GORAN LOGO

                               1999 Annual Report

Corporate Profile

Goran Capital Inc. owns subsidiaries engaged in a number of business activities.
The most  important of these is the property  and  casualty  insurance  business
conducted  in 46  U.S.  states,  Canada  and  Barbados,  on  both a  direct  and
reinsurance basis through a number of subsidiaries  collectively  referred to in
this  report as Goran.  Goran owns  68.0% of Symons  International  Group,  Inc.
("SIG")  trades on The NASDAQ Stock  Market's  National  Market under the symbol
"SIGC".  SIG  owns  niche  insurance  companies  principally  in  the  crop  and
nonstandard  automobile  insurance markets, IGF Insurance Company of Des Moines,
Iowa is the fifth  largest  crop  insurer  in the United  States.  SIG also owns
Superior Insurance Company of Tampa, Florida and Pafco General Insurance Company
of Indianapolis,  Indiana,  which provide nonstandard  automobile  insurance and
combined are the twelfth largest writers of such insurance in the United States.
Granite Reinsurance  Company Ltd.  underwrites finite (limited risk) reinsurance
in Bermuda, the United States and Canada.

The common stock of Goran  Capital  Inc.  trades on The Toronto  Stock  Exchange
under the symbol "GNC" and The NASDAQ Stock Market's  National  Market under the
symbol "GNCNF".

All dollar amounts shown in this report are in U.S.  currency  unless  otherwise
indicated.  The  conversion  rates  for 1999 and as of  December  31,  1999 were
$1.4871 and $1.4432, respectively.

Table of Contents

                                                      Page

Financial Highlights                                     2
Chairman's Report                                        3
Selected Financial Data                                  5
Management's Discussion and Analysis of
 Financial condition and Results of Operations           6
Consolidated Financial Statements                       23
Notes to Consolidated Financial Statements              27
Report of Independent Accountants                       53
Stockholder Information                                 54
Board of Directors and Executive Officers              1BC
Subsidiary and Brance Offices                          1BC


GRAPH             1995       1996          1997        1998      1999
                $146,303    $299,376    $448,982    $546,771    $473,687

Gross Premiums Written By Year

<PAGE>
<TABLE>
<CAPTION>

Financial Highlights
(in thousands, except per share data)
For the years ended December 31,

                                                     1999          1998         1997         1996          1995
                                                     ----          ----         ----         ----          ----
<S>                                                   <C>          <C>          <C>          <C>           <C>
Gross premiums written                                $473,687     $546,771     $448,982     $299,376      $146,303
Earnings (loss) from continuing operations           $(62,373)     $(9,139)      $15,763      $14,128        $6.652
Earnings (loss) per share from continuing             $(10.61)      $(1.56)        $2.82        $2.67         $1.33
Operations
Stockholders' equity                                 $(18,061)      $49,524      $61,462      $47,258       $12,761
Book Value per share                                   $(3.07)        $8.48       $10.53        $8.74         $2.52
Market Value per share                                   $2.00       $10.38       $29.41       $20.08         $8.57

     1)   1995 figures have been restated to reflect  accounting  policy changes
          and adopted in 1998 (see Note 1(0) to the financial statements);  1996
          and 1997 figures were not materially impacted by the changes.

</TABLE>

                                                          CORPORATE STRUCTURE
[graphic omitted]


Goran Capital, Inc.
Toronto, Ontario
|
--------------------------------------------------------------------------------
|
68% Owned              100% Owned          100% Owned         100% Owned
Symons International   Granite Reinsurance Granite            Symons
Group, Inc.,           Company, Ltd        Insurance          International
Indianapolis, Indiana  Barbados            Company            Group, Inc.
                                                                         Florida

               |------------------------|
               IGF Holdings, Inc.      Superior Insurance Group Management, Inc.
                     |                      |
                  North American         IGF Insurance
                  Crop Underwriters      Company

                   Inc.

                                         ---------------------------------------
                                         |                |
                                         Pafco General     Superior Insurance
                                         Insurance Company Company

                                                         ||
                                          --------------------------------------
                                                 |                    |
                                           Superior Guaranty  Superior American
                                           Insurance Company  Insurance Company

Chairman's Report to our Shareholders

On this  Millennium New Year, I gathered with my family for a New Year's repast,
hopeful  that it would see the  beginning  of a better  business  period for our
companies and us. During the past two years we had  concentrated  money and time
on extensive  adjustments  in our reporting and  operational  systems and in the
past year  accelerated  our  search  for  people  who could  add  expertise  and
experience  to the basic  divisions  of the  Company  nonstandard  auto and crop
insurance.

Many of our problems stemmed from our active  acquisition  program,  our premium
income rising from $127 million in 1994 to $546 million in 1998. The integration
of this business with its diverse data processing systems, has been an expensive
and  difficult  experience,  but I'm  pleased  to say we have  made  substantial
improvements and I expect these  modifications to show tangible  benefits in the
near future.  These systems play an important role in the  functionality  of the
Company and its  subsidiaries  but in addition can have a significant  effect on
the expense  ratio of our insurance  entities.  I will not dwell further on this
aspect  of our  operations,  but  those  shareholders  who have  been  active in
business,  know  that it is  impossible  to  survive  without  a  compliant  and
functional EDP program.

Our shareholders  know that we had significant  losses in our Crop Operations in
1998 and 1999, the most devastating  losses coming from a relatively new program
called  AgPI.  This  is a  form  of  business  interruption  insurance  designed
initially to fill a coverage  requirement  for processors of crops such as grain
dealers and  companies  that  purchase  the  products  grown by the farms.  This
business  produced in 1998  approximately $7 million of premium and we have paid
losses or established loss reserves against liabilities  totaling  approximately
$35  million.  The  reserves  are  established  by our staff,  then  reviewed by
professional  actuaries.  The business  was issued on policies of a  third-party
insurance  company  licensed in California  and elsewhere and reinsured to us. A
portion of the losses incurred resulted from the actions of certain  independent
brokers who sold the policies to insured's  who knew they had losses before they
applied for the coverage.  The issuing  company  settled certain losses over our
objections,  which calls into  question  whether we have an  obligation  to meet
liabilities of this  magnitude.  All of this business and its resultant  losses,
whether reserved or paid arose in 1998. However,  the major increase in reserves
took place in 1999 when the  magnitude of the loss could  finally be  estimated.
The losses are excessive by any standard,  but regardless of our feelings on the
quantum of the losses and practices employed to write this business,  we have to
pay some losses and reserve for others.  The company is pursuing all  applicable
recovery rights.

Unlike many other forms of insurance, crop insurance is a year-by-year thing. As
the  coverage is against loss  occurring  in the growing  season it has no "long
tail"  exposure and it is generally  possible to determine the profit or loss to
the insurers at the end of the term.  We start with a clean sheet,  so to speak,
the exception being rare. There is cause for some optimism, concerning Crop Year
2000,  for not only has there been upward  movement in the price of the products
we insure but farmers realize that the Federal  Government program is the safety
net to the farmer and bankers are  demanding  more  coverage.  These two factors
will  increase the premium  volume and we have seen this in the number and value
of the  applications  received to date.  With the  substance of our  reinsurance
program and our emphasis on increased fee income,  we are  optimistic  about our
results for the current year.

Fee  income is earned  from  such  programs  as our Geo Ag,  which  uses  global
positioning  satellites  to grid map the farm and match with soil  sampling  for
precision farming. Our agronomy-trained staff is proving to farmers the benefits
of no-till  techniques,  to increase  yields and stop soil run-off and air blown
run-off. These techniques create carbon credits from the stalks remaining in the
ground over the winter and we assist the farmers by marketing  these  credits to
the power companies. We maintain a large staff of agronomists whose services are
sold to the farmers on such  matters as to the types of seed to plant for better
results,  the  best  fertilizer  to use in  certain  areas  of  the  farm,  such
information  coming as a product of the GPS  information we obtain on a specific
piece of land.

<PAGE>

In the past  three  years the  nonstandard  auto  insurance  market  was  overly
competitive as the larger  companies  fought to increase their market share. The
resultant poor underwriting  results has led to a return to sounder underwriting
principles  in the past short while.  Our problems in the auto division were two
fold;  excessive  competition  coupled with a rising expense  ratio.  One of our
system providers went out of business and flaws in other systems  inherited from
acquisitions  needed to be  overhauled.  At  considerable  expense this has been
attended to and we look for a return to lower  expense  ratios which  previously
prevailed.  Rates have been rising in most states as many companies have reduced
their  market  share in an  attempt  to return  to  profitability,  while  other
nonstandard companies have withdrawn from the business.

We  inaugurated  a  program  to  find  the  best  man  available  to head up our
nonstandard  business.  We  believe  Gene  Yerant who had an  impressive  record
building Leader National Insurance Company, a nonstandard provider, is the right
man for the job, and in January he assumed the Presidency of Superior  Insurance
Group.  The  Board  has  been  impressed  with the  progress  he has made in the
relatively  short  time  since he joined  us.  He has  effected  changes  in key
positions of senior  personnel and has achieved a major  improvement in the flow
of business. The agents, several of them returning to the Company with business,
have been most complimentary to these changes.

I believe we are  returning  to the  position we  maintained  when  results were
profitable and that evidence of that should not be very distant.

It has been a hard haul for our staff as changes  were  implemented  and I would
like to express my gratitude to those who have  remained  with us through  these
changing times. I specifically wish to thank the Board members for their support
as we tussled  with these  problems,  and while we are not out of the woods yet,
there is realistic cause for optimism.

<PAGE>

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
 Years Ended December 31,

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA

OF GORAN CAPITAL INC.

The selected  consolidated  financial data  presented  below is derived from the
consolidated financial statements of the Company and its Subsidiaries and should
be read in conjunction with the consolidated financial statements of the Company
and the notes thereto, included elsewhere in this Report.

<TABLE>
<CAPTION>

Consolidated Statement of Operations Data (1):
(in thousands, except per share amounts and ratios)

                                                          1999         1998          1997         1996         1995

<S>                                                   <C>          <C>           <C>          <C>          <C>
Gross Premiums Written                                $473,687     $546,771      $448,982     $299,376     $146,303
Net Premiums Earned                                    276,040      342,177       276,540      214,346       72,102
Fee Income                                              15,791       20,203        17,821        9,286        2,170
Net Investment Income                                   13,418       13,401        12,777        7,745        3,686
NET EARNINGS (LOSS)                                   $(62,373)    $(12,076)      $12,218      $31,296       $6,666
                                                      =========    =========      =======      =======       ======
Per Common Share Data:
Basic Earnings Per Share From Continuing Operations

                                                        $(10.61)      $(1.56)        $2.82        $2.67        $1.33
Basic Earnings Per Share                                $(10.61)      $(2.07)        $2.19        $5.89        $1.33

GAAP Ratios:
Loss and LAE Ratio                                        100.2%        82.1%         76.5%        68.3%        71.0%
Expense Ratio                                              35.5%        30.4%         22.9%        22.7%        21.5%
Combined Ratio                                            135.7%       112.5%         99.4%        91.0%        92.5%
Consolidated Balance Sheet Data:
Investments                                           $220,740     $240,866      $236,797     $198,594      $44,174
Assets                                                 512,111      571,204       564,471      381,972      160,032
Losses and LAE                                         219,918      207,432       154,636      128,306       88,982
Trust Preferred Securities                             135,000      135,000       135,000       48,000        5,811
Equity (Deficit)                                      $(18,061)     $49,524       $61,462      $47,984      $11,977
Book Value                                              $(3.07)       $8.43        $10.73        $8.88        $2.37

     (1)  The  financial  statements  of  the  Company  have  been  prepared  in
          conformance  with U.S. GAAP. See Note 22 to the financial  statements.
     (2)  1995 figures have been restated to reflect  accounting  policy changes
          adopted in 1998 (see Note 1(0) to the financial statements);  1996 and
          1997 figures were not materially impacted by the changes.

</TABLE>

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

All statements,  trend analyses, and other information herein contained relative
to markets for the Company's products and/or trends in the Company's  operations
or  financial  results,  as well as other  statements  including  words  such as
"anticipate,"  "could,"  "feel(s),"  "believe,"  "believes," "plan," "estimate,"
"expect," "should," "intend," "will," and other similar expressions,  constitute
forward-looking statements under the Private Securities Litigation Reform Act of
1995. These  forward-looking  statements are subject to known and unknown risks;
uncertainties  and other factors which may cause actual results to be materially
different  from  those  contemplated  by the  forward-looking  statements.  Such
factors include, among other things: (i) general economic conditions,  including
prevailing  interest  rate levels and stock  market  performance;  (ii)  factors
affecting  the  Company's  crop  insurance  operations  such as  weather-related
events,  final harvest  results,  commodity price levels,  governmental  program
changes,  new product  acceptance  and commission  levels paid to agents;  (iii)
factors  affecting  the  Company's  nonstandard  automobile  operations  such as
premium volume;  and (iv) the factors described in this section and elsewhere in
this report.

Overview

Goran Capital Inc.  (the  "Company" or "Goran") owns  insurance  companies  that
underwrite and market  nonstandard  private passenger  automobile  insurance and
crop insurance. The Company's principal insurance company subsidiaries are Pafco
General Insurance Company ("Pafco"), Superior Insurance Company ("Superior") and
IGF Insurance Company ("IGF").  The Company also provides finite risk, stop loss
and quota share reinsurance  through Granite  Reinsurance Company Ltd. ("Granite
Re").

Nonstandard  Automobile Insurance Operations

Pafco, Superior,  Superior Guaranty Insurance Company ("Superior Guaranty"), and
Superior American  Insurance Company ("Superior  American"),  are engaged in the
writing of  insurance  coverage for  automobile  physical  damage and  liability
policies for nonstandard risks.  Nonstandard risk insureds are those individuals
who are unable to obtain insurance coverage through standard market carriers due
to  factors  such  as  poor  premium  payment  history,  driving  experience  or
violations, particular occupation or type of vehicle. The Company offers several
different  policies which are directed towards  different classes of risk within
the nonstandard market.  Premium rates for nonstandard risks are higher than for
standard  risks.  Since it can be viewed as a residual  market,  the size of the
nonstandard  private  passenger  automobile  insurance  market  changes with the
insurance  environment  and  grows  when  the  standard  coverage  becomes  more
restrictive.  Nonstandard  policies have relatively short policy periods and low
limits of liability.  Due to the low limits of coverage, the period of time that
elapses  between the  occurrence  and  settlement  of losses  under  nonstandard
policies  is  shorter  than  many  other  types of  insurance.  Also,  since the
nonstandard  automobile insurance business typically  experiences lower rates of
retention than standard  automobile  insurance,  the number of new policyholders
underwritten  by  nonstandard   automobile   insurance  carriers  each  year  is
substantially  greater  than the  number of new  policyholders  underwritten  by
standard carriers.

<PAGE>

Crop Insurance Operations

General

The two  principal  components  of the  Company's  crop  insurance  business are
multiple-peril  crop  insurance  (MPCI) and private named peril crop  insurance,
primarily crop hail insurance.  Crop insurance is purchased by farmers to reduce
the risk of crop loss from  adverse  weather  and other  uncontrollable  events.
Farms are subject to drought,  floods and other natural disasters that can cause
widespread  crop losses and, in severe  cases,  force  farmers out of  business.
Historically,  one out of every  twelve  acres  planted by farmers  has not been
harvested  because of adverse weather or other natural  disasters.  Because many
farmers rely on credit to finance their purchases of such agricultural inputs as
seed,  fertilizer,  machinery and fuel, the loss of a crop to a natural disaster
can reduce their ability to repay these loans and to find sources of funding for
the following year's operating expenses.

The Company generates revenue like other private insurers  participating in MPCI
program in two ways.  First, it markets,  issues and administers  policies,  for
which  it  receives  administrative  fees;  and  second,  it  participates  in a
profit-sharing arrangement with the federal government. However, the Company may
also pay a portion of the aggregate  loss, in respect of the business it writes,
if the losses  exceed  certain  levels.  The  Company  writes MPCI and crop hail
insurance through approximately 2,850 independent agencies in 46 states.

In addition to MPCI, the Company offers stand alone crop hail  insurance,  which
insures growing crops against damage  resulting from hail storms and involves no
federal  participation.  The Company  also offers a  proprietary  product  which
combines the application and underwriting  process for MPCI and hail coverages -
HailPlus(TM).  This product  tends to produce less volatile loss ratios than the
stand alone  product  since the  combined  product  generally  insures a greater
number of acres,  thereby  spreading  the risk of damage  over a larger  insured
area.   Approximately  37%  of  the  Company's  hail  policies  are  written  in
combination with MPCI. Although both crop hail and MPCI provide coverage against
hail damage,  the private crop hail coverages allow farmers to receive  payments
for hail damage which would not be severe  enough to require a payment  under an
MPCI policy.  The Company believes that offering crop hail insurance  enables it
to sell more policies than it otherwise would.

In addition to crop hail  insurance,  the Company also sells  insurance  against
crop damage from other  specific  named perils.  These  products  cover specific
crops and are  generally  written on terms that are specific to the kind of crop
and farming  practice  involved and the amount of actuarial data available.  The
Company plans to seek  potential  growth  opportunities  in this niche market by
developing  basic policies on a diverse number of named crops grown in a variety
of geographic areas.

The Company has started three new business  initiatives  related to  agriculture
risk management:  agronomy services, price risk management,  and carbon emission
reduction  credits.  Each will provide the  opportunity to increase fee revenue.
Fee revenue  provides the Company with limited risk and high profit margins from
its same base of operations and thus contributes to capital and surplus growth.

The Company, through its IGF subsidiary,  has launched additional pilot programs
- IGF  Agronomics,  IGF Price Risk  Management,  and  Carbon  Credits - aimed at
generating  fee income in addition to  continuing  its GeoAgPLUS  services.  IGF
Agronomics  is a new program where  farmer-clients  work  hand-in-hand  with IGF
employed  professional  agronomists to maximize the producer's return by helping
lower costs and increase yields. This is accomplished  through the employment of
best management  practices ranging from tillage  techniques to seed selection to
fertilizer and pesticide application programs.  Research shows that every dollar
spent by farmers on  agronomy  services  yields a multiple  positive  return per
acre.  IGF Price Risk  Management is then designed to help farmers  market their
crop  so  as to  generate  a  return  sufficient  to at  least  cover  costs  of
production, if not generate a profit. Finally, IGF is established as a solicitor
and  accumulator of Carbon  Emission  Reduction  Credits  (CERC1s).  CERCs are a
tradable   commodity  sought  by  power  companies  and  other  industries  with
operations resulting in a net addition of carbon dioxide (CO2) to the atmosphere
due to upcoming  restrictions  on such  emissions  imposed by  regulators  under
international treaties. Certain agricultural practices, many already employed by
American  farmers,  result in a net "sink" or actual  reduction  of emissions by
avoidance or  substitution  (removing  CO2) thereby  generating  CERCs.  IGF has
already  participated  in one  large  sale  of  CERCs  and is  awaiting  federal
standards criteria for expanding this initiative.

Geo AgPLUS(TM)  Services ("Geo Ag") provides to the farmer measuring,  gridding,
and soil sampling services combined with fertility maps and the software that is
necessary to run their  precision  farming  program.  Grid soil  sampling,  when
combined with precision farming technology, allows the farmer to apply the right
amount of fertilization, thus balancing soil nutrients for a maximum crop yield.
Precision farming technology increases the yield to the farmer, reduces the cost
of unnecessary fertilization, and enhances the environment by reducing overflows
of  fertilization  into the ecosystem.  Geo  AgPLUS(TM) is an precision  farming
service  operating  through  a  division  that is now  marketing  its fee  based
services to the farmer.

Seasonality

The crop insurance  business is seasonal by geographic  region;  spring crops in
northern and midwestern states,  fall crops in southern states such as fruit and
nuts,  winter crops in coastal  states such as California  and summer cash crops
grown in all states. The Company also insures long term crops such as timber and
nurseries. While this seasonality is time specific for each crop, the associated
tasks of sales and marketing primarily occur before each respective crop growing
season. The customer support,  applications and claims processing tasks are time
and event driven within the mid to later part of the growing season;  many times
being finished  after the growing  season and harvest is completed.  The bulk of
the loss  adjustment  activities for the spring and fall crops occur between May
and November.  These same activities occur for winter crops,  such as fruits, in
January and February, and for cash crops throughout the year.

Throughout  the year the Company  provides  to its  customers  services  such as
education, agronomy training, soil sampling, grid mapping for precision farming,
insurance advice and loss adjusting.

Certain Accounting Policies for Crop Insurance Operations

MPCI is a  government-sponsored  program with accounting treatment which differs
in certain  respects from the more traditional  property and casualty  insurance
lines.  For  income  statement  purposes  under  generally  accepted  accounting
principles  ("GAAP"),  gross premiums written consist of the aggregate amount of
MPCI premiums paid by farmers for buy-up  coverage  (MPCI  coverage in excess of
catastrophic  ("CAT") coverage - the minimum  available level of MPCI coverage),
and any related  federal  premium  subsidies,  but do not include  MPCI  imputed
premiums on CAT coverage.  By contrast,  net premiums written do not include any
MPCI premiums or  subsidies,  all of which are deemed to be ceded to the Federal
Crop Insurance  Corporation (FCIC) as a reinsurer.  The Company's profit or loss
from its MPCI business is determined  after the crop season ends on the basis of
a  complex  profit  sharing  formula  established  by law and the  FCIC  under a
Standard  Reinsurance  Agreement (SRA). For income statement purposes,  any such
profit or loss  sharing  earned or  payable  by the  Company  is  treated  as an
adjustment  to  commission  expense and is included  in policy  acquisition  and
general and administrative expenses.

