992 and Area Executive Vice President/Pinellas
County from 1985 to 1990.

     Messrs. Robert M. Menke, Robert G. Menke and Meehan are also members of the
Board of Directors of various direct and indirect subsidiaries of BIG including
BIC, BSIC, FCIC and BLIC, which are all wholly-owned direct or indirect
subsidiaries of BIG.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     During the year ended December 31, 2000, the executive officers and
directors of the Company filed with the Securities and Exchange Commission on a
timely basis all required reports relating to transactions involving equity
securities of the Company beneficially owned by them. The Company has relied on
the written representation of its executive officers and directors and copies of
the reports they have filed with the Commission in providing this information.

                                        31
<PAGE>   34

ITEM 11.  EXECUTIVE COMPENSATION

                           SUMMARY COMPENSATION TABLE

     The following table sets forth certain information concerning compensation
paid to or earned by the Company's Chief Executive Officer and each of the
Company's four other current executive officers for the years ended December 31,
2000, 1999 and 1998.

<TABLE>
<CAPTION>
                                                                ANNUAL COMPENSATION(1)
                                                ------------------------------------------------------
                                                                          OTHER
                                                                         ANNUAL           ALL OTHER
NAME AND PRINCIPAL POSITION              YEAR    SALARY     BONUS    COMPENSATION(2)   COMPENSATION(3)
---------------------------              ----   --------   -------   ---------------   ---------------
<S>                                      <C>    <C>        <C>       <C>               <C>
David M. Howard........................  2000   $229,678   $    --         --              $8,436
  President and Chief Executive
  Officer(4)                             1999     71,094    50,000         --               2,659
                                         1998         --        --         --                  --
David K. Meehan........................  2000     75,292        --         --               3,570
  Chairman of the Board(5)               1999    148,893    32,000         --               6,587
                                         1998    239,092    32,000         --               8,978
Jeffrey S. Bragg.......................  2000     98,413        --         --                  --
  Former Executive Vice President and    1999    160,468    25,000         --               5,728
  Chief Operating Officer(6)             1998    156,552    25,000         --               5,714
Christopher P. Breakiron...............  2000    149,519        --         --               5,942
  Chief Financial Officer, Secretary
     and                                 1999     97,806    15,000         --               4,512
  Treasurer(7)                           1998         --        --         --                  --
Robert G. Gantley......................  2000    149,424        --         --               5,839
  Senior Vice President and              1999         --        --         --                  --
  Chief Operating Officer(8)             1998         --        --         --                  --
Daniel J. White........................  2000    150,000        --         --               4,154
  President and Chief Executive Officer  1999    150,000        --         --               5,714
  of Geotrac(9)                          1998     66,050        --         --               1,044
</TABLE>

---------------

(1) During the years ended December 31, 1999 and 2000, certain of the executive
    officers of the Company were also executive officers or employees of BIG,
    and, in certain instances, BIG paid a portion of their respective
    compensation. The amounts reflected in the table above for such years were
    all paid to the respective executive officers by the Company. During the
    year ended December 31, 1998, all of the executive officers of the Company
    spent substantially all of their time on the Company's business and were
    compensated solely by the Company. During the years ended December 31, 1999
    and 2000, all of the executive officers of the Company spent substantially
    all of their time on the Company's business and were compensated solely by
    the Company except that subsequent to August 19, 1999, Mr. Meehan spent 70%
    of his time on BIG's business and was paid $96,312 and $151,847 by BIG for
    his service as an executive officer of BIG during the years ended December
    31, 1999 and 2000, respectively.
(2) Does not include the value of the perquisites provided to certain of the
    named executive officers which in the aggregate did not exceed 10% of such
    officer's salary and bonus. Also excludes benefits, if any, accrued to
    Messrs. Howard, Meehan, Bragg and Gantley under the Executive Phantom Stock
    Plans of Bankers Financial Corporation, the parent of BIG, and Venture
    Capital Corporation. No officers or directors of the Company (with the
    exception of Robert M. Menke and Robert G. Menke) are eligible to receive
    additional grants under such Phantom Stock Plans. The Company did not grant
    any options, restricted stock or other long-term incentive compensation to
    its executive officers during 1998.
(3) Reflects matching amounts paid by the Company under its 401(k) plan for the
    year indicated.
(4) Mr. Howard became the President of the Company on August 19, 1999 and the
    amounts listed for 1999 include compensation only from such time.
(5) Effective August 19, 1999, Mr. Meehan was succeeded by Mr. Howard as
    President of the Company. Prior to such time, Mr. Meehan's annual base
    salary pursuant to his Employment Agreement was $258,000. Effective August
    19, 1999 his annual base salary was reduced to $75,000 for his services as
    Chairman of the Board.

                                        32
<PAGE>   35

(6) On January 11, 2000, Mr. Bragg resigned as Executive Vice President and
    Chief Operating Officer. The amounts set forth in the summary compensation
    table reflect $30,754 paid to Mr. Bragg pursuant to his Release and
    Separation Agreement dated January 11, 2000 and $92,262 paid to Mr. Bragg
    pursuant to his Consulting Agreement dated January 11, 2000.
(7) Mr. Breakiron became the Chief Financial Officer, Secretary and Treasurer of
    the Company on August 24, 1999. Prior to such time Mr. Breakiron served as
    Vice President and Controller. Accordingly, the amounts shown include all
    compensation received from the Company for the year ended December 31, 1999.
    Effective April 17, 2001, Mr. Breakiron will resign as Chief Financial
    Officer, Vice President, Secretary and Treasurer of the Company. On April
    12, 2001, the Company and Mr. Breakiron entered into a Release and
    Separation Agreement and a Consulting Agreement pursuant to which, among
    other things, Mr. Breakiron will act as a consultant to the Company through
    May 15, 2001. See "Executive Compensation -- Employment Agreements." The
    Company has commenced efforts to hire a successor to Mr. Breakiron and
    expects to do so in the foreseeable future.
(8) Mr. Gantley became the Chief Operating Officer of the Company on January 18,
    2000. Prior to such time Mr. Gantley served as Vice President of Claims.
    Accordingly, the amounts shown include all compensation received from the
    Company for the year ended December 31, 2000.
(9) Mr. White did not join the Company as an officer until the consummation of
    the acquisition of Geotrac's predecessor in July, 1998.

     The following table sets forth information with respect to grants of stock
options during the year ended December 31, 2000 to the executive officers named
in the Summary Compensation Table. These options were granted under the
Company's Long-Term Incentive Plan and provide for vesting of 60% after three
years, 20% after four years and 20% after five years from the date of grant.
Options were granted at exercise prices on not less than the fair market value
of the Common Stock on the date of grant. The amounts under "Potential
Realizable Value at Assumed Annual Rate of Stock Price Appreciation for Option
Term" represent the hypothetical gains of the options granted based on assumed
annual compound stock appreciation rates of 5% and 10% over their exercise price
for the full seven-year term of the options. The assumed rates of appreciation
are mandated by the rules of the Commission and do not represent the Company's
estimate or projection of future Common Stock prices.

                     OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                           POTENTIAL REALIZABLE
                                                                                             VALUE AT ASSUMED
                                               PERCENT OF                                     ANNUAL RATE OF
                                 NUMBER OF       TOTAL                                          STOCK PRICE
                                 SECURITIES   OPTIONS/SARS                                   APPRECIATION FOR
                                 UNDERLYING    GRANTED TO                                       OPTION TERM
                                  OPTIONS     EMPLOYEES IN   EXERCISE PRICE   EXPIRATION   ---------------------
NAME                              GRANTED     FISCAL YEAR      PER ($/SH)        DATE         5%          10%
----                             ----------   ------------   --------------   ----------   ---------   ---------
<S>                              <C>          <C>            <C>              <C>          <C>         <C>
David K. Meehan................        --           --              --               --          --          --
David M. Howard................        --           --              --               --          --          --
Jeffrey S. Bragg...............        --           --              --               --          --          --
Christopher P. Breakiron.......    10,000         3.36%          $5.00         01/14/07     $20,355     $47,436
Robert S. Gantley..............        --           --              --               --          --          --
Daniel J. White................        --           --              --               --          --          --
</TABLE>

                                        33
<PAGE>   36

     The following table sets forth information with respect to aggregate stock
option exercises by the executive officers named in the Summary Compensation
Table during 2000 and the year-end value of unexercised options held by such
executive officers.

              AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                       AND FY-END OPTIONS/SAR VALUE TABLE

<TABLE>
<CAPTION>
                                                                                            VALUE OF UNEXERCISED
                                                                                                IN-THE-MONEY
                               NUMBER OF                      NUMBER OF UNEXERCISED        OPTIONS/SARS AT FY-END
                                SHARES                        OPTIONS/SARS A+FY-END                 ($)*
                               ACQUIRED        VALUE       ---------------------------   ---------------------------
NAME                          ON EXERCISE   REALIZED ($)   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
----                          -----------   ------------   -----------   -------------   -----------   -------------
<S>                           <C>           <C>            <C>           <C>             <C>           <C>
David K. Meehan.............      --            --             --           25,000           --             --
David M. Howard.............      --            --             --           60,000           --             --
Jeffrey S. Bragg............      --            --             --               --           --             --
Christopher P. Breakiron....      --            --             --           35,000           --             --
Robert S. Gantley...........      --            --             --           35,000           --             --
Daniel J. White.............      --            --             --           25,000           --             --
</TABLE>

---------------

* Based on the average high and low sales prices of the Company's Common Stock
  on December 31, 2000 as quoted on The Nasdaq Stock Market.

EMPLOYMENT AGREEMENTS

     Effective as of the completion of its initial public offering in February,
1999, the Company entered into an employment agreement with Mr. Meehan pursuant
to which he was originally paid an annual base salary of $258,000. Effective
August 19, 1999, Mr. Meehan resigned as President of the Company and his annual
base salary was reduced to $75,000 for his services as Chief Executive Officer
and Chairman of the Board. (In January, 2000, he also resigned as Chief
Executive Officer of the Company.) Mr. Meehan's employment agreement provides
for an initial term of three years, subject to automatic continuation until
terminated by either party. Mr. Meehan's Employment Agreement further provides
that, if he is terminated by the Company without cause (as defined therein), he
shall be entitled to severance payments, payable in accordance with the
Company's usual payroll practices, equal to his then current annual base salary.
In the event Mr. Meehan secures employment during the twelve months following
termination, then the Company shall be entitled to a credit against its
obligation to make severance payments in the amount of 75% of the base salary
paid to him by his new employer during the twelve-month period following
termination by the Company.

     Mr. Meehan's Employment Agreement provides that he shall be provided
benefits, such as health, life and disability insurance, on the same basis as
the Company's other employees. In addition, to the extent authorized by the
Board of Directors, Mr. Meehan also shall be entitled to participate in the
Company's bonus, stock option and other plans, if any. Mr. Meehan's agreement
further provides that, during the term of the agreement and for a period of two
years thereafter, Mr. Meehan will not, directly or indirectly, compete with the
Company by engaging in certain proscribed activities.

     Effective June 19, 1998, the Company entered into an employment agreement
with Mr. Gantley pursuant to which he is currently paid an annual base salary of
$150,000. Mr. Gantley's employment agreement provides for an initial term of
three years, subject to automatic continuation until terminated by either party.
Mr. Gantley's Employment Agreement further provides that, if he is terminated by
the Company without cause (as defined therein), he shall be entitled to
severance payments, payable in accordance with the Company's usual payroll
practices, equal to his then current annual base salary. In the event Mr.
Gantley secures employment during the twelve months following termination, then
the Company shall be entitled to a credit against its obligation to make
severance payments in the amount of 75% of the base salary paid to him by his
new employer during the twelve-month period following termination by the
Company.

     Mr. Gantley's Employment Agreement provides that he shall be provided
benefits, such as health, life and disability insurance, on the same basis as
the Company's other employees. In addition, to the extent authorized by the
Board of Directors, Mr. Gantley also shall be entitled to participate in the
Company's bonus, stock option and other plans, if any. Mr. Gantley's agreement
further provides that, during the term of the

                                        34
<PAGE>   37

agreement and for a period of two years thereafter, Mr. Gantley will not,
directly or indirectly, compete with the Company by engaging in certain
proscribed activities.

     In connection with the acquisition of Geotrac's predecessor, Geotrac
entered into an employment agreement with Daniel J. White pursuant to which Mr.
White will continue to serve as President and Chief Executive Officer of
Geotrac. This agreement provides for an initial term of four years and shall
continue in effect thereafter until terminated by either party upon 90 days
prior written notice. Mr. White's current annual base salary is $150,000,
subject to annual review by Geotrac's board of directors. To the extent
authorized by Geotrac's board of directors, Mr. White shall be entitled to
participate in any bonus programs established by Geotrac. Mr. White shall also
be entitled to comparable benefits, including health, life and disability
insurance, as are offered to any of Geotrac's other executive officers. In the
event of Mr. White's death or disability, Geotrac's obligations under the
agreement will automatically terminate, except that Mr. White shall be entitled
to severance equal to one times his then current annual base salary. The
agreement further provides that, in the event of termination by Geotrac without
cause (as defined therein) or by Mr. White for good reason (as defined therein),
or in the event the agreement is not renewed for any reason other than death,
disability or for cause, then Geotrac shall pay Mr. White at the rate of his
annual base salary then in effect for the longer of (i) the remainder of the
term of the agreement and (ii) one year after such termination date, subject to
a credit of up to 75% of the base salary paid to Mr. White by his new employer,
if any.

     This agreement also provides that, for a period of two years following Mr.
White's termination of employment other than by Mr. White for good reason or by
Geotrac without cause, Mr. White will not, directly or indirectly, engage (or
have an interest) in the flood zone compliance business nor in any other
business engaged or planned to be engaged in by Geotrac within any state or
country in which Geotrac is doing or plans to do business. Finally, the
agreement provides that, during the term of the agreement and for a period of
two years thereafter, Mr. White will not, directly or indirectly, employ,
attempt to employ, or solicit for employment, any of Geotrac's employees.

     Both Messrs. Jeffrey S. Bragg, former Executive Vice President and Chief
Operating Officer of the Company, and Kelly K. King, former Senior Vice
President, Treasurer, Chief Financial Officer and Secretary of the Company, had
Employment Agreements substantially similar to Mr. Meehan's described above.
Effective upon their departures from the Company, both Messrs. Bragg and King
entered into Release and Separation Agreements pursuant to which the Company
paid them a total of $30,754 and $180,000, respectively. The Release and
Separation Agreements contain confidentiality provisions. The Company also
entered into a Consulting Agreement with Mr. Bragg pursuant to which the Company
paid Mr. Bragg an additional $92,262. The Consulting Agreement also contains
non-compete provisions.

     On April 12, 2001, the Company entered into a Release and Separation
Agreement with Mr. Breakiron, which provides for his resignation as Vice
President, Chief Financial Officer, Secretary and Treasurer, effective April 17,
2001. The Release and Separation Agreement also provides for severance payments
of up to $112,500 to be paid over a nine-month period commencing on May 16,
2001. Additionally, on April 12, 2001, the Company entered into a Consulting
Agreement with Mr. Breakiron, pursuant to which he will provide various
consulting services to the Company from the date of his resignation through May
15, 2001. Mr. Breakiron will be paid an aggregate of $11,538 for services
provided under the Consulting Agreement. The Company has commenced efforts to
hire a successor to Mr. Breakiron and expects to do so in the foreseeable
future.

STOCK OPTION PLANS

     The Company currently maintains four stock option plans to attract,
motivate and retain key employees and members of the Board of Directors who are
not employees of the Company.

     Long Term Incentive Plan.  The Company currently maintains a Long Term
Incentive Plan (the "1999 Incentive Plan"). The 1999 Incentive Plan was created
to attract, retain and motivate participating employees of the Company and its
subsidiaries through awards of shares of Common Stock, options to purchase
shares of Common Stock and stock appreciation rights ("SARs"). The 1999
Incentive Plan has been approved by the Company's Board of Directors and
shareholders.

                                        35
<PAGE>   38

     Pursuant to the 1999 Incentive Plan, all employees of the Company as a
group, including executive officers, have been granted options to purchase a
total of 570,000 shares of Common Stock at a weighted average price of $9.18 per
share. All of such options expire on the seventh anniversary of the date of
grant. All such options shall become exercisable 60% after three years, 20%
after four years and 20% after five years from the date of grant. The options
previously granted to Messrs. Bragg and King were not vested prior to their
departure from the Company and, accordingly, such options were canceled. The
1999 Incentive Plan is administered by the Compensation Committee of the Board
of Directors. Effective as of October, 2000, no further grants of any kind may
be made under the 1999 Incentive Plan.

     2000 Stock Incentive Plan. In October, 2000, the Company's Board of
Directors adopted the 2000 Stock Incentive Plan (the "2000 Incentive Plan"),
subject to shareholder approval. The 2000 Incentive Plan provides for the grant
of incentive or nonqualified stock options, SARs, and other stock-based awards.
No more than 1,000,000 shares of Common Stock, plus up to an additional 750,000
shares from the 1999 Incentive Plan that may become available as a result of
canceled, forfeited or expired awards under such plan may be issued under the
2000 Incentive Plan. Awards may be issued to employees of the Company and its
subsidiaries, and consultant, advisors and others who perform services for the
Company or a subsidiary thereof. All options and stock appreciation rights are
to be issued at the greater of the fair market value or "Net Tangible Book Value
Per Share" (as defined) and will expire on the tenth anniversary of the date of
grant or such earlier date(s) as the Compensation Committee determines. As of
December 31, 2000, there were no options outstanding under the 2000 Incentive
Plan. The 2000 Incentive Plan is administered by the Compensation Committee of
the Board of Directors.

     Non-Employee Directors' Stock Option Plan.  The Company also maintains a
Non-Employee Directors' Stock Option Plan (the "1999 Director Plan") to secure
for the Company and its shareholders the benefits of the incentive inherent in
increased Common Stock ownership by the members of the Company's Board of
Directors who are not employees of the Company. The 1999 Director Plan has been
approved by the Company's Board of Directors and shareholders.

     The 1999 Director Plan provides for the grant of nonqualified stock options
to purchase up to 7,200 shares of Common Stock in any three-year period to
members of the Board of Directors who are not employees of the Company. A total
of 200,000 shares of Common Stock may be issued pursuant to this plan. In
February, 1999, each non-employee director was granted options to purchase 6,000
shares of Common Stock at $11.00 per share. Non-employee directors receiving
such options will become vested in options for the purchase of 800 shares of
Common Stock after the adjournment of each annual meeting of shareholders of the
Company, to the extent he or she has been granted options that have not yet
vested, and provided that he or she is then a non-employee director of the
Company. In addition, each non-employee director shall become vested in options
for the purchase of 400 shares of Common Stock upon the adjournment of each
regularly scheduled quarterly meeting of the Board of Directors (other than
following the annual meeting of shareholders), to the extent he or she has been
granted options that have not yet vested, and provided that he or she is then a
non-employee director of the Company. Notwithstanding the foregoing, neither
Robert M. Menke nor Robert G. Menke will be eligible to receive any option
grants under the 1999 Director Plan. In addition, no further grants shall be
made under the 1999 Director Plan on or after the date of the Company's 2001
annual meeting of shareholders. All options granted will have an exercise price
equal to the fair market value of the Common Stock as of the date of grant, will
become exercisable upon vesting, and will expire on the sixth anniversary of the
date of grant. The 1999 Director Plan is a formula plan and accordingly is
intended to be self-governing. To the extent that questions of interpretation
arise, they will be resolved by the Board of Directors.

     2000 Non-Employee Director Stock Plan.  In October, 2000, the Company's
Board of Directors adopted the 2000 Non-Employee Director Stock Plan (the "2000
Director Plan"), subject to shareholder approval. The 2000 Director Plan
provides for the automatic grant of nonqualified stock options to purchase up to
5,000 shares of Common Stock for each non-employee director who is elected,
re-elected or retained, commencing on the date of the Company's 2001 annual
meeting of shareholders, and continuing annually thereafter on the date of each
succeeding annual meeting of shareholders. A total of 250,000 shares are
reserved for issuance pursuant to this plan. The 2000 Director Plan also permits
the Board of Directors to make additional discretionary grants of stock-based
awards to the non-employee directors, provided that only 100,000 of the

                                        36
<PAGE>   39

total reserved shares may be issued pursuant to discretionary awards. All
options are to be issued at an exercise price per share equal to the greater of
the Company's fair market value per share of Common Stock or "Net Tangible Book
Value Per Share" (as defined). The annual option grants vest on the first
anniversary following the date of grant, and expire on the tenth anniversary of
the date of grant unless terminated earlier pursuant to the provision of the
2000 Director Plan. The discretionary grants will be subject to such terms and
conditions as are determined by the Board of Directors. As of December 31, 2000,
there were no options outstanding under the 2000 Director Plan. The 2000
Director Plan is intended to be self-governing with respect to the annual option
grants. With respect to the discretionary grants, the 2000 Director Plan is
administered by the Board of Directors.

     Non-Qualified Stock Option Grants.  The Company's Board of Directors and
shareholders also have adopted a Non-Qualified Stock Option Plan (the
"Non-Qualified Plan"), pursuant to which non-qualified stock options to purchase
125,000 shares of Common stock at a price per share of $11.00 were granted in
conjunction with the February, 1999 initial public offering to certain executive
officers of BIG, including options to purchase 25,000 shares each to Messrs.
Robert M. Menke and Robert G. Menke, directors of the Company, and Mr. David M.
Howard, President, Chief Executive Officer and a director of the Company. (The
options granted to Mr. Howard were voluntarily forfeited at the time Mr. Howard
became President of the Company.) All of such options expire on February 10,
2006, the seventh anniversary of the date of grant. Options shall become
exercisable 60% after three years, 20% after four years and 20% after five
years. The Non-Qualified Plan is administered by the Compensation Committee of
the Board of Directors of the Company.

DIRECTOR COMPENSATION

     Directors who are executive officers of the Company receive no compensation
for service as members of either the Board of Directors or committees thereof.
Directors who are not executive officers of the Company receive a quarterly
retainer of $ 3,750, $1,000 for each Board of Directors meeting attended and
$150 ($200 in the case of a committee chairperson) per committee meeting
attended, plus reimbursement of reasonable expenses. The outside directors are
also eligible to receive options to purchase Common Stock under the 1999
Director Plan and the 2000 Director Plan. See "Executive Compensation -- Stock
Option Plans."

COMMITTEES OF THE BOARD

     The Board of Directors has established committees whose responsibilities
are summarized as follows:

     Audit Committee.  The Audit Committee is comprised of Messrs. Solomon
(Chairman), Hussey (Vice Chairman), Grant, Sanchez and McMullen and is
responsible for reviewing the independence, qualifications and activities of the
Company's independent certified public accountants and the Company's financial
policies, control procedures and accounting staff. The Audit Committee
recommends to the Board of Directors the appointment of the independent
certified public accountants and reviews and approves the Company's financial
statements. The Audit Committee is also responsible for the review of
transactions between the Company and any Company officer, director or entity in
which a Company officer or director has a material interest.

     Compensation Committee.  The Compensation Committee is comprised of Messrs.
Solomon (Chairman), Hussey (Vice Chairman), Grant and Sanchez and is responsible
for establishing the compensation of the Company's directors, officers and other
managerial personnel, including salaries, bonuses, termination arrangements, and
other executive officer benefits. In addition, the Compensation Committee is
responsible for the administration of the Company's 1999 Incentive Plan and 2000
Incentive Plan, including the recipients, amounts and terms of stock option
grants thereunder, and the Company's Non-Qualified Stock Option Plan.