The Company also  receives  from the FCIC (i) an expense  reimbursement  payment
(made on the farmer's  behalf) equal to a percentage of gross  premiums  written
for each Buy-Up  Coverage  policy it writes and (ii) a loss  adjustment  expense
("LAE") reimbursement payment equal to a percentage of MPCI imputed premiums for
each CAT coverage policy it writes. The Buy-Up Expense Reimbursement Payment was
reduced in 1999 to 24.5%, from 27.0% in 1998 of the MPCI Premium on regular MPCI
yield-based  policies  and  21.1%  Crop  Revenue  Coverage  (CRC)  revenue-based
policies.  For GAAP principles  income  statement  purposes,  the Buy-Up Expense
Reimbursement Payment is treated as a contribution to income and reflected as an
offset against policy acquisition and general and administrative  expenses.  The
CAT LAE Reimbursement Payment is, for income statement purposes,  recorded as an
offset  against  LAE, up to the actual  amount of LAE incurred by the Company in
respect of such policies.  The remainder of the payment,  if any, is recorded as
Other Income.

In June 1998,  the United States  Congress  passed  legislation  which  provided
permanent funding for the crop insurance  industry.  However,  it also contained
the Expense Reimbursement reductions noted above that began in 1999. In addition
the new law  reduced  the CAT LAE  Reimbursement  Payment  from  14.1% to 11% of
imputed  premium  and the $60 CAT  administrative  fee  previously  retained  by
private carriers must, beginning in 1999, be remitted in full to the FCIC.

Although the Company had hoped to offset these reductions  through growth in fee
income from non-federally subsidized programs, it was not fully able to do so in
1999.

In 1996, the Company instituted a policy of recognizing (i) 35% of its estimated
MPCI gross premiums written for each of the first and second  quarters,  20% for
the third quarter and 10% for the fourth quarter, (ii) commission expense at the
applicable rate of MPCI gross premiums written recognized,  (iii) Buy-Up Expense
Reimbursement at the applicable rate of MPCI gross premiums  written  recognized
along with  normal  operating  expenses  incurred  in  connection  with  premium
writings and (iv) an estimate of underwriting  profit based on historic results.
In the third quarter,  if a sufficient  volume of  policyholder  acreage reports
have been  received and  processed by the Company,  the  Company's  policy is to
recognize  MPCI gross  premiums  written  for the first nine  months  based on a
re-estimate which takes into account actual gross premiums processed and growing
conditions.  If an  insufficient  volume of  policies  has been  processed,  the
Company's  policy  is to  recognize  in the third  quarter  20% of its full year
estimate of MPCI gross premiums written,  unless other  circumstances  require a
different approach. The remaining amount of gross premiums written is recognized
in the fourth  quarter,  when all  amounts  are  reconciled.  The  Company  also
recognizes the MPCI  underwriting  gain or loss during each quarter,  reflecting
the Company's  best estimate of the amount of such gain or loss to be recognized
for the full year,  based on, among other  things,  historical  results,  plus a
provision  for  adverse  development.  In  the  third  and  fourth  quarters,  a
reconciliation  amount is recognized for the underwriting  gain or loss based on
final premium and latest available loss information. The growing seasons vary by
region  and crop.  The  determination  of  amounts of risk and volume of premium
often is arrived at after the attachment of risk. For these reasons,  management
believes that the best method to arrive at an allocation of premium, expense and
estimate of profit and loss is as stated above.

Currently, the National Association of Insurance Commissioners ("NAIC") does not
provide guidelines for the reporting of underwriting gains/losses. The Company's
position is embedded in the understanding that these amounts more closely relate
to  ceding  commission  rather  than  normal  revenues.  Underwriting  gain is a
function of premiums  less loss,  which in non-MPCI  insurance  would  result in
commissions, which are returned to the Company from the reinsurer. Amounts are a
function of the ceding  commission  related to the MPCI  business  and have been
reported as such  (included  with the other  commission  expense  items).  These
amounts  are  reported  as a  reduction  to  commission  expense  (gain)  from a
statutory basis. The Company's position has been to maintain consistency.

The Company is currently  involved with an industry  taskforce  working with the
NAIC and the FCIC to develop  standard  accounting and reporting  procedures for
this  line of  business.  The  taskforce's  goal is to  provide  to the NAIC the
standard  methodology,  which can be  incorporated no earlier than the year 2000
codification.  Currently  there are  seventeen  companies  writing  this line of
business with varying reporting formats.

<PAGE>

Selected Segment Data of the Company

The  following  table  presents   historical  segment  data  for  the  Company's
nonstandard automobile and crop insurance operations. This data does not reflect
results of operations  attributable  to corporate  overhead,  interest costs and
amortization of intangibles.

<TABLE>
<CAPTION>

                                                                               Year Ended December 31,

Nonstandard  - Automobile Insurance Operations:
(in thousands, except ratios)                                              1999         1998          1997
                                                                           ----         ----          ----

<S>                                                                      <C>           <C>          <C>
    Gross premiums written                                               $235,773      $303,737     $323,915
                                                                         --------      --------     --------
    Net premiums written                                                 $244,826      $269,741     $256,745
                                                                         --------      --------     --------
    Net premiums earned                                                  $249,094      $264,022     $251,020
    Fee income                                                             15,185        16,431       15,515
    Net investment income                                                  12,339        11,958       10,969
    Net realized capital gain (loss)                                         (281)        4,124        9,462
                                                                             -----        -----        -----
Total Revenues                                                            276,337       296,535      286,966
                                                                          -------       -------      -------
    Losses and loss adjustment expenses                                   230,973       217,916      195,900
    Policy acquisition and general administrative expenses                 91,859        73,346       72,463
                                                                           ------        ------       ------
Total Expenses                                                            322,832       291,262      268,363
                                                                          -------       -------      -------
Earnings before income taxes                                             $(46,495)       $5,273      $18,603
                                                                         ---------       ------      -------
GAAP RATIOS (Nonstandard  Automobile Only)
Loss and LAE ratio (1)                                                       92.7%         82.5%        78.0%
Expense ratio, net of billing fees (2)                                       30.8%         21.6%        22.7%
                                                                             -----         -----        -----
Combined ratio (3)                                                          123.5%        104.1%       100.7%
Crop Insurance Operations:
    Gross premiums written                                               $237,286      $243,026     $126,401
                                                                         --------      --------     --------
    Net premiums written                                                  $12,737       $62,467      $20,796
                                                                          -------       -------      -------
    Net premiums earned                                                   $14,240       $60,901      $20,794
    Fee income                                                                456         3,772        2,276
    Net investment income                                                     293           275          191
    Net realized capital gain (loss)                                           21           217          (18)
                                                                               --           ---          ----
Total Revenues                                                             15,010        65,165       23,243
                                                                           ------        ------       ------
    Losses and loss adjustment expenses                                    34,225        52,550       16,550
    Policy acquisition and general and administrative expenses (4)            215        21,906      (14,404)
    Interest and amortization of intangibles                                1,113           502          235
                                                                            -----           ---          ---
Total Expenses                                                             35,553        74,958        2,381
                                                                           ------        ------        -----
    Earnings (loss) before income taxes                                  $(20,543)      $(9,793)     $20,862
                                                                         =========      ========     =======
</TABLE>

(1) Loss and LAE  ratio:  The  ratio of losses  incurred  during  the  financial
    reporting  year plus the cost to settle  losses  during the same period as a
    percentage of premiums earned.

(2) Expense ratio: The ratio of policy acquisition, general administrative
    expenses, as percentage of premiums earned.

(3)  Combined ratio:  The sum of the loss, plus LAE, plus the expense ratio as a
     percentage  of  premiums  earned.  Loss is the claims  incurred on policies
     written.  LAE is loss  adjusting  expense on claims for which policies have
     been written.

(4) Negative   crop   expenses   are  caused  by   inclusion   of  MPCI  expense
    reimbursements  and underwriting  gain as a set off to expense.  See certain
    accounting policies for crop insurance operations.

 [photograph of automobiles and crop field down left side]

Results of Operations

Overview

1999 Compared To 1998

The Company  recorded a net loss of  $(62,373,000)  or $(10.61) per share (basic
and diluted) compared to a net loss of $(12,076,000) or $(2.07) per share (basic
and diluted) in 1998. The loss in 1999 was due to reduced  earnings in both crop
and nonstandard automobile operations.  Results for 1999 for the crop operations
were  significantly  impacted by an increase in claims  settlements and reserves
for an agricultural  business  interruption product that was offered in 1998 and
has since been discontinued ("AgPI"). The MPCI produced a profit while the named
perils and hail  programs  had  combined  loss and expense  ratios of 117.5% and
84.6%, respectively.  Results for 1999 for the nonstandard automobile operations
were  impacted by a higher loss ratio and lower premium  volume.  These were the
result of problems encountered with untimely rate filings, implementation of the
Company's  new  operating  system and  competitive  pressure.  The Company  also
increased loss reserves for prior accident years by approximately  $16.4 million
in 1999 due to adverse loss development.

1998 Compared To 1997

The Company recorded a net loss of $(12,076,000) or $(2.07) per share (basic and
fully  diluted)  compared  to net  earnings  of  $12,218,000  or $2.19 per share
(basic) and $2.08 (fully  diluted) in 1997.  The loss in 1998 was due to reduced
earnings in both crop and nonstandard  automobile  operations.  Results for 1998
for the crop operations were  significantly  impacted by catastrophic  crop hail
losses  primarily  from  Hurricane  Bonnie and other weather  related  events of
approximately $14 million pre-tax. Contributing to the lower results were higher
than  expected  commission  and  integration  costs related to the alliance with
Continental  Casualty Company ("CNA") for its crop insurance  business (the "CNA
Transaction")  of  approximately  $3.0 million pre-tax and a lower  underwriting
gain on MPCI  (11.2%  in 1998  versus  25.0% in 1997)  due  primarily  to severe
drought  conditions  in certain parts of the country,  overly wet  conditions in
other parts of the country and higher  frequency  of CRC claims due to extremely
low commodity prices. Results for 1998 for the nonstandard automobile operations
were  impacted by a higher loss ratio and lower premium  volume.  These were the
result of problems  encountered with timely rate filings,  implementation of the
Company's  new  operating  system and  competitive  pressure.  The Company  also
increased loss reserves for prior accident years by approximately  $13.0 million
in 1998 due to adverse loss development.

Years Ended December 31, 1999 and 1998

Gross Premiums Written

Consolidated  Gross Premiums Written decreased 13.4% in 1999 due to a withdrawal
from certain  areas of hail sales,  a reduction in the price of crops leading to
less insurable values upon which to price insurance,  a reduction in nonstandard
auto sales due to increased  competition,  rate  increases and  withdrawal  from
certain small volume states. The following shows gross premiums written for crop
insurance products:

<TABLE>
<CAPTION>

                (in thousands)                                1999                 1998
                                                              ----                 ----
<S>                                                         <C>                   <C>
                CAT imputed                                 $39,727               $50,127
                MPCI                                        179,727               157,225
                Crop Hail                                    53,647                76,198
                Named perils                                  3,816                 2,074
                AgPI                                             96                 7,529
                                                                 --                 -----
                                                           $277,013              $293,153
                Less CAT imputed                            (39,727)              (50,127)
                                                            --------              --------
                Total                                      $237,286              $243,026


</TABLE>

Net Premiums Written

Net premiums written decreased 29.2% in 1999 as compared to 1998 due to a larger
quota  share  reinsurance  cover for hail,  from 25.0% in 1998 to 69.0% in 1999,
along with lower written premiums in the auto segment.

Net Premiums Earned

Net  premiums  earned  decreased  19.3% in 1999 as  compared  to the prior year,
reflecting  reduction  in  gross  and net  premiums  written.  The  ratio of net
premiums earned to net premiums written for the nonstandard  automobile  segment
was 101.7% in 1999 due to lower written premium in the auto segment.

Fee Income

Fee income  decreased  21.8% in 1999 compared to 1998. Fee income on nonstandard
automobile  operations  decreased as a result of lower gross  premiums  written.
Crop fees  primarily  include  CAT fees and  service  fees  such as GeoAg  which
totaled $456,000 in 1999 compared to $3,772,000 in 1998, a decline of 87.9%. The
primary  reason for the  decline is due to the law  change  prohibiting  company
retention of the CAT fee.

Net Investment Income

Net investment  income increased .1% in 1999 compared to 1998, such increase was
due to higher yields.

Net Realized Capital Gains (Losses)

In 1999, the investment portfolio realized a small gain of $65,000 compared to a
realized gain in 1998 of $4,104,000 which emanated from a high level of activity
in the equity portfolio in 1998.

Losses and LAE

The loss and LAE ratio  (the  ratio of claims  and loss  adjusting  expense as a
percentage  of earned  premiums)  ("Loss  and LAE  Ratio")  for the  nonstandard
automobile  segment was 92.7% for 1999 as  compared to 82.5% for 1998.  The crop
hail Loss and LAE  Ratio  was  240.6%  in 1999  compared  to 79.4% in 1998.  The
increase  in the Loss  and LAE  Ratio  for the  nonstandard  automobile  segment
reflects adverse  development on prior years of approximately  6.6%. The Company
estimates its nonstandard  automobile 1999 accident year loss ratio was 86.2% as
compared to its current estimate of 81.1% in accident year 1998. The increase in
the accident  year loss ratio  results from  product and pricing  decisions  and
increases in claim  frequency.  The increase in the crop hail Loss and LAE Ratio
primarily  reflects the adverse  reserve  development  on 1998 AgPI  losses.  In
addition,  the pricing for crop insurance was inadequate and crop  experience in
the whole market was poor. The reinsurance  program helped reduce the net effect
to the Company as detailed in the reinsurance section.  During 1998, premiums of
$7.5 million were recognized  from AgPI;  however,  the Company  suffered losses
during  1999  from  this  program.   Adverse  development,   almost  exclusively
associated with AgPI, on 1998 crop Loss and LAE reserves  affected 1999 by $14.1
million.

Policy Acquisition and General and Administrative Expenses

Policy acquisition and general and  administrative  expenses have increased as a
result of the following:  As previously reported,  the Company had problems with
its policy  administration  systems  which  resulted  in higher  expenses  being
incurred in 1999.  The crop  operation  wrote  approximately  the same number of
policies but at a lower average premium than in 1998 due to depressed  commodity
prices.  Thus,  as a  percentage,  the  Company  experienced  an increase in its
expense  ratio  in 1999.  Policy  acquisition  and  general  and  administrative
expenses reduced to $97,950,000 or 35.5% of net premiums earned in 1999 compared
to $103,926,000 or 30.4% of net premiums earned for 1998.

The following  represents the breakdown of crop policy  acquisition  and general
and administrative expenses:

<TABLE>
<CAPTION>

         (in thousands)                                     1999                 1998

<S>                                                       <C>                  <C>
         MPCI expense reimbursements                      $(38,580)            $(37,982)
         MPCI  underwriting  gain, net of stop loss
         and CNA reinsurance in 1998                       (18,404)             (14,902)
         Commissions                                        44,797               50,089
         Ceding commission income                          (12,266)              (6,899)
         Operating expenses                                 24,668               31,600
                                                            ------               ------

         Total                                                $215              $21,906
                                                              ====              =======
</TABLE>

MPCI  expense  reimbursements  declined  to 21.5% of MPCI  premiums  for 1999 as
compared  to 24.2%  in 1998 due to  federally  mandated  reductions.  Commission
expense as a percentage of gross written  premiums were, in 1999, 16.2% of gross
written premiums compared to 17.1% in 1998.  Operating  expenses as a percentage
of  gross  written  premiums  were  9.3% in 1999  compared  to  10.8%  in  1998.
Nonstandard  automobile expenses net of fee income were 30.8% of earned premiums
in 1999 compared to 21.6% in 1998.

In 1998 the Company reserved for uncollectable  items as a result of issues with
the operating system acquired as part of the CNA Transaction.

Amortization of Intangibles

Amortization of intangibles  includes goodwill from the acquisition of Superior,
additional  goodwill from the  acquisition of the minority  interest  portion of
Superior  Insurance  Group  Management,   Inc.   ("Superior  Group  Management",
formerly,  GGS Management  Holdings,  Inc.  ("GGSH")),  the acquisition of North
American  Crop  Underwriters,  Inc.  ("NACU")  and  debt or  preferred  security
issuance costs.  Amortization expense in 1999 of $2,297,000 is a decrease of 3.4
% over 1998.

Interest Expense

Interest  expense  in 1999  represents  the  crop  segment's  borrowings  on its
seasonal line of credit at weighted  average rate of 7.02% and from the FCIC, at
15%  interest.  Due to the  payments of  approximately  $21.9  million for gross
losses  in 1999 on AgPI,  the cash  reserves  of IGF  were  lower  than in 1998.
Therefore,  IGF  deferred  remittance  to the FCIC of  uncollected  premiums  in
accordance with the SRA.

Income Tax Expense (Benefit)

The  variance  in the  rate  from  the  U.S.  federal  statutory  rate of 35% is
primarily  due  to  tax  exempt  income,  nondeductible  goodwill  amortization,
alternative  minimum  taxes,  tax  versus  book  basis  in  capital  assets  and
securities disposed.

At December 31, 1999 the Company's net deferred tax assets are fully offset by a
valuation allowance. The Company will continue to assess the valuation allowance
and to the extent it is determine that such allowance is no longer required, the
tax benefit of the  remaining  net deferred tax assets will be recognized in the
future.

Approximately  $21.4 million of the 1999 net operating  loss ("NOL") was carried
back to the 1997 tax year which  resulted in a refund claim.  The ability of the
Company  to  utilize  the 1999  NOL is  dependent  upon  future  taxable  income
generated by the Company.

Years Ended December 31, 1998 and 1997

Gross Premiums Written

Consolidated gross premiums written increased 21.8% in 1998 due to growth in the
crop  operations  from the  integration  of business  from the CNA  Transaction,
internal growth and AgPI revenue. Crop gross premiums written increased 92.3% in
1998 from 1997.

Nonstandard automobile gross premiums written decreased 6.2% in 1998 as compared
to 1997 due primarily to reduced  volume in the states of Florida and California
for the reasons previously disclosed. Remaining gross premiums written represent
reinsurance business.

Net Premiums Written

Net premiums written  increased in 1998 as compared to 1997 due to the growth in
gross premiums written offset by quota share reinsurance.

In 1998, the Company ceded 10% of its nonstandard automobile premiums as part of
a quota share treaty. This treaty and all previous quota share treaties for 1997
and 1998 were  commuted  effective  October 1, 1998 and the  Company  received a
return of unearned  premiums  and loss  reserves  from such  treaties as of that
date. For the first three quarters of 1997, the Company ceded 20% of nonstandard
automobile  premiums  and ceded 25% of such  premiums  in the fourth  quarter of
1997.  In 1998,  the  Company  ceded 25% of its crop hail  premiums as part of a
quota share treaty as compared to 40% in 1997.  Named peril  premiums were ceded
at a 50% rate in both 1998 and 1997 under a quota share treaty.

Net Premiums Earned

Net premiums earned  increased in 1998 as compared to 1997 reflecting  growth in
gross and net premiums written. The ratio of net premiums earned to net premiums
written for the nonstandard  automobile segment was 97.9% in 1998 as compared to
97.8% in 1997.

Fee Income

Fee income  increased  13.4% in 1998 compared to 1997. Fee income on nonstandard
automobile  operations  increased as a result of higher fees as a percentage  of
gross premiums written, 5.41% in 1998 and 4.79% in 1997, offset by lower premium
volume.  Crop fees  primarily  included CAT fees.  CAT fees increased in 1998 as
compared to 1997 due to growth in premium  volume.  Fees in 1998 also  increased
due to the introduction of Geo Ag Plus and other processing fees.

Net Investment Income

Net investment income increased 4.9% in 1998 compared to 1997. Such increase was
due to greater invested assets offset somewhat by declining yields due to market
conditions.

Net Realized Capital Gains

Capital transaction activity primarily reflects activity in the Company's equity
portfolio.  The  higher  level of  gains  in 1997  reflects  the  strong  market
conditions  during  that  year.  Gains  decreased  in 1998 as a result of market
conditions. In the fourth quarter of 1998, the Company significantly reduced its
exposure to equities  reflecting  the Company's  concern with the market and its
desire to increase investment income.

<PAGE>

Losses and LAE

The Loss and LAE Ratio for the nonstandard automobile segment was 82.5% for 1998
as  compared  to 78.0% for  1997.  The crop hail Loss and LAE Ratio was 79.4% in
1998  compared to 75.1% in 1997.  The increase in the Loss and LAE Ratio for the
nonstandard  automobile  segment reflects adverse  development on prior years of
approximately  5.0%.  The Company  estimates  its  nonstandard  automobile  1998
accident  year loss ratio was 77.5% as compared to 76.1% in accident  year 1997.
The  increase in the accident  year loss ratio  results from product and pricing
decisions and increases in frequency in certain  product lines.  The increase in
the crop hail loss and LAE Ratio  includes  $10.7  million  for the  effects  of
catastrophic  events net of reinsurance  recoveries.  The crop hail Loss and LAE
Ratio prior to reinsurance  recoveries  was 100.6%.  The named perils loss ratio
was 100% and the AgPI  loss  ratio  was 100% in 1998 due to  losses  on  certain
coverages due to unusual weather related events estimated to be $3.3 million.

Policy Acquisition and General and Administrative Expenses

Policy  acquisition and general and  administrative  expenses  increased in 1998
over  1997 as a result  of the  increased  volume of  business  produced  by the
Company.  Policy  acquisition  and general and  administrative  expenses rose to
$103,926,000  or 30.4% of net premiums earned in 1998 compared to $63,344,000 or
22.9% of net premiums earned for 1997.