     Executive Committee.  The Executive Committee is comprised of Messrs.
Meehan (Chairman), Howard, (Vice Chairman), Robert M. Menke, Robert G. Menke,
Grant and McMullen. The Executive Committee, to the fullest extent allowed by
the Florida Business Corporation Act (the "FBCA"), and subject to the powers and
authority delegated to the Audit Committee and the Compensation Committee, has
and

                                        37
<PAGE>   40

may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Company during intervals between
meetings of the Board of Directors. Pursuant to the FBCA, the Executive
Committee shall not have the authority to, among other things: approve actions
requiring shareholder approval, such as the sale of all or substantially all of
the Company's assets; fill vacancies on the Board of Directors or any committee
thereof; adopt, repeal or amend the Company's Bylaws; or, subject to certain
exceptions, reacquire or issue shares of the Company's capital stock.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The Company's Compensation Committee was established in connection with the
Company's initial public offering in February, 1999. The members of the
Compensation Committee are Messrs. Solomon (Chairman), Hussey (Vice Chairman),
Grant and Sanchez. No member of the Compensation Committee is currently or was
formerly an officer or an employee of the Company or its subsidiaries.

                                        38
<PAGE>   41

            COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

INTRODUCTION

     Under the rules of the Commission, the Company is required to provide
certain information concerning compensation provided to the Company's chief
executive officer and its executive officers reported for the year ended
December 31, 2000. The disclosure requirements for the executive officers
include the use of tables and a report of the Committee responsible for
compensation decisions for the named executive officers, explaining the
rationale and considerations that led to those compensation decisions. The
Compensation Committee of the Board of Directors was formed in connection with
the Company's initial public offering in February, 1999. Prior to such time, the
Board of Directors was responsible for these decisions.

COMPENSATION COMMITTEE ROLE

     The Compensation Committee of the Board of Directors is currently
responsible for the Company's compensation program for its executive officers,
including the named executive officers. The Compensation Committee is
responsible for establishing the compensation of the Company's directors,
officers and other managerial personnel, including salaries, bonuses,
termination arrangements, and other executive officer benefits. The Compensation
Committee is responsible for the administration of the Company's 1999 Incentive
Plan and 2000 Incentive Plan, including the recipients, amounts and terms of
stock option grants thereunder, and the Non-Qualified Plan. Prior to the
formation of the Compensation Committee in connection with the Company's initial
public offering in February, 1999, the entire Board of Directors performed most
of these functions.

COMPENSATION PHILOSOPHY

     The compensation philosophy for executive officers conforms generally to
the compensation philosophy followed for all of the Company's employees. The
Company's compensation is designed to maintain executive compensation programs
and policies that enable the Company to attract and retain the services of
highly qualified executives. In addition to base salaries, executive
compensation programs and policies consisting of discretionary cash bonuses and
periodic grants of stock options are designed to reward and provide incentives
for individual contributions as well as overall Company performance.

     The Compensation Committee monitors the operation of the Company's
executive compensation policies. Key elements of the Company's compensation
program include base salary, discretionary annual cash bonuses and periodic
grants of stock options. The Company's policies with respect to these elements,
including the basis for the compensation awarded the Company's chief executive
officer, are discussed below. While the elements of compensation described below
are considered separately, the Compensation Committee takes into account the
full compensation package offered by the Company to the individual, including
healthcare and other insurance benefits.

     Base Salaries.  The Company has established competitive annual base
salaries for all executive officers, including the named executive officers.
Effective as of the initial public offering, the Company entered into employment
agreements with each of its then executive officers. The only executive officers
who currently have employment agreements are David K. Meehan and Robert G.
Gantley. Each of these employment agreements provides for an initial term of
three years, subject to automatic continuation until terminated by either party.
See "Executive Compensation - Employment Agreements." The annual base salaries
for each of the Company's executive officers, including the Company's chief
executive officer, reflect the subjective judgment of the Board of Directors
based on the consideration of the executive officer's position and tenure with
the Company, the Company's needs, and the executive officer's individual
performance, achievements and contributions to the growth of the Company.

     Mr. Howard currently serves as Chief Executive Officer of the Company at an
annual base salary of $229,678. The Board of Directors and Compensation
Committee believe that this annual base salary is consistent with the salary
range established for this position based on the factors noted above and

                                        39
<PAGE>   42

Mr. Howard's prior experience and managerial expertise, his knowledge of the
Company's operations and the industry in which it operates.

     Annual Bonus.  The Company's executive officers are eligible for a
discretionary annual cash bonus. No bonus was paid to Mr. Howard as the
Company's chief executive officer for the year ended December 31, 2000.

     Stock Options.  Under the Company's 1999 and 2000 Incentive Plans, stock
options may be granted to key employees, including executive officers of the
Company. The 1999 and 2000 Incentive Plans are administered by the Compensation
Committee in accordance with the requirements of Rule 16b-3. The Compensation
Committee also administers the Company's Non-Qualified Plan. During the year
ended December 31, 2000, no options were granted to Mr. Howard under either of
these plans.

SECTION 162(M) LIMITATIONS

     Under Section 162(m) of the Code, a tax deduction by corporate taxpayers,
such as the Company, is limited with respect to the compensation of certain
executive officers unless such compensation is based upon performance objectives
meeting certain regulatory criteria or is otherwise excluded from the
limitation. Based upon the Compensation Committee's commitment to link
compensation with performance as described in this report, the Compensation
Committee currently intends to qualify compensation paid to the Company's
executive officers for deductibility by the Company under Section 162(m).

                             COMPENSATION COMMITTEE

                           E. RAY SOLOMON (CHAIRMAN)
                       WILLIAM D. HUSSEY (VICE CHAIRMAN)
                               JOHN A. GRANT, JR.
                              ALEJANDRO M. SANCHEZ

APRIL 13, 2001

     The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this annual
report on Form 10-K into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934 (together, the "Acts"), except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.

                                        40
<PAGE>   43

                               PERFORMANCE GRAPH

     The following line graph compares the Company's cumulative total
shareholder return with the cumulative total shareholder return of the S&P 500
Index and the NASDAQ Computer and Data Processing Index since the Company's
initial public offering in February 1999, assuming in each case an initial
investment of $100 on February 11, 1999:

                COMPARISON OF 22 MONTH CUMULATIVE TOTAL RETURN*
               AMONG INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.,
       THE S&P 500 INDEX AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX

<TABLE>
<CAPTION>
                                                  INSURANCE MANAGEMENT                                      NASDAQ COMPUTER &
                                                  SOLUTIONS GROUP, INC.              S&P 500                 DATA PROCESSING
                                                  ---------------------              -------                -----------------
<S>                                             <C>                         <C>                         <C>
2/11/99                                                  100.00                      100.00                      100.00
3/99                                                      81.82                      102.69                      106.80
6/99                                                      77.27                      109.93                      111.09
9/99                                                      27.27                      103.07                      115.69
12/99                                                     22.73                      118.41                      194.54
3/00                                                      21.31                      121.12                      192.38
6/00                                                      15.91                      117.90                      157.19
9/00                                                      12.50                      116.76                      145.47
12/00                                                      7.39                      107.62                       90.01
</TABLE>

---------------

* $100 invested on 2/11/99 in stock or index -- including reinvestment of
  dividends. Fiscal year ending December 31.

                                        41
<PAGE>   44

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of March 31, 2001, with respect to: (i) each of the
Company's directors; (ii) each of the Company's executive officers named in the
Summary Compensation Table above; (iii) all directors and executive officers of
the Company as a group; and (iv) each person known by the Company to own
beneficially more than 5% of the Common Stock. Except as otherwise indicated,
each of the shareholders listed below has sole voting and investment power over
the shares beneficially owned.

<TABLE>
<CAPTION>
                                                              SHARES BENEFICIALLY
                                                                     OWNED
                                                              -------------------
NAME                                                           SHARES     PERCENT
----                                                          ---------   -------
<S>                                                           <C>         <C>
Bankers Insurance Group, Inc.(1)............................  8,349,884    65.2%
Western International Insurance Company(2)..................    700,000     5.5%
David M. Howard.............................................     13,000       *
David K. Meehan.............................................      2,200       *
Christopher P. Breakiron(3).................................        400       *
Robert S. Gantley(4)........................................      1,700       *
Daniel J. White(5)..........................................    524,198     4.1%
Robert M. Menke(6)..........................................    162,200       *
Robert G. Menke.............................................      3,200       *
John A. Grant, Jr.(7).......................................     41,000       *
William D. Hussey...........................................      3,000       *
E. Ray Solomon..............................................      5,500       *
Alejandro M. Sanchez........................................      1,000       *
John S. McMullen(8).........................................    354,300     2.8%
All directors and executive officers as a group (12
  persons)(6)...............................................  1,111,698     8.7%
</TABLE>

---------------

 *  Less than 1%
(1) Includes 147,084 shares held by Bankers Insurance Group, Inc. ("BIG"),
    3,528,455 shares held by Bankers Insurance Corporation ("BIC") and 4,674,345
    shares held by Bankers Security Insurance Company ("BSIC"). The business
    addresses of BIG, BIC and BSIC are all 360 Central Avenue, St. Petersburg,
    Florida 33701. Bankers Insurance Group, Inc. is an indirect subsidiary of
    Bankers International Financial Corporation, Ltd. ("BIFC"), a Cayman Islands
    corporation wholly owned by Bankers International Financial Corporation II
    Trust, a discretionary charitable trust. The sole trustee of this trust is
    Ansbacher (Cayman) Limited, a Cayman Island corporation unaffiliated with
    BIG, the Company or their respective officers or directors. Pursuant to the
    trust's declaration of trust, Independent Foundation for the Pursuit of
    Charitable Endeavors, Ltd., a not for profit Cayman Islands corporation
    ("IFPCE"), possesses the discretionary power to (i) direct the trustee to
    appoint the trust fund to another trust for the benefit of one or more of
    the beneficiaries of the trust and (ii) remove the trustee and appoint one
    or more new trustees outside the Cayman Islands. A majority vote of the
    directors of IFPCE is required to take either of these actions. The Articles
    of Association of IFPCE provide that the Board of Directors shall consist of
    seven members, three of whom shall be the top three executives of Bankers
    International Financial Corporation, a Florida corporation and subsidiary of
    BIFC, three of whom shall be Mr. Robert M. Menke and his lineal descendants,
    and one of whom shall be a director elected by a majority vote of the
    remaining six directors (or, if they cannot agree, appointed by a court of
    competent jurisdiction). Until his death or adjudication of incompetency,
    Robert M. Menke shall have five votes and all other directors shall have one
    vote, and Robert M. Menke's presence at a meeting shall be required for a
    quorum. As of the March 31, 2001, the directors of IFPCE included David K.
    Meehan, Robert M. Menke and Robert G. Menke.
(2) Western International Insurance Company ("WIIC") is a wholly-owned
    subsidiary of Venture Capital Company ("VCC"). The business address of VCC
    and WIIC is Bank America Building, Fort Street, Georgetown, Grand Cayman,
    British West Indies. VCC is a Cayman Island corporation wholly-owned by
    Venture II Trust, a discretionary charitable trust. The sole trustee of this
    trust is Cayman National Trust Company Limited, a Cayman bank unaffiliated
    with BIG, the Company or their respective officers or

                                        42
<PAGE>   45

    directors. Pursuant to the trust's declaration of trust, IFPCE possesses the
    same discretionary powers as described in note (1) above.
(3) Represents shares held jointly with spouse.
(4) Includes 700 shares held directly by Mr. Gantley and 1,000 shares held
    jointly with his spouse.
(5) Includes 262,099 shares held in trust by his spouse.
(6) Excludes 147,084 shares held by BIG, 3,528,455 shares held by BIC, 4,674,345
    shares held by BSIC and 700,000 shares held by WIIC. See Notes (1) and (2)
    above. All shares are held by Robert M. Menke Trust U/A dated 5/17/95, a
    revocable trust pursuant to which Robert M. Menke is the sole trustee and
    lifetime beneficiary.
(7) Includes 15,000 shares held directly by Mr. Grant and 26,000 shares held
    directly by his spouse.
(8) Includes 154,300 shares held directly by Mr. McMullen, 110,000 shares held
    by Andros Associates, Inc., 45,000 shares held by the Kenneth S. McMullen
    Family Trust and 45,000 shares held by the Gertrude B. McMullen Family
    Trust. Mr. McMullen owns 99% of the outstanding equity securities of Andros
    Associates, Inc., is the sole trustee and sole beneficiary of the Kenneth S.
    McMullen Trust, and is the sole trustee and sole beneficiary of the Gertrude
    B. McMullen Trust.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ADMINISTRATION SERVICES AGREEMENT

     Effective as of January 1, 1998, the Company and BIG entered into an
Administrative Services Agreement (the "Administration Agreement") pursuant to
which BIG provides the Company with various administrative and support services,
such as human resources and benefits administration, accounting, legal, cash
management and investment services, requested by the Company from time to time
and reasonably necessary in the conduct of its operations. Under the
Administration Agreement, as originally in effect, the Company was charged for
these services generally based upon a contractually agreed-upon quarterly fee of
$396,250. Effective as of January 1, 1999, the Administration Agreement was
amended to eliminate certain accounting and internal audit service functions
(which functions are currently performed by the Company directly) and to reduce
the quarterly fee payable by the Company to BIG (including one-fourth of the
annual fee for legal services) to $258,750, subject to renegotiation by either
party. In addition, the Company paid BIG, through the year ended December 31,
1999, an annual fee of $120,000 for routine legal services provided. Legal
services provided with respect to non-routine matters are to be billed to the
Company at negotiated prices. Effective January 1, 2000, the annual fee for
routine legal services was reduced to $60,000 from $120,000. Effective April 1,
2000, the portion of the fee attributable to human resources and benefits
administration services, excluding training services (approximately $393,000),
was eliminated as the Company began to perform such services at such date. On
December 31, 2000, the Administration Agreement was renewed by the Company for
an additional one-year term.

     Pursuant to the Letter Agreement described below, the Administration
Agreement was terminated effective April 1, 2001 and will be replaced effective
June 1, 2001 with a new Corporate Services Agreement pursuant to which BIG will
provide the Company with various marketing and training services at fixed hourly
rates. See "Certain Relationships and Related Transactions -- Letter
Agreements."

SERVICE AGREEMENTS

     Effective as of January 1, 1998, the Company entered into a separate
Service Agreement (each a "Service Agreement") with each of BIC, BSIC and FCIC,
all direct or indirect subsidiaries of BIG, pursuant to which the Company
provides policy administration, claims administration and data processing
services to such entities in connection with their flood, homeowners and
automobile lines of business, and claims administration and data processing
services for all such entities' other property and casualty lines of business.
Under the Service Agreements, as originally in effect, each entity paid the
Company as follows: (1) for its policy administration services a monthly fee
based upon direct written premiums for the flood, homeowners and automobile
insurance programs; (2) for its claims administration services a monthly fee
based upon direct earned premiums for the property, casualty, automobile
properly, automobile casualty, flood, and workers' compensation insurance
programs (In addition, a monthly fee based upon direct incurred losses is
charged for flood claims administration and a reimbursement not to exceed 5% of
direct incurred losses from a single event

                                        43
<PAGE>   46

in excess of $2 million is charged to property claims.); (3) for its data
processing services, a monthly fee based upon direct written premiums for all
insurance programs; and (4) for certain customer services such as mailroom,
policy assembly, records management and cash office a monthly fee based upon
direct written premiums (except, if provided in connection with their flood,
homeowner and automobile insurance lines, where no such fees are imposed). The
total service fees charged to BIC, BSIC and FCIC under these Service Agreements
during the year ended December 31, 1998 totaled $36.1 million.

     Effective January 1, 1999, these Service Agreements were modified to
provide for tiered pricing based on the volume of business processed, and to
change the fee for data processing services, which was previously charged as a
percentage of direct written premium, to a fixed monthly fee. The total service
fees charged to BIC, BSIC and FCIC under these Service Agreements, as amended,
during the years ended December 31, 1999 and 2000 totaled $41.5 million and
$37.9 million, respectively. These modifications resulted in a reduction in the
base fees charged for certain lines of business and increases in base fees
charged for other lines of business to better reflect the services provided and
competitive market rates for such services. The term of each Service Agreement
was to expire on June 1, 2001, provided that it was thereafter to be
automatically extended until terminated upon 90 days prior notice by either
party.

     Effective April 1, 1999, the Company further amended its existing Service
Agreements with affiliated insurers to provide for minimum aggregate quarterly
service fee payments through December 31, 1999 with respect to certain lines of
business, provided that certain key tasks are performed timely. If such minimum
service fee requirements with respect to said lines of business under the
agreements had not been implemented as of April 1, 1999, aggregate affiliated
outsourcing services revenues, which totaled $41.5 million for the year ended
December 31, 1999, would have been $39.7 million in accordance with the terms of
the affiliated service agreements as in effect prior to April 1, 1999.
Additionally, for the year ended December 31, 1999, the Company did not
recognize approximately $500,000 of additional affiliated service fees under the
minimum service fee arrangement, as the Company did not meet certain specified
milestones on a timely basis. Such minimums were established to compensate the
Company for maintaining an infrastructure to process certain lines of business
of affiliated insurers that have not grown as rapidly as originally forecasted.

     In addition, under the Service Agreement with BIC, the Company administers
an AYO Claims Agreement between BIG and Florida Windstorm Underwriting
Association, which agreement BIG assigned to BIC on December 15, 1998. The
Company processes and adjusts all claims made under the AYO Claims Agreement.
The administrative fee (equal to a percentage of each loss paid) is allocated
between BIC and the Company.

     Pursuant to the Letter Agreement described below, the Service Agreements
will be amended effective June 1, 2001 to, among other things, extend the term
of each agreement, modify certain of the service fees payable thereunder, and
eliminate data and technical support services from the administrative services
to be provided by the Company thereunder. See "Certain Relationships and Related
Transactions -- Letter Agreements."

     Effective December 1, 1998, the Company entered into a service agreement
with BLIC, a subsidiary of BIG, pursuant to which the Company provides certain
administrative services and allows BLIC to make use of certain of the Company's
property, equipment and facilities in connection with BLIC's day-to-day
operations. Under the service agreement, as amended, BLIC agrees to pay the
Company predetermined fees on a quarterly basis. To date, no services have been
provided and no fees have been charged or paid under this service agreement. The
term of the service agreement with BLIC ends on June 1, 2001, but may be
terminated at any time by BLIC upon 90 days prior written notice.

TECHNICAL SUPPORT SERVICES AGREEMENT

     In April, 1999, the Company entered into a Technical Support Services
Agreement (the "Old Support Agreement") with BIG pursuant to which the Company
provided BIG with certain system development services. Under the Old Support
Agreement, such services were charged to BIG on a time and materials basis. The
total service fees charged to BIG under the Old Support Agreement during the
years ended December 31, 1999 and 2000 totaled $1.3 million and $0,
respectively. Pursuant to the Letter Agreement described below,

                                        44
<PAGE>   47

the Old Support Agreement was terminated effective April 1, 2001 and will be
replaced, effective June 1, 2001, with a new Technical Support Services
Agreement (the "New Support Agreement"). Pursuant to the New Support Agreement,
BIG will provide certain technical support services to the Company. See "Certain
Relationships and Related Transactions -- Letter Agreements."

LETTER AGREEMENTS

     On April 13, 2001, the Company entered into a Letter Agreement with BIG,
BIC, BSIC and FCIC (the "Letter Agreement") pursuant to which the various
contractual arrangements between the Company and such affiliated entities will
be significantly altered as described below.

     With respect to the Administration Agreement, the Letter Agreement provides
that the existing Administration Agreement was terminated effective as of April
1, 2001 and will be replaced effective June 1, 2001 with a new Corporate
Services Agreement (the "Corporate Services Agreement"). Pursuant to the
Corporate Services Agreement, BIG will provide the Company with various
corporate marketing (including graphic design and web-site development) and
corporate training services requested by the Company from time to time at fixed
hourly rates ranging from $40 to $100 per hour, depending on the service being
provided. The Letter Agreement provides that the parties will negotiate in good
faith to execute and deliver the Corporate Services Agreement incorporating
these terms on or before June 1, 2001; provided, however, that in the event such
agreement is not executed and delivered by that date, BIG will provide such
services at the rates specified in the Letter Agreement.

     The Letter Agreement further provides that the Old Support Agreement was
terminated effective April 1, 2001 and will be replaced, effective June 1, 2001,
with the New Support Agreement. Pursuant to the New Support Agreement, BIG will
provide the Company with certain technical support, computer programming and
systems analysis services at specified rates (except for software development
services, which shall be provided on a time and materials basis).

     With respect to the Service Agreements, the Letter Agreement provides that
each of such agreements shall be amended, effective June 1, 2001, to (i)
postpone the expiration date of the agreement from June 1, 2001 until December
1, 2002, (ii) modify the service fees payable thereunder with respect to policy
and claim administration services to be provided in connection with certain
lines of business, (iii) eliminate data and technical support services from the
administrative services to be provided by the Company under the agreement, and
(iv) assess a fixed monthly fee for usage of the Company's AS 400 computer
system. With respect to the service fee modifications, under the Service
Agreements, as amended, each entity will pay the Company (1) a monthly fee based
upon direct written premiums for policy administration services relating to its
flood, homeowners and commercial lines of business and (2) a monthly fee based
upon net claims (after deductibles) for claims administration services relating
to its flood line of business. The service fees payable under the Service
Agreements with respect to (a) policy administration services relating to the
automobile line of business, and (b) claims administration services relating to
all lines of business other than flood, shall remain unchanged. If such
amendments to the Service Agreements had been in effect for the fiscal year
ended December 31, 2000, the Company's affiliated outsourcing revenues, which
totaled approximately $38 million on an actual basis, would have been
approximately $30 million on a pro forma basis. The Company believes that any
anticipated reduction in affiliated outsourcing revenues resulting from the
implementation of such service fee changes will be largely offset by a
corresponding reduction in operating costs as a result of, among other things,
the elimination of data and technical support services from the administration
services to be provided by the Company under the Service Agreements, although no
assurances can be given in this regard.

     On April 13, 2001, the Company entered into a Commitment Letter to advance
service fee payments (the "Commitment Letter") with BIG pursuant to which BIG
has agreed to advance to the Company up to $1.5 million per month as a
prepayment of service fees due by BIG and its affiliates under the Service
Agreements. Such advances are available to the Company beginning June 1, 2001
continuing through December 1, 2002 and shall be payable upon demand by the
Company. Any funds advanced by BIG to the Company under the Commitment Letter
shall constitute a prepayment of, and shall be credited toward, the service fees
charged to BIG by the Company during the month following such advance.

                                        45
<PAGE>   48

PROPERTY LEASES

     The Company currently leases from BIC approximately 84,200 square feet of
office space in St. Petersburg, Florida at a monthly rate of approximately
$108,000. During the year-ended December 31, 2000, the Company paid BIC
approximately $1.4 million under this lease. The current term of this lease
expires on December 31, 2001. The Company anticipates that, in connection with
the transactions contemplated by the Letter Agreement, a portion of the leased
premises will be sublet back to BIG, although no assurances can be given in this
regard.

     The Company currently leases from BIG approximately 4,600 square feet of
office space in St. Petersburg, Florida at a monthly rate of approximately
$5,100. During the year-ended December 31, 2000, the Company paid BIG
approximately $106,000 under this lease. The current term of this lease also
expires on December 31, 2001.