MPCI  expense  reimbursements  declined  to 24.2% of MPCI  premiums  for 1998 as
compared  to  28.2%  in 1997  due to  federally  mandated  reductions.  The MPCI
underwriting  gain,  net of stop loss costs,  decreased  to 9.5% of CAT and MPCI
premiums  in 1998  (after  adding  $4,861,000  in 1998  as a  result  of the CNA
Transaction) compared to 21.9% in 1997 due to severe drought in certain sections
of the country and overly wet conditions in other  sections of the country.  The
Company  considers the 1998 underwriting gain to be well below average while the
1997 gain was well above  average.  Commission  expense as a percentage of gross
written  premiums  (including  CAT)  increased in 1998 to 17.1% of gross written
premiums  compared to 16.1% in 1997 due to the  integration of business from the
CNA Transaction and competitive  industry  pressure.  Ceding  commission  income
increased  in 1998  compared  to  1997  due to a  increase  in  ceded  premiums.
Operating  expenses as a percentage of gross written  premiums  (including  CAT)
increased in 1998 to 10.8%  compared to 10.2% 1997.  Operating  expenses in 1998
include $3 million,  or 1.0% of gross written  premiums  (including CAT), of one
time  costs  primarily  related  to the  integration  of  business  from the CNA
Transaction.  These additional one-time expenses, due to a reduction of offices,
severances and write down of assets,  were recorded as normal operating expenses
and were  deducted  in 1998 as  incurred in  accordance  with  APB16.  Operating
expenses in 1998 also include a $3.2 million  reserve,  or 1.1% of gross written
premiums (including CAT), for potential processing errors during 1998 on assumed
premiums from business  from the CNA  Transaction.  This increase in reserve was
due to the  integration of a processing  system  acquired in the CNA Transaction
that did not  reconcile  properly.  The Company  reserved for this  unreconciled
amount as at December 31, 1998.  The Company has  determined  that the amount is
not recoverable, therefore it was properly reserved as at December 31, 1998.

Nonstandard  automobile expenses net of fee income were 21.6% of earned premiums
in 1998 compared to 22.7% in 1997.

Amortization of Intangibles

Amortization of intangibles  includes goodwill from the acquisition of Superior,
additional  goodwill from the  acquisition of the minority  interest  portion of
Superior  Group  Management  and the  acquisition  of NACU and debt or preferred
security  issuance costs. The increase in 1998 over 1997 reflected a full year's
impact of amortization of goodwill  associated with the purchase of the minority
interest position in Superior Group Management and a full year's amortization of
deferred  issuance  costs  on the  Company's  manditorily  redeemable  preferred
securities issued by SIG's trust subsidiary ("Preferred Securities").

<PAGE>

Interest Expense

Interest  expense  in 1998  represents  the  crop  segment's  borrowings  on its
seasonal  line of credit.  Interest  expense for 1997 includes both interest for
the crop segment and interest on the Superior  Insurance Group, Inc.  ("Superior
Group" formerly GGS Management,  Inc.  ("GGS")) Senior Credit Facility which was
repaid in 1997 from the proceeds of the offering of the Preferred Securities.

Income Tax Expense (Benefit)

The variance in the rate from the U.S. statutory rate of 35% is primarily due to
nondeductible goodwill amortization.

Distributions on Preferred Securities

Distributions  on the Preferred  Securities  are  calculated at 9.5% net of U.S.
federal income taxes from the offering date of August 12, 1997.

Symons International Group, Inc. - Florida

Goran's  wholly-owned  subsidiary,  Symons  International  Group, Inc. - Florida
("SIGF") is a specialized  surplus lines underwriting unit. SIGF's operations no
longer  fit the  Company's  strategic  operating  plan of  concentrating  on the
business segments of nonstandard automobile, crop and reinsurance.  Accordingly,
the majority of the book of business was sold effective January 1, 1999. A small
amount of premium remained after the sale. In 1999, the premium volume from this
operation reduced to $526,000 from $6,427,000 in 1998 and $9,560,000 in 1997. In
1999,  SIGF  recognized  a loss of  $861,000  primarily  as a result of  closing
expenses  and the write down of  capitalized  software,  compared  to  operating
losses of $2,937,000 in 1998 and $3,545,000 in 1997.

Non-U.S. Operations

Granite Insurance Company

Granite Insurance Company ("Granite") is a Canadian federally licensed insurance
company  which is presently  servicing its  investment  portfolio and a very few
outstanding  claims.  Granite stopped writing  business on December 31, 1989 and
sold its book of Canadian business in June 1990. The outstanding claims continue
to be settled in accordance with actuarial estimates with moderate  redundancies
appeared in the most recent year.  Granite's  invested assets  increased to $3.0
million  from $2.6 million in 1998.  This is the result of realized  profits for
the year.  Total net  outstanding  claims  decreased  to  $368,000  in 1999 from
$400,000 in 1998.  It is expected  that the run-off of  outstanding  claims will
continue at least  through  2000.  Granite  recorded a net profit of $179,000 in
1999,  compared to a $403,000  net loss in 1998 and  $261,000  net loss in 1997.
This is a reflective of the  realization  of gains and losses in the  investment
portfolio.

Granite Reinsurance Company Ltd.

Granite  Reinsurance Company Ltd. ("Granite Re") is managed by Atlantic Security
Ltd. of Bermuda and a corporate services management company in Barbados. Granite
Re  underwrites  finite  risk,  stop loss and quota share  reinsurance,  through
various programs in Bermuda, the United States and Canada. During 1999, 1998 and
1997,  Granite Re participated in certain quota share and stop loss programs for
Goran's crop insurance  subsidiary,  IGF.  These covers were in accordance  with
third party placements whereby Granite Re assumed a portion of these treaties as
third party  reinsurers.  In 1998 and 1997,  Granite Re  participated in Goran's
nonstandard automobile  subsidiaries through a quota share treaty. On January 1,
1999,  the  nonstandard  automobile  treaty was  commuted  resulting in a return
premium of $11.2 million.  There was no other assumed automobile  reinsurance in
1999. 1999 gross premiums written  relating to crop were  effectively  offset by
the automobile commutation disclosed above. However, net premiums earned in 1999
of $12.7 million  compared to $21.8 million in 1998 and $12.7 million in 1997. A
break even year in 1999  resulted  in a $.2 million  loss  compared to a loss of
$1.1 million in 1998 and a profit of $2.1 million in 1997.

Granite Re's capital and surplus reduced by approximately $10 million from $16.2
million as reported in 1998 to $6.6 million as at December  31, 1999,  primarily
as a result of a deemed dividend to Goran relating to prior years activities.

Liquidity and Capital Resources

         The  primary  source of funds for Goran is through  dividend  and other
funding from Granite Re, its offshore subsidiary.

The  primary  source of funds  available  to SIG are fees from  policy  holders,
management fees and dividends from its subsidiaries.  SIG also receives $150,000
quarterly pursuant to an administration agreement with IGF to cover the costs of
executive  management,  accounting,  investing,  marketing,  data processing and
reinsurance.

Superior  Group  collects  billing  fees charged to  policyholders  of Pafco and
Superior  who elect to make their  premium  payments in  installments.  Superior
Group also receives  management  fees under its management  agreement with Pafco
and Superior.  When the Florida Department of Insurance  ("Florida  Department")
approved the acquisition of Superior by Superior Group Management, it prohibited
Superior from paying any dividends (whether extraordinary or not) for four years
from the date of acquisition (May 1, 1996) without the prior written approval of
the  Florida  Department.  Extraordinary  dividends,  within the  meaning of the
Indiana  Insurance  Code,  cannot be paid by Pafco without the prior approval of
the Indiana  Insurance  Commissioner.  The management  fees charged to Pafco and
Superior by Superior  Group are subject to review by the Indiana  Department  of
Insurance ("Indiana Department") and Florida Department.

         The nonstandard  automobile insurance  subsidiaries'  primary source of
funds are premiums,  investment income and proceeds from the maturity or sale of
invested  assets.  Such funds are used  principally  for the  payment of claims,
payment of claims settlement costs,  operating  expenses  (primarily  management
fees),  commissions  to  independent  agents,  dividends  and  the  purchase  of
investments.  There is  variability  to cash outflows  because of  uncertainties
regarding settlement dates for liabilities for unpaid losses.  Accordingly,  the
Company maintains  investment programs intended to provide adequate funds to pay
claims.  During 1999,  due to a slow down in premium  volume,  the Company began
liquidating  investments to pay claims.  The Company  historically  has tried to
maintain duration averages of 3.5 years. However, the reduction in new funds due
to lower premium has and will cause the Company to shorten duration. The Company
may incur a cost of selling  longer bonds to pay claims.  Claim payments tend to
lag  premium  receipts.  Due to the decline in premium  volume,  the Company has
experienced  a  reduction  in its  investment  portfolio  but to  date  has  not
experienced any problems meeting its obligations for claims payments.

         Cash flows in the Company's  MPCI business  differ from cash flows from
certain more  traditional  lines.  The Company pays insured losses to farmers as
they are  incurred  during  the  growing  season,  with the full  amount of such
payments being reimbursed to the Company by the federal  government within three
business  days.  MPCI premiums are not received from farmers until covered crops
are  harvested.  Collected and  uncollected  premiums are required to be paid in
full  to the  FCIC by the  Company,  with  interest  at  15%,  if not  paid by a
specified date during the crop year.

During 1999,  IGF borrowed  funds under its revolving  line of credit to finance
payables  to  the  FCIC  for  collected  and  uncollected   premiums  (the  "IGF
Revolver").  In 1999,  the maximum  borrowing  amount under the IGF Revolver was
$15,000,000. The IGF Revolver carried a weighted average interest rate of 8.75%,
6.96%  and  7.02% in 1997,  1998 and 1999,  respectively.  Payables  to the FCIC
accrue  interest  at a rate of  15%,  as do the  receivables  from  farmers.  By
utilizing the IGF Revolver, which bears interest at a floating rate equal to the
prime rate minus .75% in 1999  (prime  rate plus 1.00% in 1998),  IGF avoids the
higher interest expense to the FCIC while continuing to earn 15% interest on the
receivables due from the farmer.  The IGF Revolver  contains  certain  covenants
which (i) restricts IGF's ability to accumulate  common stock, (ii) sets minimum
standards for investments and policyholder surplus and (iii) limits the ratio of
net written premiums to surplus.  The IGF Revolver also contains other customary
covenants which,  among other things,  restricts IGF's ability to participate in
mergers,  acquire  another  enterprise or  participate  in the  organization  or
creation of any other  business  entity.  At December 31, 1999, IGF had borrowed
the full  amount  available.  This  line of  credit  has been  extended  through
December 15, 2000;  however,  the authorized  line of credit has been reduced to
$8,000,000 as of March 17, 2000,  all of which was  available  April 1, 2000. At
December 31, 1999, IGF was not in compliance  with a minimum  statutory  surplus
covenant; however, IGF received a waiver of such covenant for December 31, 1999.
IGF does expect to meet the minimum statutory surplus covenant for 2000.

During 1999 IGF deferred  remittance of uncollected  premium amounts to the FCIC
and therefore  incurred interest of 15% on such amounts.  The Company expects to
continue this practice in 2000.

         On August 12, 1997, the SIG's trust  subsidiary  issued $135 million in
Preferred  Securities  at a rate  of  9.5%  paid  semi-annually.  The  Preferred
Securities  are  backed  by  Senior  Subordinated  Notes to the  trust  from the
Company.  The  proceeds  of the  Preferred  Securities  offering  were  used  to
repurchase  the  remaining   minority  interest  in  Superior   Insurance  Group
Management,  Inc.  (formerly GGS  Management  Holdings,  Inc.)  ("GGSH") for $61
million, repay the balance of the Superior Group Senior Credit Facility of $44.9
million and contribute $10.5 million to the nonstandard automobile insurers with
the  balance  held  for  general  corporate  purposes.  Expenses  of  the  issue
aggregated  $5.1  million  and are  amortized  over  the  term of the  Preferred
Securities  (30 years).  In the third quarter of 1997, the Company wrote off the
remaining  unamortized  costs of the Superior  Group Senior  Credit  Facility of
approximately  $1.1 million pre-tax or approximately  $0.07 per share (basic) as
an extraordinary item.

         The  Preferred  Securities  have a term of 30  years  with  semi-annual
interest  payments which commenced  February 15, 1998. The Preferred  Securities
may be redeemed in whole or in part after 10 years.

         The Preferred Security interest obligation of approximately $13 million
was funded  from SIG's  nonstandard  automobile  management  company and surplus
funds  available  in SIG in  1999.  During  1999  SIG  paid  the  two  Preferred
Securities interest payments.  Semi-annual  interest payments of $6,412,500 were
made in February and August 1999.  In February  2000,  the Company  deferred the
interest  payment in accordance with the terms of the Trust  Indenture.  SIG may
defer payment of any or all interest  payments for up to five years.  The unpaid
interest  installment  amounts accrue interest at 9.5%. SIG presently intends to
defer  interest  payments in the year 2000;  however,  it will  reconsider  this
intention depending upon cash flow and profitability.

         The Trust  Indenture  contains  certain  restrictive  covenants.  These
covenants  are based  upon the SIG's  Consolidated  Coverage  Ratio of  earnings
before interest,  taxes,  depreciation and amortization  (EBITDA) whereby if the
SIG's  EBITDA falls below 2.5 times  consolidated  interest  expense  (including
Preferred  Security  distributions)  for the  most  recent  four  quarters,  the
following restrictions become effective:

o  SIG  may  not  incur   additional   indebtedness   or  guarantee   additional
indebtedness.

o SIG may not make certain  restricted  payments  including loans or advances to
affiliates,  stock repurchases and a limitation on the amount of dividends is in
force.  o SIG may not  increase  its level of  non-investment  grade  securities
defined  as  equities,  mortgage  loans,  real  estate,  real  estate  loans and
non-investment grade fixed income securities.

         These restrictions currently apply as SIG's consolidated coverage ratio
was (4.9) in 1999, and will continue to apply until SIG's consolidated  coverage
ratio  is in  compliance  with  the  terms  of the  Trust  Indenture.  SIG is in
compliance with these  additional  restrictions  and,  therefore,  this does not
represent a default by the SIG on the Preferred Securities.

         Net cash  provided/(used)  by operating  activities in 1999  aggregated
$(20,619,000)  compared to  $11,716,000  in 1998 due to reduced cash provided by
operations as a result of the net loss.

<PAGE>

         The Company believes cash flows in the nonstandard  automobile  segment
from  premiums,  investment  income and billing fees are sufficient to meet that
segment's   obligations  to  policyholders   and  operating   expenses  for  the
foreseeable  future.  This is due  primarily to the lag time between  receipt of
premiums  and  claims  payments.  Therefore,  the  Company  does not  anticipate
borrowings  for this  segment.  The Company also believes cash flows in the crop
segment from  premiums and expense  reimbursements  are  sufficient  to meet the
segment's  obligations  for the  foreseeable  future.  Due to the more  seasonal
nature of the crop  segment's  operations,  it may be  necessary to obtain short
term funding at times  during a calendar  year by drawing on the IGF Revolver or
deferring remittance of premiums to the FCIC. Except for this short term funding
and normal  increases  therein  resulting  from an increase  in the  business in
force,  the  Company  does not  anticipate  any  significant  short or long term
additional borrowing needs for crop business. Accordingly, while there can be no
assurance as to the  sufficiency of the Company's  cash flow in future  periods,
the Company  believes  that its cash flow will be  sufficient to meet all of the
Company's  operating  expenses and  operating  debt service (not  including  the
Preferred  Securities)  for the  foreseeable  future  and,  therefore,  does not
anticipate additional borrowings.

While GAAP  shareholders'  equity reflected a deficit of $18 million at December
31,  1999,  it does not  reflect  the  statutory  equity  upon which the company
conducts  its various  insurance  operations.  Its  insurance  subsidiaries  had
statutory surplus of approximately $50 million at December 31, 1999.

         Effects of Inflation

         Due to the short term that  claims are  outstanding  in the two product
lines the Company underwrites, inflation does not pose a significant risk to the
Company.

Primary Differences Between GAAP and SAP

         The  financial  statements  contained  herein  have  been  prepared  in
conformity with GAAP which differ from Statutory  Accounting  Practices  ("SAP")
prescribed or permitted for insurance companies by regulatory authorities in the
following  respects:  (i) certain  assets are excluded as  "Nonadmitted  Assets"
under statutory  accounting;  (ii) costs incurred by the Company relating to the
acquisition  of new  business are expensed  for  statutory  purposes;  (iii) the
investment in wholly- owned  subsidiaries is  consolidated  for GAAP rather than
valued on the  statutory  equity  method.  The net income or loss and changes in
unassigned surplus of the subsidiaries is reflected in net income for the period
rather  than  recorded  directly  to  unassigned  surplus;  (iv) fixed  maturity
investments  are reported at amortized  cost or market value based on their NAIC
rating;  (v) the liability for losses and loss adjustment  expenses and unearned
premium  reserves  are  recorded net of their  reinsured  amounts for  statutory
accounting  purposes;  (vi)  deferred  income  taxes  are  not  recognized  on a
statutory  basis;  and (vii)  credits for  reinsurance  are recorded only to the
extent considered realizable.

New Accounting Standards

On March 4, 1998, the AICPA  Accounting  Standards  Executive  Committee  issued
Statement of Position No. 98-1 (SOP 98-1),  "Accounting for the Cost of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 was issued to address
diversity in practice  regarding  whether and under what conditions the costs of
internal-use software should be capitalized. SOP 98-1 is effective for financial
statements for years  beginning after December 15, 1998. The Company has adopted
the new  requirements of the SOP in 1999. There is no material impact on the net
earnings in 1999.

The NAIC is  considering  the  adoption of a  recommended  statutory  accounting
standard  for crop  insurers,  the impact of which is  uncertain  since  several
methodologies are currently being examined.  Although the Indiana Department has
permitted  the  Company to  continue,  for its  statutory  financial  statements
through  December 31, 1999,  its practice of recording its MPCI business as 100%
ceded  to  the  FCIC  with  net  underwriting   results   recognized  in  ceding
commissions,  the Indiana  Department  has indicated  that in the future it will
require the Company to adopt the MPCI  accounting  practices  recommended by the
NAIC or any similar  practice  adopted by the Indiana  Department.  Since such a
standard  would be adopted  industry wide for crop  insurers,  the Company would
also be required to conform its future GAAP financial  statements to reflect the
new MPCI statutory  accounting  methodology  and to restate all historical  GAAP
financial  statements  consistent with this methodology for  comparability.  The
Company  cannot  predict the  accounting  methodology  that will  eventually  be
implemented or when the Company will be required to adopt such methodology.  The
Company  anticipates  that any such new  crop  accounting  methodology  will not
affect GAAP net income.

In 1998, the NAIC adopted the  Codification of Statutory  Accounting  Principles
guidance,  which replaced the current Accounting Practices and Procedures manual
as the  NAIC's  primary  guidance  on  statutory  accounting.  The  NAIC  is now
considering amendments to the Codification guidance that would also be effective
upon  implementation.  The NAIC has  recommended an effective date of January 1,
2001. The Codification  provides  guidance for areas where statutory  accounting
has been silent and changes current statutory accounting in some areas.

It is not known whether the Indiana  Department and the Florida  Department will
adopt the Codification or make any changes to the guidance.  The Company has not
estimated the potential  effect of the  Codification  guidance if adopted by the
departments of insurance. However, the actual effect of adoption could differ as
changes  are  made  to the  Codification  guidance,  prior  to  its  recommended
effective date of January 1, 2001.

In June 1998 SFAS No. 133, as amended,  "Accounting  for Derivative  Instruments
and Hedging  Activities"  was issued,  to be effective  for fiscal  quarters and
fiscal  years  beginning  after June 15,  2000.  The  Company  does not have any
derivative  instruments or hedging activities,  therefore,  the Company believes
that  SFAS No.  133 will have no  material  impact  on the  Company's  financial
statements or notes thereto.