     Effective January 1, 1998, BIG assigned to the Company a lease of
approximately 6,600 square feet of office space in St. Petersburg, Florida. This
lease expired on December 31, 2000 and was not renewed. During the year ended
December 31, 2000, the Company paid approximately $71,000 under this lease to
the third-party lessor.

EMPLOYEE LEASING AGREEMENT

     Effective as of January 1, 1998, the Company entered into an Employee
Leasing Agreement with BIC (the "Employee Leasing Agreement") pursuant to which
the Company continued to lease various personnel, including customer service
personnel, from BIC. The number of employees leased varied depending on the
needs of the Company and the availability of employees from BIC. The Company was
responsible for all expenses associated with such leased employees, including
salaries, bonuses and benefits. Effective April 1, 2000, the Employee Leasing
Agreement was terminated, at which time all such leased employees became direct
employees of the Company.

SALES AND ASSIGNMENT AGREEMENT

     In May, 1998, the Company entered into a sales and assignment agreement
with BIG and certain affiliated companies whereby certain assets were
transferred and assigned to the Company, effective retroactively to April, 1998,
for use in its business. The assets, including, but not limited to, telephone
equipment, computer hardware and software, and service marks were transferred at
their net book value as of the date of transfer. The Company paid consideration
consisting of $325,075 in cash and entered into two promissory notes amounting
to $2,802,175. The notes were repaid in full in February, 2000 out of the net
proceeds to the Company from its initial public offering. In addition, the
Company assumed the existing leases with unaffiliated third parties relating to
various computer equipment. The Company anticipates that, in connection with the
transactions contemplated by the Letter Agreement, certain assets of the Company
will be sold to BIG, although no assurances can be given in this regard.

SOFTWARE LICENSING AGREEMENT

     Effective January 1, 1998, the Company entered into a non-exclusive license
agreement with BIG and BIC pursuant to which the Company licenses its primary
operating systems from BIG and BIC in exchange for a nominal fee. The term of
the license is perpetual. The license agreement provides that the Company shall
be solely responsible for maintaining and upgrading the systems and shall have
the authority to sell or license such systems to third parties.

IMS DIRECT SALE

     Effective July 31, 2000, IMS Direct, Inc. ("IMS Direct"), a wholly-owned
subsidiary of the Company, and Bankers Insurance Services, Inc. ("BIS"), a
wholly-owned subsidiary of BIG, entered into an Asset Purchase Agreement
pursuant to which IMS Direct sold substantially all of its assets to BIS. In
exchange, BIS paid IMS Direct $2,463 and assumed substantially all of the
liabilities of IMS Direct. Additionally, all of

                                        46
<PAGE>   49

the employees of IMS Direct, consisting of approximately 10 persons, ceased to
be employees of the Company as of July 31, 2000 and became employees of BIS.

TAX INDEMNITY AGREEMENT

     As of July 31, 1998, BIG had sold a sufficient number of shares in the
Company such that the Company will no longer file its tax return with Bankers
International Financial Corporation ("BIFC") on a consolidated basis. Effective
as of July 31, 1998, the Company and BIFC entered into a Tax Indemnity Agreement
pursuant to which (i) BIFC agrees to indemnify the Company in the event the
Company incurs a tax liability as a result of taxable income of BIFC or one of
its subsidiaries, and (ii) the Company agrees to indemnify BIFC in the event
BIFC incurs a tax liability as a result of taxable income of the Company or one
of its subsidiaries. Each party also agrees to reimburse the other by certain
tax credits arising on or before July 31, 1998. Under the Tax Indemnity
Agreement, the parties terminated a previous tax allocation agreement which had
been in effect since October 1, 1993.

GEOTRAC TRANSACTIONS

     DJWW Corp., an Ohio corporation, was formed in June, 1987 by Daniel J.
White ("Mr. White"), the corporation's president and sole shareholder. In May,
1991, the corporation changed its name to Geotrac, Inc. In August, 1994,
Geotrac, Inc. sold substantially all of its assets to SMS Geotrac, Inc., a
Delaware corporation ("SMS Geotrac"), for a purchase price of $1,000,000 in
cash, plus a contingent payment based on net profits after taxes for the fiscal
year ended June 30, 1995. SMS Geotrac was a wholly-owned subsidiary of Strategic
Holdings USA, Inc. ("Strategic"). During the year ended June 30, 1996 and on
July 30, 1997, SMS Geotrac made payments of $932,222 and $1,700,000,
respectively to Mr. White in satisfaction of the contingent payment obligations
under the acquisition agreement. The amounts were recorded as an increase to
goodwill and an additional capital contribution to SMS Geotrac. In connection
with the sale of assets to SMS Geotrac, Mr. White became the president of SMS
Geotrac and received a four-year employment contract at a base salary of
$100,000 per year. In September, 1994, Geotrac, Inc. changed its name to
YoSystems, Inc. During the year ended June 30, 1997, SMS Geotrac and Strategic
agreed to treat all outstanding amounts owed to the parent, $1,611,140, as an
additional capital contribution. In addition, Strategic contributed $500,000 to
SMS Geotrac.

     During the one-month period ended July 31, 1997, SMS Geotrac advanced
$797,000 to YoSystems, Inc. In July, 1997, YoSystems acquired all of the issued
and outstanding shares of capital stock of SMS Geotrac from Strategic for
$15,000,000 in cash. The purchase price was funded through an $8.75 million loan
from Huntington National Bank to YoSystems ($8.25 million of which was used in
the purchase) plus $6.75 million in cash paid by the Company in connection with
its acquisition of a 49% interest in YoSystems, as described below. Thereafter,
the Company assumed the loan from Huntington National Bank, which loan has since
been repaid from proceeds received in the Company's initial public offering.

     Neither YoSystems nor Mr. White, its president and sole shareholder, had a
preexisting right to acquire SMS Geotrac pursuant to the August, 1994
transaction. The purchase price of the SMS Geotrac stock was determined by arm's
length negotiations. After the stock purchase transaction, SMS Geotrac merged
into YoSystems, with YoSystems being the surviving entity and changing its name
back to Geotrac, Inc.

     Concurrent with the acquisition of SMS Geotrac by YoSystems, the Company,
through a subsidiary, Bankers Hazard Determination Services, Inc. ("BHDS"),
purchased a 49% interest in YoSystems for $6,750,000 in cash. At that time, the
Company did not contemplate acquiring the remaining 51% of YoSystems, Inc.

     In connection with the Company's purchase of a 49% interest in YoSystems,
BHDS issued 675,000 shares of non-cumulative 8% preferred stock to Heritage
Hotel Holding Company ("Heritage"), a corporation owned by Richard M. Brubaker,
the half brother of Robert M. Menke, a director of the Company. The preferred
stock of BHDS issued to Heritage had a par value of $10 per share and was
subject to redemption at the option of the board of directors of BHDS. The
preferred stock could be redeemed at any time at a price equal to 108% of the
original consideration paid for the stock by the shareholder plus the amount of
the

                                        47
<PAGE>   50

dividends declared and unpaid on the redemption date Heritage funded the
preferred stock purchase by entering into a note agreement with a commercial
bank for $6,750,000, with the preferred stock serving as collateral. On May 8,
1998, the Company purchased the outstanding preferred stock of BHDS in exchange
for a note to Heritage in the principal amount of $6,750,000. The note was
repaid in full in February, 2000 out of the net proceeds to the Company from its
initial public offering. After May 8, 1998, the preferred stock of BHDS held by
the Company was exchanged for 675,000 shares or 8.5% cumulative preferred stock
of BHDS. The shares of non-cumulative 8% preferred stock were then retired.
Dividends declared on the preferred stock for l997 and 1998 were $229,315 and
$189,370, respectively.

     In July, 1998, the Company acquired the remaining 51% equity interest in
Geotrac, Inc. (formerly YoSystems) pursuant to the merger of Geotrac, Inc. with
and into BHDS, with the surviving entity being known as "Geotrac of America,
Inc." The Company acquired the remaining 51% interest from Mr. White and his
wife and certain minority shareholders in exchange for (i) 524,198 shares of
Common Stock, (ii) a promissory note in the principal amount of $1,500,000
bearing interest at a rate of 8.5%, and (iii) cash in the amount of $728,069
(paid in December, 1998), for a total purchase price of $7,994,000. In addition,
the Company assumed the loan in the original principal amount of $8,750,000 from
Huntington National Bank made to YoSystems in July, 1997. As described above,
the loan from Huntington Bank was repaid from proceeds received in the Company's
initial public offering. In connection with this transaction, Geotrac of
America, Inc. entered into an employment agreement with Mr. White pursuant to
which Mr. White serves as the President and Chief Executive Officer of Geotrac
of America, Inc.

     In addition, the Company entered into a Corporate Governance Agreement with
Mr. White and Geotrac setting forth certain terms and conditions upon which
Geotrac continues to operate following the merger. The Corporate Governance
Agreement provides, in part, that for so long as Mr. White owns stock in the
Company or Geotrac, or has an option to purchase stock in Geotrac, (i) the
Company will vote all of its shares in Geotrac to fix and maintain the number of
directors on the Geotrac Board of Directors at five, (ii) the Company will vote
its shares in Geotrac to elect as directors of Geotrac two persons designated by
Mr. White, (iii) the termination of Mr. White as an employee of Geotrac will
require the vote of four out of five members of the Board of Directors, and (iv)
certain actions by Geotrac will require the unanimous approval of the Geotrac
Board of Directors, including any merger or consolidation, the payment of
management or similar fees to the Company or its subsidiaries and affiliates,
the sale or issuance of Geotrac stock, and the sale of Geotrac assets outside
the ordinary course of business to anyone other than an affiliate of Geotrac.
Among the actions requiring such unanimous board approval under the Corporate
Governance Agreement is the making of cash distributions to the Company, whether
by dividend or otherwise. Therefore, pursuant to the Corporate Governance
Agreement, Mr. White may impede the Company's ability to access excess cash
balances retained by its Geotrac subsidiary, even if all of the other directors
of Geotrac were to approve the distribution thereof to the Company. Mr. White is
presently a director and shareholder of the Company. Mr. White also has a right
of first refusal to purchase the assets of Geotrac in the event such assets are
to be sold.

     The board of directors of Geotrac of America, Inc. consists of five
members: Robert M. Menke (Chairman), David K. Meehan, David M. Howard, Daniel J.
White and John Payne. Pursuant to his rights under the Corporate Governance
Agreement, Mr. White appointed himself and Mr. Payne as nominees to such board.
Mr. Howard is currently an executive officer the Company and the former
President of BHDS.

     Geotrac currently leases a 12,400 square-foot facility in Norwalk, Ohio
from DanYo LLC, a limited liability company wholly owned by Daniel J. White and
his spouse. This lease, which was renewed effective September 1, 1999, is for a
term of five years, expiring on August 31, 2004, and provides for monthly rental
payments of approximately $10,448, plus payment of utilities, real estate taxes
and assessments, insurance, repairs and similar expenses.

PHANTOM STOCK PLANS

     During the year ended December 31, 2000, the Company recognized
approximately $338,000 in compensation expense (of which approximately $145,000
relates to 1999) resulting from the vesting of benefits payable to certain
current and former officers and directors of the Company under the Amended and

                                        48
<PAGE>   51

Completely Restated Phantom Stock Plan (the "BFC Plan") of Bankers Financial
Corporation ("BFC"), the parent corporation of BIG, and the Amended and Restated
Phantom Stock Plan (the "VCC Plan") of Venture Capital Corporation ("VCC"). The
foregoing compensation charge is a non-recurring, non-cash item to the Company,
as all such benefits under such plans were fully vested as of September 30, 2000
and constitute the respective obligations of BFC and VCC, not the Company.

     Effective September 30, 2000, the BFC and VCC Plans were amended to provide
for, among other things, immediate vesting of benefits payable thereunder to
certain current and former officers and directors of the Company. Accordingly,
as of September 30, 2000, the total discounted and non-discounted benefits
payable under these plans, which have accrued since February 11, 1999, the date
of the Company's initial public offering (the "IPO Date"), totaled $327,000 and
$894,000, respectively, for the BFC Plan and $12,000 and $43,000, respectively,
for the VCC Plan. Benefits under each of such plans generally are payable in 120
equal installments beginning at age 60. Although resulting in a compensation
expense (on a discounted basis) to the Company, all of such benefits under such
plans were granted on or before the IPO Date and constitute the respective
obligations of BFC and VCC, not the Company. The benefits described herein
exclude amounts vested prior to the IPO Date and/or allocable to services
provided to BIG or its affiliated entities (other than the Company or its
subsidiaries) since the IPO Date.

     The aggregate amount (on a non-discounted basis) in benefits payable to
each of the Company's current and former executive officers and directors of the
Company under the BFC Plan and the VCC Plan, respectively, and which have
accrued from the IPO Date through September 30, 2000, are as follows: David K.
Meehan, $0 and $0; David M. Howard, $247,515 and $25,523; Robert G. Gantley,
$217,583 and $0; Christopher P. Breakiron, $0 and $0; Daniel J. White, $0 and
$0; Kathleen M. Batson, $43,348 and $6,160; John A. Grant, Jr., $154,100 and
$9,210; William D. Hussey, $100,000 and $0; E. Ray Solomon, $100,000 and $0; and
Alejandro M. Sanchez, $0 and $0. The foregoing benefits exclude amounts vested
prior to the IPO Date and/or allocable to services provided to BIG or its
affiliated entities (other than the Company or its subsidiaries) since the IPO
Date.

     Except as set forth below, since the IPO Date, no officers or directors of
the Company have been eligible to receive additional grants under such phantom
stock plans or have been subject to future allocations of profits or losses with
respect thereto. In addition, except as set forth below, all current officers
and directors of the Company were fully vested, as of September 30, 2000, in all
benefits under such plans. Notwithstanding the foregoing, Robert G. Menke, a
director of the Company, and David K. Meehan, Chairman of the Board of the
Company, will continue to be eligible to receive grants, vest in benefits
received and share in profits and losses under such plans in their capacity as
officers and directors of BIG and its affiliated entities.

MISCELLANEOUS

     In February, 1999, Western International Insurance Company, a wholly-owned
subsidiary of VCC and presently a more than 5% shareholder of the Company,
loaned $12.0 million to BIG in exchange for a subordinated note. This loan was
funded by using a portion of the net proceeds received by VCC in the Company's
initial public offering. BIG, in turn, used a portion of such loan proceeds to
satisfy a note payable (including accrued interest) to the Company which totaled
$5,322,455. The balance of the loan proceeds will provide BIG with additional
capital to repay other outstanding indebtedness and expand its operations. The
Company, in turn, used the funds received from BIG, together with a portion of
the net proceeds from its initial public offering, to satisfy $7,054,996 in
accounts, income taxes and notes payable (including accrued interest) payable to
BIG.

     The Audit Committee of the Board of Directors is responsible for reviewing
all future transactions between the Company and any officer or director of the
Company or any entity in which an officer of director has a material interest.
Any such transactions must be on terms no less favorable than those that could
be obtained on an arm's-length basis from independent third parties.

                                        49
<PAGE>   52

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) List of documents filed as part of this report:

     (1) Financial Statements.

             Insurance Management Solutions Group, Inc. Consolidated Financial
        Statements.

             Report of Independent Certified Public Accountants.

             Consolidated Balance Sheets as of December 31, 1999 and 2000.

             Consolidated Statements of Income for the years ended December 31,
        1998, 1999 and 2000.

           Consolidated Statement of Shareholders' Equity for the years ended
           December 31, 1998, 1999 and 2000.

           Consolidated Statements of Cash Flows for the years ended December
           31, 1998, 1999 and 2000.

             Notes to Consolidated Financial Statements.

     (2) Financial Statement Schedules.

           Report of Independent Certified Public Accountants on Schedule 1.

           Schedule 1 -- Condensed Financial Information of Registrant.

           Notes to Condensed Financial Information of Registrant.

     (3) Exhibits.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             EXHIBIT DESCRIPTION
-------                            -------------------
<S>        <C> <C>
   3.1     --  Amended and Restated Articles of Incorporation of Insurance
               Management Solutions Group, Inc.*
   3.2     --  Amended and Restated Bylaws of Insurance Management
               Solutions Group, Inc.*
   4.1     --  Specimen certificate for the Common Stock of Insurance
               Management Solutions Group, Inc.*
  10.1     --  Employment Agreement, dated August 10, 1998, between David
               K. Meehan and Insurance Management Solutions Group, Inc.*
  10.2     --  Insurance Management Solutions Group, Inc. Long Term
               Incentive Plan.*
  10.3     --  Insurance Management Solutions Group, Inc. Non-Employee
               Directors' Stock Option Plan.*
  10.4     --  Snell Arcade Building Lease, dated May 15, 1996, between
               Snell Arcade Limited Company and Bankers Insurance Group,
               Inc., as revised and assigned to Insurance Management
               Solutions Group, Inc., effective January 1, 1998.*
  10.5     --  Bankers Building -- 5th Street North Lease Agreement, dated
               January 1, 1997, between Bankers Insurance Group, Inc. and
               Insurance Management Solutions Group, Inc.*
</TABLE>

                                        50
<PAGE>   53

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             EXHIBIT DESCRIPTION
-------                            -------------------
<C>       <C>  <S>
  10.6     --  Bankers Financial Center Lease Agreement, dated January 1,
               1997, between Bankers Insurance Company and Insurance
               Management Solutions Group, Inc.*
  10.7     --  Lease, dated September 2, 1994, between DanYo LLC (as
               successor to Sandan) and SMS Geotrac, Inc.*
  10.8     --  Indenture of Lease, dated September 23, 1994, between
               Southview Business Center, Ltd., an Ohio limited
               partnership, and SMS Geotrac, Inc., including Addendum I,
               dated March 20, 1995, and Addendum II, dated December 8,
               1995.*
  10.9     --  Master Equipment Lease Agreement, dated May 11, 1995, and
               executed on May 15, 1995, between National City Leasing
               Corporation and SMS Geotrac, Inc.*
  10.10    --  Term Lease Master Agreement, dated June 30, 1995, between
               IBM Credit Corporation and SMS Geotrac, Inc.*
  10.11    --  Employment Agreement, dated June 11, 1998, between Jeffrey
               S. Bragg and Insurance Management Solutions Group, Inc.*
  10.12    --  Administration Services Agreement, dated January 1, 1998,
               between Bankers Insurance Group, Inc. and Insurance
               Management Solutions Group, Inc., including Addendum to
               Administration Services Agreement, dated December 2, 1998
               and effective January 1, 1998, and Addendum to
               Administration Services Agreement, effective January 1,
               1999.*
  10.13    --  Service Agreement, dated January 1, 1998, between Insurance
               Management Solutions, Inc. and Bankers Insurance Company,
               including Addendum dated April 1, 1998 and form of Addendum
               to Service Agreements effective January 1, 1999.*
  10.14    --  Service Agreement dated January 1, 1998 between Insurance
               Management Solutions, Inc. and Bankers Security Insurance
               Company, including form of Addendum to Service Agreements
               effective January 1, 1999. *
  10.15    --  Service Agreement dated January 1, 1998 between Insurance
               Management Solutions, Inc. and First Community Insurance
               Company, including form of Addendum to Service Agreements
               effective January 1, 1999. *
  10.16    --  Vendor Flood Insurance Agreement, dated January 1, 1996,
               between Insurance Management Solutions, Inc. (as successor
               to Insurance Management Information Services, Inc.) and
               Mobile USA Insurance Company, Inc.*
  10.17    --  Vendor Flood Insurance Agreement, dated November 10, 1995,
               between AAA Auto Club South Insurance Company and Insurance
               Management information Services, Inc.*
  10.18    --  Flood Insurance Program Services Agreement by and among
               Insurance Management Information Services, Inc., American
               Alternative Insurance Corporation, and Corporate Insurance
               Agency Services.*
  10.19    --  Agreement and Plan of Merger, dated May 12, 1998, by and
               among Geotrac, Inc., Insurance Management Solutions, Inc.,
               Daniel J. and Sandra White, Bankers Insurance Group, Inc.
               and Bankers Hazard Determination Services, Inc.*
  10.20    --  Employment Agreement, dated July 31, 1998, between Geotrac
               of America, Inc. (as successor to Geotrac, Inc.) and Daniel
               J. White.*
  10.21    --  Term Lease Master Agreement, dated August 6, 1996, between
               IBM Credit Corporation and Bankers Insurance Company,
               assigned by flankers Insurance Company to Insurance
               Management Solutions, Inc., effective April 1, 1998,
               pursuant to Sales and Assignment Agreement, dated May 6,
               1998.*
</TABLE>

                                        51
<PAGE>   54

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             EXHIBIT DESCRIPTION
-------                            -------------------
<C>       <C>  <S>
  10.22    --  Sales and Assignment Agreement, dated May 6, 1998, by and
               between Insurance Management Solutions Group, Inc.,
               Insurance Management Solutions, Inc., Bankers Insurance
               Group, Inc., Bankers Insurance Services, Inc., Bankers Life
               Insurance Company, Southern Rental & Leasing Corporation,
               Bankers Insurance Company and Insurance Management
               Information Services, Inc.*
  10.23    --  Corporate Governance Agreement, dated July 31, 1998, between
               Geotrac, Inc., Daniel J. White and Insurance Management
               Solutions Group, Inc.*
  10.24    --  Tax Indemnity Agreement dated July 31, 1998 between Bankers
               Insurance Group, Inc., Insurance Management Solutions Group,
               Inc. and Daniel J. and Sandra White.*
  10.25    --  Flood Insurance Agreement, dated January 6, 1998, between
               First Community Insurance Company and Keystone Insurance
               Company.*
  10.26    --  Marketing Agreement, dated November 14, 1997, between First
               Community Insurance Company and Nobel Insurance Company.*
  10.27    --  Flood Insurance Agreement, dated February 11, 1998, between
               First Community Insurance Company and Horace Mann Insurance
               Company.*
  10.28    --  Flood Compliance Service Agreement dated November 1, 1996,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and SMS Geotrac) and Mortgage Corporation of America.*
  10.29    --  Flood Compliance Service Agreement dated March 1, 1997,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and SMS Geotrac) and CitFed Mortgage Corporation of
               America.*
  10.30    --  Flood Compliance Service Agreement dated March 1, 1998,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and SMS Geotrac), ABN AMRO North American and certain
               of its affiliates.*
  10.31    --  Flood Compliance Service Agreement dated April 12, 1997,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and SMS Geotrac) and Third Federal Savings.*
  10.32    --  Flood Compliance Service Agreement dated April 9, 1997,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and SMS Geotrac) and MidAm, Inc.*
  10.33    --  Flood Compliance Service Agreement dated December 28, 1995,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc.) and Crestar Bank.*
  10.34    --  Flood Compliance Service Agreement dated April 1, 1996,
               between Geotrac of America, Inc.(as successor to Geotrac,
               Inc. and SMS Geotrac) and ReliaStar Mortgage Corporation.*
  10.35    --  Flood Zone Determination Agreement dated March 25, 1993,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and National Flood Certification Services, Inc.) and
               AIG Consultants, Inc.*
  10.36    --  Flood Zone Determination Agreement dated December 28, 1995,
               between Geotrac of America, Inc. (as successor to Bankers
               Hazard Determination Services, Inc.) and SouthTrust
               Corporation, as amended on June 3, 1997.*
  10.37    --  Flood Zone Determination Agreement dated July 14, 1994,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and National Flood Certification Services, Inc.) and
               SunBank, N.A.*
  10.38    --  Flood Zone Determination Agreement dated November 8, 1993,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and National Flood Certification Services, Inc.) and
               Royal Indemnity Company.*
  10.39    --  Flood Insurance Agreement, dated February 17, 1995, between
               First Community Insurance Company and Armed Forces Insurance
               Exchange, as amended.*
</TABLE>

                                        52
<PAGE>   55

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             EXHIBIT DESCRIPTION
-------                            -------------------
<C>       <C>  <S>
  10.40    --  Flood Insurance Agreement, dated November 17, 1995, between
               First Community Insurance Company and Amica Mutual Insurance
               Company, as amended.*
  10.41    --  Non-Qualified Stock Option Plan.*
  10.42    --  Funding Agreement, dated June 19, 1998, by and between
               Bankers Insurance Group, Inc. and Insurance Management
               Solutions Group, Inc.*
  10.43    --  Assignment of Registered Service Mark ("Floodwriter"), dated
               May 7, 1998, from Bankers Insurance Company to Insurance
               Management Solutions, Inc.*
  10.44    --  Assignment of Registered Service Mark ("Undercurrents"),
               dated May 7, 1998, from Bankers Insurance Company to
               Insurance Management Solutions, Inc.*
  10.45    --  Registration Rights Agreement, dated July 31, 1998, between
               Insurance Management Solutions Group, Inc. and Daniel J. and
               Sandra White.*
  10.46    --  Software License Agreement, effective January 1, 1998,
               between Insurance Management Solutions, Inc., Bankers
               Insurance Group, Inc. and Bankers Insurance Company.*
  10.47    --  Tax Indemnity Agreement dated July 31, 1998 between
               Insurance Management Solutions Group, Inc., Insurance
               Management Solutions, Inc. and Geotrac of America, Inc.,
               including Addendum dated July 31, 1998.*
  10.48    --  Tax Allocation Agreement dated July 31, 1998 between
               Insurance Management Solutions Group, Inc., Insurance
               Management Solutions, Inc. and Geotrac of America, Inc.,
               including Addendum dated July 31, 1998.*
  10.49    --  Articles of Merger filed with the Florida Department of
               State relating to the merger between Bankers Hazard
               Determination Services, Inc. and Geotrac, Inc.*
  10.50    --  Certificate of Merger filed with the Ohio Department of
               State relating to the merger between Bankers Hazard
               Determination Services, Inc. and Geotrac, Inc.*
  10.51    --  Secrecy and Confidentiality Agreement, dated October 8,
               1993, between Geotrac of America, Inc. (formerly Geotrac,
               Inc.) and Kirloskar Computer Services, Ltd.*
  10.52    --  Service Agreement dated December 1, 1998 between Insurance
               Management Solutions, Inc. and Bankers Life Insurance
               Company, including Addendum to Service Agreements dated
               December 11, 1998 and effective January 1, 1999*
  10.53    --  Stock Purchase Agreement, dated July 31, 1997, between
               YoSystems, Inc., Bankers Hazard Determination Services, Inc.
               and Daniel J. and Sandra White.*
  10.54    --  AYO Claims Agreement between Florida Windstorm Underwriting
               Association and Bankers Insurance Group, Inc., dated
               February, 1998.*
  10.55    --  Assignment of AYO Claims Agreement among Bankers Insurance
               Group, Inc., Bankers Insurance Company and Florida Windstorm
               Underwriting Association dated December 15, 1998.*
  10.56    --  Software Transfer Agreement dated September 1, 1998 by and
               among Bankers Insurance Group, Inc., Bankers Insurance
               Company, Insurance Management Solutions, Inc., and First
               Community Insurance Company.*
  10.57    --  Registration Rights Agreement dated January, 1999, between
               Insurance Management Solutions Group, Inc. and J. Douglas
               Branham and Felicia A. Rivas.*
  10.58    --  Stock Purchase Agreement dated December 10, 1998 between
               Colonial Catastrophe Claims Corporation, J. Douglas Branham,
               Felicia A. Rivas, and Insurance Management Solutions Group,
               Inc., including Addenda thereto.*
  10.59    --  Loan Agreement dated December 16, 1998 between Bankers
               Insurance Group, Inc. and Western International Insurance
               Company.*
</TABLE>

                                        53
<PAGE>   56

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             EXHIBIT DESCRIPTION
-------                            -------------------
<C>       <C>  <S>
  10.60    --  Promissory Note of Bankers Insurance Group, Inc. in favor of
               Western International Insurance Company*
  10.61    --  Agreement for Satisfaction of Debt and Capitalization of
               Subsidiary dated December 16, 1998 between Venture Capital
               Corporation and Western International Insurance Company.*
  10.62    --  Plan of Merger dated January 7, 1999 and effective January
               15, 1999 between IMS Colonial, Inc. and Colonial Catastrophe
               Claims Corporation.*
  10.63    --  Flood Insurance Services Agreement, dated January 14, 1999,
               by and between Insurance Management Solutions Group, Inc.
               and Farmers Services Corporation.*
  10.64    --  Funding Agreement, dated February 16, 1999, by and between
               Bankers Insurance Group, Inc., Bankers Insurance Company,
               Venture Capital Corporation and Western International
               Insurance Company.**
  10.65    --  Flood Insurance Services Agreement, dated October 23, 1998,
               by and between Insurance Management Solutions, Inc. and
               Middlesex Mutual Assurance Company.**
  10.66    --  Flood Insurance Services Agreement, effective January 13,
               1999, by and between Insurance Management Solutions, Inc.
               and Island Insurance Companies, Ltd.**
  10.67    --  Lease Agreement, dated February 1, 1999, by and between
               Colonial Real Estate of Dunedin, Inc. and Colonial Claims
               Corporation.**
  10.68    --  Second Addendum to Service Agreements, effective as of April
               1, 1999, by and between Insurance Management Solutions, Inc.
               and each of Bankers Insurance Company, First Community
               Insurance Company and Bankers Security Insurance Company.***
  10.69    --  Technical Support Services Agreement, dated April 1, 1999,
               by and between Insurance Management Solutions, Inc. and
               Bankers Insurance Group, Inc. and its subsidiaries.***
  10.70    --  Lease Agreement, dated September 27, 1999, by and between
               Koger Equity, Inc. and Insurance Management Solutions Group,
               Inc.****
  10.71    --  Insurance Administration Services Agreement, effective as of
               May 3, 2000, by and between Insurance Management Solutions,
               Inc. and Reliance Insurance Company.*****
  10.72    --  Insurance Administration Services Agreement, effective as of
               June 30, 2000, by and between Insurance Management
               Solutions, Inc. and Instant Insurance Holding, Inc.*****
  10.73    --  Development Services Agreement, effective as of June 30,
               2000, by and between Insurance Management Solutions, Inc.
               and Instant Insurance Holding, Inc.*****
  10.74    --  Insurance Administration Services Agreement (Interim),
               effective as of June 22, 2000, by and between Insurance
               Management Solutions, Inc. and Instant Insurance Holding,
               Inc.*****
  10.75    --  Insurance Administration Services Agreement Termination and
               Interim Services Addendum, effective as of August 1, 2000,
               by and between Insurance Management Solutions, Inc.,
               International Catastrophe Insurance Managers, LLC and
               Clarendon National Insurance Company, including all
               schedules and exhibits thereto.******
  10.76    --  Insurance Management Solutions Group, Inc. 2000 Stock
               Incentive Plan
  10.77    --  Insurance Management Solutions Group, Inc. 2000 Non-Employee
               Director Stock Plan
  10.78    --  Employment Agreement, dated August 19, 1998, between Robert
               G. Gantley and Insurance Management Solutions, Inc.
  10.79    --  Release and Separation Agreement, dated April 12, 2001,
               between Christopher P. Breakiron and Insurance Management
               Solutions Group, Inc.
  10.80    --  Consulting Agreement, dated April 12, 2001, between
               Christopher P. Breakiron and Insurance Management Solutions
               Group, Inc.
</TABLE>

                                        54
<PAGE>   57

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             EXHIBIT DESCRIPTION
-------                            -------------------
<C>       <C>  <S>
  10.81    --  Asset Purchase Agreement, including Indemnification
               Agreement, Bill of Sale and Assignment of Flood Monitoring
               Agreement, effective July 31, 2000, between IMS Direct, Inc.
               and Bankers Insurance Services, Inc.
  10.82    --  Letter Agreement, dated April 13, 2001, by and between
               Insurance Management Solutions, Inc., Bankers Insurance
               Group, Inc., Bankers Insurance Company, First Community
               Insurance Company and Bankers Security Insurance Company.
  10.83    --  Settlement Agreement, dated February 20, 2001, by and
               between Instant Insurance Holdings, Instant Auto Insurance
               Company and Insurance Management Solutions, Inc.
  10.84    --  Commitment Letter to advance service fee payments, dated
               April 13, 2001, between Insurance Management Solutions, Inc.
               and Bankers Insurance Group, Inc.
  21.1     --  List of subsidiaries of Insurance Management Solutions
               Group, Inc.*
  24.1     --  Power of Attorney relating to subsequent amendments
               (included on signature page hereto).
</TABLE>

---------------

* Previously filed as part of the Company's Form S-1 Registration Statement
  (Reg. No. 333-57747) originally filed on June 28, 1998, as amended, and
  incorporated by reference herein.
** Previously filed as part of the Company's Annual Report on Form 10-K for the
   year ended December 31, 1998, and incorporated by reference herein.
*** Previously filed as part of the Company's Form 10-Q for the quarter ended
    June 30, 1999, and incorporated by reference herein.
**** Previously filed as part of the Company's Form 10-K for the year ended
     December 31, 1999, and incorporated by reference herein.
***** Previously filed as part of the Company's Form 10-Q for the quarter ended
      June 30, 2000, and incorporated by reference herein.
****** Previously filed as part of the Company's Form 10-Q for the quarter ended
       September 30, 2000, and incorporated by reference herein.

     Exhibits 10.1, 10.2, 10.3, 10.11, 10.20, 10.41, 10.76, 10.77, 10.78, 10.79
and 10.80 represent management contracts and compensatory plans.

     (b) Reports on Form 8-K.

          The Company filed a Report on Form 8-K on November 29, 2000 reporting
     that it had received notification from The Nasdaq Stock Market that the
     Company's common stock would be delisted from trading on the Nasdaq
     National Market at the opening of business on February 22, 2001. Such
     notification indicated that this action was being taken by Nasdaq as a
     result of the failure of the Company's Common Stock to satisfy the
     maintenance criteria for continued listing on the Nasdaq National Market.

                                        55
<PAGE>   58

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. CONSOLIDATED
  FINANCIAL STATEMENTS
  Report of Independent Certified Public Accountants........    57
  Consolidated Balance Sheets as of December 31, 1999 and
     2000...................................................    58
  Consolidated Statements of Operations for the years ended
     December 31, 1998, 1999 and 2000.......................    59
  Consolidated Statement of Shareholders' Equity for the
     years ended December 31, 1998, 1999 and 2000...........    60
  Consolidated Statements of Cash Flows for the years ended
     December 31, 1998, 1999
     and 2000...............................................    61
  Notes to Consolidated Financial Statements................    62
  Report of Independent Certified Public Accountants on
     Schedule 1.............................................    85
  Schedule 1 -- Condensed Financial Information of
     Registrant.............................................    86
  Notes to Condensed Financial Information of Registrant....    89
</TABLE>

                                        56
<PAGE>   59

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of
Insurance Management Solutions Group, Inc.

     We have audited the accompanying consolidated balance sheets of Insurance
Management Solutions Group, Inc. and subsidiaries as of December 31, 1999 and
2000, and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the three years in the period ended December
31, 2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Insurance Management Solutions Group, Inc. and subsidiaries as of December 31,
1999 and 2000, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America.

                                          GRANT THORNTON LLP

Tampa, Florida
April 13, 2001

                                        57
<PAGE>   60

                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                              -------------------------
                                                                 1999          2000
                                                              -----------   -----------
<S>                                                           <C>           <C>
                           ASSETS
Current Assets:
  Cash and cash equivalents.................................  $ 4,702,861   $ 5,192,161
  Accounts receivable, net..................................    3,621,714     3,789,288
  Due from affiliates.......................................    2,920,543     2,615,699
  Prepaid expenses and other assets.........................    1,572,976     1,573,037
                                                              -----------   -----------
          Total current assets..............................   12,818,094    13,170,185
Property and equipment, net.................................    7,225,494     9,116,552
Other Assets:
  Goodwill, net.............................................   16,257,663    15,352,001
  Customer contracts, net...................................    1,116,667       916,667
  Deferred tax assets, net..................................    1,063,366       682,081
  Capitalized software costs, net...........................      976,225     1,044,846
  Other.....................................................       33,398       483,216
                                                              -----------   -----------
          Total assets......................................  $39,490,907   $40,765,548
                                                              ===========   ===========

            LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Current portion of long-term debt.........................  $   481,637   $   219,857
  Accounts payable, trade...................................      990,495     2,370,825
  Due to affiliates.........................................       12,833            --
  Employee related accrued expenses.........................    2,294,858     1,693,823
  Other accrued expenses....................................    1,293,060     2,008,201
  Income taxes payable......................................      413,241       557,676
  Deferred revenue..........................................      214,891            --
                                                              -----------   -----------
          Total current liabilities.........................    5,701,015     6,850,382
Long-term debt, less current portion........................      219,857            --
Deferred revenue............................................      684,915       802,578
Commitments and Contingencies
Shareholders' Equity:
  Preferred Stock, $.01 par value; 20,000,000 shares
     authorized, no shares issued and outstanding...........           --            --
  Common Stock, $.01 par value; 100,000,000 shares
     authorized, 12,678,743 and 12,800,261 shares issued and
     outstanding at December 31, 1999 and 2000,
     respectively...........................................      126,787       128,002
  Additional paid-in capital................................   26,810,282    27,545,901
  Retained earnings.........................................    5,948,051     5,438,685
                                                              -----------   -----------
          Total shareholders' equity........................   32,885,120    33,112,588
                                                              -----------   -----------
          Total liabilities and shareholders' equity........  $39,490,907   $40,765,548
                                                              ===========   ===========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                        58
<PAGE>   61

                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                          ---------------------------------------
                                                             1998          1999          2000
                                                          -----------   -----------   -----------
<S>                                                       <C>           <C>           <C>
Revenues:
  Outsourcing services -- affiliated....................  $36,068,944   $41,465,498   $37,943,501
  Outsourcing services..................................    1,989,306    10,702,732     7,973,651
  Flood zone determination services.....................   24,454,558    18,540,543    16,137,943
  Flood zone determination services -- affiliated.......    1,279,689       620,320       929,002
                                                          -----------   -----------   -----------
          Total revenues................................   63,792,497    71,329,093    62,984,097
                                                          -----------   -----------   -----------
Expenses:
  Cost of outsourcing services..........................   26,874,609    37,427,886    36,766,042
  Cost of flood zone determination services.............   11,131,254     8,102,234     7,664,052
  Selling, general and administrative...................    8,381,290    11,856,833    11,205,336
  Management services from Parent.......................    3,259,712     2,255,810     1,885,022
  Deferred compensation (non-recurring item)............      728,069            --            --
  Depreciation and amortization.........................    4,311,011     5,498,007     5,342,099
                                                          -----------   -----------   -----------
          Total expenses................................   54,685,945    65,140,770    62,862,551
                                                          -----------   -----------   -----------
Operating Income........................................    9,106,552     6,188,323       121,546
                                                          -----------   -----------   -----------
Minority Interest.......................................     (472,803)           --            --
                                                          -----------   -----------   -----------
Other Income (Expense):
  Interest income.......................................      455,995       349,680       288,715
  Interest expense......................................   (2,194,353)     (809,383)      (70,244)
                                                          -----------   -----------   -----------
          Total other income (expense)..................   (1,738,358)     (459,703)      218,471
Income Before Provision for Income Taxes................    6,895,391     5,728,620       340,017
Provision for Income Taxes..............................    3,042,400     2,533,560       849,383
                                                          -----------   -----------   -----------
Net Income (Loss).......................................  $ 3,852,991   $ 3,195,060   $  (509,366)
                                                          ===========   ===========   ===========
Net Income (Loss) Per Common Share......................  $       .38   $       .26   $      (.04)
                                                          ===========   ===========   ===========
Weighted average common shares outstanding..............   10,264,253    12,448,183    12,793,953
                                                          ===========   ===========   ===========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                        59
<PAGE>   62

                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                           ADDITIONAL
                                                 COMMON      PAID-IN      RETAINED
                                                 STOCK       CAPITAL      EARNINGS        TOTAL
                                                --------   -----------   -----------   -----------
<S>                                             <C>        <C>           <C>           <C>
Balance at December 31, 1997..................  $100,000   $    69,991   $        --   $   169,991
  Cash dividends to Parent....................        --            --    (1,100,000)   (1,100,000)
  Issuance of Common Stock as partial
     consideration for the acquisition of
     Geotrac, Inc.............................     5,242     5,760,939            --     5,766,181
  Net income..................................        --            --     3,852,991     3,852,991
                                                --------   -----------   -----------   -----------
Balance at December 31, 1998..................   105,242     5,830,930     2,752,991     8,689,163
  Issuance of Common Stock as partial
     consideration for the acquisition of
     Colonial Claims..........................     1,545     1,698,455            --     1,700,000
  Initial public offering of Common Stock, net
     of offering costs........................    20,000    19,143,897            --    19,163,897
  Compensation expense related to stock
     options issued to non-employees..........        --       137,000            --       137,000
  Net income..................................        --            --     3,195,060     3,195,060
                                                --------   -----------   -----------   -----------
Balance at December 31, 1999..................   126,787    26,810,282     5,948,051    32,885,120
  Issuance of Common Stock in connection with
     earn-out computation for Colonial Claims
     acquisition..............................     1,215       298,785            --       300,000
  Non-cash compensation expense related to
     phantom stock plans......................        --       338,200            --       338,200
  Compensation expense related to stock
     options issued to non-employees..........        --        98,634            --        98,634
  Net loss....................................        --            --      (509,366)     (509,366)
                                                --------   -----------   -----------   -----------
Balance at December 31, 2000..................  $128,002   $27,545,901   $ 5,438,685   $33,112,588
                                                ========   ===========   ===========   ===========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                        60
<PAGE>   63

                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31,
                                                              ----------------------------------------
                                                                 1998           1999          2000
                                                              -----------   ------------   -----------
<S>                                                           <C>           <C>            <C>
Cash Flows from Operating Activities:
  Net income (loss).........................................  $ 3,852,991   $  3,195,060   $  (509,366)
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
    Depreciation and amortization...........................    4,311,011      5,498,007     5,342,099
    Depreciation and amortization of Geotrac prior to July
       1998 acquisition.....................................     (712,990)            --            --
    Loss on disposal of property and equipment..............       37,914        350,785       201,540
    Minority interest in earnings of Geotrac, Inc...........     (485,034)            --            --
    Write-off of deferred financing costs...................           --        244,752            --
    Compensation expense related to non-employee stock
       options..............................................           --        137,000        98,634
    Non-cash compensation expense related to phantom stock
       plans................................................           --             --       338,200
    Deferred income taxes, net..............................     (382,191)      (202,564)      381,285
    Changes in assets and liabilities:
       Accounts receivable..................................     (238,449)       928,223      (167,574)
       Income taxes recoverable.............................   (1,148,902)     1,148,902            --
       Prepaid expenses and other assets....................     (574,122)      (388,639)      108,867
       Other assets.........................................     (257,648)      (199,673)     (697,118)
       Accounts payable, trade..............................      252,012        140,996     1,380,330
       Employee related accrued expenses....................     (695,910)       490,181      (601,035)
       Other accrued expenses...............................      566,625       (446,468)    1,015,141
       Income taxes payable.................................   (2,443,058)       413,241       144,435
       Deferred revenue.....................................      333,313         33,313       (97,228)
                                                              -----------   ------------   -----------
         Net cash provided by operating activities..........    2,415,562     11,343,116     6,938,210
                                                              -----------   ------------   -----------
Cash Flows from Investing Activities:
  Acquisition of Geotrac, net of cash acquired..............    2,797,008             --            --
  Purchases of property and equipment.......................   (1,613,518)    (3,185,028)   (5,789,690)
  Payment of acquisition debt...............................   (1,420,530)      (500,000)           --
  Issuance of notes receivable..............................           --             --      (560,000)
  Collection of notes receivable............................           --             --        90,406
  Acquisition of Colonial Claims, net of cash acquired......           --          1,092            --
  Payment of dividend to prior Colonial Claims
    shareholders............................................           --       (670,000)           --
                                                              -----------   ------------   -----------
         Net cash used in investing activities..............     (237,040)    (4,353,936)   (6,259,284)
                                                              -----------   ------------   -----------
Cash Flows from Financing Activities:
  Net proceeds received from initial public offering........           --     19,163,897            --
  Repayment of debt.........................................   (5,251,662)    (9,795,989)     (481,637)
  Cash dividends paid to Parent.............................   (1,100,000)            --            --
  Repayment of affiliated notes and accrued interest........           --    (14,708,420)           --
  Collection of affiliated note and interest receivable.....           --      5,271,406            --
  Net advances to (from) affiliates.........................    6,680,187     (4,086,080)      292,011
  Deferred offering costs...................................     (753,250)            --            --
                                                              -----------   ------------   -----------
         Net cash used in financing activities..............     (424,725)    (4,155,186)     (189,626)
                                                              -----------   ------------   -----------
Increase in Cash and Cash Equivalents.......................    1,753,797      2,833,994       489,300
Cash and Cash Equivalents, beginning of period..............      115,070      1,868,867     4,702,861
                                                              -----------   ------------   -----------
Cash and Cash Equivalents, end of period....................  $ 1,868,867   $  4,702,861   $ 5,192,161
                                                              ===========   ============   ===========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                        61
<PAGE>   64

                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- DESCRIPTION OF ORGANIZATION AND BUSINESS

     Insurance Management Solutions Group, Inc. ("IMSG") is a holding company
that was incorporated in the State of Florida in December 1996 by its Parent,
Bankers Insurance Group ("BIG" or the "Parent"), which contributed to IMSG two
of its wholly-owned operating subsidiaries, Insurance Management Solutions, Inc.
("IMS") and Bankers Hazard Determination Services, Inc. ("BHDS"). In July 1997,
the Company acquired a 49% interest in Geotrac, Inc. and, in July 1998 acquired
the remaining 51% interest. Geotrac was subsequently merged into BHDS with the
surviving company being known as Geotrac of America, Inc. ("Geotrac of
America"). In January, 1999, the Company acquired Colonial Claims Catastrophe
Corporation ("Colonial"). IMSG, IMS, Geotrac of America and Colonial are
hereinafter collectively known as the "Company".

     The Company operates in two major business segments: providing outsourcing
services to the property and casualty insurance industry with an emphasis on
flood insurance; and providing flood zone determinations primarily to insurance
companies and financial institutions. The Company's outsourcing services, which
are provided by IMS and Colonial, include policy and claims administration
(policy issuance, billing and collection functions, claims adjusting and
processing) and information technology services. The Company's flood zone
determination services are provided by Geotrac of America.

     The Company is substantially dependent on the business of its affiliated
insurance companies under the common control of BIG as the Company derives a
substantial portion of its revenue from outsourcing services provided to these
affiliated companies and BIG.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of Insurance
Management Solutions Group, Inc. and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation. In 1998, the operations of Geotrac for the year ended December
31, 1998 are consolidated in the Company's statement of operations. The minority
interest deduction in the statement of operations represents the net income of
Geotrac allocable to the 51% interests held by the other stockholders during the
six months ended June 30, 1998, prior to the Company acquiring the remaining 51%
interest in Geotrac.