Quantitative And Qualitative Disclosures About Market Risk

Insurance  company  investments must comply with applicable laws and regulations
which prescribe the kind, quality and concentration of investments.  In general,
these laws and  regulations  permit  investments,  within  specified  limits and
subject to certain qualifications,  in federal, state and municipal obligations,
corporate bonds, preferred and common securities, real estate mortgages and real
estate.  The Company's  investments in real estate and mortgage loans  represent
 .9% of the Company's  aggregate  investments.  The investment  portfolios of the
Company at December 31, 1999, consisted of the following:

<TABLE>
<CAPTION>

                                                                            Cost or

        Type of Investment (in thousands)                                Amortized Cost   Market Value
                                                                         --------------   ------------

Fixed maturities:
    United  States  Treasury  securities  and  obligations  of  United
<S>                                                                          <C>              <C>
    States government corporation and agencies                               $63,857          $61,187
    Obligations of states and political subdivisions                              42               38
    Corporate securities                                                     113,272          110,391
                                                                             -------          -------
Total Fixed Maturities                                                       177,171          171,616
Equity Securities:
    Common Stocks                                                             15,511           13,555
Short-Term investments                                                        32,634           32,634
Mortgage loans                                                                 1,990            1,990
Other invested assets                                                            945              945
                                                                                 ---              ---
Total Investments                                                           $228,251         $220,740
                                                                            ========         ========

</TABLE>

<PAGE>

The following  table sets forth  composition  of the fixed  maturity  securities
portfolio of the Company by time to maturity as of December 31:

<TABLE>
<CAPTION>

         (in thousands)                                         1998                              1999
                                                                      Percent Total                    Percent Total
         Time to Maturity                            Market Value      Market Value    Market Value     Market Value
         ----------------

<S>                                                        <C>                <C>            <C>                <C>
         1 year or less                                     7,937              4.0%           4,268              2.5
         More than 1 year through 5 years                  53,327             27.0%          89,901             52.4
         More than 5 years through 10 years                38,236             19.4%          38,566             22.5
         More than 10 years                                23,034             11.7%          35,641             20.7
                                                           ------             -----          ------             ----
                                                          122,534             62.1%         168,376             98.1
         Mortgage-backed securities                        74,717             37.9%           3,420              1.9
                                                           ------             -----           -----              ---
         Total                                            197,251            100.0%         171,616           100.00
                                                          =======            ======         =======           ======
</TABLE>

The  following  table  sets forth the  ratings  assigned  to the fixed  maturity
securities of the Company as of December 31:

<TABLE>
<CAPTION>

         (in thousands)                                         1998                              1999
                                                                     Percent Total                    Percent Total

         Rating (1)                                  Market Value      Market Value    Market Value     Market Value
         ----------                                  ------------      ------------    ------------     ------------

<S>                                                        <C>                <C>           <C>                 <C>
         Aaa or AAA                                        76,484             38.8%         106,547             62.1
         Aa or AA                                           2,256              1.1%           3,381              2.0
         A                                                 81,271             41.2%          25,718             15.0
         Baa or BBB                                        23,504             11.9%          21,576             12.5
         Ba or BB                                          13,736              7.0%          13,691              8.0
         Other below investment grade                        ----              0.0%             702               .4
                                                             ----              ----             ---               --
         Total                                            197,251            100.0%         171,616            100.0
                                                          =======            ======         =======            =====

     (1)  Ratings are assigned by Moody's Investors Service,  Inc., and when not
          available,  are  based  on  ratings  assigned  by  Standard  &  Poor's
          Corporation.
</TABLE>

The  investment  results of the Company for the periods  indicated are set forth
below:

<TABLE>
<CAPTION>

         (in thousands)                                                   Years Ended December 31,
                                                                   1997              1998              1999

<S>                                                                   <C>                <C>             <C>
         Net investment income (1)                                     13,418             13,401          12,777
         Average investment portfolio (2)                             215,894            236,197         233,423
         Pre-tax return on average investment portfolio                  5.7%               5.7%            5.9%
         Net realized gains (losses)                                    9,393              4,104              65

         (1) Includes dividend income received in respect of holdings of common
             stock.

         (2) Average  investment  portfolio  represents  the  average  (based on
         amortized cost) of the beginning and ending investment portfolio.

</TABLE>

The Company has the ability to hold its fixed  maturity  securities to maturity.
If interest  rates were to increase 10% from the  December 31, 1999 levels,  the
decline in fair value of the fixed maturity  securities would not  significantly
affect  the  Company's  ability to meet its  obligations  to  policyholders  and
debtors.

<PAGE>

Market-Sensitive Instruments and Risk Management

The Company's  investment strategy is to invest available funds in a manner that
will  maximize  the  after-tax  yield of the  portfolio  while  emphasizing  the
stability and  preservation  of the capital base.  The Company seeks to maximize
the total return on investment  through active investment  management  utilizing
third-party  professional  administrators,  in accordance  with  pre-established
investment policy guidelines  established and reviewed regularly by the Board of
Directors of the Company.  Accordingly,  the entire  portfolio of fixed maturity
securities  is  available  to be sold in response to changes in market  interest
rate;  changes in relative  values of individual  securities  and asset sectors;
changes in prepayment risks;  changes in credit quality; and liquidity needs, as
well as other factors.

The  portfolio is invested in types of securities  and in an aggregate  duration
which reflect the nature of the  Company's  liabilities  and expected  liquidity
needs  diversified  among  industries,  issuers and  geographic  locations.  The
Company's fixed maturity and common equity  investments are substantially all in
public companies.

The  following  table  provides   information  about  the  Company's   financial
instruments  that are  sensitive to changes in interest  rates.  For  investment
securities and debt  obligations,  the table  presents  principal cash flows and
related weighted-average interest rates by expected maturity date. Additionally,
the Company has assumed its available for sale  securities are similar enough to
aggregate those securities for presentation purposes.

<TABLE>
<CAPTION>

                                                       Interest Rate Sensitivity
                                                 Principal Amount by Expected Maturity

                                                         Average Interest Rate
                                                        (dollars in thousands)


                                                                                                              Fair Value

                                                                                    There-after                12/31/99
                                                                                    -----------                --------
                            2000        2001        2002       2003        2004                     Total
                            ----        ----        ----       ----        ----                     -----


Assets

<S>                           <C>        <C>         <C>        <C>         <C>          <C>         <C>          <C>
Available for sale            4,278      22,056      20,268     24,072      27,113       87,189      184,976      171,616
Average interest rate          6.5%        7.1%        7.3%       6.0%        6.3%         6.4%         6.5%         7.0%

Liabilities

IGF line of credit          $15,000        $ --        $ --       $ --        $ --         $ --      $15,000      $15,000
Preferred securities           $ --        $ --        $ --       $ --        $ --     $135,000     $135,000     $135,000
Average interest rate          8.5%         --%         --%        --%         --%         9.5%         9.4%         9.4%

</TABLE>

Impact of the Year 2000 Issue

The Company successfully completed the appropriate  assessment,  remediation and
testing  processes  necessary  in all  of its  primary  locations,  Des  Moines,
Atlanta,  Indianapolis and Tampa, to resolve the year 2000 issue. No significant
issues were  identified  by  management,  and there was no  interruption  to the
Company's  business  processing system as a result of the year 2000 issue. Total
costs  associated  with the year 2000  issue  were $9.4  million,  of which $7.7
million was capitalized. The Company had already made the decision to transition
off all of its  nonstandard  auto legacy  systems  and this  process had been in
progress  since 1996.  These new systems are Y2K  compliant  and were  completed
prior to December  31,1999.  The majority of costs  capitalized are hardware and
software costs.

<PAGE>

CONSOLIDATED FINANCIAL STATEMENTS
as of December 31, 1999 and 1998
(in thousands, except share data)

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                        1999          1998
                                                                                        ----          ----

ASSETS:
Investments:
Available for sale:
<S>                                                                                 <C>           <C>
Fixed maturities, at market                                                         $171,616      $197,251
Equity securities, at market                                                          13,555        12,988
Short-term investments, at amortized cost, which approximates market                  32,634        27,637
Mortgage loans, at cost                                                                1,990         2,100
Other invested assets                                                                    945           890
                                                                                         ---           ---
TOTAL INVESTMENTS                                                                    220,740       240,866
Investments in and advances to related parties                                         1,346         2,118
Reinsurance recoverable on paid and unpaid losses, net                                88,293        67,885
Cash and cash equivalents                                                              3,173        15,123
Receivables, Net of allowances                                                        92,446       123,690
Prepaid reinsurance premiums                                                          10,259        17,486
Federal income taxes recoverable                                                       6,820        12,711
Deferred policy acquisition costs                                                     13,920        16,332
Deferred income taxes                                                                      0         5,146
Property and equipment, net of accumulated depreciation                               21,967        19,350
Intangible assets                                                                     43,812        46,300
Other assets                                                                           9,335         4,197
                                                                                       -----         -----
TOTAL ASSETS                                                                        $512,111      $571,204
                                                                                    ========      ========

LIABILITIES
LIABILITIES:

Losses and loss adjustment expenses                                                 $219,918      $207,432
Unearned premiums                                                                     90,007       110,665
Reinsurance payables                                                                  37,603        12,353
Notes payable                                                                         16,929        13,744
Distributions payable on preferred securities                                          4,809         4,809
Other                                                                                 25,906        17,474
                                                                                      ------        ------
TOTAL LIABILITIES                                                                   $395,172      $366,477
                                                                                    --------      --------
Minority interest:
Equity in net assets of subsidiaries                                                      --        20,203
Company obligated mandatorily redeemable preferred stock of trust subsidiary
 holding solely parent debentures                                                    135,000       135,000

SHAREHOLDERS EQUITY (DEFICIT)

Common Stock                                                                          19,017        17,940
Additional paid in capital                                                             2,775         2,775
Unrealized gain (loss), net of deferred tax                                           (4,874)        1,176
Cumulative translation adj.                                                               13           252
Retained earnings (accumulated deficit)                                              (34,992)       27,381
                                                                                     --------       ------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                                                 (18,061)       49,524
                                                                                     --------       ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                                $512,111      $571,204
                                                                                   =========      ========
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

</TABLE>

<PAGE>

CONSOLIDATED  FINANCIAL  STATEMENTS for the years ended December 31, 1999, 1998,
and 1997 (in  thousands,  except  per share  data)
CONSOLIDATED  STATEMENTS  OF EARNINGS (LOSS)
<TABLE>
<CAPTION>

                                                                                         1999         1998          1997
                                                                                         ----         ----          ----
<S>                                                                                  <C>           <C>           <C>
Gross premiums written                                                               $473,687      $546,771      $448,982
Less ceded premiums                                                                 $(217,188)    $(184,665)    $(167,086)
                                                                                    ----------    ----------    ----------
    NET PREMIUMS WRITTEN                                                             $256,499      $362,106      $281,896
                                                                                     ========      ========      ========
    NET PREMIUMS EARNED                                                              $276,040      $342,177      $276,540
Fee income                                                                             15,791        20,203        17,821
Net investment income                                                                  13,418        13,401        12,777
Net realized capital gain                                                                  --         -----         -----
    TOTAL REVENUES                                                                    305,314       379,885       316,531
                                                                                      -------       -------       -------
Expenses:
    Losses and loss adjustment expenses                                               276,633       279,127       211,503
    Policy acquisition and general and administrative expenses                         97,950       103,926        63,344
    Interest expense                                                                      620           163         3,087
    Amortization of intangibles                                                         2,687         2,379         1,197
                                                                                        -----         -----         -----
    TOTAL EXPENSES                                                                    377,890       385,595       279,131
                                                                                      -------       -------       -------
    EARNINGS (LOSS) BEFORE INCOME TAXES, MINORITY INTEREST AND
        UNDERNOTED ITEMS                                                              (72,576)       (5,710)       37,400
                                                                                      --------       -------       ------
        ITEM
Income taxes:

    Current                                                                            (6,617)       (1,706)       12,720
    Deferred                                                                            7,865         1,643        (1,301)
                                                                                        -----         -----        -------
    TOTAL INCOME TAXES                                                                  1,248           (63)       11,419
                                                                                        -----           ----       ------
    NET EARNINGS (LOSS) BEFORE MINORITY INTEREST UNDERNOTED ITEMS                     (73,824)       (5,647)       25,981
Minority Interest                                                                     (19,787)       (4,919)        7,098
Distributions on preferred securities, net of tax                                       8,336         8,411         3,120
                                                                                        -----         -----         -----
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS                                        (62,373)       (9,139)       15,763
Net earnings (loss) from discontinued operations                                         ----        (2,937)       (3,545)
NET EARNINGS (LOSS)                                                                  $(62,373)     $(12,076)      $12,218
                                                                                     =========     =========      =======
Weighted average shares outstanding - Basic                                         5,876,398     5,841,329     5,590,576
                                                                                    =========     =========     =========
Earnings (loss) per share from continuing operations                                  $(10.61)       $(1.56)         $2.82
                                                                                      ========       =======         =====
Earnings (loss) per share from continuing operations - diluted                        $(10.61)       $(1.56)         $2.68
                                                                                      ========       =======         =====
Net earnings (loss) per share                                                         $(10.61)       $(2.07)         $2.19
                                                                                      ========       =======         =====
Net earnings (loss) per share -diluted                                                $(10.61)       $(2.07)         $2.08
                                                                                      ========       =======         =====
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

</TABLE>

<PAGE>

CONSOLIDATED FINANCIAL STATEMENTS
for the years ended  December 31, 1999,  1998,  and 1997 (in  thousands,  except
number of shares)  CONSOLIDATED  STATEMENTS OF CHANGES IN  STOCKHOLDERS'  EQUITY
<TABLE>
<CAPTION>
                                                                Additional                  Unrealized    Cumulative        Total
                                          Common Stock             Paid        Retained    Gain/(Loss)   Transulation  Stockholders'
                                                                                                          Adjustment

                                        Shares      Amount      In Capital     Earnings         On                         Equity
                                                                                           Investments

BALANCE AT JANUARY 1, 1997                               (1)                          (1)
<S>                                     <C>          <C>              <C>         <C>              <C>         <C>             <C>
                                        5,405,820    $16,821          $2,775      $27,761          $820        $(334)       $47,843

Comprehensive Income:
Net earnings                                                                       12,218                                    12,218
Change in unrealized gains
(losses) on securities and
Cumulative Translation Adjustments                                                                  516            42           558
Comprehensive income                                                               12,218           516            42        12,776
Adjustments of offering costs
Issuance of shares                        324,456        594                                                                    594
Change in loans to acquire shares                        249                                                                    249
BALANCE AT DECEMBER 31, 1997
                                        5,730,276     17,664           2,775       39,979         1,336         (292)        61,462

Comprehensive Income:
Net loss                                                                         (12,076)                                  (12,076)
Change in unrealized gains
(losses) on securities and
Cumulative Translation Adjustments                                                                (160)           544          384
Comprehensive income (loss)                                                      (12,076)         (160)           544        11,692
Exercise of stock options                 215,922      1,533                                                                  1,533
Shares acquired                          (69,800)      (226)                        (522)                                      (748)
Change in loans to acquire shares                    (1,031)                                                                  1,031
BALANCE AT DECEMBER 31, 1998
                                        5,876,398     17,940           2,775       27,381         1,176           252        49,524

Comprehensive Income:
Net earnings (loss)                                                              (62,373)                                  (62,373)
Change in unrealized gains
(losses) on securities                                                                          (6,050)         (239)       (6,289)
Comprehensive loss

                                                                                 (62,373)       (6,050)         (239)       (68,662)
Change in loans to acquire shares                      1,077                                                                  1,077
BALANCE AT DECEMBER 31, 1999
                                        5,876,398    $19,017          $2,775    $(34,992)      $(4,874)           $13      $(18,061)

               (1)  Capital  stock and retained  earnings  have been restated by
                    $(595) and $(360)  respectively,  to reflect the adoption of
                    U.S. GAAP.  (See Note 22)

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED FINANCIAL STATEMENTS
for the years ended December 31, 1999, 1998, and 1997 (in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                1999            1998           1997
                                                                                ----            ----           ----
Cash flows from operating activities
    Net earnings (loss)                                                         (62,373)        (12,076)       12,218
    Adjustments to reconcile net earnings (loss) to net cash provided
        from operations:
<S>                                                                             <C>              <C>            <C>
        Minority interest                                                       (19,787)         (4,919)        7,098
        Depreciation, amortization and other                                      7,722           6,032         5,258
        Deferred income tax expense (benefit)                                     8,462          (1,752)       (1,301)
        Net realized capital (gain) loss                                            (65)         (4,371)       (9,393)
        Net changes in operating assets and liabilities (net of assets
        acquired):
           Receivables                                                           40,354         (10,396)       (6,644)
           Reinsurance recoverable on losses, net                               (32,552)         40,321       (61,311)
           Prepaid reinsurance premiums                                           7,227          19,121       (21,624)
           Federal income taxes recoverable                                       5,891               0             0
           Deferred policy acquisition costs                                      2,412          (4,483)        2,011
           Other assets and liabilities                                           5,012         (11,836)       (4,083)
           Losses and loss adjustment expenses                                   12,486          52,796        26,330
           Unearned premiums                                                    (20,658)         (7,951)       27,409
           Reinsurance payables                                                  25,250         (48,770)       37,810
                                                                                 ------         --------       ------
NET CASH PROVIDED FROM (USED IN) OPERATIONS                                     (20,619)         11,716        13,778
                                                                                --------         ------        ------
    Cash flow from investing activities net of assets acquired:

        Purchase of minority interest and subsidiaries                                0          (1,208)      (61,000)
        Net sales (purchases) of short-term investments                         (13,168)         (8,807)       11,638
        Proceeds from sales, calls and maturities of fixed maturities           206,208         129,951       227,604
        Purchases of fixed maturities                                          (182,453)       (148,417)     (268,542)
        Proceeds from sales of equity securities                                 11,215          69,379        36,101
        Purchase of equity securities                                            (9,850)        (42,909)      (35,558)
        Net proceeds from (purchase) sales of other investments                  (2,045)           (390)           41
        Purchase of property and equipment                                       (7,278)         (9,348)       (5,803)
        Cash paid for NACU                                                            0          (3,000)            0
        Other, net                                                                  (71)              0         1,130
                                                                                    ----              -         -----
NET CASH PROVIDED FROM (USED IN) INVESTING ACTIVITIES                             2,558         (14,749)      (94,389)
                                                                                  -----         --------      --------
    Cash flow from financing activities net of assets acquired:

        Proceeds from issuance of preferred securities                                0               0       129,877
        Proceeds from (purchase)  issue of share capital                          1,077            (675)          843
        Redemption of share capital                                                   0            (748)            0
        Proceeds from (payments made on) term debt                                3,185           7,855       (43,818)
        Proceeds from consolidated subsidiary minority interest owner                 0               0         2,354
        Loans from and (repayments to) related parties                            1,849          (1,600)            0
                                                                                  -----          -------            -
NET CASH PROVIDED FROM (USED IN) FINANCING ACTIVITIES:
                                                                                  6,111           4,832        89,256
                                                                                  -----           -----        ------
Increase (decrease) in cash and cash equivalents                                (11,950)          1,799         8,645
Cash and cash equivalents, beginning of year                                     15,123          13,324         4,679
                                                                                 ------          ------         -----
Cash and cash equivalents, end of year                                            3,173          15,123        13,324
                                                                                  =====          ======        ======

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

</TABLE>

<PAGE>

[HEADER]



GORAN CAPITAL INC AND SUBSIDIARIES

1.   Nature of Operations and Significant Accounting Policies:

Goran Capital Inc. ("Goran" or the "Company") is the parent company of the Goran
group of companies.  The consolidated  financial statements include the accounts
of all subsidiary companies of Goran as follows:

Symons  International  Group,  Inc.  ("SIG") is a 68% owned  subsidiary of Goran
Capital  Inc.  ("Goran").  The  Company  is  primarily  involved  in the sale of
nonstandard automobile insurance and crop insurance.  The Company's products are
marketed through independent agents and brokers. Its insurance  subsidiaries are
licensed in 35 states, primarily in the Midwest and Southern United States.

The  following  is a  description  of the  significant  accounting  policies and
practices employed:

a.   Basis of Presentation:  The consolidated  financial  statements  include
     the accounts,  after  intercompany  eliminations,  of the
     Company and its wholly-owned subsidiaries as follows:

     Superior  Insurance Group  Management,  Inc ("Superior  Group  Management")
     (formerly,  GGS Management Holdings,  Inc. ("GGSH")) -a holding company for
     the nonstandard automobile operations which includes:

         Superior  Insurance Group, Inc.  ("Superior  Group")  (formerly,
         GGS Management,  Inc. ("GGS")) -a management company for the
         nonstandard  automobile operations;

         Superior Insurance Company ("Superior")-an insurance company domiciled
         in Florida;

         Superior American Insurance Company  ("Superior American")-an insurance
         company domiciled in Florida;

         Superior Guaranty Insurance Company ("Superior Guaranty")-an insurance
         company domiciled in Florida;

         Pafco General Insurance Company ("Pafco")-an insurance company
         domiciled in Indiana;

     IGF Holdings, Inc. ("IGFH")-a holding company for the crop operations which
     includes IGF and Hail Plus Corp.;

         IGF Insurance Company ("IGF")-an insurance company domiciled in
         Indiana;

         North American Crop Underwriters, Inc. ("NACU") - a managing general
         agency with exclusive focus on crop insurance.

                  Granite Reinsurance Company Ltd. ("Granite Re") - a finite
                  risk reinsurance company based in Barbados.

        Granite Insurance Company  ("Granite") - a Canadian  federally  licensed
     insurance company which ceased writing new insurance policies on January 1,
     1990.

     Symons International  Group, Inc. of Ft. Lauderdale,  Florida ("SIGF") -
     a Florida based surplus lines insurance agency. These
     operations have been discontinued effective January 1, 1999.

     On August 12,  1997,  the  Company  acquired  the  remaining  48%  minority
     interest in Superior Group Management from Goldman Funds through a purchase
     business combination. (See Note 2.)

     On July 8, 1998,  the Company  acquired  NACU  through a purchase  business
     combination.  The Company's Consolidated Statement of Earnings for the year
     ended  December  31,  1998  includes  the  results  of  operations  of NACU
     subsequent to July 8, 1998. (See Note 2.)

b.   Use  of  Estimates:   The  preparation  of  financial  statements  requires
     management to make estimates and assumptions  that affect amounts  reported
     in the financial  statements  and  accompanying  notes.  Such estimates and
     assumptions  could change in the future as more  information  becomes known
     which could impact the amounts reported and disclosed herein.

c.  Premiums:  Premiums are recognized as income  ratably over the life of the
     related  policies and are stated net of ceded  premiums.
     Unearned premiums are computed on the semimonthly pro rata basis.

d.  Investments:  Investments are presented on the following basis:

     Fixed maturities and equity securities are classified as available for sale
     and are  carried  at market  value  with the  unrealized  gain or loss as a
     component of  stockholders'  equity,  net of deferred tax, and accordingly,
     has no effect on net income.

     Real estate-at cost, less allowances for depreciation.

     Mortgage loans-at outstanding principal balance.