USE OF ESTIMATES

     The preparation of the financial statements conforms with accounting
principles generally accepted in the United States of America and require
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates and assumptions.

CASH AND CASH EQUIVALENTS

     The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. At December 31, 1999
and 2000, cash equivalents consisted of U.S. Treasury bills, certificates of
deposit and overnight repurchase agreements.

                                        62
<PAGE>   65
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ACCOUNTS RECEIVABLE TRADE AND CONCENTRATION OF CREDIT RISK

     Accounts receivable, trade represents amounts due from insurance companies
and financial institutions related to flood zone determinations and claims
adjusting services performed. Credit is granted to customers based on
management's assessment of their credit worthiness. Customer deposits are
required in certain instances. The allowance for doubtful accounts totaled
approximately $250,000 and $232,000 as of December 31, 1999 and 2000,
respectively. Net bad debt expense totaled $134,733, $301,813, and $195,634
during the years ended December 31, 1998, 1999, and 2000, respectively.

PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are provided for using the
straight-line method over the assets' estimated service lives. Accelerated
methods are used for tax purposes.

GOODWILL

     Goodwill is being amortized using the straight-line method over twenty
years. The amortization period was determined based on various factors including
the nature of the product or service provided, the Company's market position and
historical and projected operating results. Accumulated amortization at December
31, 1999 and 2000 was $1,434,296 and $2,339,959, respectively.

CUSTOMER CONTRACTS

     Customer contracts are being amortized using the straight-line method over
seven years. The amortization period, which does not materially differ from the
underlying contract lives, was determined based on historical and expected
contract duration periods as well as the nature of the products and services
provided. Accumulated amortization at December 31, 1999 and 2000 was $300,000
and $500,000, respectively.

CAPITALIZED SOFTWARE COSTS

     In accordance with Statement of Position 98-1 "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"), the
Company capitalizes certain qualifying software development costs incurred
during the application development stage. Amortization is recorded using the
straight-line method over the service life of the software or the term of the
customer contract to which the software relates, which ranges from one to five
years. Accumulated amortization at December 31, 1999 and 2000 was $247,497 and
$518,055, respectively.

IMPAIRMENT OF LONG-LIVED ASSETS

     The Company evaluates the recoverability of its long-lived assets
(including goodwill) in accordance with Statement of Financial Accounting
Standards No. 121, ("SFAS No. 121"), "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of". SFAS No. 121
requires long-lived assets to be reviewed for impairment whenever circumstances
indicate that the carrying amount of an asset may not be recoverable. Factors
considered include current operating results, trends, and anticipated
undiscounted future cash flows. An impairment loss is recognized to the extent
the sum of discounted (using the Company's incremental borrowing rate) estimated
future cash flows (over a period of less than 20 years) expected to result from
the use of the asset is less than the carrying value. No impairment exists for
all periods presented.

                                        63
<PAGE>   66
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

REVENUE RECOGNITION AND DEFERRED REVENUE

  Outsourcing Services Revenues

     Revenue generated from outsourcing services is recognized as earned when
services are provided.

     In 1998, the affiliated service agreements as they pertain to claims
administration, resulted in deferred revenue totaling $214,891 being recorded as
the related fees are billed and payable based on a percentage of the customers'
earned premiums, which is in advance of a portion of the total claims expense
that were expected to be incurred by the Company. During 1999, the Company
determined that the majority of claims being settled on behalf of its affiliated
customers were actually settled within or shortly after the expiration of the
policy term for which the Company was receiving a service fee based upon the
underlying earned premium. As such, during 1999, the Company discontinued its
practice of deferring claims revenue and amortized the remaining deferred
revenue balance, which totaled $214,891 as of December 31, 1999, ratably over
the 2000 calendar year.

  Flood Zone Determination Revenues

     The Company's flood zone revenues are principally derived from flood zone
determination services and life-of-loan monitoring services. Flood zone
determinations involve the Company ascertaining and certifying to a property's
flood zone classification. Revenues for these services are recognized upon
completion of each flood zone determination, as each determination is completed
within a short period of time.

     The Company receives an up-front, non-refundable fee to provide life of
loan monitoring of flood zone determinations whereby the Company notifies its
customers of changes in previously issued flood zone determinations. The Company
defers a portion of the fee associated with this future obligation and amortizes
these amounts using the straight-line method over the average life of the
underlying loan, approximately seven years.

INCOME TAXES

     The Company accounts for income taxes on the liability method, as provided
by SFAS No. 109, "Accounting for Income Taxes." Deferred tax assets and
liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities as measured by the enacted tax
rates which will be in effect when these differences reverse. An allowance is
recognized when it is more likely than not that any or all of a deferred tax
asset will not be realized. Deferred tax expense is the result of changes in
deferred tax assets and liabilities.

                                        64
<PAGE>   67
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NET INCOME (LOSS) PER COMMON SHARE

     Net income (loss) per common share, which represents both basic and diluted
earnings per share ("EPS") since no dilutive securities were outstanding for all
periods presented, is computed by dividing net income (loss) by the weighted
average common shares outstanding. The following table reconciles the numerator
and denominator of the basic and dilutive EPS computation:

<TABLE>
<CAPTION>
                                                           YEAR ENDED DECEMBER 31,
                                                    -------------------------------------
                                                       1998         1999         2000
                                                    ----------   ----------   -----------
<S>                                                 <C>          <C>          <C>
Numerator:
  Net income (loss)...............................  $3,852,991   $3,195,060   $  (509,366)
                                                    ==========   ==========   ===========
Denominator:
  Weighted average number of Common Shares used in
     basic EPS....................................  10,264,253   12,448,183    12,793,953
  Diluted stock options...........................          --           --            --
                                                    ----------   ----------   -----------
  Weighted average number of Common Shares and
     diluted potential Common Shares used in
     diluted EPS..................................  10,264,253   12,448,183    12,793,953
                                                    ==========   ==========   ===========
</TABLE>

     As of December 31, 1999 and 2000, options to purchase 453,500 and 594,000
shares, respectively, of Common Stock were outstanding but were not included in
the computation of diluted earnings per share as the inclusion of such shares
would have an anti-dilutive effect.

STOCK BASED COMPENSATION

     The Company accounts for stock based compensation awards to its employees
pursuant to Accounting Principles Board Opinion No. 25, "Accounting For Stock
Issued to Employees", and its related interpretations which prescribe the use of
the intrinsic value based method. However, the Company has adopted the
disclosure requirements of SFAS No. 123, "Accounting for Stock Based
Compensation."

     For awards for other than employees, the Company accounts for stock based
compensation awards pursuant to the fair value based method of SFAS No. 123.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying amount of the Company's financial instruments, which include
cash and cash equivalents, accounts receivable, due from affiliates, accounts
payable, due to affiliates and debt approximate fair value due to the short
maturity of those instruments. The Company considers the fixed rate debt
instruments to be representative of current market interest rates and,
accordingly, the recorded amounts approximate their present fair market value.

RECENT ACCOUNTING PRONOUNCEMENTS

     In December 1999, the SEC issued Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 summarizes
the SEC's views in applying generally accepted accounting principles to revenue
recognition. The adoption of SAB 101 had no impact on the Company's operating
results or financial position.

     In April 2000, the FASB issued FASB Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation" ("FIN 44"), which contains
rules designed to clarify the application of Accounting Principles Board Opinion
No. 25. FIN 44 became effective on July 1, 2000 at which time the

                                        65
<PAGE>   68
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company adopted the interpretation. The adoption of FIN 44 had no impact on the
Company's operating results and financial position.

NOTE 3 -- ACQUISITIONS

GEOTRAC, INC.

     On July 31, 1997, the Company, through its subsidiary, BHDS, invested cash
in the amount of $6,750,000 in YoSystems in exchange for 490 shares of common
stock issued by YoSystems, representing a 49% equity interest. On July 31, 1997,
YoSystems concurrently acquired all of the issued and outstanding shares of
capital stock of SMS Geotrac, Inc. SMS Geotrac, Inc. merged into YoSystems, with
YoSystems becoming the surviving entity, which then changed its name to Geotrac,
Inc. In July 1998, the Company acquired the remaining 51% of the outstanding
shares of Geotrac, Inc.'s common stock in exchange for $7,994,250 consisting of:

<TABLE>
<S>                                                           <C>
524,198 shares of the Company's Common Stock valued at
  $11.00 per share, the initial public offering price.......  $5,766,181
Promissory note.............................................   1,500,000
Cash........................................................     728,069
                                                              ----------
                                                              $7,994,250
                                                              ==========
</TABLE>

     The following unaudited pro forma consolidated results of operations for
the year ended December 31, 1998 is presented as if the acquisition of Geotrac,
Inc. had been made on January 1, 1998. The unaudited pro forma information
reflects the additional goodwill amortization and interest expense that would
have been incurred if the Company had purchased Geotrac, Inc. on January 1,
1998. These pro forma results are not necessarily indicative of the results of
operations that would have occurred had the purchase been made at January 1,
1998, or the future results of the consolidated operations (in thousands, except
per share data):

<TABLE>
<S>                                                           <C>
Revenue.....................................................  $63,792
Operating income............................................    9,758
Net income..................................................    4,610
Net income per common share.................................  $   .44
</TABLE>

     In addition, the Company entered into a Corporate Governance Agreement with
Geotrac and Dan White ("Mr. White"), its president and former majority
shareholder (the "former majority shareholder"), setting forth certain terms and
conditions upon which Geotrac will operate following the merger. The Corporate
Governance Agreement provides, in part, that, for so long as the former majority
shareholder owns stock in the Company or Geotrac, or has an option to purchase
stock in Geotrac, (i) the Company will vote all of its shares in Geotrac to fix
and maintain the number of directors on the Geotrac Board of Directors at five,
(ii) the Company will vote its shares in Geotrac to elect as directors of
Geotrac two persons designated by the former majority shareholder, (iii) the
termination of the former majority shareholder as an employee of Geotrac will
require the vote of four out of five members of the Board of Directors, and (iv)
certain actions by Geotrac will require the unanimous approval of the Geotrac
Board of Directors, including any merger or consolidation, the payment of
distributions or management or similar fees to the Company or its subsidiaries
and affiliates, the sale or issuance of Geotrac stock, and the sale of Geotrac
assets outside the ordinary course of business to anyone other than an affiliate
of Geotrac. The former majority shareholder also has a right of first refusal to
purchase the assets of Geotrac in the event such assets are to be sold.

                                        66
<PAGE>   69
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

COLONIAL CATASTROPHE

     Effective January 7, 1999, the Company, through a wholly-owned subsidiary,
acquired all of the issued and outstanding capital stock of Colonial Catastrophe
Claims Corporation, a Florida corporation ("Colonial Catastrophe"), in exchange
for (i) 154,545 shares of Common Stock, (ii) cash in the amount of $500,000,
(iii) a promissory note in the principal amount of $500,000, and (iv) an
earn-out payment of $300,000, which was paid during February, 2000 in 121,518
shares of Common Stock, based upon achieving a target income before taxes of
Colonial Claims for the year ended December 31, 1999. On January 15, 1999,
Colonial Catastrophe was merged into the acquiring subsidiary and the name of
the acquiring subsidiary was changed to "Colonial Claims Corporation"
(hereinafter "Colonial Claims"). The acquisition was accounted for as a purchase
in accordance with Accounting Principles Board Opinion No. 16 "Business
Combinations". The results of operations of Colonial Claims is included in the
accompanying financial statements since the date of acquisition. The total cost
of the acquisition, including the $300,000 earn-out payment made in February,
2000, was $3.0 million which exceeded the fair value of the acquired net assets
by $2.6 million. Such excess is being amortized on a straight-line basis over
twenty years.

     The following unaudited pro forma consolidated results of operations for
the year ended December 31, 1998 is presented as if the acquisition of Colonial
Catastrophe had been made on January 1, 1998. The unaudited pro forma
information reflects the additional goodwill amortization that would have been
incurred if the Company had purchased Colonial Catastrophe on January 1, 1998.
These pro forma results are not necessarily indicative of the results of
operations that would have occurred had the purchase been made at January 1,
1998 or the future results of the consolidated operations (in thousands, except
per share data):

<TABLE>
<S>                                                           <C>
Revenue.....................................................  $70,010
Operating income............................................   10,110
Net income..................................................    4,421
Net income per common share.................................  $   .42
</TABLE>

NOTE 4 -- RESTRICTED NET ASSETS AND RETAINED EARNINGS

     As discussed in Note 3. "Acquisitions", the Company acquired its Geotrac
subsidiary through a series of transactions. In connection with the acquisition
of Geotrac, the Company entered into a Corporate Governance Agreement, dated
July 31, 1998, with Geotrac and Mr. White, setting forth certain terms and
conditions pertaining to the operation of Geotrac. This agreement contains a
provision, among other things, that restricts the Company's ability to make
distributions or transfer funds from Geotrac by means of intercompany loans,
advances or dividends without the unanimous approval of the Geotrac Board of
Directors. Mr. White is presently a director of Geotrac. Therefore, pursuant to
the Corporate Governance Agreement, Mr. White may impede the Company's ability
to access excess cash balances retained by its Geotrac subsidiary, even if all
of the other directors of Geotrac were to approve the distribution thereof to
the Company. To date, the Company has been able to access Geotrac's excess cash
when necessary, primarily through the prepayment of outstanding intercompany
indebtedness. No assurances can be given, however, that the Company will be able
to obtain available cash from Geotrac. If the Company is unable to do so, it
ultimately could have a material adverse effect on the Company's business,
financial condition and results of operations.

     As of December 31, 2000, the Company had total consolidated net assets of
approximately $33.1 million of which $20.8 million represents the net assets of
Geotrac. The tangible net assets of Geotrac primarily consist of: cash of $2.8
million; other current assets of $4.0 million, including $1.1 million due from
affiliates; and current liabilities of $3.0 million, including $1.1 million due
to affiliates. As a result of the foregoing restriction of Geotrac's net assets,
the Company's consolidated retained earnings as of December 31, 2000, which
totaled $5.4 million, is not completely available for dividend distribution.
However, the Company did

                                        67
<PAGE>   70
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

not pay any dividends in either 1999 or 2000 and does not anticipate declaring
or paying cash dividends in the foreseeable future. As such, all future earnings
are expected to be retained for operating purposes.

NOTE 5 -- PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                                              LIFE     --------------------------
                                                             (YEARS)      1999           2000
                                                             -------   -----------   ------------
<S>                                                          <C>       <C>           <C>
Computer equipment and software............................    3-5     $ 9,707,957   $ 12,980,586
Office furniture and equipment.............................      5       2,719,441      2,826,388
Leasehold improvements.....................................      5         181,045        794,621
Maps and map database......................................      5       2,087,570      2,897,899
Automobiles................................................      5          23,608         20,239
                                                                       -----------   ------------
                                                                        14,719,621     19,519,733
Less -- accumulated depreciation and amortization..........             (7,494,127)   (10,403,181)
                                                                       -----------   ------------
                                                                       $ 7,225,494   $  9,116,552
                                                                       ===========   ============
</TABLE>

     Maps and map database, which are used as a basis for making flood zone
determinations, include the capitalized costs of purchasing maps as well as the
direct labor cost of converting the maps to digitized computer files.

     At December 31, 1999 and 2000, property and equipment includes $1,603,784
and $1,548,151 of assets, respectively, and $966,074 and $1,327,484 of
accumulated amortization, respectively, recorded under capital leases.

     Depreciation and amortization expense was $2,941,602, $4,132,898 and
$3,697,090 in 1998, 1999 and 2000, respectively.

NOTE 6 -- OTHER ACCRUED EXPENSES

     Other accrued expenses consisted of the following as of December 31, 1999
and 2000:

<TABLE>
<CAPTION>
                                                                 1999         2000
                                                              ----------   ----------
<S>                                                           <C>          <C>
Adjuster expenses payable...................................  $  539,062   $  281,697
Contract termination settlement.............................          --      800,000
Operating lease rebate......................................          --      228,595
Accrued earn-out payable....................................     300,000           --
Accrued professional fees...................................      80,000      265,000
Taxes payable other than income.............................     237,440      157,308
Commission payable..........................................      61,557       64,305
Other accrued expenses......................................      75,001      211,296
                                                              ----------   ----------
                                                              $1,293,060   $2,008,201
                                                              ==========   ==========
</TABLE>

NOTE 7 -- NOTES RECEIVABLE

     In August, 2000 the Company loaned $500,000 to an unaffiliated customer in
connection with the termination of the outsourcing services agreement between
the Company and such unaffiliated customer and received in return a $500,000
promissory note from such entity. The note provides for monthly payments equal
to the greater of (a) ten thousand dollars ($10,000), or (b) one and one-half
percent (1 1/2%) of net written premium (as defined) issued by such customer on
or after August 1, 2000. In accordance with the terms of the note, ninety-two
and one-half percent (92 1/2%) of each monthly payment shall be applied to the
reduction

                                        68
<PAGE>   71
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of the outstanding principal balance and seven and one-half percent (7 1/2%)
shall be interest under the note. The note is collateralized by all of the
borrower's assets.

     The current and non-current portions of the note, which totaled $120,000
and $286,739, respectively, at December 31, 2000, are included in "Prepaid
expenses and other assets" and "Other assets," respectively, in the accompanying
consolidated balance sheet.

NOTE 8 -- LONG-TERM DEBT

     The Company leases various computer related equipment under capital leases
which expire in 2001. The outstanding balance under the capital leases as of
December 31, 1999 and 2000 totaled $701,494 and $219,857, respectively (net of
interest of approximately $40,000 and $3,600, respectively).

     In June, 1999, the Company entered into a revolving line of credit
agreement ("LOC") with a financial institution (the "Bank") that provides for
borrowings of up to two times the rolling four quarter earnings before interest,
taxes, depreciation and amortization ("EBITDA"), but in no event more than
$12,000,000. At December 31, 1999, no amounts were outstanding under the LOC. In
December, 2000, the Company received notification from the Bank that it would no
longer honor any requests by the Company for advances under the LOC due to the
fact that the Bank believed the Company had experienced a material adverse
change in its financial condition. To date, the Company has been unable to
secure a new LOC upon acceptable terms. Although management continues to seek
such an arrangement, no assurances can be given that the Company will be able to
secure a new LOC.

NOTE 9 -- SHAREHOLDERS' EQUITY

INITIAL PUBLIC OFFERING

     In February 1999, the Company completed an initial public offering ("IPO")
of 3,350,000 shares of Common Stock at a price of $11 per share. Of the
3,350,000 shares sold in the IPO, 1,350,000 were sold by the Selling Shareholder
and the remaining 2,000,000 shares were sold by the Company. The offering
generated net proceeds to the Company of $19,164,000, after deducting offering
expenses of approximately $1,296,000 paid by the Company. Such offering expenses
were charged to additional paid-in capital against proceeds from the IPO.

PREFERRED STOCK

     The Company is authorized to issue 20,000,000 shares of Preferred Stock,
$.0l par value per share. The Board of Directors has the authority, without any
further vote or action by the Company's shareholders, to issue Preferred Stock
in one or more series and to fix the number of shares, designations, relative
rights (including voting rights), preferences, and limitations of those series
to the full extent now or hereafter permitted by Florida law. The Company has no
present intention to issue shares of Preferred Stock, although it may determine
to do so in the future.

COMPENSATION EXPENSE

     During the year ended December 31, 2000, the Company recognized
approximately $338,000 in additional compensation expense (of which
approximately $145,000 relates to 1999), resulting from the vesting of benefits
payable to certain current and former officers and directors of the Company
under the Amended and Completely Restated Phantom Stock Plan (the "BFC Plan") of
Bankers Financial Corporation ("BFC"), the parent corporation of BIG, and the
Amended and Restated Phantom Stock Plan (the "VCC Plan") of Venture Capital
Corporation ("VCC"). The foregoing compensation charge is a non-recurring,
non-cash item to the Company, as all such benefits under such plans were fully
vested as of September 30,

                                        69
<PAGE>   72
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2000 and constitute the respective obligations of BFC and VCC, not the Company.
In addition, the offset to such compensation expense is an increase to
additional paid-in capital, since the ultimate obligations under these plans are
that of BFC and VCC, respectively, and not of the Company.

LONG TERM INCENTIVE PLANS

     The Long-Term Incentive Plan (the "1999 Incentive Plan"), approved by the
Company's Board of Directors and shareholders, provides for the grant of
incentive or nonqualified stock options to purchase up to 875,000 shares of
Common Stock. All such options are granted at fair market value or above and
expire on the tenth anniversary from the date of grant. Options shall become
exercisable 60% after three years, 20% after four years and 20% after five
years. As of December 31, 2000, options to purchase 570,000 shares are
outstanding under the 1999 Incentive Plan.

     In October, 2000, the Company's Board of Directors adopted the 2000 Stock
Incentive Plan, subject to shareholder approval. The 2000 Stock Incentive Plan
provides for the grant of incentive or nonqualified stock options, stock
appreciation rights, and other stock based awards. No more than 1,000,000 shares
of Common Stock, plus an additional 750,000 shares from the 1999 Incentive Plan
that become available as a result of canceled, forfeited or expired awards under
such plan may be issued under the 2000 Incentive Plan. All options are to be
issued at the greater of the fair market value or "Net Tangible Book Value Per
Share" (as defined) and expire on the tenth anniversary from the date of grant.
As of December 31, 2000, there were no options outstanding under the 2000 Stock
Incentive Plan.

NON-EMPLOYEE DIRECTORS' STOCK OPTION PLANS

     The Non-Employee Directors' Stock Option Plan (the "1999 Non-Employee
Director Plan"), approved by the Company's Board of Directors and shareholders,
provides for the grant of nonqualified stock options to purchase up to 7,200
shares of Common Stock in any three-year period to members of the Board of
Directors who are not employees of the Company. A total of 200,000 shares may be
issued pursuant to this plan. Non-employee directors receiving such options will
become vested in options for the purchase of 800 shares of Common Stock after
the adjournment of each annual meeting of shareholders of the Company, to the
extent he or she has been granted options that have not yet vested, and provided
that he or she is then a non-employee director of the Company. In addition, each
non-employee director shall become vested in options for the purchase of 400
shares of Common Stock upon the adjournment of each regularly scheduled
quarterly meeting of the Board of Directors (other than following the annual
meeting of shareholders), to the extent he or she has been granted options that
have not yet vested, and provided that he or she is then a non-employee director
of the Company. All options granted will have an exercise price equal to the
fair market value of the Common Stock as of the date of grant, will become
exercisable upon vesting, and will expire on the sixth anniversary of the date
of grant. As of December 31, 2000, options to purchase 24,000 shares are
outstanding under the 1999 Non-Employee Directors' Plan.

     In October, 2000, the Company's Board of Directors adopted the 2000
Non-Employee Director Stock Plan, subject to shareholder approval. The 2000
Non-Employee Director Stock Plan provides for the automatic grant of
nonqualified stock options to purchase up to 5,000 shares of Common Stock,
commencing on the date of the Company's 2001 annual meeting of shareholders, and
continuing annually thereafter on the date of each succeeding annual meeting of
shareholders. A total of 250,000 options may be issued pursuant to this plan.
All options are to be issued at the greater of the fair market value or "Net
Tangible Book Value Per Share" (as defined), vest on the first anniversary
following the date of grant, and expire on the tenth anniversary from the date
of grant. As of December 31, 2000, there were no options outstanding under the
2000 Non-Employee Director Stock Plan.

                                        70
<PAGE>   73
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NON-QUALIFIED STOCK OPTION PLAN

     The Non-Qualified Stock Option Plan (the "Non-Qualified Plan"), approved by
the Company's Board of Directors and shareholders, provides for the grant of
non-qualified stock options to purchase up to 125,000 shares of Common Stock.
Options to purchase 125,000 shares of Common Stock at fair market value were
granted to certain executive officers of BIG. All of such options expire on the
tenth anniversary from the date of grant. Options shall become exercisable 60%
after three years, 20% after four years and 20% after five years. As of December
31, 2000, options to purchase 100,000 shares were outstanding under the
Non-Qualified Plan.

     Under this plan, the Company will recognize aggregate compensation expense
of approximately $600,000 of which $137,000 and 98,634 was recognized during the
years ended December 31, 1999 and 2000, respectively, and is included in
"Selling, general and administrative" expenses in the accompanying consolidated
statements of operations. The balance will be recognized ratably over the
remainder of the vesting period.

     The following table summarizes option activity from December 31, 1998
through December 31, 2000:

<TABLE>
<CAPTION>
                                                       OPTIONS     NUMBER OF       WEIGHTED
                                                      AVAILABLE     OPTIONS        AVERAGE
                                                      FOR GRANT   OUTSTANDING   EXERCISE PRICE
                                                      ---------   -----------   --------------
<S>                                                   <C>         <C>           <C>
Balance at December 31, 1998........................         --          --         $   --
  Options authorized................................  1,200,000          --             --
  Options granted...................................   (794,500)    794,500          10.76
  Options cancelled.................................    241,000    (241,000)         11.00
  Options exercised.................................         --          --             --
                                                      ---------    --------
Balance at December 31, 1999........................    646,500     553,500          10.64
  Options authorized................................  1,250,000          --             --
  Options granted...................................   (297,750)    297,750           7.70
  Options cancelled.................................    157,250    (157,250)         10.09
  Options exercised.................................         --          --             --
                                                      =========    ========
Balance at December 31, 2000........................  1,756,000     694,000         $ 9.50
                                                      =========    ========
</TABLE>

     The range of exercise prices, shares, weighted average contractual life and
exercise price for the options outstanding as of December 31, 2000 are presented
below:

<TABLE>
<CAPTION>
                   RANGE OF                      NUMBER     WEIGHTED AVERAGE   WEIGHTED AVERAGE
               EXERCISE PRICES                  OF SHARES   CONTRACTUAL LIFE    EXERCISE PRICE
               ---------------                  ---------   ----------------   ----------------
<S>                                             <C>         <C>                <C>
$5.00 - $ 7.69................................   184,000       5.90 years           $ 6.38
 9.00 -  11.00................................   510,000       5.40 years            10.63
                                                 -------       ----------           ------
$5.00 - $11.00................................   694,000       5.53 years           $ 9.50
                                                 =======       ==========           ======
</TABLE>

     As of December 31, 2000, there were 24,000 options that were exercisable at
a weighted average exercise price of $11.00.

     The per-share weighted-average fair value of stock options granted during
1999 and 2000 was $6.37 and $1.16, respectively, using the Black-Scholes
option-pricing model with the following weighted-average assumptions: expected
dividend yield of 0%; risk-free interest rate of 5.75%; expected volatility of
65%; and an expected life of 5 years.

                                        71
<PAGE>   74
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PRO FORMA RESULTS

     The Company applies APB Opinion No. 25 in accounting for its Incentive Plan
and Non-Employee Director Plan and, accordingly, no compensation cost has been
recognized for its stock options in the consolidated financial statements. Had
the company determined compensation cost based on SFAS No. 123, the Company's
net income would have been as follows:

<TABLE>
<CAPTION>
                                                          1999                  2000
                                                  --------------------   -------------------
                                                     NET       DILUTED      NET      DILUTED
                                                    INCOME       EPS       LOSS        EPS
                                                  ----------   -------   ---------   -------
<S>                                               <C>          <C>       <C>         <C>
As reported.....................................  $3,195,060    $ .26    $(509,366)   $(.04)
Statement 123 compensation (net of tax).........    (617,500)    (.05)    (441,000)    (.03)
Pro forma disclosure............................  $2,577,560    $ .21    $(950,366)   $(.07)
</TABLE>

NOTE 10 -- INCOME TAXES

     The provision for income taxes is summarized as follows:

<TABLE>
<CAPTION>
                                                           YEAR ENDED DECEMBER 31,
                                                     ------------------------------------
                                                        1998         1999         2000
                                                     ----------   ----------   ----------
<S>                                                  <C>          <C>          <C>
Current:
  Federal..........................................  $2,090,400   $1,955,660   $  956,383
  State............................................     450,000      481,900      274,000
                                                     ----------   ----------   ----------
                                                      2,540,400    2,437,560    1,230,383
                                                     ----------   ----------   ----------
Deferred:
  Federal..........................................     435,400       77,000     (297,000)
  State............................................      66,600       19,000      (84,000)
                                                     ----------   ----------   ----------
                                                        502,000       96,000     (381,000)
                                                     ----------   ----------   ----------
                                                     $3,042,400   $2,533,560   $  849,383
                                                     ==========   ==========   ==========
</TABLE>

     Reconciliation of the federal statutory income tax rate of 34% to the
effective income tax rate is as follows:

<TABLE>
<CAPTION>
                                                           YEAR ENDED DECEMBER 31,
                                                      ----------------------------------
                                                         1998         1999        2000
                                                      ----------   ----------   --------
<S>                                                   <C>          <C>          <C>
Federal income taxes, at statutory rates............  $2,344,400   $1,947,700   $115,600
State taxes, net of federal benefit.................     323,500      292,200     88,400
Minority interest...................................     160,800           --         --
Dividends declared on Preferred Stock of
  Subsidiary........................................      64,400           --         --
Non-deductible compensation expense related to stock
  plans.............................................          --           --    262,100
Non-deductible goodwill.............................      85,500      175,000    278,000
Non-deductible meals and entertainment..............      12,700       58,900     64,400
Other, net..........................................      51,100       59,760     40,883
                                                      ----------   ----------   --------
                                                      $3,042,400   $2,533,560   $849,383
                                                      ==========   ==========   ========
</TABLE>

                                        72
<PAGE>   75
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the corresponding amounts used for income tax reporting purposes.
Significant components of the Company's deferred tax assets and liabilities are
as follows:

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                              ---------------------
                                                                 1999        2000
                                                              ----------   --------
<S>                                                           <C>          <C>
Deferred tax assets:
  Vacation pay..............................................  $  279,800   $244,200
  Deferred recognition of life-of loan premium..............     628,100    474,600
  Deferred revenue..........................................     (13,300)   121,000
  Depreciation and fixed asset bases differences............     181,100    304,200
  Allowance for doubtful accounts...........................     (13,710)    62,300
  Other.....................................................      53,310         --
Deferred tax liabilities:
  Goodwill and customer list bases differences..............     (52,300)   (74,000)
  Capitalized software development costs....................          --   (417,900)
  Other.....................................................          --    (32,400)
                                                              ----------   --------
          Net deferred tax asset............................  $1,063,000   $682,000
                                                              ==========   ========
</TABLE>

NOTE 11 -- COMMITMENTS AND CONTINGENCIES

RISKS AND UNCERTAINTIES

     The Company derives a substantial portion of its revenues from outsourcing
services provided to its principal shareholder, BIG. The Company has entered
into contracts with BIG pursuant to which it will continue to provide
administrative services to BIG (See Note 12). The Company's future financial
condition and results of operations will depend to a significant extent upon the
commercial success of BIG and its continued willingness to utilize the Company's
services. Any significant downturn in the business of BIG or its commitment to
utilize the Company's services could have a material adverse effect on the
Company's business, financial condition and results of operations.

     The Company's business is dependent upon various factors, such as general
economic conditions and weather patterns, which are beyond its control. For
example, the demand for flood zone determinations by lenders and their customers
is directly related to the affordability of mortgage financing and refinancing.
An increase in interest rates could have a negative impact on mortgage lending
and consequently also on the level of flood zone determinations requested.
Fluctuations in interest rates will likely produce fluctuations in the Company's
quarterly earnings and operating results. Likewise, natural disasters such as
hurricanes, tornadoes and floods, all of which are unpredictable, directly
impact the demand for both the Company's outsourcing and flood zone
determination services.

                                        73
<PAGE>   76
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

OPERATING LEASES

     The Company leases property and equipment under operating leases which
expire at various dates through 2005. Future minimum rental payments under
non-cancelable operating leases, exclusive of related party leases discussed in
Note 12, having initial or remaining terms in excess of one year as of December
31, 2000 are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                         AMOUNT
-----------------------                                       ----------
<S>                                                           <C>
2001........................................................  $3,190,000
2002........................................................   2,699,000
2003........................................................   2,200,000
2004........................................................   1,314,000
2005........................................................     552,000
                                                              ----------
  Total future minimum rental payments......................  $9,955,000
                                                              ==========
</TABLE>

     Total rental expense, excluding amounts paid to BIG under the affiliated
lease agreements, totaled $470,000, $1,025,000 and $1,935,000 for the years
ended 1998, 1999 and 2000, respectively.

LEGAL PROCEEDINGS

     On September 28, 2000, October 25, 2000 and October 30, 2000, three alleged
shareholders of the Company filed three nearly identical lawsuits in the United
States District Court for the Middle District of Florida, each on behalf of a
putative class of all persons who purchased shares of the Company's Common Stock
pursuant and/or traceable to the registration statement for the Company's
February 1999 initial public offering (the "IPO"). The lawsuits were
consolidated on December 1, 2000, and the consolidated action's proceeding under
Case No. 8:00-CV-2013-T-26MAP. The plaintiff's Consolidated Amended Class Action
Complaint, filed February 7, 2001, names as defendants the following parties:
the Company; Geotrac; BIG; Venture Capital Corporation, a selling shareholder in
the IPO; the five inside directors of the Company at the time of the IPO; and
Raymond James & Associates, Inc. and Keefe, Bruyette & Woods, Inc., the
underwriters for the IPO. The complaint alleges, among other things, that the
defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933,
as amended, by making certain false and misleading statements in the roadshow
presentations, registration statement and prospectus relating to the IPO. More
specifically, the complaint alleges that, in connection with the IPO, the
defendants made various material misrepresentations and/or omissions relating to
(i) the Company's ability to integrate Geotrac's flood zone determination
business with the Company's own flood zone determination business and with its
insurance outsourcing services business; (ii) actual and anticipated synergies
between the Company's flood zone determination and outsourcing services business
lines; and (iii) the Company's use of the IPO proceeds. The complaint seeks
unspecified damages, including interest, and equitable relief, including a
rescission remedy. On March 26, 2001, the Company, BIG and the five inside
director defendants filed a motion to dismiss the plaintiffs' Consolidated
Amended Class Action Complaint for, among other things, failure to allege
material misstatements and/or omissions in the roadshow presentations,
registration statement and/or prospectus relating to the IPO. Management of the
Company believes the material allegations of the complaints are without merit
and intends to vigorously defend the lawsuit. No assurances can be given,
however, with respect to the outcome of the litigation, and an adverse result
could have a material adverse effect on the Company's business, financial
condition and results of operations.

     Bankers Insurance Company ("BIC"), a subsidiary of BIG, and Bankers Life
Insurance Company ("BLIC") and Bankers Security Insurance Company ("BSIC"),
subsidiaries of BIC, have been subject to an investigation by the Florida
Department of Insurance (the "DOI"), the principal regulator of insurance
activities in the State of Florida, stemming from their use of a private
investigator to gather information on a

                                        74
<PAGE>   77
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DOI employee and the private investigator's unauthorized use of illegal wiretaps
in connection therewith. On March 23, 2000, the Treasurer and Insurance
Commissioner of the State of Florida, as head of the DOI, filed an
administrative complaint against BIC, BLIC and BSIC based upon the results of
such investigation. The administrative complaint charges BIC, BLIC and BSIC with
violating various provisions of the Florida Insurance Code including, among
other things, a provision requiring insurance companies to have management,
officers or directors that are, among other things, trustworthy. The complaint
further notifies BIC, BLIC and BSIC that the Insurance Commissioner intends to
impose such penalties or take such other administrative actions as may be proper
or appropriate under applicable law, including possibly entering an order
suspending or revoking the certificates of authority of BIC, BLIC and BSIC to
conduct business as insurance companies in the State of Florida. On February 19,
2001, the DOI filed a Motion for Leave to File Amended Complaint. On March 29,
2001, the court issued an order granting the DOI's motion.

     BIC, BLIC and BSIC have informed the Company that they intend to vigorously
defend against such action, but no assurances can be given as to the outcome
thereof. In the event the DOI were to enter an order suspending or revoking the
certificates of authority of BIC, BLIC and BSIC to conduct business as insurance
companies in the State of Florida, or impose other significant penalties on any
of them, it would materially adversely affect the business and/or operations of
BIG and, in turn, could result in the loss of or material decrease in the
Company's business from BIG, which would have a material adverse effect on the
Company's business, financial condition and results of operations.

     On November 19, 1999, the United States, on behalf of the Federal Emergency
Management Agency ("FEMA"), filed a civil action against BIC in the United
States District Court for the District of Maryland stemming from FEMA's
investigation of certain cash management and claims processing practices of BIC
in connection with its participation in the National Flood Insurance Program
("NFIP"). The complaint alleges, among other things, that BIC knowingly failed
to report and pay interest income it had earned on NFIP funds to the United
States in violation of the False Claims Act. The complaint further alleges
various common law theories, including fraud, breach of contract, unjust
enrichment and negligent misrepresentation. The complaint seeks civil penalties
of $1.08 million and actual damages of approximately $1.1 million as well as
treble, punitive and consequential damages, costs and interest. The suit is
currently stayed pending arbitration following a decision by the United States
Court of Appeals for the Fourth Circuit in favor of BIC on its motion to stay
the litigation pending arbitration. BIC has informed the Company that BIC is not
aware of the government's intentions for further appeal of the order regarding
arbitration. BIC has further informed the Company that it intends to vigorously
defend against the action, but no assurances can be given as to the outcome
thereof. However, BIG has advised the Company that an adverse judgment in this
action should not have a material adverse affect on the business and/or
operations of BIC, although no assurances can be given in this regard.

     FEMA's investigation of certain claims processing practices of BIC in
connection with its participation in the NFIP is continuing, and BIC has
produced documentation in connection therewith. If the parties are either unable
to reach agreement in these matters or resolve their disagreement in
arbitration, the United States could amend its complaint against BIC to add
additional claims under the False Claims Act and/or various common law and
equitable theories relating to such matters. In the event such continuing
investigation or any consequence thereof materially adversely affects the
business or operations of BIC, it could result in the loss of or material
decrease in the Company's business from BIC, which would have a material adverse
effect on the Company's business, financial condition and results of operations.

     The Company is involved in various other legal proceedings arising in the
ordinary course of business. Management believes that the ultimate resolution of
these proceedings will not have a material adverse effect on the Company's
financial position, results of operations, or liquidity, although no assurances
can be given in this regard.

                                        75
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                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

COMMON STOCK AWARDS

     Prior to the Company's acquisition of Geotrac, Inc., Geotrac's president
had a non-binding commitment to grant to certain former and current employees
options to purchase shares of Geotrac, Inc. common stock held by the president
and his wife, for prior employee services rendered. During May 1998, the
president and his wife contributed 46.45 shares of their Common Stock to these
individuals which is recorded as "Deferred compensation (non-recurring item)"
totaling $728,069 in the accompanying December 31, 1998 consolidated statement
of operations. The valuation of the common stock used to compute the deferred
compensation expense was determined by dividing the purchase price of $7,994,250
for the 51% interest in Geotrac by 510 shares, the remaining shares purchased.

EMPLOYMENT AGREEMENTS

     The Company entered into employment agreements with certain members of its
executive management team. The agreements provide for employment terms of three
years and shall continue indefinitely until terminated by either party pursuant
to the terms of the agreements. In the event an employment agreement is
terminated by the Company without cause, the employee shall be entitled to
earned, but unpaid benefits as well as a "Severance Payment" equal to the
employee's then current annual base salary, subject to adjustment as defined.
The agreements contain non-compete provisions, which prevent a terminated
employee from soliciting customers, prospective customers or employees of the
Company.

     In connection with the acquisition of Geotrac, Inc., the Company entered
into an employment agreement with the president and chief executive officer of
Geotrac, Inc. ("Geotrac's President"). This agreement provides for an initial
term of four years and shall continue in effect thereafter until terminated by
either party upon 90 days prior written notice. The agreement provides for an
initial annual base salary of $150,000 subject to annual review by Geotrac,
Inc.'s Board of Directors. In the event of Geotrac's President's death or
disability, Geotrac, Inc.'s obligations under the agreement will automatically
terminate, except that Geotrac's President shall be entitled to severance equal
to his then current annual base salary. The agreement further provides that, in
the event of termination by Geotrac, Inc. without cause (as defined therein) or
by Geotrac's President for good reason (as defined therein), or in the event the
agreement is not renewed for any reason other than death, disability or for
cause, then Geotrac, Inc. shall pay Geotrac's President at the rate of his
annual base salary then in effect for the longer of (i) the remainder of the
term of the agreement and (ii) one year after such termination date, subject to
a credit of up to 75% of the base salary paid to Geotrac's President by his new
employer, if any. The agreement contains certain non-compete provisions which
prevent Geotrac's President from engaging in the flood zone compliance business
within a specified area and soliciting or employing any Geotrac, Inc. employees.

NOTE 12 -- RELATED PARTY TRANSACTIONS

ADMINISTRATION SERVICES AGREEMENT

     Effective as of January 1, 1998, the Company and BIG entered into an
Administrative Services Agreement (the "Administration Agreement") pursuant to
which BIG provides the Company with various administrative and support services,
such as human resources and benefits administration, accounting, legal, cash
management and investment services, requested by the Company from time to time
and reasonably necessary in the conduct of its operations. Under the
Administration Agreement, as originally in effect, the Company was charged for
these services generally based upon a contractually agreed-upon quarterly fee of
$396,250. In addition, the Company paid BIG, through the year ended December 31,
1999, an annual fee of $120,000 for routine legal services provided.
Administration fees charged to the Company during the year ended December 31,
1999 totaled $2.3 million and are included in "Management Services from Parent"
in the

                                        76
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                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

accompanying consolidated statement of operations. The Administration Agreement
expired on December 31, 2000 and was renewed by the Company for an additional
one-year term.

     Effective as of January 1, 1999, the Administration Agreement was amended
to eliminate certain accounting and internal audit service functions (which
functions are currently performed by the Company directly) and to reduce the
quarterly fee payable by the Company to BIG (including one-fourth of the annual
fee for legal services) to $258,750, subject to renegotiation by either party.
Administration fees charged to the Company during the year ended December 31,
1999 totaled $1.2 million and are included in "Management Services from Parent"
in the accompanying consolidated statement of operations.

     Effective January 1, 2000, the annual fee for routine legal services was
reduced to $60,000 from $120,000. Effective April 1, 2000, the portion of the
fee attributable to human resources and benefits administration services
(approximately $393,000), excluding training services, was eliminated as the
Company began to perform such services at such date. Administration fees charged
to the Company during the year ended December 31, 2000 totaled $488,000 and are
included in "Management Services from Parent" in the accompanying consolidated
statement of operations.

     On April 13, 2001, the Company and BIG entered into the Letter Agreement.
Pursuant to the Letter Agreement, the Administration Agreement was terminated
effective April 1, 2001 and will be replaced with a new corporate services
agreement pursuant to which BIG will provide the Company with various marketing
and training services at fixed hourly rates.

SERVICE AGREEMENTS

     Effective as of January 1, 1998, the Company entered into a separate
Service Agreement (each a "Service Agreement") with each of Bankers Insurance
Company ("BIC"), Bankers Security Insurance Company ("BSIC"), and First
Community Insurance Company ("FCIC"), all direct or indirect subsidiaries of
BIG, pursuant to which the Company provides policy administration, claims
administration and data processing services to such entities in connection with
their flood, homeowners and automobile lines of business, and claims
administration and data processing services for all such entities' other
property and casualty lines of business. Under the Service Agreements, as
originally in effect, each entity paid the Company as follows: (1) for its
policy administration services, a monthly fee based upon direct written premiums
for the flood, homeowners and automobile insurance programs; (2) for its claims
administration services, a monthly fee based upon direct earned premiums for the
property, casualty, automobile properly, automobile casualty, flood, and
workers' compensation insurance programs (In addition, a monthly fee based upon
direct incurred losses is charged for flood claims administration and a
reimbursement not to exceed 5% of direct incurred losses from a single event in
excess of $2 million is charged to property claims.); (3) for its data
processing services, a monthly fee based upon direct written premiums for all
insurance programs; and (4) for certain customer services such as mailroom,
policy assembly, records management and cash office, a monthly fee based upon
direct written premiums (except, if provided in connection with their flood,
homeowner and automobile insurance lines, where no such fees are imposed). The
total service fees charged to BIC, BSIC and FCIC under these Service Agreements
during the year ended December 31, 1998 totaled $36.1 million.

     Effective January 1, 1999, these Service Agreements were modified to
provide for tiered pricing based on the volume of business processed, and to
change the fee for data processing services, which was previously charged as a
percentage of direct written premium, to a fixed monthly fee. The total service
fees charged to BIC, BSIC and FCIC under these Service Agreements, as amended,
during the years ended December 31, 1999 and 2000 totaled $41.5 million and
$37.9 million, respectively. These modifications resulted in a reduction in the
base fees charged for certain lines of business and increases in base fees
charged for other lines of business to better reflect the services provided and
competitive market rates for such services. The

                                        77
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                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

term of each Service Agreement shall expire on June 1, 2001, provided that it
shall thereafter be automatically extended until terminated upon 90 days prior
notice by either party.

     Effective April 1, 1999, the Company further amended its existing service
agreements with affiliated insurers to provide for minimum aggregate quarterly
service fee payments through December 31, 1999 with respect to certain lines of
business, provided that certain key tasks are performed timely. If such minimum
service fee requirements with respect to said lines of business under the
agreements had not been implemented as of April 1, 1999, aggregate affiliated
outsourcing services revenues, which totaled $41.5 million for the year ended
December 31, 1999, would have been $39.7 million in accordance with the terms of
the affiliated service agreements as in effect prior to April 1, 1999.
Additionally, for the year ended December 31, 1999, the Company did not
recognize approximately $500,000 of additional affiliated service fees under the
minimum service fee agreement, as the Company did not meet certain specified
milestones on a timely basis. Such minimums were established to compensate the
Company for maintaining an infrastructure to process certain lines of business
of affiliated insurers that have not grown as rapidly as originally forecasted.

     In addition, under the Service Agreement with BIC, the Company administers
an AYO Claims Agreement between BIG and Florida Windstorm Underwriting
Association, which agreement BIG assigned to BIC on December 15, 1998. The
Company processes and adjusts all claims made under the AYO Claims Agreement.
The administrative fee (equal to a percentage of each loss paid) is allocated
between BIC and the Company.