     Realized gains and losses on sales of investments are recorded on the trade
     date and are recognized in net income on the specific identification basis.
     Interest and dividend income are recognized as earned.

e.   Cash and Cash  Equivalents:  For purposes of the  statement of cash flows,
     the Company  includes in cash and cash  equivalents  all
     cash on hand and demand deposits with original maturities of three months
     or less.

f.   Deferred Policy  Acquisition  Costs:  Deferred policy acquisition costs are
     comprised of agents'  commissions,  premium taxes,  certain other costs and
     investment  income  (starting  in 1999) which are  related  directly to the
     acquisition of new and renewal business, net of expense allowances received
     in connection with  reinsurance  ceded,  which have been accounted for as a
     reduction of the related policy acquisition costs. These costs are deferred
     and  amortized  over  the  terms of the  policies  to  which  they  relate.
     Acquisition costs that exceed estimated losses and loss adjustment expenses
     and  maintenance  costs are charged to expense in the period in which those
     excess costs are determined.

g.   Property  and  Equipment:  Property  and  equipment  are  recorded at cost.
     Depreciation for buildings is based on the  straight-line  method over 31.5
     years and the  straight-line  method for other  property and equipment over
     their  estimated  useful lives ranging from five to seven years.  Asset and
     accumulated  depreciation  accounts  are relieved  for  dispositions,  with
     resulting gains or losses reflected in net income.

h.   Intangible  Assets:  Intangible  assets consists  primarily of goodwill,
     and debt  acquisition  costs.  Goodwill is amortized
     over a 25-year period on a straight-line  basis based upon  management's
     estimate of the expected  benefit period.  Deferred debt
     acquisition costs are amortized over the term of the debt.

i.   Losses and Loss Adjustment  Expenses:  Reserves for losses and loss
     adjustment  expenses include estimates for reported unpaid
     losses  and  loss  adjustment  expenses  and for  estimated  losses
     incurred  but not  reported.  These  reserves  have  not been
     discounted.  The  Company's  loss and loss  adjustment  expense  reserves
     include an aggregate  stop-loss  program.  Reserves are
     established using individual  case-basis  valuations and statistical
     analysis as claims are reported.  Those estimates are subject
     to the effects of trends in loss severity and  frequency.  While management
     believes the reserves are adequate,  the  provisions
     for losses and loss adjustment  expenses are necessarily based on estimates
     and are subject to considerable  variability.  Changes
     in the  estimated  reserves are charged or credited to operations as
     additional  information  on the estimated  amount of a claim
     becomes known during the course of its settlement.  The reserves for
     losses and loss  adjustment  expenses are reported net of the
     receivables for salvage and subrogation of approximately $8,506 and
     $10,684 at December 31, 1999 and 1998, respectively.


j.   Preferred Securities: Preferred securities represent Company-obligated
     mandatorily  redeemable securities of subsidiary holding solely parent
     debentures and are reported at their  liquidation value under minority
     interest.  Distributions  on  these  securities  are  charged  against
     consolidated earnings.

k.   Income Taxes:  The Company  utilizes the liability method of accounting for
     deferred income taxes. Under the liability method, companies will establish
     a deferred  tax  liability or asset for the future tax effects of temporary
     differences  between book and taxable  income.  Changes in future tax rates
     will result in  immediate  adjustments  to deferred  taxes.  (See Note 11.)
     Valuation  allowances are established when necessary to reduce deferred tax
     assets to the amount expected to be realized. Income tax expense is the tax
     payable or  refundable  for the period plus or minus the change  during the
     period in deferred tax assets and liabilities.

l.   Reinsurance: Reinsurance premiums, commissions, expense reimbursements, and
     reserves  related  to  reinsured   business  are  accounted  for  on  basis
     consistent with those used in accounting for the original  policies and the
     terms of the reinsurance contracts.  Premiums ceded to other companies have
     been reported as a reduction of premium income.

m.   Asset  Impairment  Policy:  The Company  reviews the carrying values of its
     long-lived  and  identifiable  intangible  assets for  possible  impairment
     whenever  events or changes in  circumstances  indicate  that the  carrying
     amount of the assets may not be recoverable. Any long-lived assets held for
     disposal are reported at the lower of their carrying  amounts or fair value
     less cost to sell.

n.   Certain  Accounting  Policies for Crop Insurance  Operations:  In 1996, IGF
     instituted a policy of recognizing (i) 35% of its estimated  multiple peril
     crop  insurance  (MPCI)  gross  premiums  written for each of the first and
     second quarters,  20% for the third quarter and 10% for the fourth quarter;
     (ii)  commission  expense at the  applicable  rate of MPCI  gross  premiums
     written recognized; and (iii) Buy-up Expense Reimbursement at a rate of 25%
     in  1999,  27% in  1998,  and 29% in 1997 of MPCI  gross  premiums  written
     recognized along with normal operating expenses incurred in connection with
     premium  writings.  In  the  third  quarter,  if  a  sufficient  volume  of
     policyholder acreage reports have been received and processed by IGF, IGF's
     policy is to  recognize  MPCI  gross  premiums  written  for the first nine
     months based on a reestimate which takes into account actual gross premiums
     processed. If an insufficient volume of policies has been processed,  IGF's
     policy is to recognize in the third  quarter 20% of its full year  estimate
     of MPCI  gross  premiums  written,  unless  other  circumstances  require a
     different  approach.  The  remaining  amount of gross  premiums  written is
     recognized  in the fourth  quarter,  when all amounts are  reconciled.  IGF
     recognizes  MPCI  underwriting  gain or loss  during  the first and  second
     quarters,  as well as the third quarter,  reflecting IGF's best estimate of
     the amount of such gain or loss to be recognized  for the full year,  based
     on, among other things,  historical  results,  plus a provision for adverse
     developments.  In the third and fourth quarters, a reconciliation amount is
     recognized  for the  underwriting  gain or loss based on final  premium and
     latest  available loss  information.  o. Accounting  Changes:  In 1998, the
     Company  adopted the provisions of SFAS No. 130,  "Reporting  Comprehensive
     Income" and SFAS No. 131,  "Disclosures About Segments of an Enterprise and
     Related Information." SFAS 130 requires companies to disclose comprehensive
     income in their financial statements.  In addition to items included in net
     income,  comprehensive  income includes items currently charged or credited
     directly  to  stockholders'  equity,  such  as  the  change  in  unrealized
     appreciation   (depreciation)  of  securities.  SFAS  131  established  new
     standards  for  reporting  operating   segments,   products  and  services,
     geographic areas and major customers.  Segments are defined consistent with
     the basis  management  used  internally to assess  performance and allocate
     resources.

     On March 4, 1998, the AICPA Accounting Standards Executive Committee issued
     Statement  of Position  No. 98-1 (SOP  98-1),  "Accounting  for the Cost of
     Computer  Software  Developed or Obtained  for Internal  Use." SOP 98-1 was
     issued to address  diversity in practice  regarding  whether and under what
     conditions the costs of internal-use  software  should be capitalized.  SOP
     98-1 is  effective  for  financial  statements  for years  beginning  after
     December 15, 1998. In 1999, the Company adopted the new requirements of the
     SOP which did not have significant effect on net earnings during 1999.

     In  June  1998  SFAS  No.  133,  as  amended,  "Accounting  for  Derivative
     Instruments and Hedging  Activities" was issued, to be effective for fiscal
     quarters and fiscal years  beginning  after June 15, 2000. The Company does
     not have any derivative  instruments or hedging activities  therefore,  the
     Company  believes  that SFAS No.  133 will have no  material  impact on the
     Company's financial statements or notes thereto.

                The  Company's  accounting  policy prior to 1998 was to discount
                 the  reserves  for  direct  claims for the time value of money.
                 Effective  January 1, 1998,  the  Company  adopted  its current
                 policy which does

        not take into  account  the  impact of  discounting.  The new  policy is
        consistent with United States generally accepted  accounting  principles
        ("GAAP").

 p.  Earnings Per Share: The Company's basic earnings per share calculations are
     based  upon  the  weighted   average  number  of  shares  of  common  stock
     outstanding during each period. Due to the net loss in 1998 and 1999, fully
     diluted earnings per share is the same as basic earnings per share.

2.       Corporate Reorganization and Acquisitions:

On August 12, 1997,  the Company  purchased the remaining  minority  interest in
Superior Group Management for $61 million in cash. The excess of the acquisition
price over the minority interest liability aggregated  approximately $36,045 and
was  assigned to goodwill  as the fair  market  value of assets and  liabilities
approximated their carrying value.

In July 1998,  IGFH  acquired all of the  outstanding  shares of common stock of
NACU,  a  Henning,   Minnesota  based  managing  general  agency  which  focuses
exclusively  on crop  insurance.  The  acquisition  price for NACU was $4,000 of
which  $3,000 was paid in cash and the  remaining  $1,000  payable  July 1, 2001
without interest.

The  acquisition of NACU was accounted for as a purchase and recorded as follows
(in thousands):

   Assets acquired                                                    $21,035
   Liabilities assumed                                                 19,705
                                                                       ------
   Net assets acquired                                                  1,330
   Purchase price                                                       4,000
                                                                        -----
   Excess purchase price (goodwill)                                    $2,670
                                                                       ======

The  Company's  results  from  operations  for the year ended  December 31, 1998
include the results of NACU subsequent to July 8, 1998.

<PAGE>

3.   Investments:
<TABLE>
<CAPTION>

Investments are summarized as follows:

                                                      Cost or                                   Estimated
                                                    Amortized             Unrealized             Market
December 31, 1999 (in thousands)                        Cost               Gain Loss              Value

Fixed Maturities:
U.S.  Treasury  securities and obligations of U.S.
<S>                                                    <C>              <C>        <C>           <C>
    government corporations and agencies               $63,857          $103       $(2,773)      $61,187
Foreign governments                                       ----         -----          ----          ----
Obligations of states and political subdivisions            42         -----            (4)           38
Corporate securities                                   113,272            14        (2,895)      110,391
                                                       -------            --        -------      -------
    TOTAL FIXED MATURITIES                             177,171           117        (5,672)      171,616
Equity securities                                       15,511           884        (2,840)       13,555
Short-term investments                                  32,634          ----          ----        32,634
Mortgage loans                                           1,990          ----          ----         1,990
Other invested assets                                      945     ---------     ---------           945
                                                           ---     ---------     ---------           ---

    TOTAL INVESTMENTS                                 $228,251        $1,001       $(8,512)     $220,740
                                                      ========        ======       ========     ========
</TABLE>
<TABLE>
<CAPTION>

                                                      Cost or                                   Estimated
                                                     Amortized            Unrealized             Market
December 31, 1998 (in thousands)                        Cost               Gain Loss              Value

Fixed Maturities:
U.S.  Treasury  securities and obligations of U.S.
<S>                                                    <C>            <C>             <C>       <C>
    government corporations and agencies               $74,060        $2,193          $(174)    $76,079
Foreign governments                                       ----          ----           ----        ----
Obligations of states and political subdivisions         7,080             3           (115)      6,968
Corporate securities                                   113,137         1,766           (699)    114,204
                                                       -------         -----           -----    -------
    TOTAL FIXED MATURITIES                             194,277         3,962           (988)    197,251
                                                       -------         -----           -----    -------
Equity securities                                       13,691           755         (1,458)     12,988
Short-term investments                                  27,637          ----           ----      27,637
Mortgage loans                                           2,100          ----           ----       2,100
Other invested assets                                      890          ----           ----         890
                                                           ---          ----           ----         ---

    TOTAL INVESTMENTS                                 $238,595        $4,717        $(2,446)   $240,866
                                                      ========        ======        ========   ========
</TABLE>

At December 31, 1999,  91.4% of the Company's  fixed  maturities were considered
investment  grade  by The  Standard  & Poors  Corporation  or  Moody's  Investor
Services,  Inc.  Securities  with quality  ratings Baa and above are  considered
investment grade  securities.  In addition,  the Company's  investments in fixed
maturities did not contain any significant  geographic or industry concentration
of credit risk.

The amortized  cost and estimated  market value of fixed  maturities at December
31,  1999,  by  contractual  maturity,  are  shown in the table  which  follows.
Expected  maturities will differ from contractual  maturities  because borrowers
may have the right to call or prepay obligations with or without penalty:

<TABLE>
<CAPTION>

                                                                                     Estimated Market
                                                                   Amortized Cost          Value

(in thousands)
Maturity:
<S>                                                                          <C>                <C>
    Due in one year or less                                                  $4,276             $4,268
    Due after one year through five years                                    91,708             89,901
    Due after five years through ten years                                   40,779             38,566
    Due after ten years                                                      37,099             35,641
    Mortgage-backed securities                                                3,309              3,240
                                                                              -----              -----
TOTAL                                                                      $177,171           $171,616
                                                                           ========           ========
</TABLE>

Gains and losses realized on sales of investments are as follows:

<TABLE>
<CAPTION>

(in thousands)                                                       1999       1998           1997
                                                                     ----       ----           ----

<S>                                                              <C>             <C>           <C>
Proceeds from sales                                              $206,208        $129,951      $227,604
Gross gains realized                                               $3,375         $10,901       $10,639
Gross losses realized                                             $(3,310)      $ (6,797)      $(1,246)
</TABLE>

  Net  investment  income for the years  ended  December  31 are as follows  (in
thousands):

<TABLE>
<CAPTION>

                                                                 1999            1998              1997
                                                                 ----            ----              ----

<S>                                                               <C>         <C>               <C>
Fixed maturities                                                  $12,301     $11,931           $11,213
Equity securities                                                     401         596               340
Cash and short-term investments                                     1,475       1,346             1,544
Mortgage loans                                                        152         173               182
Other                                                               (173)          32              (40)
                                                                    -----          --              ----
Total investment income                                            14,156      14,078            13,239
Investment expenses                                                 (738)        (677)            (462)
                                                                    -----        -----            -----
Net investment income                                             $13,418     $13,401           $12,777
                                                                  =======     =======           =======
</TABLE>

  Investments  with a market  value of $12,728  and $14,950  (amortized  cost of
  $12,760 and $14,726) as of December 31, 1999 and 1998,  respectively,  were on
  deposit in the United States and Canada.  The deposits are required by various
  insurance departments and others to support licensing requirements and certain
  reinsurance contracts, respectively.

4.   Deferred Policy Acquisition Costs:

Policy  acquisition  costs are  capitalized  and amortized  over the life of the
policies.  Policy  acquisition  costs are those  costs  directly  related to the
issuance  of  insurance  policies  including  commissions,  premium  taxes,  and
underwriting  expenses net of  reinsurance  commission  income on such policies.
During  1999 the  Company  changed  its method of  calculating  deferred  policy
acquisition  costs by  including  investment  income in the  computation.  Prior
period calculations did not consider investment income. The effect of the change
was to increase policy acquisition costs by approximately $4,071 in 1999. Policy
acquisition  costs both  acquired  and  deferred,  and the related  amortization
charged to income were as follows:

<TABLE>
<CAPTION>

(in thousands)                                                   1999            1998           1997

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

<S>                                                               <C>         <C>            <C>
Balance, beginning of year                                        $16,332     $11,849        $13,860
Costs deferred during year                                         43,714      56,041         17,345
Amortization during year                                         (46,126)     (51,558)       (19,356)
                                                                 --------     --------       --------
Balance, end of year                                              $13,920     $16,332        $11,849
                                                                  =======     =======        =======
</TABLE>

5.   Property and Equipment:

Property and equipment at December 31 are summarized as follows (in thousands):

<TABLE>
<CAPTION>

                                                                     Accumulated

                                                   1999 Cost     Depreciation      1999 Net     1998 Net
                                                   ---------     ------------      --------     --------

<S>                                                       <C>             <C>            <C>          <C>
Land                                                      $260            $----          $260         $260
Buildings                                                7,412            1,232         6,180        6,348
Office furniture and equipment                           7,626            4,853         2,773        3,182
Automobiles                                                160               57           103           70
Computer equipment                                      20,889            8,238        12,651        9,490
                                                        ------            -----        ------        -----
Total                                                  $36,347          $14,380       $21,967      $19,350
                                                       =======          =======       =======      =======
</TABLE>

Accumulated  depreciation at December 31, 1998 was $9,719.  Depreciation expense
related to property and  equipment for the years ended  December 31, 1999,  1998
and 1997 were $4,887, $3,151 and $1,754, respectively.

6.   Intangible Assets:

Intangible assets at December 31 are as follows (in thousands):

<TABLE>
<CAPTION>

                                                                     Accumulated

                                                   1999 Cost     Depreciation      1999 Net     1998 Net
                                                   ---------     ------------      --------     --------

<S>                                                    <C>               <C>          <C>          <C>
Goodwill                                               $43,376           $4,641       $38,735      $39,851
Deferred debt costs                                      5,131              413         4,718        4,889
Other                                                    1,299              940           359        1,560
                                                         -----              ---           ---        -----
                                                       $49,806           $5,994       $43,812      $46,300
                                                       =======           ======       =======      =======
</TABLE>

Accumulated  amortization at December 31, 1998 was $3,697.  Amortization expense
related to  intangible  assets for the years ended  December 31, 1999,  1998 and
1997 was $2,297, $2,379 and $1,197 respectively.

7.   Unpaid Losses and Loss Adjustment Expenses (in thousands):

Activity in the  liability  for unpaid  losses and loss  adjustment  expenses is
summarized as follows:

<TABLE>
<CAPTION>

                                                                               1999       1998        1997
                                                                               ----       ----        ----

<S>                                                                        <C>           <C>         <C>
Balance at January 1                                                       $207,432      $154,636    $128,306
Less reinsurance recoverables                                                67,885       108,206      33,113
                                                                             ------       -------      ------
    NET BALANCE AT JANUARY 1                                                139,547        46,430      95,193
                                                                            -------        ------      ------
Incurred related to:
Current year                                                                237,817       267,395     200,566
Prior years                                                                  38,816        11,732      10,937
                                                                             ------        ------      ------
    TOTAL INCURRED                                                          276,633       279,127     211,503
                                                                            -------       -------     -------
Paid related to:
Current year                                                                167,262       165,336     180,925
Prior years                                                                 117,293        61,677      79,341
                                                                            -------        ------      ------
    TOTAL PAID                                                              284,555       227,013     260,266
                                                                            -------       -------     -------
    NET BALANCE AT DECEMBER 31                                              131,625       139,547      46,430
Plus reinsurance recoverables                                                88,293        67,885     108,206
                                                                             ------        ------     -------
    BALANCE AT DECEMBER 31                                                 $219,918      $207,432    $154,636
                                                                           ========      ========    ========
</TABLE>

Reserve  estimates  are  regularly  adjusted in  subsequent  reporting  periods,
consistent  with  sound  insurance  reserving   practices,   as  new  facts  and
circumstances  emerge which  indicate a  modification  of the prior  estimate is
necessary.  The adjustment,  referred to as "reserve development," is inevitable
given  the  complexities  of  the  reserving  process  and  is  recorded  in the
statements  of  earnings  in the  period  the need for the  adjustments  becomes
apparent.  The  foregoing   reconciliation   indicates  that  deficient  reserve
developments of $30,461, $12,996 and $10,967 in the December 31, 1999, 1998, and
1997 loss and loss adjustment  expense  reserves,  respectively,  emerged in the
following  year.  The 1997  and  1998  deficient  reserve  development  occurred
primarily  due to  volatility  in the  historical  trends  for  the  nonstandard
automobile  business as a result of significant growth during 1996 and 1997. The
deficient reserve  development  during 1999 resulted from a higher than expected
frequency  and severity on  nonstandard  automobile  claims and from higher than
expected losses on 1998 AgPI policies (see Note 17).

The  anticipated  effect of inflation is implicitly  considered  when estimating
liabilities for losses and loss adjustment  expenses.  While  anticipated  price
increases due to inflation  are  considered  in  estimating  the ultimate  claim
costs,  the  increase in average  severities  of claims is caused by a number of
factors that vary with the  individual  type of policy  written.  Future average
severities are projected  based on historical  trends  adjusted for  implemented
changes in  underwriting  standards,  policy  provisions,  and general  economic
trends.  Those anticipated  trends are monitored based on actual development and
are modified if necessary.

Liabilities for loss and loss  adjustment  expenses have been  established  when
sufficient  information  has been  developed  to indicate the  involvement  of a
specific  insurance  policy.  In addition,  a liability has been  established to
cover additional  exposure on both known and unasserted  claims.  The effects of
changes in settlement costs,  inflation,  growth and other factors have all been
considered in  establishing  the current year reserve for unpaid losses and loss
adjustment expenses.

8.   Notes Payable:

At December 31,  1999,  IGF  maintained  a revolving  bank line of credit in the
amount of $15,000  (the "IGF  Revolver").  At December  31,  1999 and 1998,  the
outstanding balance was $15,000 and $12,000 respectively.  Interest on this line
of credit was at the New York prime rate (8.50% at December 31, 1999) minus .75%
adjusted daily.  This line is  collateralized  by the  crop-related  uncollected
premiums,  reinsurance  recoverable  on  paid  losses,  Federal  Crop  Insurance
Corporation (FCIC) annual settlement,  and a first lien on the real estate owned
by IGF. The IGF Revolver  contains  certain  covenants which (i) restricts IGF's
ability to accumulate  common stock; (ii) sets minimum standards for investments
and policyholder  surplus; and (iii) limits the ratio of net written premiums to
surplus.  At  December  31,  1999,  IGF was not in  compliance  with the minimum
statutory surplus covenant. However, IGF has received a waiver from the bank for
December 31, 1999.

The weighted average  interest rate on the line of credit was 7.02%,  6.96%, and
8.75% during 1999, 1998 and 1997, respectively.

Notes  payable at December 31, 1999 also  includes a $1,000 note due 2001 on the
purchase of NACU at no  interest.  The balance of notes  payable at December 31,
1999  includes  three  smaller  notes  (less  than  $300  each)  assumed  in the
acquisition  of NACU due  2002-2006  with  periodic  payments at interest  rates
ranging from 7% to 9.09%.