     On April 13, 2001 the Company entered into the Letter Agreement with BIG.
Pursuant to the Letter Agreement, the parties agreed to extend the term of each
of the Service Agreements until December 1, 2002. To obtain BIG's agreement to
such extensions, the Company, in turn, agreed to certain service fee
modifications. Under the Service Agreements, as amended, BIG will pay the
Company (1) a monthly fee based upon direct written premiums for policy
administration services relating to its flood, homeowners and commercial lines
of business and (2) a monthly fee based upon net claims (after deductibles) for
claims administration services relating to its flood line of business. The
service fees payable under the Service Agreements with respect to (a) policy
administration services relating to the automobile line of business, and (b)
claim administration services relating to all lines of business other than
flood, shall remain unchanged. If such amendments to the Service Agreements had
been in effect for the fiscal year ended December 31, 2000, the Company's
affiliated outsourcing revenues, which totalled approximately $38 million on an
actual basis, would have been approximately $30 million on a pro forma basis
(unaudited). The Company believes that any anticipated reduction in affiliated
outsourcing revenues resulting from the implementation of such service fee
changes will be largely offset by a corresponding reduction in operating costs
as a result of, among other things, the elimination of data and technical
support services from the administration services to be provided by the Company
to BIG under the Service Agreements, although no assurances can be given in this
regard.

     Pursuant to the Letter Agreement described below, the Service Agreements
will be amended effective June 1, 2001 to, among other things, extend the term
of each agreement, modify certain of the service fees payable thereunder, and
eliminate data and technical support services from the administrative services
to be provided by the Company thereunder.

     Effective December 1, 1998, the Company entered into a service agreement
with BLIC, a subsidiary of BIG, pursuant to which the Company provides certain
administrative services and allows BLIC to make use of certain of the Company's
property, equipment and facilities in connection with BLIC's day-to-day
operations. Under the service agreement, as amended, BLIC agreed to pay the
Company predetermined fees on a quarterly basis. To date, no services have been
provided and no fees have been charged or paid under this service agreement. The
term of the service agreement with BLIC ends on June 1, 2001, but may be
terminated at any time by BLIC upon 90 days prior written notice.

                                        78
<PAGE>   81
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

TECHNICAL SUPPORT SERVICES AGREEMENT

     In April, 1999, the Company entered into a Technical Support Services
Agreement (the "Old Support Agreement") with BIG pursuant to which the Company
provided BIG with certain technical support services, computer programming and
systems analysis services. Under the Old Support Agreement, such services were
charged to BIG on a time and materials basis. The total service fees charged to
BIG under this agreement during the years ended December 31, 1999 and 2000
totaled $1.3 million and $0, respectively. Pursuant to the Letter Agreement
described below, the Old Support Agreement will be terminated effective June 1,
2001 and replaced with a new Technical Support Services Agreement (the "New
Support Agreement"). Pursuant to the New Support Agreement, BIG will provide
certain technical support services to the Company.

LETTER AGREEMENTS

     On April 13, 2001, the Company entered into a Letter Agreement with BIG,
BIC, BSIC and FCIC (the "Letter Agreement") pursuant to which the various
contractual arrangements between the Company and such affiliated entities will
be significantly altered effective as of June 1, 2001.

     With respect to the Administration Agreement, the Letter Agreement provides
that the existing Administration Agreement will be terminated effective as of
June 1, 2001 and replaced with a new Corporate Services Agreement (the
"Corporate Services Agreement"). Pursuant to the Corporate Services Agreement,
BIG will provide the Company with various corporate marketing (including graphic
design and web-site development) and corporate training services requested by
the Company from time to time at fixed hourly rates ranging from $40 to $100 per
hour, depending on the service being provided. The Letter Agreement provides
that the parties will negotiate in good faith to execute and deliver the
Corporate Services Agreement incorporating these terms on or before June 1,
2001; provided, however, that in the event such agreement is not executed and
delivered by that date, BIG will provide such services at the rates specified in
the Letter Agreement.

     The Letter Agreement further provides that, effective June 1, 2001, the Old
Support Agreement will be terminated and replaced with the New Support
Agreement. Pursuant to the New Support Agreement, BIG will assume substantially
all of the information technology personnel of the Company, consisting of
approximately 70 persons, and provide the Company with certain technical
support, computer programming and systems analysis services at specified rates
(except for software development services, which shall be provided on a time and
materials basis).

     With respect to the Service Agreements, the Letter Agreement provides that
each of such agreements shall be amended, effective June 1, 2001, to (i)
postpone the expiration date of the agreement from June 1, 2001 until December
1, 2002, (ii) modify the service fees payable thereunder with respect to policy
and claim administration services to be provided in connection with certain
lines of business, (iii) eliminate data and technical support services from the
administrative services to be provided by the Company under the agreement, and
(iv) assess a fixed monthly fee for usage of the Company's AS/400 computer
system. With respect to the service fee modifications, under the Service
Agreements, as amended, each entity will pay the Company (1) a monthly fee based
upon direct written premiums for policy administration services relating to its
flood, homeowners and commercial lines of business and (2) a monthly fee based
upon net claims (after deductibles) for claims administration services relating
to its flood line of business. The service fees payable under the Service
Agreements with respect to (a) policy administration services relating to the
automobile line of business, and (b) claims administration services relating to
all lines of business other than flood, shall remain unchanged.

     On April 13, 2001, the Company entered into a Commitment Letter to advance
service fee payments (the "Commitment Letter") with BIG pursuant to which BIG
has agreed to advance to the Company up to

                                        79
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                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$1.5 million per month as a prepayment of service fees due by BIG and its
affiliates under the Service Agreements. Such advances are available to the
Company beginning June 1, 2001 continuing through December 1, 2002 and shall be
payable upon demand by the Company. Any funds advanced by BIG to the Company
under the Commitment Letter shall constitute a prepayment of, and shall be
credited toward, the service fees charged to BIG by the Company during the month
following such advance.

PROPERTY LEASES

     The Company currently leases from BIC approximately 84,200 square feet of
office space in St. Petersburg, Florida at a monthly rate of approximately
$108,000. Additionally, the Company currently leases from BIG approximately
4,600 square feet of office space in St. Petersburg, Florida at a monthly rate
of approximately $5,100. Rent expense under these leases, which totaled $1.0
million, $1.0 million and $1.5 million during the years ended December 31, 1998,
1999 and 2000, respectively, is included in "Management services from Parent" in
the consolidated statements of operations. The current terms of these leases
expire on December 31, 2001.

     Effective January 1, 1998, BIG assigned to the Company a lease of
approximately 6,600 square feet of office space in St. Petersburg, Florida. This
lease expired on December 31, 2000 and was not renewed. Rent expense recorded
under the lease, which totaled $53,000, $77,000 and $71,000 during the years
ended December 31, 1998, 1999 and 2000, respectively, is included in "Cost of
outsourcing services" in the consolidated statements of operations.

EMPLOYEE LEASING AGREEMENT

     Effective as of January 1, 1998, the Company entered into an Employee
Leasing Agreement with BIC (the "Employee Leasing Agreement") pursuant to which
the Company continued to lease various personnel, including customer service
personnel, from BIC. The number of employees leased varied depending on the
needs of the Company and the availability of employees from BIC. The Company was
responsible for all expenses associated with such leased employees, including
salaries, bonuses and benefits. These charges, which totaled $6.1 million, $7.5
million and $1.5 million during the years ended December 31, 1998, 1999 and
2000, respectively, are included in "Cost of outsourcing services" and "Selling,
general and administrative expenses" in the consolidated statements of
operations. Effective April 1, 2000, the Employee Leasing Agreement was
terminated at which time all such leased employees became direct employees of
the Company.

SALES AND ASSIGNMENT AGREEMENT

     In May, 1998, the Company entered into a sales and assignment agreement
with BIG and certain affiliated companies whereby certain assets were
transferred and assigned to the Company, effective retroactively to April, 1998,
for use in its business. The assets, including, but not limited to, telephone
equipment, computer hardware and software, and service marks were transferred at
their net book value as of the date of transfer. The Company paid consideration
consisting of $325,075 in cash and entered into two promissory notes amounting
to $2,802,175. The notes were repaid in full in February, 2000 out of the net
proceeds to the Company from its initial public offering. In addition, the
Company assumed the existing leases with unaffiliated third parties relating to
various computer equipment.

SOFTWARE LICENSING AGREEMENT

     Effective January 1, 1998, the Company entered into a non-exclusive license
agreement with BIG and BIC pursuant to which the Company licenses its primary
operating systems from BIG and BIC in exchange for a nominal fee. The term of
the license is perpetual. The license agreement provides that the Company shall

                                        80
<PAGE>   83
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

be solely responsible for maintaining and upgrading the systems and shall have
the authority to sell or license such systems to third parties.

GEOTRAC TRANSACTIONS

     Geotrac currently leases a 12,400 square-foot facility in Norwalk, Ohio
from DanYo LLC, a limited liability company wholly owned by Daniel J. White and
his spouse. This lease, which was renewed effective September 1, 1999, is for a
term of five years, expiring on August 31, 2004, and provides for monthly rental
payments of approximately $10,448, plus payment of utilities, real estate taxes
and assessments, insurance, repairs and similar expenses. Rent expense recorded
under the lease, which totaled $105,000, $121,000 and $125,000 during the years
ended December 31, 1998, 1999 and 2000, respectively, is included in "Cost of
flood zone determination services" in the consolidated statements of operations.

     Flood zone determination services performed by Geotrac on behalf of the
Company's insurance outsourcing services subsidiary totaled $1.3 million,
$620,000 and $929,000 during the years ended December 31, 1998, 1999 and 2000,
respectively.

PHANTOM STOCK PLANS

     During the year ended December 31, 2000, the Company recognized
approximately $338,000 in compensation expense (of which approximately $145,000
relates to 1999) resulting from the vesting of benefits payable to certain
current and former officers and directors of the Company under the Amended and
Completely Restated Phantom Stock Plan (the "BFC Plan") of Bankers Financial
Corporation ("BFC"), the parent corporation of BIG, and the Amended and Restated
Phantom Stock Plan (the "VCC Plan") of Venture Capital Corporation ("VCC"). The
foregoing compensation charge is a non-recurring, non-cash item to the Company,
as all such benefits under such plans were fully vested as of September 30, 2000
and constitute the respective obligations of BFC and VCC, not the Company.

     Effective September 30, 2000, the BFC and VCC Plans were amended to provide
for, among other things, immediate vesting of benefits payable thereunder to
certain current and former officers and directors of the Company. Accordingly,
as of September 30, 2000, the total discounted and non-discounted benefits
payable under these plans, which have accrued since February 11, 1999, the date
of the Company's initial public offering (the "IPO Date"), totaled $327,000 and
$894,000, respectively, for the BFC Plan and $12,000 and $43,000, respectively,
for the VCC Plan. Benefits under each of such plans generally are payable in 120
equal installments beginning at age 60. Although resulting in a compensation
expense (on a discounted basis) to the Company, all of such benefits under such
plans were granted on or before the IPO Date and constitute the respective
obligations of BFC and VCC, not the Company. The benefits described herein
exclude amounts vested prior to the IPO Date and/or allocable to services
provided to BIG or its affiliated entities (other than the Company or its
subsidiaries) since the IPO Date.

     Except as set forth below, since the IPO Date, no officers or directors of
the Company have been eligible to receive additional grants under such phantom
stock plans or have been subject to future allocations of profits or losses with
respect thereto. In addition, except as set forth below, all current officers
and directors of the Company were fully vested, as of September 30, 2000, in all
benefits under such plans. Notwithstanding the foregoing, Robert G. Menke, a
director of the Company, and David K. Meehan, Chairman of the Board of the
Company, will continue to be eligible to receive grants, vest in benefits
received and share in profits and losses under such plans in their capacity as
officers and directors of BIG and its affiliated entities.

                                        81
<PAGE>   84
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

MISCELLANEOUS

     In February, 1999, Western International Insurance Company, a wholly-owned
subsidiary of Venture Capital Corporation and presently a more than 5%
shareholder of the Company, loaned $12.0 million to BIG in exchange for a
subordinated note. This loan was funded by using a portion of the net proceeds
received by Venture Capital Corporation in the Company's initial public
offering. BIG, in turn, used a portion of such loan proceeds to satisfy a note
payable (including accrued interest) to the Company which totaled $5,322,455.
The balance of the loan proceeds will provide BIG with additional capital to
repay other outstanding indebtedness and expand its operations. The Company, in
turn, used the funds received from BIG, together with a portion of the net
proceeds from its initial public offering, to satisfy $7,054,996 in accounts,
income taxes and notes payable (including accrued interest) payable to BIG.

     The Company's Chairman of the Board also serves as Vice Chairman of the
Board of Directors of BIG, and two other directors of the Company serve as
executive officers and/or directors of BIG. As the interests of the Company and
BIG may differ, these individuals may face certain conflicts of interest.

NOTE 13 -- EMPLOYEE BENEFIT PLANS

     The Company's employees participate in its Parent company's 401(k) plan
which covers substantially all employees. To participate in the plan, employees
must be at least 18 years old and have completed 90 days of service. The Company
makes matching contributions of up to 5% of each participant's deferral. The
Company's expense related to this plan was approximately $647,072, $821,217 and
$829,645 in 1998, 1999 and 2000, respectively.

     In addition, the Company's employees (except for employees of Geotrac)
participate in self-insured medical and dental plans provided by the Parent. The
medical program provides for specific excess loss reinsurance for individual
claims greater than $60,000 for any one claimant and aggregate claims greater
than $1,000,000. The Company accrues the estimated liabilities for the ultimate
costs of both reported claims and incurred but not reported claims.

NOTE 14 -- SEGMENT INFORMATION

     The Company primarily operates in two business segments within the United
States; providing policy and claims administration services and flood zone
determinations. No unaffiliated customer accounted for more than 10% of the
Company's total revenues for the periods presented. The following table provides
information about these reportable segments as required by SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information".

<TABLE>
<CAPTION>
                                                                           INTERCOMPANY
                                            OUTSOURCING     FLOOD ZONE     ELIMINATIONS   CONSOLIDATED
                                             SERVICES     DETERMINATIONS    AND OTHER        TOTALS
                                            -----------   --------------   ------------   ------------
<S>                                         <C>           <C>              <C>            <C>
1998
Operating revenues -- affiliated..........  $37,596,598    $ 1,279,689     $ (1,527,654)  $37,348,633
Operating revenues -- unaffiliated........    1,989,306     24,454,558               --    26,443,864
Operating income..........................    1,867,742      7,238,810               --     9,106,552
Interest expense..........................    1,078,759      1,115,594               --     2,194,353
Depreciation and amortization.............    2,236,940      2,074,071               --     4,311,011
Identifiable assets.......................   18,664,056     28,443,025       (7,205,226)   39,901,855
Minority interests........................           --       (472,803)              --      (472,803)
</TABLE>

                                        82
<PAGE>   85
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
                                                                           INTERCOMPANY
                                            OUTSOURCING     FLOOD ZONE     ELIMINATIONS   CONSOLIDATED
                                             SERVICES     DETERMINATIONS    AND OTHER        TOTALS
                                            -----------   --------------   ------------   ------------
<S>                                         <C>           <C>              <C>            <C>
1999
Operating revenues -- affiliated..........  $42,142,568    $   620,320     $   (677,070)  $42,085,818
Operating revenues -- unaffiliated........   10,702,732     18,540,543               --    29,243,275
Operating income..........................    1,870,427      4,317,896               --     6,188,323
Interest expense..........................      255,393        669,530         (115,540)      809,383
Depreciation and amortization.............    3,229,839      2,268,168               --     5,498,007
Identifiable assets.......................   28,723,070     26,089,991      (15,322,154)   39,490,907
2000
Operating revenues -- affiliated..........  $38,904,503    $   929,002     $   (961,002)  $38,872,503
Operating revenues -- unaffiliated........    7,973,651     16,137,943               --    24,111,594
Operating income (loss)...................   (3,163,936)     3,285,482               --       121,546
Interest expense..........................       60,905        272,164         (262,825)       70,244
Depreciation and amortization.............    3,024,573      2,317,526               --     5,342,099
Identifiable assets.......................   33,248,784     25,044,943      (17,528,179)   40,765,548
</TABLE>

     During the year ended December 31, 2000, the Company's outsourcing services
business segment incurred an operating loss of approximately $3.2 million. This
operating loss was partially due to a decrease in revenue from the
administration of property damage claims resulting from flood and wind claims,
as well as an increase in personnel and contractor costs incurred to bring on
new unaffiliated contracts, which contracts were subsequently terminated. In an
effort to improve the operating results of its outsourcing services business
segment, the Company completed a workforce reduction of approximately 10%, or 53
employees on February 13, 2001. In addition, on April 13, 2001, the Company
entered into a Letter Agreement with BIG, BIC, BSIC and FCIC providing for
various changes to the Company's existing contractual arrangements with such
affiliated entities.

NOTE 15 -- STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                              ----------------------------------
                                                                 1998         1999        2000
                                                              ----------   ----------   --------
<S>                                                           <C>          <C>          <C>
Cash paid for:
  Interest..................................................  $1,614,807   $1,141,161   $ 70,244
  Income taxes..............................................   7,381,907    1,470,000    440,175
</TABLE>

     During 1998, the Company acquired fixed assets by issuing various debt
obligations (including capital leases) totaling $4,265,639.

     During 1998, the Company repurchased the Preferred Stock of a subsidiary by
issuing a note in the amount of $6,750,000.

                                        83
<PAGE>   86
                   INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
                                AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     During 1998, the Company acquired the remaining 51% interest in Geotrac,
Inc. and in 1999, acquired Colonial Catastrophe. In conjunction with these
acquisitions, assets acquired and liabilities assumed were as follows:

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                                 1998          1999
                                                              -----------   ----------
<S>                                                           <C>           <C>
Common Stock................................................  $ 5,766,181   $1,700,000
Common Stock payable........................................           --      300,000
Promissory note.............................................    1,500,000      500,000
Short-term obligation.......................................      728,069      500,000
                                                              -----------   ----------
                                                              $ 7,994,250   $3,000,000
                                                              ===========   ==========
Fair value of assets acquired...............................  $10,990,152   $1,846,555
Liabilities assumed.........................................   10,650,887    1,478,306
                                                              -----------   ----------
Net assets..................................................      339,265      368,249
Goodwill....................................................   14,933,247    2,631,751
                                                              -----------   ----------
                                                              $15,272,512   $3,000,000
                                                              ===========   ==========
</TABLE>

NOTE 16 -- SUPPLEMENTAL SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

     Following is a summary of the quarterly results of operations for the
quarterly periods in 1998, 1999 and 2000:

<TABLE>
<CAPTION>
                                                                  QUARTER ENDED
                                              ------------------------------------------------------
                                               MARCH 31       JUNE 30     SEPTEMBER 30   DECEMBER 31
                                              -----------   -----------   ------------   -----------
<S>                                           <C>           <C>           <C>            <C>
1998
Total revenues..............................  $15,518,805   $15,725,571   $16,128,175    $16,419,946
Operating income............................    3,028,012     1,938,285     2,147,585      1,992,670
Net income..................................    1,108,368       848,288       950,763        945,572
Net income per common share.................         0.11          0.08          0.09           0.09
1999
Total revenues..............................  $18,105,319   $18,478,008   $15,646,548    $19,099,218
Operating income (loss).....................    2,471,611     3,134,248       (20,116)       602,580
Net income (loss)...........................    1,318,543     1,848,448      (228,071)       256,140
Net income (loss) per common share..........         0.11          0.15         (0.02)          0.02
2000
Total revenues..............................  $14,687,559   $15,995,377   $16,170,344    $16,130,817
Operating income (loss).....................     (310,029)      131,108      (623,330)       923,797
Net income (loss)...........................     (220,500)       23,725      (556,543)       243,952
Net income (loss) per common share..........        (0.02)           --         (0.04)          0.02
</TABLE>

     The consecutive growth in total revenues during 1998 and 1999 is primarily
due to the acquisitions of Geotrac during 1998 and Colonial Catastrophe during
1999 and the corresponding incremental revenues, operating income and net income
contributed by those acquisitions.

                                        84
<PAGE>   87

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                                 ON SCHEDULE 1

To the Board of Directors of
Insurance Management Solutions Group, Inc.

     In connection with our audit of the consolidated financial statements of
Insurance Management Solutions Group, Inc. and Subsidiaries referred to in our
report dated April 13, 2001, which is included in this Annual Report on form
10-K for the year ended December 31, 2000, we have also audited Schedule I for
each of the three years in the period ended December 31, 2000. In our opinion,
this schedule presents fairly, in all material respects, the information
required to be set forth therein.

                                          GRANT THORNTON LLP

Tampa, Florida
April 13, 2001

                                        85
<PAGE>   88

          INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. (PARENT COMPANY)
          SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                              -------------------------
                                                                 1999          2000
                                                              -----------   -----------
<S>                                                           <C>           <C>
                           ASSETS
Current Assets:
  Cash and cash equivalents.................................  $   697,914   $ 2,922,342
  Due from affiliates.......................................    6,515,862     8,686,359
  Note and interest receivable -- affiliate.................    1,409,939     1,198,930
  Other current assets......................................       41,468            --
                                                              -----------   -----------
          Total current assets..............................    8,665,183    12,807,631
Investment in subsidiaries..................................   23,873,738    23,700,395
Note receivable -- affiliate................................    2,782,560            --
Other assets................................................       51,600            --
                                                              -----------   -----------
          Total assets......................................  $35,373,081   $36,508,026
                                                              ===========   ===========
            LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Due to affiliates.........................................  $ 2,187,933   $ 3,379,762
  Other current liabilities.................................      300,028        15,676
                                                              -----------   -----------
          Total current liabilities.........................    2,487,961     3,395,438
Shareholders' Equity........................................   32,885,120    33,112,588
                                                              -----------   -----------
          Total liabilities and shareholders' equity........  $35,373,081   $36,508,026
                                                              ===========   ===========
</TABLE>

The "Notes to Consolidated Financial Statements of Insurance Management
Solutions Group, Inc. and Subsidiaries" are an integral part of these
statements.

   See accompanying "Notes to Condensed Financial Information of Registrant."

                                        86
<PAGE>   89

          INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. (PARENT COMPANY)
          SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                             -----------------------------------
                                                                1998         1999        2000
                                                             ----------   ----------   ---------
<S>                                                          <C>          <C>          <C>
Interest Income:
  Affiliates...............................................  $       --   $  115,540   $ 262,825
  Non-affiliates...........................................      10,286      173,617      35,364
                                                             ----------   ----------   ---------
          Total interest income............................      10,286      289,157     298,189
                                                             ----------   ----------   ---------
Expenses:
  Selling, general and administrative......................       5,065      172,687     507,367
  Interest expense -- affiliates...........................     354,339      100,156          --
  Other expenses, net......................................          --       23,651      59,644
                                                             ----------   ----------   ---------
          Total expenses...................................     359,404      296,494     567,011
                                                             ----------   ----------   ---------
Loss from Operations Before Income Tax Benefit (Provision)
  and Equity in Earnings (Losses) of Subsidiaries..........    (349,118)      (7,337)   (268,822)
Income Tax Benefit (Provision).............................     129,400        4,704     (67,200)
                                                             ----------   ----------   ---------
Loss from Operations Before Equity in Earnings (Losses) of
  Subsidiaries.............................................    (219,718)      (2,633)   (336,022)
Equity in Earnings (Losses) of Subsidiaries................   4,072,709    3,197,693    (173,344)
                                                             ----------   ----------   ---------
Net Income (Loss)..........................................  $3,852,991   $3,195,060   $(509,366)
                                                             ==========   ==========   =========
</TABLE>

The "Notes to Consolidated Financial Statements of Insurance Management
Solutions Group, Inc. and Subsidiaries" are an integral part of these
statements.