9.   Company-Obligated Mandatorily Redeemable Preferred Stock of Trust
     Subsidiary Holding

On August 12, 1997, SIG's wholly owned trust  subsidiary  issued $135 million in
preferred   securities   ("Preferred   Securities")  at  a  rate  of  9.5%  paid
semi-annually.  The  principal  asset of the wholly owned trust  subsidiary  are
Senior Subordinated Notes of SIG in the principal amount of $135 million with an
interest  rate  and  maturity  date  substantially  identical  to  those  of the
Preferred  Securities.  The Preferred Securities were offered under Rule 144A of
the SEC  ("Preferred  Securities  Offering") and,  pursuant to the  Registration
Rights  Agreement  executed  at  closing,  SIG  filed  a Form  S-4  Registration
Statement with the SEC on September 16, 1997 to effect the Exchange  Offer.  The
S-4 Registration  Statement was declared effective on September 30, 1997 and the
Exchange  Offer  successfully  closed on October 31,  1997.  The proceeds of the
Preferred  Securities  Offering were used to repurchase  the remaining  minority
interest in Superior Group Management for $61 million,  repay the balance of the
term debt of $44.9 million the balance,  after expenses,  of  approximately  $24
million was  contributed to the nonstandard  automobile  insurers of which $10.5
million was contributed in 1997.  Expenses of the issue  aggregated $5.1 million
and are amortized over the term of the Preferred  Securities (30 years).  In the
third quarter of 1997, the Company wrote off the remaining  unamortized costs of
the term debt of approximately  $1.1 million pre-tax or approximately  $0.09 per
share which was recorded as an extraordinary item.

The Preferred  Securities  represent  company-obligated  mandatorily  redeemable
securities of a subsidiary  holding solely its parent debentures and have a term
of 30 years with semi-annual interest payments commencing February 15, 1998. The
Preferred  Securities  may be redeemed  in whole or in part after 10 years.  The
Preferred  Security  obligations of approximately $13 million per year is funded
from the  Company's  nonstandard  automobile  management  company  and  dividend
capacity from the crop operations.  The nonstandard auto funds are the result of
management and billing fees in excess of operating costs.

The Trust Indenture for the Preferred  Securities  contains certain  restrictive
covenants.  These covenants are based upon SIG's consolidated  coverage ratio of
earnings before interest,  taxes, depreciation and amortization (EBITDA) whereby
if SIG's EBITDA falls below 2.5 times  consolidated  interest expense (including
Preferred  Security  distributions)  for  the  most  recent  four  quarters  the
following restrictions become effective:

o  SIG  may  not  incur   additional   indebtedness   or  guarantee   additional
indebtedness.

o        SIG may  not  make  certain  restricted  payments  including  loans  or
         advances to  affiliates,  stock  repurchases  and a  limitation  on the
         amount of dividends is inforce.

o        SIG may not  increase  its  level of  non-investment  grade  securities
         defined as equities, mortgage loans, real estate, real estate loans and
         non-investment grade fixed income securities.

These restrictions  currently apply as the SIG's consolidated coverage ratio was
(4.89) in 1999, and will continue to apply until the SIG's Consolidated Coverage
Ratio  is in  compliance  with  the  terms  of the  Trust  Indenture.  SIG is in
compliance  with these  additional  restrictions  and  therefore,  this does not
represent a default by the Company on the Preferred Securities.

Assuming the Preferred  Securities  Offering took place at January 1, 1997,  the
proforma  effect of this  offering on the  Company's  consolidated  statement of
earnings from  continuing  operations for the year ended December 31, 1997 is as
follows:

                                                               Unaudited
                                                            (In thousands)

Revenues                                                       $319,019
Net earnings from continuing operations                         $11,163
Net earnings  from  continuing  operations  per common            $1.99
    share (fully diluted)

The pro forma results are not necessarily indicative of what actually would have
occurred  if  these  transactions  had been in  effect  for the  entire  periods
presented.  In  addition,  they are not  intended to be a  projection  of future
results.

10.      Capital Stock

The Company's authorized share capital consists of:

(a)      First Preferred shares

An unlimited  number of first preferred  shares of which none are outstanding at
December 31, 1999 (1998-nil)

(b)      Common Shares

An unlimited  number of common shares of which  5,876,398 are  outstanding as at
December 31, 1999 (1998 - 5,876,398).  During the year, pursuant to the exercise
of warrants and options,  the Company issued nil (1998 - 215,992)  common shares
for aggregate consideration in the amount nil (1998 - $1,533) of which $1,177 of
the  consideration was in the form of a loan. During 1998, the Company purchased
69,800 of its common shares for an aggregate consideration of $748.

11.            Income Taxes:

The Company and its subsidiaries  have net operating loss carryovers of $66,152.
Of that amount, $43,325 is attributable to SIG, $15,983 is attributable to Goran
and its  non  U.S.  subsidiaries,  and  $6,844  is  attributable  to SIGF a U.S.
subsidiary which does not qualify for filing  consolidated tax returns with SIG.
These losses are usable only against future income in these respective operating
units.

As of December 31, 1999,  the Company has unused net operating  loss  carryovers
available as follows (in thousands):

  Years ending not later than December 31:                     Goran &
<TABLE>
<CAPTION>

                                                               -------
                                                               Canadian                        Total

                                                    SIG        Subsidiaries        SIGF
                                                    ---        ------------        ----

<S>   <C>                                            <C>           <C>                         <C>
      2000                                           541           1,571                       2,112
      2001                                                         1,537                       1,537
      2002                                           126             865                         991
      2003                                                         1,120                       1,120
      2004                                                           511                         511
      2005                                                         1,659                       1,659
      2006                                                         1,113                       1,113
      2017                                                                        4,688        4,688
      2018                                                                        1,295        1,295
      2019                                        42,658              --            861       43,519
      Capital Losses                                  --           7,607             --        7,607
                                                      --           -----             --        -----
          TOTAL                                   43,325          15,983          6,844       66,152
                                                  ======          ======          =====       ======
</TABLE>

SIG files a consolidated  U.S.  federal income tax return with its  wholly-owned
subsidiaries.   Intercompany  tax  sharing   agreements   between  SIG  and  its
wholly-owned subsidiaries provide that income taxes will be allocated based upon
separate return  calculations  in accordance  with the Internal  Revenue Code of
1986,  as  amended.  Intercompany  tax  payments  are  remitted at such times as
estimated  taxes would be required to be made to the  Internal  Revenue  Service
("IRS"). Refunds received from the IRS are distributed in a timely manner to the
appropriate subsidiaries.

A reconciliation of the differences between federal tax computed by applying the
federal  statutory  rate of 35% to income before income taxes and the income tax
provision is as follows (in thousands):

<TABLE>
<CAPTION>

                                                                              1999          1998        1997
                                                                              ----          ----        ----
<S>                                                                         <C>           <C>        <C>
Computed income taxes (benefit) at statutory rate                           $(25,509)     (2,953)    $13,266
Alternative minimum taxes                                                      1,203          55        ----
Dividends received deduction                                                     (92)       (130)        (78)
Goodwill and acquisition costs                                                   793         621         179
Other                                                                         (1,649)     (1,243)       (346)
Tax Exempt (Income) Loss                                                          88         689        (134)
Application of Operating Loss Carry Forward                                      (82)       ----      (1,291)
                                                                             (25,248)     (2,961)     11,596
Valuation allowance change                                                    23,859         923        ----
                                                                              ------         ---        ----
Income Tax Expense (Benefit)                                                 $(1,389)    $(2,038)    $11,596
                                                                             ========    ========    =======
</TABLE>

The net  deferred  tax asset at December  31, 1999 and 1998 is  comprised of the
following (in thousands):

<TABLE>
<CAPTION>

                                                                                      1999       1998


Deferred tax assets:
<S>                                                                                 <C>         <C>
    Unpaid losses and loss adjustment expenses                                      $4,271      $3,548
    Unearned premiums and prepaid insurance                                          5,568       5,972
    Allowance for doubtful accounts                                                  1,022       1,118
    Unrealized losses on investments                                                 2,637        ----
    Net operating loss carryforwards                                                23,779       8,129
    Other                                                                              303       1,468
                                                                                       ---       -----
        DEFERRED TAX ASSET                                                         $37,580     $20,235
                                                                                   -------     -------
Deferred tax liabilities:
Deferred policy acquisition costs                                                  $(4,872)    $(5,716)
Unrealized gains on investments                                                       ----        (680)
Other                                                                                 (799)       (602)
                                                                                      -----       -----
        DEFERRED TAX LIABILITY                                                     $(5,671)    $(6,998)
                                                                                   --------    --------
                                                                                    31,909      13,237
        VALUATION ALLOWANCE                                                        $31,909      (8,090)
                                                                                   -------      -------
        NET DEFERRED TAX ASSET                                                       $----      $5,147
                                                                                    =====      ======
</TABLE>

<PAGE>

At December 31, 1999 the Company's net deferred tax assets are fully offset by a
valuation allowance. The company will continue to assess the valuation allowance
and to the extent it is determined  that such  allowance is no longer  required,
the tax benefit of the  remaining  net deferred tax assets will be recognized in
the future.

12.   Leases:

The Company leases  buildings,  furniture,  cars and equipment  under  operating
leases.  Operating leases generally  include renewal options for periods ranging
from two to seven  years  and  require  the  Company  to pay  utilities,  taxes,
insurance and maintenance expenses.

The following is a schedule of future minimum lease  payments  under  cancelable
and  non-cancelable  operating  leases  for  each of the five  years  succeeding
December 31, 1999 and thereafter, excluding renewal options (in thousands):

Year Ending December 31:
2000                                                                  $4,316
2001                                                                   2,529
2002                                                                   2,270
2003                                                                   1,411
2004 and Thereafter                                                   $2,586

Rental expense  charged to operations in 1999, 1998 and 1997 amounted to $3,607,
$2,939  and  $1,176,  respectively,  including  amounts  paid  under  short-term
cancelable leases.

13.   Reinsurance:

The Company  limits the  maximum  net loss that can arise from a large risk,  or
risks in concentrated areas of exposure,  by reinsuring  (ceding) certain levels
of risks with other insurers or reinsurers,  either on an automatic  basis under
general  reinsurance   contracts  known  as  "treaties"  or  by  negotiation  on
substantial  individual risks. Such reinsurance  includes quota share, excess of
loss,  stop-loss and other forms of reinsurance on essentially  all property and
casualty lines of insurance.  In addition,  the Company  assumes  reinsurance on
certain  risks.  The  Company  remains   contingently  liable  with  respect  to
reinsurance,  which  would  become an ultimate  liability  of the Company in the
event that such  reinsuring  companies  might be unable,  at some later date, to
meet their obligations under the reinsurance agreements.

On March 2, 1998,  the Company  announced  that it had signed an agreement  with
Continental  Casualty  Company  ("CNA") to assume its  multi-peril and crop hail
operations.  CNA wrote  approximately  $80 million of multi-peril  and crop hail
insurance  business  in 1997.  The  Company  reinsures  a small  portion  of the
Company's total crop book of business (approximately 22% MPCI and 15% crop hail)
with CNA.  Starting in the year 2000,  assuming no event of change in control as
defined in the  agreement,  the Company can  purchase the  reinsurance  from CNA
through a call  provision  or CNA can require  the  Company to buy the  premiums
reinsured  with CNA.  Regardless  of the method of takeout of CNA,  CNA must not
compete in MPCI or crop hail for a period of time.  There was no purchase price.
The  formula  for the buyout in the year 2000 is based on a multiple  of average
pre-tax  earnings  that CNA  received  from  reinsuring  the  Company's  book of
business.

<PAGE>

Reinsurance  activity for 1999, 1998 and 1997,  which includes  reinsurance with
related parties, is summarized as follows (in thousands):

<TABLE>
<CAPTION>

                         1999                               Gross          Ceded          Net
                         ----                               -----          -----          ---

<S>                                                      <C>           <C>           <C>
Premiums Written                                         $473,687      $(217,188)    $256,499
Premiums Earned                                           495,019       (218,979)     276,040
Incurred losses and loss adjustment expenses              494,725       (218,092)     276,633
Commission expenses (income)                              $76,679       $(73,088)      $3,591

                         1998

Premiums Written                                          546,771       (184,665)     362,106
Premiums Earned                                           554,722       (212,545)     342,177
Incurred losses and loss adjustment expenses              519,711       (240,584)     279,127
Commission expenses (income)                               94,818        (80,272)      14,546

                         1997

Premiums Written                                          448,982       (167,086)     281,896
Premiums Earned                                           422,200       (145,660)     276,540
Incurred losses and loss adjustment expenses              312,583       (101,080)     211,503
Commission expenses (income)                               65,529        (77,279)     (11,750)
</TABLE>

Amounts   recoverable  from  reinsurers  relating  to  unpaid  losses  and  loss
adjustment  expenses were $88,293 and $67,885, as of December 31, 1999 and 1998,
respectively.  These  amounts are reported as assets and are not netted  against
the  liability  for  loss  and  loss  adjustment  expenses  in the  accompanying
Consolidated Balance Sheets.

14.      Related Party Transactions

The 1989,  the Company wrote off a loan of $5,135 owed by a subsidiary of Symons
International  Group Ltd.  ("SIGL").  SIGL the  majority  shareholder  of Goran,
guaranteed  this loan and pledged 1.2 million  escrowed  common  shares of Goran
(the "escrowed shares") as security for the loan. During 1994, SIGL entered into
agreements with Goran whereby as consideration for the release of 766,600 of the
escrowed shares,  SIGL repaid $1,465 of the loan. During 1997, SIGL entered into
an agreement with Goran whereby as  consideration  for release of 333,400 of the
escrowed  shares,  SIGL repaid  $1,444 of the loan,  The balance due to Goran of
$2,226  continues  to be  guaranteed  by  SIGL  and is  secured  by the  100,000
remaining escrowed shares.

Included in investments and advances to related parties are $300 (1998 - $1,377)
due from  certain  shareholders  and  directors  which relate to the purchase of
common  shares  of the  company.  Approximately  $300 of the  amounts  due  bear
interest and are subject to principal repayment schedules.  Other receivables at
December 31, 1999, also includes $1,046 due from certain shareholders  unrelated
to stock  purchases,  the  majority  of which bear  interest  and are subject to
principal repayment terms.

SIG paid $3,112,  $2,832 and $1,034 in 1999,  1998 and 1997,  respectively,  for
consulting  and other  services  relative to the conversion to the company's new
non-standard  automobile  operating  system.  The Company has capitalized  these
costs as part of its new non-standard automobile operating system. Approximately
90% of these  payments  are for  services  provided by  consultants  and vendors
unrelated to the Company.  Stargate Solutions  ("Stargate")  manages the work of
each unrelated  consultants and vendors and, as compensation  for such work, has
retained  approximately  10% of the  payments  referred  to above in return  for
management  services provided.  During 1999,  Stargate was owned beneficially by
certain  directors  of the  Company  and a  relative  of those  directors.  Also
included in consulting fees to related parties is $520 and $270 in 1999 and 1998
respectively,  for payments to Onex, Inc., an officer of which is on SIG's Board
of Directors, for employment related matters.

15.      Regulatory Matters:

Pafco  and  IGF,  domiciled  in  Indiana,   prepare  their  statutory  financial
statements in accordance  with accounting  practices  prescribed or permitted by
the  Indiana  Department  of  Insurance  (IDOI).  Statutory  requirements  place
limitations  on the amount of funds which can be  remitted  to the Company  from
Pafco  and  IGF.  The  Indiana  statute  allows  10% of  surplus  as  regard  to
policyholders  or  100%  of net  income,  whichever  is  greater,  to be paid as
dividends only from earned surplus. The Superior entities, domiciled in Florida,
prepare their  statutory  financial  statements in  accordance  with  accounting
practices prescribed or permitted by the Florida Department of Insurance (FDOI).
In the consent  order  approving  the  Acquisition  of  Superior,  the FDOI (the
"Acquisition  Consent Order") has prohibited  Superior from paying any dividends
for four years without the prior written approval of the FDOI which  prohibition
was in effect through the 1999 calendar year.  Prescribed  statutory  accounting
practices  include a variety of  publications  of the  National  Association  of
Insurance Commissioners (NAIC), as well as state laws, regulations,  and general
administrative  rules.  Permitted statutory  accounting  practices encompass all
accounting practices not so prescribed.

IGF received written approval through December 31, 1999 from the IDOI to reflect
its  business  transacted  with  the  FCIC  as  a  100%  cession  with  any  net
underwriting  results recognized in ceding commissions for statutory  accounting
purposes,  which differs from prescribed statutory accounting  practices.  As of
December 31, 1999, that permitted transaction had no effect on statutory surplus
or net income.  The  underwriting  profit results of the FCIC  business,  net of
reinsurance of $18,206,  $18,405 and $31,595, are netted with policy acquisition
and general and  administrative  expenses for the years ended December 31, 1999,
1998 and 1997,  respectively,  in the  accompanying  Consolidated  Statements of
Earnings.

The NAIC is  considering  the  adoption of a  recommended  statutory  accounting
standard  for crop  insurers,  the impact of which is  uncertain  since  several
methodologies are currently being examined.  Although the IDOI has permitted the
Company to continue for its statutory financial  statements through December 31,
1999 its practice of recording  its MPCI business as 100% ceded to the FCIC with
net  underwriting  results  recognized  in  ceding  commissions,  the  IDOI  has
indicated  that in the  future it will  require  the  Company  to adopt the MPCI
accounting practices  recommended by the NAIC or any similar practice adopted by
the  IDOI.  Since  such a  standard  would  be  adopted  industry-wide  for crop
insurers,  the  Company  would  also be  required  to conform  its  future  GAAP
financial  statements to reflect the new MPCI statutory  accounting  methodology
and to restate all historical GAAP financial  statements  consistently with this
methodology  for  comparability.  The Company  cannot  predict  what  accounting
methodology  will  eventually  be  implemented,  but believe the Company will be
required to adopt such  methodology.  The Company  anticipates that any such new
crop accounting methodology will not affect GAAP net earnings.

Net  income  (loss)  of  the  U.S.  insurance  subsidiaries,  as  determined  in
accordance  with statutory  accounting  practices  (SAP),  was $(20.5)  million,
$(21.5)  million  and $7.7  million,  for  1999,  1998 and  1997,  respectively.
Consolidated  statutory  capital and surplus was  approximately  $50 million and
$105 million at December 31, 1999 and 1998, respectively.

<PAGE>

As of December  31,  1999,  the  risk-based  capital of IGF was in excess of the
company  action  level.  Superior's  risk-based  capital  ratio  was at  199% or
$151,000 below the company action level and Pafco's  risk-based ratio was at 72%
or $10.5 million below the company  action level using the NAIC  guidelines.  To
address IDOI concerns  relating to Pafco, on February 17, 2000,  Pafco agreed to
an order under which the IDOI may monitor more closely the ongoing operations of
Pafco. Among other matters, Pafco must:

o    Refrain from doing any of the  following  without the IDOI's prior  written
     consent:  selling  assets or  business in force or  transferring  property,
     except in the ordinary course of business; disbursing funds, other than for
     specified  purposes or for normal  operating  expenses  and in the ordinary
     course of business  (which does not include  payments to affiliates,  other
     than under written contracts  previously approved by the IDOI, and does not
     include payments in excess of $10,000);  lending funds; making investments,
     except in specified  types of investments;  incurring  debt,  except in the
     ordinary  course  of  business  and to  unaffiliated  parties;  merging  or
     consolidating  with  another  company,  or entering  into new, or modifying
     existing, reinsurance contracts.

o    Reduce its monthly auto premium writings,  or obtain  additional  statutory
     capital or surplus,  such that the year 2000 ratio of gross written premium
     to surplus and net written  premium to surplus does not exceed 4.0 and 2.4,
     respectively;  and  provide  the IDOI with  regular  reports  demonstrating
     compliance with these monthly writings limitations. Further restrictions in
     premium  writings  would result in lower premium  volume.  Management  fees
     payable to  Superior  Group are based on gross  written  premium  therefore
     lower premium volume would result in reduced management fees paid by Pafco.

o                 Provide a summary of affiliate transactions to the IDOI.

o    Continue  to comply  with  prior  IDOI  agreements  and  orders to  correct
     business  practices,  under  which (as  previously  disclosed)  Pafco  must
     provide  monthly  financial  statements  to the  IDOI,  obtain  prior  IDOI
     approval of reinsurance  arrangements and of affiliated party transactions,
     submit  business  plans to the IDOI that address  levels of surplus and net
     premiums written, and consult with the IDOI on a monthly basis.

Pafco's inability or failure to comply with any of the above could result in the
IDOI requiring  further  reductions in Pafco's  permitted premium writings or in
the IDOI instituting  future  proceedings  against Pafco. No report has yet been
issued by the IDOI on its  previously  disclosed  target  examination  of Pafco,
covering loss reserves, pricing and reinsurance.

Pafco has also agreed with the Iowa Department of Insurance (IADOI) to (i) limit
its policy counts on automobile business in Iowa and (ii) provide the IADOI with
policy count  information  on a monthly basis until June 30, 2000 and thereafter
on a quarterly basis.

In addition Pafco has agreed to provide monthly  financial  information to other
departments of insurance in states in which it writes business.

As  previously  disclosed,  with  regard  to IGF and as a result  of the  losses
experienced  by IGF in the crop  insurance  operations,  IGF has agreed with the
IDOI to provide monthly financial  statements and consult monthly with the IDOI,
and to obtain prior approval for affiliated party transactions. IGF currently is
in compliance  with its  agreement to provide  monthly  financial  statements to
IDOI;  however,  IGF is working with the IDOI to provide this  information  on a
timely basis.

IGF has agreed with the IADOI that it will not write any  nonstandard  business,
other than that which it is  currently  writing  until such time as IGF has: (i)
increased surplus;  (ii) a net written premium to surplus ratios less than three
to one; and (iii) surplus reasonable to its risk.

The  FDOI has  initiated  examinations  covering  Superior.  The  scope of these
examinations has covered or will cover market conduct,  data processing systems,
Year 2000 readiness and financial  examinations as of June 30, 1999 and December
31, 1999.  Although no report has been issued or other action taken by the FDOI,
Superior expects to maintain ongoing  discussions with the FDOI to address these
and other issues, including reserve levels and financial review and reporting.

The Company's  operating  subsidiaries,  their  business  operations,  and their
transactions with affiliates,  including the Company,  are subject to regulation
and  oversight by the IDOI,  the FDOI,  and the  insurance  regulators  of other
states  in which the  subsidiaries  write  business.  The  Company  is a holding
company and all of its operations are conducted by its subsidiaries.  Regulation
and oversight of insurance  companies and their  transactions with affiliates is
conducted  by  state  insurance  regulators  primarily  for  the  protection  of
policyholders  and not for the protection of other creditors or of shareholders.
Failure to resolve issues with the IDOI and the FDOI in a manner satisfactory to
the  Company  could  result in future  regulatory  actions or  proceedings  that
materially and adversely affect the Company.

In 1998, the NAIC adopted the  Codification of Statutory  Accounting  Principles
guidance,  which will replace the current  Accounting  Practices and  Procedures
manual as the NAIC's primary guidance on statutory  accounting.  The NAIC is now
considering amendments to the Codification guidance that would also be effective
upon implementation. The NAIC has recommended an effective date of July 1, 2001.
The Codification provides guidance for areas where statutory accounting has been
silent and changes current statutory accounting in some areas.

It is not known  whether the IDOI or the FDOI will adopt the  Codification,  and
whether the Departments  will make any changes to the guidance.  The Company has
not estimated the potential  effect of the  Codification  guidance if adopted by
the  departments  of insurance.  However,  the actual  effect of adoption  could
differ  as  changes  are  made  to  the  Codification  guidance,  prior  to  its
recommended effective date of July 1, 2001.

16.      Commitments and Contingencies:

On February 23, 2000, a complaint  for a class  action  alleging  violations  of
Sections  10(b)  and  20(a) of the  Securities  Exchange  Act of 1934 was  filed
against the Company, SIG, certain officers,  and certain directors in the United
States  District  Court for the  Southern  District  of Indiana.  The  complaint
alleges,  among other things,  that the defendants rendered false and misleading
statements  and/or  omissions   concerning   financial  condition  and  business
prospects of the Company,  as well as the financial benefits that would inure to
the Company and its  shareholders.  The Company intends to vigorously defend the
claims brought against it.

The California Department of Insurance (CDOI) has advised the Company that it is
reviewing a possible  assessment  which could  total $3 million.  This  possible
assessment  relates to the charging of brokers fees charged to  policyholders by
independent  agents who placed  business with  Superior.  The CDOI has indicated
that such broker fees charged by the independent  agent to the policyholder were
improper and has requested  reimbursement to the policyholders by Superior.  The
Company did not receive any of these  broker fees.  As the  ultimate  outcome of
this potential  assessment is not deemed  probable,  the Company has not accrued
any amount in its consolidated financial statements. Although the assessment has
not been  formally  made by the CDOI at this time,  the Company will  vigorously
defend any potential assessment and believes it will prevail.

         In 1998,  IGF sold a total of 157  policies for  agricultural  business
interruption insurance called AgPI that were intended to protect businesses that
depend upon a steady flow of crop (or crops) to stay in  business.  This product
was sold to a variety of businesses involved in agribusiness, including farmers,
as well as grain elevator operators, produce shippers, custom harvesters, cotton
gins,  agriculture chemical dealers and other processing businesses whose income
is heavily dependent on a stable supply of raw product (i.e.,  cotton), or whose
product  sales are  negatively  affected if crop  yields  fall  (i.e.,  chemical
dealers). Most of the policies were sold to California policyholders. The policy
form  required that the county in which crops reside must suffer a minimum level
of crop loss before a loss  recovery by a  policyholder  is possible.  After the
county loss test was met, then the  policyholder  must  demonstrate an insurable
economic loss on an individual basis under the policy.

The Company recognized approximately $7.6 million in written premium in 1998, of
which $6 million was earned in 1998 and $1.6 million earned in the first quarter
of 1999.  Adverse  weather  conditions and resultant crop damage in parts of the
country  where the  policies  were sold,  led the Company to begin  establishing
reserves for its possible exposure.  However, the lack of National  Agricultural
Statistical  Service ("NASS") and policyholder loss data adversely  affected the
Company's  ability to establish  the amount of their  exposure.  At December 31,
1998,  the  Company set its  reserves  at an amount  equal to 100% of the earned
premium.  County loss data, as well as policyholder loss data,  gradually became
known  starting in late April 1999. As of May 28, 1999,  the Company  recognized
that it was experiencing  unexpected  adverse loss development on these policies
and increased its incurred losses related to 1998 policies to $15 million.  When
the Company  published second quarter results,  NASS data was complete,  and the
Company had received  policyholder  data on nearly all policies to determine its
exposure.  The  Company's  estimated  gross  ultimate  incurred  loss  and  loss
adjustment expense ("LAE") related to these policies was $25 million (gross loss
before  reinsurance  recoveries).  As the Company  continued to investigate  and
reevaluate these claims, it increased its estimated ultimate gross incurred loss
and loss adjustment expense related to these policies to $34.5 million.

IGF is a party to a number of pending legal  proceedings  relating to AgPI.  IGF
remains a defendant in six lawsuits  pending in California state court (King and
Fresno  counties)  having  settled four other suits  including  two  declaratory
judgment  actions  that  were  brought  by  IGF in  Federal  District  Court  in
California.  In addition,  IGF has settled 13 arbitration  proceedings involving
policyholders  of AgPI  and has no  outstanding  arbitrations  relating  to this
product.  The  first  of these  proceedings  was  commenced  in July  1999.  All
discovery  in the  remaining  proceedings  has been  stayed  pending a June 2000
hearing  on IGF's  appeal  of an order  denying a  dismissal  of the cases and a
remanding  of  these  disputes  to  arbitration  as  called  for in  the  policy
provisions.  The  policyholders  involved in the open  proceedings have asserted
that IGF is liable to them for the face amount of their  policies,  an aggregate
of approximately  $14.7 million,  plus an unspecified amount of punitive damages
and  attorney's  fees.  As of December  31,  1999,  IGF had paid an aggregate of
approximately  $7  million  to  the   policyholders   involved  in  these  legal
proceedings.  The Company  increased  its reserves by $9.5 million in the fourth
quarter  of 1999 and  reserved a total of $34.5  million in 1999 of which  $22.3
million was paid through December 31, 1999.

Less than $0.1 million of 1999 gross written AgPI premiums have been written and
assumed by the Company in 1999;  in  addition  the policy  language  was revised
materially.  Based on the information presently available,  the Company believes
that it has recognized, through loss and LAE payments and reserves, its ultimate
loss  exposure  related to the AgPI  product.  The Company  feels its  financial
reserves for the lawsuits and arbitrations are sufficient to cover the resulting
liability,  if any, that may arise from these matters.  However, there can be no
assurance that the Company's ultimate liability for AgPI related claims will not
be materially greater than the $34.5 million in gross losses already recorded in
the consolidated  financial statements related to this product and will not have
a material  adverse  effect on the Company's  results of operations or financial
condition.  Of the $34.5 million AgPI losses reserved  approximately $21 million
has been paid to date.

During  the  first  quarter  of  1999,  the  Company  entered  into  reinsurance
arrangements covering a portion of the AgPI business.  Under those arrangements,
during the first  quarter  the  Company  recorded  $4.7  million of ceded  gross
premium and a $9.4 million  reinsurance  recovery,  deferring  the resulting net
gain of $4.7 million. The $4.7 million deferred gain was recognized as income in
the  second  quarter.  The  Company  subsequently  negotiated  a  change  to the
reinsurance in the fourth quarter which resulted in  approximately  $4.2 million
additional  gain being  recorded as of  December  31,  1999.  The Company is not
entitled to any further recoveries under these reinsurance arrangements.

The  Company  is  a  joint  and  several  guarantor  in  a  $7.25  million  debt
collateralized  by operating  assets held in an entity in which the company is a
50% owner. The estimated fair market value of the assets approximates the debt.

At  December  31,  1998,  the  Company  provided an  allowance  of $3.2  million
associated  with  discrepancies  identified in connection with the processing of
premiums  from the  assumption  of the CNA  business  and the  related  premiums
receivable  balance.  In 1999, the Company  resolved the discrepancy and reduced
the allowance to $0.

Two  assertions  have been made in  Florida  alleging  that  service  charges or
finance  charges are in violation of Florida law. The  plaintiffs are attempting
to obtain class certification in these actions. The Company believes that it has
substantially  complied  with the  premium  financing  statute  and  intends  to
vigorously defend any potential loss.

The Company,  and its subsidiaries,  are named as defendants in various lawsuits
relating to their business. Legal actions arise from claims made under insurance
policies  issued by the  subsidiaries.  These  actions  were  considered  by the
Company  in  establishing  its loss  reserves.  The  Company  believes  that the
ultimate  disposition of these lawsuits will not materially affect the Company's
operations or financial position.

17.      Supplemental Cash Flow Information:
<TABLE>
<CAPTION>

Cash paid for interest and income taxes are summarized as follows:

      (in thousands)                                                           1999       1998         1997
                                                                               ----       ----         ----

<S>                                                                            <C>        <C>        <C>
      Cash paid for interest                                                   $515       $260       $3,467
      Cash  paid/(received)  for federal income taxes,  net of refunds    $(17,910)     $5,351      $11,670
      refunds

</TABLE>

18.      Disclosures About Fair Values of Financial Instruments:

The following  discussion  outlines the  methodologies  and assumptions  used to
determine  the  estimated  fair value of the  Company's  financial  instruments.
Considerable judgment is required to develop these fair values and, accordingly,
the estimates shown are not necessarily  indicative of the amounts that would be
realized  in a  one-time,  current  market  exchange  of all  of  the  Company's
financial instruments.

a)       Fixed Maturity, Equity Securities, and Other Investments:  Fair values
         for fixed maturity and equity securities are based on quoted market
         prices.

b)       Short-term Investments, and Cash and Cash Equivalents:  The carrying
         value for assets classified as  short-term investments,
         and cash and cash equivalents in the accompanying Consolidated Balance
         Sheets  approximates  their fair value.

c)       Short-term Debt: The carrying value for short-term debt approximates
         fair value.

d)       Preferred Securities:  The December 31, 1999 estimated market value
         of the Preferred Securities was $40,500  based on quoted
         market prices.

19.      Segment Information:

The  Company  has  two  reportable  segments  based  on  products:   nonstandard
automobile  insurance and crop  insurance.  The nonstandard  automobile  segment
offers personal nonstandard  automobile insurance coverages through a network of
independent  general  agencies.  The crop  segment  writes  MPCI  and crop  hail
insurance  through  independent  agencies with its primary  concentration in the
Midwest. The accounting policies of the segments are the same as those described
in "Nature of Operations  and  Significant  Accounting  Policies."  There are no
significant  intersegment  transactions.  The Company evaluates  performance and
allocates  resources  to the  segments  based on profit or loss from  operations
before income taxes.

<PAGE>

The following is a summary of the Company's segment data and a reconciliation of
the segment data to the Consolidated  Financial  Statements.  The "Corporate and
Other"  includes  operations  not directly  related to the  reportable  business
segments and unallocated  corporate items (i.e.,  corporate  investment  income,
interest expense on corporate debt and unallocated  overhead expenses).  Segment
assets are those assets in the Company's operations in each segment.  "Corporate
and Other" assets are principally cash,  short-term  investments,  related-party
assets, intangible assets, and property and equipment.

<TABLE>
<CAPTION>

                                            Nonstandard                   Segment     Corporate     Consolidated
                                            ------------                  --------    ----------    ------------
                                                Auto          Crop         Totals       & Other        Totals
                                                ----          ----         ------       -------        ------
(in thousands)
Year Ended December 31, 1999

<S>                                              <C>         <C>         <C>            <C>           <C>
Premiums earned                                  $249,094    $14,240     $263,334       $12,706       $276,040
Fee income                                         15,185        456       15,641           150         15,791
Net investment income                              12,339        293       12,632           786         13,418
Net realized capital gain (loss)                    (281)         21         (260)          325             65
                                                    -----         --         -----          ---             --
Total Revenue                                     276,337     15,010      291,347        13,967        305,314
                                                  -------     ------      -------        ------        -------

Loss and loss adjustment expenses                 230,973     34,225      265,198        11,435        276,633
Operating expenses                                 91,859        215       92,074         5,876         97,950
Amortization of intangibles                            --        493          493         2,194          2,687
Interest expense                                       --        620          620            --            620
                                                       --        ---          ---            --            ---
Total expenses                                    322,832     35,553      358,385        19,505        377,890
                                                  -------     ------      -------        ------        -------

Loss  before   income   taxes,   minority
    interest and other items
                                                $(46,495)   $(20,543)    $(67,038)      $(5,538)      $(72,576)
                                                =========   =========    =========      ========      =========

Segment assets                                   $229,640   $145,622     $375,262      $136,849       $512,111
                                                 ========   ========     ========      ========       ========

Year Ended December 31, 1998

Premiums earned                                  $264,022    $60,901     $324,923       $17,254       $342,177
Fee income                                         16,431      3,772       20,203            --         20,203
Net investment income                              11,958        275       12,233         1,168         13,401
Net realized capital gain (loss)                    4,124        217        4,341          (237)         4,104
                                                    -----        ---        -----          -----         -----
Total revenue                                    $296,535     65,165      361,700        18,185        379,885
                                                 --------     ------      -------        ------        -------

Loss   and   loss   adjustment   expenses
(recovery)                                        217,916     52,550      270,466         8,661        279,127
Operating Expenses                                 73,346     21,906       95,252         8,674        103,926
Amortization of intangibles                            --        339          339         2,040          2,379
Interest expense                                       --        163          163            --            163
                                                       --        ---          ---            --            ---
Total expenses                                    291,262     74,958      366,220        19,375        385,595
                                                  -------     ------      -------        ------        -------

Earnings   (loss)  before  income  taxes,
    minority  interest and other items
                                                   $5,273    $(9,793)     $(4,520)      $(1,190)       $(5,710)
                                                   ======    ========     ========      ========       ========

Segment assets                                   $376,831   $143,434     $520,265       $50,939       $571,204
                                                 ========   ========     ========       =======       ========

Year Ended December 31, 1997

Premiums earned                                  $251,020    $20,794     $271,814         4,726       $276,540
Fee income                                         15,515      2,276       17,791            30         17,821
Net investment income                              10,969        191       11,160         1,617         12,777
Net realized capital gain (loss)                    9,462        (18)       9,444           (51)         9,393
                                                    -----        ----       -----           ----         -----
Total revenue                                    $286,966    $23,243     $310,209        $6,322       $316,531
                                                 --------    -------     --------        ------       --------

Loss   and   loss   adjustment   expenses
(recovery)                                        195,900     16,550      212,450          (947)       211,503
Operating Expenses                                 72,463    (14,404)      58,059         5,285         63,344
Amortization of intangibles                            --          2            2         1,195          1,197
Interest expense                                       --        233          233         2,854          3,087
                                                       --        ---          ---         -----          -----
Total expenses                                    268,363      2,381      270,744         8,387        279,131
                                                  -------      -----      -------         -----        -------

Earnings   (loss)  before  income  taxes,
    minority  interest and  other items
                                                  $18,603    $20,862      $39,465       $(2,065)       $37,400
                                                  =======    =======      =======       ========       =======
Segment assets                                   $363,864   $119,660     $483,524       $80,947       $564,471
                                                 ========   ========     ========       =======       ========

</TABLE>

20.    Stock Option Plans:

Information  regarding  the Goran  Stock  Option  Plan is  summarized  below (in
Canadian dollars):

<TABLE>
<CAPTION>

                                                        1999                       1998                      1997
                                                      Weighted                   Weighted                  Weighted
                                                       Average                    Average                   Average
                                                      Exercise                   Exercise                  Exercise
                                          Shares        Price        Shares        Price       Shares        Price
                                          ------        -----        ------        -----       ------        -----

<S>                                         <C>           <C>          <C>           <C>         <C>            <C>
Outstanding  at the  beginning of the       695,572       $29.92       546,856       $17.86      526,899        $8.76
 year

Granted                                          --           --       363,970       $36.57      188,355       $29.57
Exercised                                        --           --     (215,254)       $10.53    (166,831)        $2.26
Forfeited/Surrendered                      (34,864)       $14.69            --           --      (1,567)       $25.45
                                           --------       ------            --           --      -------       ------
Outstanding at the end of the year          660,708       $14.17       695,572       $29.92      546,856       $17.86
                                            =======       ======       =======       ======      =======       ======
Options exercisable at year end             619,035           --       569,126           --      349,141           --
Available for future grant                  251,865           --       175,428           --       40,062           --
</TABLE>

On November 1, 1996, SIG adopted the Symons International Group, Inc. 1996 Stock
Option Plan (the "SIG Stock Option  Plan").  The SIG Stock Option Plan  provides
SIG the  authority  to grant  nonqualified  stock  options and  incentive  stock
options  to  officers  and  key  employees  of  SIG  and  its  subsidiaries  and
nonqualified  stock options to nonemployee  directors of SIG and Goran.  Options
have been  granted at an exercise  price  equal to the fair market  value of the
SIG's stock at date of grant.  All of the  outstanding  stock  options  vest and
become  exercisable in three equal  installments on the first,  second and third
anniversaries  of the date of grant.  On October 14, 1998,  all SIG options were
repriced  to $6.3125 per share.  In  November  1999,  certain  officers  and non
employee directors of SIG surrendered a total of 1,153,600 stock options.

Information regarding the SIG Stock Option Plan is summarized below:

<TABLE>
<CAPTION>

                                                        1999                       1998                      1997
                                                      Weighted                   Weighted                  Weighted
                                                       Average                    Average                   Average
                                                      Exercise                   Exercise                  Exercise
                                          Shares        Price        Shares        Price       Shares        Price
                                          ------        -----        ------        -----       ------        -----

<S>                                       <C>            <C>         <C>            <C>          <C>           <C>
Outstanding  at the  beginning of the     1,457,833      $6.3125     1,000,000      $6.3125      830,000       $12.50
 year

Granted                                          --      $6.3125       478,000       6.3125      185,267        15.35
Exercised                                   (1,667)      $6.3125       (4,332)       6.3125      (1,667)        12.50
Forfeited/Surrendered                   (1,243,133)      $6.3125      (15,835)       6.3125     (13,600)        12.50
                                        -----------      -------      --------       ------     --------        -----
Outstanding at the end of the year          213,033      $6.3125     1,457,833      $6.3125    1,000,000       $13.03
                                            =======      =======     =========      =======    =========       ======
Options exercisable at year end             120,366      $6.3125       760,289      $6.3125      521,578       $12.50
Available for future grant                1,286,967                     42,167                        --

</TABLE>

The weighted  average  remaining life of the SIG options as of December 31, 1999
is 7.9 years.

The Board of Directors of Superior Group  Management  adopted the GGS Management
Holdings,  Inc. Stock Option Plan (the "Superior Group  Management  Stock Option
Plan"),  effective  April 30, 1996. The Superior Group  Management  Stock Option
Plan authorizes the granting of nonqualified and incentive stock options to such
officers and other key  employees as may be designated by the Board of Directors
of  Superior  Group  Management.   Options  granted  under  the  Superior  Group
Management  Stock Option Plan have a term of ten years and vest at a rate of 20%
per year for the five years after the date of the grant.  The exercise  price of
any options  granted under the Superior  Group  Management  Stock Option Plan is
subject  to the  following  formula:  50% of each  grant of  options  having  an
exercise price determined by the Board of Directors of Superior Group Management
at its discretion,  with the remaining 50% of each grant of options subject to a
compound  annual increase in the exercise price of 10%, with a limitation on the
exercise price escalation as such options vest.

<PAGE>

Information  regarding  the  Superior  Group  Management  Stock  Option  Plan is
summarized below:

<TABLE>
<CAPTION>

                                                      1999                       1998                      1997
                                                    Weighted                   Weighted                  Weighted
                                                     Average                   Average                    Average
                                                    Exercise                   Exercise                  Exercise
                                         Shares       Price      Shares(1)      Price       Shares(1)      Price
                                         ------       -----      ---------      -----       ---------      -----

Outstanding  at the  beginning of the
<S>                                        <C>          <C>          <C>           <C>          <C>          <C>
 year                                      94,732       $51.75       95,282        $51.75       27,777       $51.75
Granted                                        --           --           --            --       68,855           --
Forfeited                                 (2,500)       $51.75        (550)         51.75      (1,350)        51.75
                                          -------       ------        -----         -----      -------        -----
Outstanding at the end of the year         92,232       $51.75       94,732        $51.75       95,282       $51.75
                                           ======       ======       ======        ======       ======       ======
Options exercisable at year end            42,448                    24,601                      5,555
Available for future grant                 18,879                    16,379                     15,829

</TABLE>

(1) Prior years outstanding share options have been restated to properly reflect
 outstanding options as at those respective dates.