   See accompanying "Notes to Condensed Financial Information of Registrant."

                                        87
<PAGE>   90

              INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. (PARENT)
          SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                          ---------------------------------------
                                                             1998           1999          2000
                                                          -----------   ------------   ----------
<S>                                                       <C>           <C>            <C>
Cash Flows from Operating Activities:
  Net income (loss).....................................  $ 3,852,991   $  3,195,060   $ (509,366)
  Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
     Equity in (earnings) losses of subsidiaries........   (3,852,991)    (3,197,693)     173,344
     Compensation expense related to non-employee stock
       options..........................................           --        137,000       98,634
     Non-cash compensation expense related to phantom
       stock plans......................................           --             --      338,200
     Changes in assets and liabilities:
       Other current assets.............................      (74,437)        32,969       41,468
       Other assets.....................................           --        (52,101)      51,600
       Other current liabilities........................           --             28       15,647
                                                          -----------   ------------   ----------
          Net cash provided by (used in) operating
            activities..................................      (74,437)       115,263      209,527
                                                          -----------   ------------   ----------
Cash Flows from Investing Activities:
  Issuance of Common Stock in connection with the
     acquisition of Geotrac.............................    5,766,181             --           --
  Investment in preferred stock of subsidiary...........   (6,750,000)            --           --
  Preferred stock dividend received from subsidiary.....           --         66,020           --
  Cash dividends paid to majority shareholder...........   (1,100,000)            --           --
                                                          -----------   ------------   ----------
          Net cash provided by (used in) investing
            activities..................................   (2,083,819)        66,020           --
                                                          -----------   ------------   ----------
Cash Flows From Financing Activities:
  Net proceeds received from initial public offering....           --     19,163,897           --
  Proceeds from the issuance of debt....................    6,750,000             --           --
  Repayment of debt.....................................   (1,621,766)    (5,128,234)          --
  Issuance of intercompany debt.........................           --     (4,500,000)          --
  Repayment of intercompany debt........................           --        307,501    2,993,569
  Net advances to (from) affiliates.....................   (1,856,872)   (10,439,639)    (978,668)
                                                          -----------   ------------   ----------
          Net cash provided by (used in) financing
            activities..................................    3,271,362       (596,475)   2,014,901
                                                          -----------   ------------   ----------
Increase in Cash and Cash Equivalents...................    1,113,106       (415,192)   2,224,428
Cash and Cash Equivalents, beginning of period..........           --      1,113,106      679,914
                                                          -----------   ------------   ----------
Cash and Cash Equivalents, end of period................  $ 1,113,106   $    697,914   $2,922,342
                                                          ===========   ============   ==========
</TABLE>

The "Notes to Consolidated Financial Statements of Insurance Management
Solutions Group, Inc. and Subsidiaries" are an integral part of these
statements.

   See accompanying "Notes to Condensed Financial Information of Registrant."

                                        88
<PAGE>   91

            INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. (REGISTRANT)

             NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT

NOTE 1 -- BASIS OF PRESENTATION

     Pursuant to the rules and regulations of the Securities and Exchange
Commission, the Condensed Financial Statements of the Registrant do not include
all of the information and notes normally included with financial statements
prepared in accordance with generally accepted accounting principles. It is,
therefore, suggested that these Condensed Financial Statements be read in
conjunction with the Consolidated Financial Statements and Notes thereto include
in the Registrant's Annual Report as referenced in Form 10-K, Part II, Item 8.

NOTE 2 -- CASH DIVIDENDS FROM SUBSIDIARIES

     No dividends have been declared or paid by the Registrant's subsidiaries
for any of the periods presented.

NOTE 3 -- RESTRICTED NET ASSETS AND RETAINED EARNINGS

     See Note 4 to the Consolidated Financial Statements of the Company.

NOTE 4 -- ACQUISITIONS AND DISPOSITIONS

     In July, 1997, the Company, through its subsidiary, BHDS, acquired a 49%
equity interest in YoSystems from Daniel J. White ("Mr. White"), the
corporation's president and then sole shareholder. In July, 1997, YoSystems
concurrently acquired all of the issued and outstanding shares of capital stock
of SMS Geotrac, Inc. SMS Geotrac, Inc. merged into YoSystems, with YoSystems
becoming the surviving entity, which then changed its name to Geotrac, Inc. In
July, 1998, the Company acquired the remaining 51% equity interest in Geotrac,
Inc. (formerly YoSystems) pursuant to the merger of Geotrac, Inc. with and into
BHDS, with the surviving entity being known as "Geotrac of America, Inc." The
Company acquired the remaining 51% interest from Mr. White and his wife and
certain minority shareholders.

     Effective January 7, 1999, the Company acquired Colonial Catastrophe Claims
Corporation, a Florida corporation.

                                        89
<PAGE>   92

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          INSURANCE MANAGEMENT SOLUTIONS GROUP,
                                          INC.

                                          By:      /s/ DAVID M. HOWARD
                                            ------------------------------------
                                                      David M. Howard
                                                    President and Chief
                                                     Executive Officer

April 17, 2001

                               POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David K. Meehan and David M. Howard, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this report, and to
file the same, with all exhibits thereto, and any other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitutes, may lawfully do or cause to be done
by virtue hereof.

     Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on April 17, 2001.

<TABLE>
<CAPTION>
                      SIGNATURE                                                TITLE
                      ---------                                                -----
<C>                                                    <S>
                 /s/ DAVID K. MEEHAN                   Chairman of the Board and Director
-----------------------------------------------------
                   David K. Meehan

                 /s/ DAVID M. HOWARD                   President, Chief Executive Officer and Director
-----------------------------------------------------  (Principal Executive Officer)
                   David M. Howard

                 /s/ ROBERT G. MENKE                   Director
-----------------------------------------------------
                   Robert G. Menke

                /s/ WILLIAM D. HUSSEY                  Director
-----------------------------------------------------
                  William D. Hussey

                 /s/ DANIEL J. WHITE                   Director
-----------------------------------------------------
                   Daniel J. White

            /s/ CHRISTOPHER P. BREAKIRON               Vice President, Chief Financial Officer, Treasurer
-----------------------------------------------------  and Secretary (Principal Financial and Accounting
              Christopher P. Breakiron                 Officer)
</TABLE>

                                        90
<PAGE>   93

<TABLE>
<CAPTION>
                      SIGNATURE                                                TITLE
                      ---------                                                -----

<C>                                                    <S>
                 /s/ ROBERT M. MENKE                   Director
-----------------------------------------------------
                   Robert M. Menke

               /s/ JOHN A. GRANT, JR.                  Director
-----------------------------------------------------
                 John A. Grant, Jr.

                 /s/ E. RAY SOLOMON                    Director
-----------------------------------------------------
                   E. Ray Solomon

              /s/ ALEJANDRO M. SANCHEZ                 Director
-----------------------------------------------------
                Alejandro M. Sanchez

                /s/ JOHN S. MCMULLEN                   Director
-----------------------------------------------------
                  John S. McMullen
</TABLE>

                                        91
<PAGE>   94

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             EXHIBIT DESCRIPTION
-------                            -------------------
<C>       <C>  <S>
   3.1     --  Amended and Restated Articles of Incorporation of Insurance
               Management Solutions Group, Inc.*
   3.2     --  Amended and Restated Bylaws of Insurance Management
               Solutions Group, Inc.*
   4.1     --  Specimen certificate for the Common Stock of Insurance
               Management Solutions Group, Inc.*
  10.1     --  Employment Agreement, dated August 10, 1998, between David
               K. Meehan and Insurance Management Solutions Group, Inc.*
  10.2     --  Insurance Management Solutions Group, Inc. Long Term
               Incentive Plan.*
  10.3     --  Insurance Management Solutions Group, Inc. Non-Employee
               Directors' Stock Option Plan.*
  10.4     --  Snell Arcade Building Lease, dated May 15, 1996, between
               Snell Arcade Limited Company and Bankers Insurance Group,
               Inc., as revised and assigned to Insurance Management
               Solutions Group, Inc., effective January 1, 1998.*
  10.5     --  Bankers Building -- 5th Street North Lease Agreement, dated
               January 1, 1997, between Bankers Insurance Group, Inc. and
               Insurance Management Solutions Group, Inc.*
  10.6     --  Bankers Financial Center Lease Agreement, dated January 1,
               1997, between Bankers Insurance Company and Insurance
               Management Solutions Group, Inc.*
  10.7     --  Lease, dated September 2, 1994, between DanYo LLC (as
               successor to Sandan) and SMS Geotrac, Inc.*
  10.8     --  Indenture of Lease, dated September 23, 1994, between
               Southview Business Center, Ltd., an Ohio limited
               partnership, and SMS Geotrac, Inc., including Addendum I,
               dated March 20, 1995, and Addendum II, dated December 8,
               1995.*
  10.9     --  Master Equipment Lease Agreement, dated May 11, 1995, and
               executed on May 15, 1995, between National City Leasing
               Corporation and SMS Geotrac, Inc.*
  10.10    --  Term Lease Master Agreement, dated June 30, 1995, between
               IBM Credit Corporation and SMS Geotrac, Inc.*
  10.11    --  Employment Agreement, dated June 11, 1998, between Jeffrey
               S. Bragg and Insurance Management Solutions Group, Inc.*
  10.12    --  Administration Services Agreement, dated January 1, 1998,
               between Bankers Insurance Group, Inc. and Insurance
               Management Solutions Group, Inc., including Addendum to
               Administration Services Agreement, dated December 2, 1998
               and effective January 1, 1998, and Addendum to
               Administration Services Agreement, effective January 1,
               1999.*
  10.13    --  Service Agreement, dated January 1, 1998, between Insurance
               Management Solutions, Inc. and Bankers Insurance Company,
               including Addendum dated April 1, 1998 and form of Addendum
               to Service Agreements effective January 1, 1999.*
  10.14    --  Service Agreement dated January 1, 1998 between Insurance
               Management Solutions, Inc. and Bankers Security Insurance
               Company, including form of Addendum to Service Agreements
               effective January 1, 1999. *
  10.15    --  Service Agreement dated January 1, 1998 between Insurance
               Management Solutions, Inc. and First Community Insurance
               Company, including form of Addendum to Service Agreements
               effective January 1, 1999. *
  10.16    --  Vendor Flood Insurance Agreement, dated January 1, 1996,
               between Insurance Management Solutions, Inc. (as successor
               to Insurance Management Information Services, Inc.) and
               Mobile USA Insurance Company, Inc.*
</TABLE>

                                       E-1
<PAGE>   95

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             EXHIBIT DESCRIPTION
-------                            -------------------
<C>       <C>  <S>
  10.17    --  Vendor Flood Insurance Agreement, dated November 10, 1995,
               between AAA Auto Club South Insurance Company and Insurance
               Management information Services, Inc.*
  10.18    --  Flood Insurance Program Services Agreement by and among
               Insurance Management Information Services, Inc., American
               Alternative Insurance Corporation, and Corporate Insurance
               Agency Services.*
  10.19    --  Agreement and Plan of Merger, dated May 12, 1998, by and
               among Geotrac, Inc., Insurance Management Solutions, Inc.,
               Daniel J. and Sandra White, Bankers Insurance Group, Inc.
               and Bankers Hazard Determination Services, Inc.*
  10.20    --  Employment Agreement, dated July 31, 1998, between Geotrac
               of America, Inc. (as successor to Geotrac, Inc.) and Daniel
               J. White.*
  10.21    --  Term Lease Master Agreement, dated August 6, 1996, between
               IBM Credit Corporation and Bankers Insurance Company,
               assigned by flankers Insurance Company to Insurance
               Management Solutions, Inc., effective April 1, 1998,
               pursuant to Sales and Assignment Agreement, dated May 6,
               1998.*
  10.22    --  Sales and Assignment Agreement, dated May 6, 1998, by and
               between Insurance Management Solutions Group, Inc.,
               Insurance Management Solutions, Inc., Bankers Insurance
               Group, Inc., Bankers Insurance Services, Inc., Bankers Life
               Insurance Company, Southern Rental & Leasing Corporation,
               Bankers Insurance Company and Insurance Management
               Information Services, Inc.*
  10.23    --  Corporate Governance Agreement, dated July 31, 1998, between
               Geotrac, Inc., Daniel J. White and Insurance Management
               Solutions Group, Inc.*
  10.24    --  Tax Indemnity Agreement dated July 31, 1998 between Bankers
               Insurance Group, Inc., Insurance Management Solutions Group,
               Inc. and Daniel J. and Sandra White.*
  10.25    --  Flood Insurance Agreement, dated January 6, 1998, between
               First Community Insurance Company and Keystone Insurance
               Company.*
  10.26    --  Marketing Agreement, dated November 14, 1997, between First
               Community Insurance Company and Nobel Insurance Company.*
  10.27    --  Flood Insurance Agreement, dated February 11, 1998, between
               First Community Insurance Company and Horace Mann Insurance
               Company.*
  10.28    --  Flood Compliance Service Agreement dated November 1, 1996,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and SMS Geotrac) and Mortgage Corporation of America.*
  10.29    --  Flood Compliance Service Agreement dated March 1, 1997,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and SMS Geotrac) and CitFed Mortgage Corporation of
               America.*
  10.30    --  Flood Compliance Service Agreement dated March 1, 1998,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and SMS Geotrac), ABN AMRO North American and certain
               of its affiliates.*
  10.31    --  Flood Compliance Service Agreement dated April 12, 1997,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and SMS Geotrac) and Third Federal Savings.*
  10.32    --  Flood Compliance Service Agreement dated April 9, 1997,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and SMS Geotrac) and MidAm, Inc.*
  10.33    --  Flood Compliance Service Agreement dated December 28, 1995,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc.) and Crestar Bank.*
  10.34    --  Flood Compliance Service Agreement dated April 1, 1996,
               between Geotrac of America, Inc.(as successor to Geotrac,
               Inc. and SMS Geotrac) and ReliaStar Mortgage Corporation.*
</TABLE>

                                       E-2
<PAGE>   96

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             EXHIBIT DESCRIPTION
-------                            -------------------
<C>       <C>  <S>
  10.35    --  Flood Zone Determination Agreement dated March 25, 1993,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and National Flood Certification Services, Inc.) and
               AIG Consultants, Inc.*
  10.36    --  Flood Zone Determination Agreement dated December 28, 1995,
               between Geotrac of America, Inc. (as successor to Bankers
               Hazard Determination Services, Inc.) and SouthTrust
               Corporation, as amended on June 3, 1997.*
  10.37    --  Flood Zone Determination Agreement dated July 14, 1994,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and National Flood Certification Services, Inc.) and
               SunBank, N.A.*
  10.38    --  Flood Zone Determination Agreement dated November 8, 1993,
               between Geotrac of America, Inc. (as successor to Geotrac,
               Inc. and National Flood Certification Services, Inc.) and
               Royal Indemnity Company.*
  10.39    --  Flood Insurance Agreement, dated February 17, 1995, between
               First Community Insurance Company and Armed Forces Insurance
               Exchange, as amended.*
  10.40    --  Flood Insurance Agreement, dated November 17, 1995, between
               First Community Insurance Company and Amica Mutual Insurance
               Company, as amended.*
  10.41    --  Non-Qualified Stock Option Plan.*
  10.42    --  Funding Agreement, dated June 19, 1998, by and between
               Bankers Insurance Group, Inc. and Insurance Management
               Solutions Group, Inc.*
  10.43    --  Assignment of Registered Service Mark ("Floodwriter"), dated
               May 7, 1998, from Bankers Insurance Company to Insurance
               Management Solutions, Inc.*
  10.44    --  Assignment of Registered Service Mark ("Undercurrents"),
               dated May 7, 1998, from Bankers Insurance Company to
               Insurance Management Solutions, Inc.*
  10.45    --  Registration Rights Agreement, dated July 31, 1998, between
               Insurance Management Solutions Group, Inc. and Daniel J. and
               Sandra White.*
  10.46    --  Software License Agreement, effective January 1, 1998,
               between Insurance Management Solutions, Inc., Bankers
               Insurance Group, Inc. and Bankers Insurance Company.*
  10.47    --  Tax Indemnity Agreement dated July 31, 1998 between
               Insurance Management Solutions Group, Inc., Insurance
               Management Solutions, Inc. and Geotrac of America, Inc.,
               including Addendum dated July 31, 1998.*
  10.48    --  Tax Allocation Agreement dated July 31, 1998 between
               Insurance Management Solutions Group, Inc., Insurance
               Management Solutions, Inc. and Geotrac of America, Inc.,
               including Addendum dated July 31, 1998.*
  10.49    --  Articles of Merger filed with the Florida Department of
               State relating to the merger between Bankers Hazard
               Determination Services, Inc. and Geotrac, Inc.*
  10.50    --  Certificate of Merger filed with the Ohio Department of
               State relating to the merger between Bankers Hazard
               Determination Services, Inc. and Geotrac, Inc.*
  10.51    --  Secrecy and Confidentiality Agreement, dated October 8,
               1993, between Geotrac of America, Inc. (formerly Geotrac,
               Inc.) and Kirloskar Computer Services, Ltd.*
  10.52    --  Service Agreement dated December 1, 1998 between Insurance
               Management Solutions, Inc. and Bankers Life Insurance
               Company, including Addendum to Service Agreements dated
               December 11, 1998 and effective January 1, 1999*
  10.53    --  Stock Purchase Agreement, dated July 31, 1997, between
               YoSystems, Inc., Bankers Hazard Determination Services, Inc.
               and Daniel J. and Sandra White.*
  10.54    --  AYO Claims Agreement between Florida Windstorm Underwriting
               Association and Bankers Insurance Group, Inc., dated
               February, 1998.*
</TABLE>

                                       E-3
<PAGE>   97

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             EXHIBIT DESCRIPTION
-------                            -------------------
<C>       <C>  <S>
  10.55    --  Assignment of AYO Claims Agreement among Bankers Insurance
               Group, Inc., Bankers Insurance Company and Florida Windstorm
               Underwriting Association dated December 15, 1998.*
  10.56    --  Software Transfer Agreement dated September 1, 1998 by and
               among Bankers Insurance Group, Inc., Bankers Insurance
               Company, Insurance Management Solutions, Inc., and First
               Community Insurance Company.*
  10.57    --  Registration Rights Agreement dated January, 1999, between
               Insurance Management Solutions Group, Inc. and J. Douglas
               Branham and Felicia A. Rivas.*
  10.58    --  Stock Purchase Agreement dated December 10, 1998 between
               Colonial Catastrophe Claims Corporation, J. Douglas Branham,
               Felicia A. Rivas, and Insurance Management Solutions Group,
               Inc., including Addenda thereto.*
  10.59    --  Loan Agreement dated December 16, 1998 between Bankers
               Insurance Group, Inc. and Western International Insurance
               Company.*
  10.60    --  Promissory Note of Bankers Insurance Group, Inc. in favor of
               Western International Insurance Company*
  10.61    --  Agreement for Satisfaction of Debt and Capitalization of
               Subsidiary dated December 16, 1998 between Venture Capital
               Corporation and Western International Insurance Company.*
  10.62    --  Plan of Merger dated January 7, 1999 and effective January
               15, 1999 between IMS Colonial, Inc. and Colonial Catastrophe
               Claims Corporation.*
  10.63    --  Flood Insurance Services Agreement, dated January 14, 1999,
               by and between Insurance Management Solutions Group, Inc.
               and Farmers Services Corporation.*
  10.64    --  Funding Agreement, dated February 16, 1999, by and between
               Bankers Insurance Group, Inc., Bankers Insurance Company,
               Venture Capital Corporation and Western International
               Insurance Company.*
  10.65    --  Flood Insurance Services Agreement, dated October 23, 1998,
               by and between Insurance Management Solutions, Inc. and
               Middlesex Mutual Assurance Company.*
  10.66    --  Flood Insurance Services Agreement, effective January 13,
               1999, by and between Insurance Management Solutions, Inc.
               and Island Insurance Companies, Ltd.*
  10.67    --  Lease Agreement, dated February 1, 1999, by and between
               Colonial Real Estate of Dunedin, Inc. and Colonial Claims
               Corporation.*
  10.68    --  Second Addendum to Service Agreements, effective as of April
               1, 1999, by and between Insurance Management Solutions, Inc.
               and each of Bankers Insurance Company, First Community
               Insurance Company and Bankers Security Insurance Company.*
  10.69    --  Technical Support Services Agreement, dated April 1, 1999,
               by and between Insurance Management Solutions, Inc. and
               Bankers Insurance Group, Inc. and its subsidiaries.*
  10.70    --  Lease Agreement, dated September 27, 1999, by and between
               Koger Equity, Inc. and Insurance Management Solutions Group,
               Inc.*
  10.71    --  Insurance Administration Services Agreement, effective as of
               May 3, 2000, by and between Insurance Management Solutions,
               Inc. and Reliance Insurance Company.*
  10.72    --  Insurance Administration Services Agreement, effective as of
               June 30, 2000, by and between Insurance Management
               Solutions, Inc. and Instant Insurance Holding, Inc.*
  10.73    --  Development Services Agreement, effective as of June 30,
               2000, by and between Insurance Management Solutions, Inc.
               and Instant Insurance Holding, Inc.*
  10.74    --  Insurance Administration Services Agreement (Interim),
               effective as of June 22, 2000, by and between Insurance
               Management Solutions, Inc. and Instant Insurance Holding,
               Inc.*
</TABLE>

                                       E-4
<PAGE>   98

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             EXHIBIT DESCRIPTION
-------                            -------------------
<C>       <C>  <S>
  10.75    --  Insurance Administration Services Agreement Termination and
               Interim Services Addendum, effective as of August 1, 2000,
               by and between Insurance Management Solutions, Inc.,
               International Catastrophe Insurance Managers, LLC and
               Clarendon National Insurance Company, including all
               schedules and exhibits thereto.*
  10.76    --  Insurance Management Solutions Group, Inc. 2000 Stock
               Incentive Plan
  10.77    --  Insurance Management Solutions Group, Inc. 2000 Non-Employee
               Director Stock Plan
  10.78    --  Employment Agreement, dated August 19, 1998, between Robert
               G. Gantley and Insurance Management Solutions, Inc.
  10.79    --  Release and Separation Agreement, dated April 12, 2001,
               between Christopher P. Breakiron and Insurance Management
               Solutions Group, Inc.
  10.80    --  Consulting Agreement, dated April 12, 2001, between
               Christopher P. Breakiron and Insurance Management Solutions
               Group, Inc.
  10.81    --  Asset Purchase Agreement, including Indemnification
               Agreement, Bill of Sale and Assignment of Flood Monitoring
               Agreement, effective July 31, 2000, between IMS Direct, Inc.
               and Bankers Insurance Services, Inc.
  10.82    --  Letter Agreement, dated April 13, 2001, by and between
               Insurance Management Solutions, Inc., Bankers Insurance
               Group, Inc., Bankers Insurance Company, First Community
               Insurance Company and Bankers Security Insurance Company.
  10.83    --  Settlement Agreement, dated February 20, 2001, by and
               between Instant Insurance Holdings, Instant Auto Insurance
               Company and Insurance Management Solutions, Inc.
  10.84    --  Commitment Letter to advance service fee payments, dated
               April 13, 2001, between Insurance Management Solutions, Inc.
               and Bankers Insurance Group, Inc.
  21.1     --  List of subsidiaries of Insurance Management Solutions
               Group, Inc.*
  24.1     --  Power of Attorney relating to subsequent amendments
               (included on signature page hereto).
</TABLE>

---------------

* Indicates document incorporated herein by reference.

                                       E-5