<TABLE>
<CAPTION>

                                                                         Options                        Options
                                                                       Outstanding                    Exercisable
                                                        Weighted         weighted                       Weighted
                                                        Average          Average                        Average
                                        Number      Remaining Life    Exercise Price     Number      Exercise Price
                                                              -----            -----                          -----
Range of Exercise Prices             Outstanding       (in years)                      Exercisable
------------------------             -----------       ----------                      -----------

<S>                                         <C>                  <C>          <C>            <C>             <C>
$44.17 - $53.45                             64,561               6.8          $46.13         39,668          $47.35
$58.79-$71.14                               27,671               6.8           64.87          2,777          $58.79
                                            ------               ---           -----          -----          ------
                                            92,232                                           42,445
                                            ======                                           ======
</TABLE>

The Company applies Accounting  Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees"  and related  interpretation  in  accounting  for its
stock option plans.  Accordingly,  no compensation  cost has been recognized for
such plans.  Had compensation  cost been determined,  based on fair value at the
grant dates for options  granted  under the  Company  stock  option plan as well
under both the SIG Stock  Option Plan and the GGS Stock Option Plan during 1998,
1997 and 1996  consistent  with the  method  of SFAS No.  123,  "Accounting  for
Stock-Based  Compensation",  the Company's  pro-forma net earnings and pro-forma
earnings per share for the years ended  December  31, 1998,  1997 and 1996 would
have been as follows:

<TABLE>
<CAPTION>

                                                  1999        1999         1998       1998        1997        1997
                                                   As         Pro-          As        Pro-         As         Pro-
                                                Reported      Forma      Reported     Forma     Reported     Forma
<S>                                             <C>           <C>         <C>       <C>           <C>         <C>
Earnings (loss) from continuing operations      $(62,373)     (65,969)    $(9,139)  $(12,109)     $15,763     $13,592
Basic EPS from continuing operations             $(10.61)     $(11.23)     $(1.56)    $(2.07)       $2.82       $2.43
Fully diluted EPS continuing operations          $(10.61)     $(11.23)     $(1.56)    $(2.07)       $2.68       $2.31
Net earnings (loss)                              (62,373)    $(65,969)   $(12,076)  $(15,046)     $12,218     $10,047
Basic EPS                                        $(10.61)     $(11.23)     $(2.07)    $(2.58)       $2.19       $1.80
Fully diluted EPS                                $(10.61)     $(11.23)     $(2.07)    $(2.58)       $2.08       $1.71
</TABLE>

The  fair  value of each  option  grant  used for  purposes  of  estimating  the
pro-forma  amounts  summarized  above is  estimated  on the grant date using the
Black-Scholes  option-pricing  model with the weighted  average  assumptions for
1998, 1997 and 1996 shown on the following table:

<TABLE>
<CAPTION>

                                                  SIG        Goran        SIG         SIG
                                                  1998        1998        1997        1997
                                                 Grants      Grants      Grants      Grants
<S>                                                 <C>         <C>         <C>         <C>
Risk-free interest rates                            5.53%       5.40%       6.03%       6.40%
Dividend yields                                       ---         ---         ---         ---
Volatility factors                                   0.41        0.41        0.40        0.39
Weighted average expected life                  2.5 years   3.2 years   2.0 years   3.3 years
Weighted average fair value per share               $7.20       $5.73       $5.28       $5.54
</TABLE>

The Goran stock options are granted and  denominated  in Canadian  dollars.  The
pro-forma  stock based  compensation  for these  options are  translated  at the
average  rate for the  year.  The  weighted  average  fair  value  per  share is
translated at the year end rate.

21.   Quarterly Financial Information (unaudited):
<TABLE>
<CAPTION>

Quarterly financial information is as follows:

(in thousands)                                                    First      Second       Third       Fourth           Total
                                                                  -----      ------       -----       ------           -----
                           1999

<S>                                                            <C>         <C>          <C>          <C>            <C>
Gross written premiums                                         $152,022    $173,870     $67,685      $80,110        $473,687
Net premiums written                                             67,271      79,150      55,228       54,850         256,499
Net premiums earned                                              67,124      76,527      68,164       64,225         276,040
Total revenues                                                   73,774      83,553      74,272       73,715         305,314
Net earnings (loss)                                                $123    $(5,882)   $(13,907)    $(42,707)       $(62,373)
Net earnings (loss) per share - basic                              $.02     $(1.00)     $(2.37)      $(7.26)        $(10.61)
Net earnings (loss) per share - fully diluted                      $.02     $(1.00)     $(2.37)      $(7.26)        $(10.61)

                           1998

Gross premiums written                                         $177,196    $170,505     $95,887     $103,183        $546,771
Net premiums written                                             98,361     109,729      72,469       81,547         362,106
Net premiums earned                                              71,885      99,618      94,168       76,506         342,177
Total revenues                                                   82,149     109,085     102,407       86,244         379,885
Net earnings                                                     $3,517      $4,775  $( 10,233)    $(10,135)       $(12,076)
Net earnings (loss) per share - basic                             $0.61       $0.82     $(1.76)      $(5.23)         $(2.07)
Net earnings (loss) per share - fully diluted                     $0.59       $0.78     $(1.76)      $(5.19)         $(2.07)

</TABLE>

In the fourth quarter of 1999, the Company provided for a valuation allowance on
its net deferred tax assets of $23.1 million.

In the fourth  quarter of 1999, the Company  provided for  additional  AgPI loss
reserves of $5.3 million, net of reinsurance.

During the fourth quarters of 1999 and 1998, the Company  increased  reserves on
its   nonstandard   automobile   business  by  $6.9  million  and  $3.0  million
respectively for both current and prior accident years.

In the fourth quarter of 1998, the Company  provided a $3.2 million  reserve for
potential  processing  errors in the crop business assumed from CNA. The Company
also increased its reserves on AgPI exposures by approximately $1.8 million.  As
is customary in the crop insurance industry,  insurance company  participants in
the FCIC program  receive more  precise  financial  results from the FCIC in the
fourth quarter based upon business written on spring-planted crops. On the basis
of FCIC-supplied  financial  results,  IGF recorded,  in the fourth quarter,  an
additional underwriting gain (loss), net of reinsurance, on its FCIC business of
$791, $(3,506) and $6,979 during 1999, 1998 and 1997, respectively.

22.  Reconciliation Of Canadian And United States Generally Accepted Accounting
     Principles ("GAAP") And Additional Information

The consolidated  financial statements are prepared in accordance with U.S. GAAP
Material  differences  between Canadian and U.S. GAAP are described below.


(a)      Earnings per share

Earnings per share,  as determined in accordance  with Canadian GAAP are set out
below.

The following  average  number of shares were used for the  compilation of basic
and fully diluted earnings per share:

<TABLE>
<CAPTION>

                                                                       1999             1998            1997

Basic                                                             5,876,398        5,841,329       5,590,576
<S>                                                               <C>              <C>             <C>
Fully Diluted                                                     5,876,398        5,841,329       5,886,211
Earnings per share,  as determined in accordance with U.S. GAAP,
are as follows:
Basic earnings per share from continuing operations               $(10.61)         $(1.56)         $2.82
Fully diluted earnings per share from continuing operations       $(10.61)         $(1.56)         $2.68
Basic earnings per share                                          $(10.61)         $(2.07)         $2.19
Fully diluted earnings per share                                  $(10.61)         $(2.07)         $2.08
</TABLE>

(b)      Receivables from sale of capital stock

The SEC Staff  Accounting  Bulletins  require that accounts or notes  receivable
arising  from  transactions  involving  capital  stock  should be  presented  as
deductions from shareholders' equity and not as assets. Accordingly, in order to
comply with U.S. GAAP  shareholders'  equity has been reduced by $300 and $1,377
at December 31, 1999 and December  31, 1998,  respectively  to reflect the loans
due from certain  shareholders  which relate to the purchase of common shares of
the Company.

(c)      Unrealized gain (loss) on investments

U.S. GAAP requires that unrealized gains and losses on investment  portfolios be
included as a component in determining  shareholders' equity. In addition,  SFAS
No.  115  permits  prospective  recognition  of  unrealized  gains  (losses)  on
investment  portfolio for  year-ends  commencing  after  December 15, 1993. As a
result,  shareholders'  equity was increased by $(4,874) and by $1,176, which is
net of deferred tax of $2,637 and $679 and related minority interest of $416 and
$658, as at December 31, 1999 and 1998, respectively.

(d)      Changes in shareholders's equity

A  reconciliation  of  shareholders'  equity from US GAAP to Canadian GAAP is as
follows:

<TABLE>
<CAPTION>

                                                                      1999             1998           1997
<S>                                                                    <C>               <C>           <C>
Shareholders equity in accordance with U.S. GAAP                       $(18,061)         $49,524       $61,462
Add (deduct) effect of difference in account for:
    Receivables from sale of capital stock (see note (f))                    300           1,377           346
    Unrealized gain on investments (see note (g))                          4,874         (1,176)       (1,336)
                                                                           -----         -------       -------
Shareholder's equity in accordance with Canadian GAAP                  $(12,887)         $49,725       $60,472
                                                                       =========         =======       =======

</TABLE>

23.  Subsequent Events

On March 23, 2000, the FDOI notified SIG that Superior is required to not exceed
a written premiums to surplus ratio of 4 to 1 as computed on an annualized basis
and to file on a monthly basis a schedule that verifies its compliance  with the
net writing limitation of 4 to 1.

On February 29, 2000, SIG contributed $2.0 million in capital to Pafco.

24.   Management's Plans

The Company reported net losses of $62.4 million and $12.1 million for the years
1999 and 1998 respectively.  While the stockholders  equity at December 31, 1999
is a deficit of approximately  $18.1 million,  SIG has a thirty year mandatorily
redeemable  preferred  stock  outstanding of $135 million at an interest rate of
9.5%. This Trust  Preferred is not due for redemption  until 2027. The insurance
subsidiaries  have statutory surplus of approximately $57 million upon which the
Company  conducts  its  insurance  operations.   The  management  has  initiated
substantial  changes in  operational  procedures  and  business  in an effort to
return the Company to profitable levels and to improve its financial  condition.
The  nonstandard  auto  insurance  segment  hired a new  President,  a new Chief
Information  Officer,  and pricing and claims management since the year end. The
Company has and is continuing to raise its rates in a market  environment  where
increasing  rates  and  withdrawal  from the  market  by other  companies  shows
positive trends for an improving profitability of the nonstandard auto division.
The crop insurance company has experienced a substantial increase in gross sales
in its major product lines and strong demand for its new innovative products.

Management  believes  that despite the recent  losses and the  deterioration  in
stockholders equity and statutory surplus, it has developed a business plan that
if successfully implemented, can substantially improve operating results and its
financial condition.

MANAGEMENT RESPONSIBILITY

Management recognizes its responsibility for conducting the Company's affairs in
the  best  interests  of  all  its  shareholders.   The  consolidated  financial
statements and related  information in this Annual Report are the responsibility
of  management.  The  consolidated  financial  statements  have been prepared in
accordance with generally accepted  accounting  principles which involve the use
of judgement and estimates in applying the accounting principles selected. Other
financial  information  in this  Annual  Report is  consistent  with that in the
consolidated financial statements.

The Company maintains systems of internal controls which are designed to provide
reasonable  assurance that accounting records are reliable and to safe-guard the
Company's assets.  The independent  accounting firm of Schwartz Levitsky Feldman
LLP has audited and reported on the Company's consolidated financial statements.
Their  opinion  is  based  upon  audits  conducted  by them in  accordance  with
generally  accepted auditing standards to obtain assurance that the consolidated
financial statements are free of material misstatements.

The Audit  Committee  of the Board of  Directors,  the members of which  include
outside directors,  meets with the independent  external auditors and management
representatives  to review the internal  accounting  controls,  the consolidated
financial  statements  and other  financial  reporting  matters.  In addition to
having  unrestricted  access  to the  books  and  records  of the  Company,  the
independent  external  auditors  also  have  unrestricted  access  to the  Audit
Committee. The Audit Committee reports its findings and makes recommendations to
the Board of Directors.

/s/ Alan G. Symons
Chief Executive Officer

April 14, 2000


<PAGE>

Board of Directors And Stockholders of Goran Capital Inc.
REPORT OF INDEPENDENT AUDITOR"S

We have audited the  accompanying  consolidated  balance sheets of Goran Capital
Inc.  (incorporated in Canada) as of December 31, 1999 and 1998, and the related
consolidated  statements of income (loss),  changes in stockholders' equity, and
cash flows for each of the years ended December 31, 1999,  1998 and 1997.  These
consolidated  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 did not audit the  financial  statements of
Symons  International  Group,  Inc., a 68% owned subsidiary,  which statements
reflect total assets of $499,811 as of December 31, 1999,  and total revenues of
$291,207 for the year then ended.  Those 1999  statements  were audited by other
auditors whose report has been  furnished to us, and our opinion,  insofar as it
relates to the amounts included for Symons  International  Group, Inc., is based
solely on the report of the other auditors.

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

In our  opinion,  based on our  audits  and the  report of other  auditors,  the
consolidated  financial  statements  referred to above  present  fairly,  in all
material respects,  the consolidated financial position of Goran Capital Inc. as
of December  31, 1999 and 1998,  and the results of their  operations  and their
cash  flows  for the  years  ended,  December  31,  1999  and  1998  and 1997 in
conformity with general accepted  accounting  principles in the United States of
America.

Since the accompanying  consolidated financial statements have been prepared and
audited in accordance with generally accepted accounting principles and auditing
standards in the United  States of America,  they may not satisfy the  reporting
requirements  of Canadian  statutes  and  regulations.  Significant  differences
between  the  accounting  principles  applied in the  accompanying  consolidated
financial  statements and those under  Canadian  generally  accepted  accounting
principles are quantified and explained in note 22 to the consolidated financial
statements.


/s/ Schwartz Levitsky Feldman, LLP
Chartered Accountants

Toronto, Ontario, Canada M6A 2X1 March 14, 2000, except for Note 23, which is as
of March 23, 2000

<PAGE>

Stockholder Information

Registrar and Transfer Agent
CIBC Mellon Trust Company
Toronto, Ontario

Independent Public Accountants
Schwartz Levitsky Feldman LLP
Toronto, Ontario

Annual Meeting of Stockholders May 30, 2000 10:00 a.m.

Location to be announced

Annual Report on Form 10-K

A copy of the Annual  Report on Form 10-K for Goran  Capital  Inc.  for the year
ended December 31, 1999, filed with the Securities and Exchange Commission,  may
be obtained,  without  charge,  upon request to the individual and address noted
under Shareholder Inquiries.

Market and Dividend Information

The Company's  common shares began trading on the Toronto Stock  Exchange  under
the symbol "GNC" in 1986.  The  Company's  common  shares  began  trading on The
NASDAQ National Market under the symbol "GNCNF" on November 8, 1994.

As of December  31, 1999 there were  approximately  100 Common  shareholders  of
record,  including many brokers holding shares for the individual  clients.  The
number of individual shareholders on the same date is estimated at 1,000.

The number of common shares  outstanding on December 31, 1999 totaled 5,876,398.
Information  relating  to the  common  shares is  available  through  The NASDAQ
National Market system and the Toronto Stock Exchange.  The following table sets
forth the high and low  closing  sale  prices  for the  common  shares  for each
quarter of 1999, 1998 and 1997.

<TABLE>
<CAPTION>

                                                        TORONTO STOCK EXCHANGE


                                                            1999                 1998                1997

                                                       High       Low       High      Low       High      Low

Quarter Ended

<S>   <C>                                             <C>        <C>       <C>       <C>       <C>       <C>
March 31                                              $12.37     $7.73     $31.93    $25.84    $29.15    $18.98

June 30                                                $9.75     $7.06     $29.61    $23.89    $26.05    $19.31

September 30                                          $12.78     $7.40     $28.10    $20.38    $39.35    $24.27

December 30                                            $8.74     $1.95     $21.40    $8.04     $39.32    $27.75

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                                          NASDAQ

                                                            1999                 1998                1997

                                                       High       Low       High      Low       High      Low

Quarter Ended

<S>                                                   <C>        <C>       <C>       <C>       <C>       <C>
March 31                                              $10.73     $8.38     $31.50    $25.25    $29.25    $18.75

June 30                                               $10.19     $7.31     $30.50    $23.50    $26.25    $19.75

September 30                                          $13.25     $7.75     $28.50    $19.75    $40.00    $24.50

December 30                                            $8.38     $2.00     $21.06    $8.00     $39.50    $27.75

</TABLE>

On March 22,  2000,  SIG  received  notice  from  Nasdaq - Amex that the Listing
Qualifications  Panel has determined that SIG was not in compliance with certain
listing qualifications.  On or before June 30, 2000, SIG must make a filing with
the SEC and  Nasdaq - Amex  evidencing  complete  compliance  with the  required
qualifications including net tangible assets excluding Preferred Securities,  of
at least $15,000,000,  market value of public float of at least $5,000,000 for a
period of ten consecutive days immediately  thereafter,  and a minimum $1.00 per
share bid price  requirement.  In the event that SIG fails to comply with any of
the terms of these requirements, SIG securities will be delisted from The Nasdaq
National Market.  There can be no assurance that SIG will be able to comply with
such requirements.  In that event, SIG expects that its common stock may then be
traded on the OTC Bulletin Board.  The Company intends to appeal the decision of
the Listing Qualifications Panel.

The  Company  was   scheduled   to  appear   before  the   Nasdaq-Amex   Listing
Qualifications  Panel on April 6, 2000.  Nasdaq  advised the Company  that it no
longer met the minimum $15 million  market  value of public  float and $5.00 bid
price requirements pursuant to certain Nasdaq listing requirements.  On April 4,
2000, the Company received a communication  from Nasdaq that it was recommending
to the Listing  Qualifications  Panel that Goran be granted a similar  period to
correct  its  listing  deficiencies,  as  had  previously  been  granted  to the
Company's 68% owned  subsidiary,  SIG. To date, the Company has not received any
further  communication  from Nasdaq  regarding  this issue and therefore  cannot
evaluate its ability to comply with any current or future  listing  requirements
that may be established by Nasdaq. Should Goran's common shares be delisted from
the Nasdaq  National  Market,  the Company  expects  that its shares may then be
traded on the OTC  Bulletin  Board.  Regardless  of the  outcome  of the  Nasdaq
Listing Qualifications Panel, the Company expects to continue the listing of the
commons shares on the Toronto Stock Exchange.

Shareholder Inquiries

Inquiries should be directed to:
Alan G. Symons
Chief Executive Officer
Goran Capital Inc.
Tel:  (317) 259-6302
E-mail:  asymons@sigins.com

Board of Directors

G. Gordon Symons
Chairman of the Board
Goran Capital Inc.

Symons International Group, Inc.

Alan G. Symons
President, Chief Executive Officer
Goran Capital Inc.

Douglas H. Symons

Vice President, Chief Operating Officer
Goran Capital Inc.
President, Chief Executive Officer and Secretary
Symons International Group, Inc.

J. Ross Schofield
President

Schofield Insurance Brokers

David B. Shapira
President Medbers Limited

John K. McKeating
Former Partner
Vision 2120, Inc.

Executive Officers

Alan G. Symons
President, Chief Executive Officer
Goran Capital Inc.

Douglas H. Symons

Vice President, Chief Operating Officer
Goran Capital Inc.
President, Chief Executive Officer and Secretary
Symons International Group, Inc.

Bruce K. Dwyer

Vice President, Chief Financial Officer and Treasurer
Goran Capital Inc.
Symons International Group, Inc.

Gene Yerant
Executive Vice President
Goran Capital Inc.

Symons International Group, Inc.
Chief Operating  Officer and President
Superior Insurance Group, Inc.

Mary E. DeLaat

Vice President, Chief Accounting Officer
Goran Capital Inc.
Symons International Group, Inc.


<PAGE>

Company, Subsidiaries and Branch Offices

HEAD OFFICE - CANADA
Goran Capital Inc.
2 Eva Road, Suite 200
Etobicoke, Ontario  Canada  M9C 2A8
Tel:  416-622-0660
Fax:  416-622-8809

HEAD OFFICE - US
Goran Capital Inc.
4720 Kingsway Drive
Indianapolis, Indiana  46205
Tel:  317-259-6400
Fax:  317-259-6395
Website:  www.sigins.com


<PAGE>

SUBSIDIARIES AND BRANCHES
Symons International Group, Inc.
4720 Kingsway Drive
Indianapolis, Indiana  46205
Tel: 317-259-6300
Fax: 317-259-6395
                                                   IGF Southwest

Pafco General Insurance Company                    7914 Abbeville Avenue
4720 Kingsway Drive                                Lubbock, Texas  79424
Indianapolis, Indiana  46205                       Tel:  806-783-3010
Tel:  317-259-6300                                 Fax:  806-783-3017
Fax:  317-259-6395
                                                   IGF South

Superior Insurance Company                         101 Business Park Drive,
280 Interstate North Circle, N.W., Suite 500       Ridgeland, Mississippi  39157
Atlanta, Georgia  30339                            Tel:  601-957-9780
Tel:  770-952-4885                                 Fax:  601-957-9793
Fax:  770-988-8583
                                                   IGF West

Superior Insurance Company                         1700 Bullard Avenue, Suite106
5483 W. Waters Avenue                              Fresno, California  93710
Suite 1200, Building P                             Tel:  559-432-0196
Tampa, Florida  33634                              Fax:  559-432-0294
Tel:  813-887-4878
Fax:  813-287-8362                                 IGF North
                                                   116 South Main, Box 1090
Superior Insurance Company                         Stanley, North Dakota  58784
1745 West Orangewood Road, Suite 210               Tel:  701-628-3536
Orange, California  92826                          Fax:  701-628-3537
Tel:  714-978-6811
Fax:  714-978-0353                                 IGF - NACU

                                                   Highway 210 West, Box 375
IGF Insurance Company                              Henning, Minnesota 56551
Corporate Office                                   Tel:  218-583-4800
6000 Grand Avenue                                  Fax:  218-583-4852
Des Moines, Iowa  50312
Tel:  515-633-1000
Fax:  515-633-1010

IGF Mid East
3921 Pintail Drive

Springfield, Illinois  62707
Tel:  217-726-2450
Fax:  217-726-2451