[GRAPHIC OMITED]


                                                                [GRAPHIC OMITED]


                               GORAN CAPITAL INC.

                               2002 ANNUAL REPORT

<PAGE>


<PAGE>


                               GORAN CAPITAL INC.

                          ANNUAL REPORT TO SHAREHOLDERS

                                DECEMBER 31, 2002


BUSINESS  ACTIVITIES
Goran  Capital  Inc. ("Goran") owns subsidiaries engaged in a number of business
activities.  The  most extensive of these is the property and casualty insurance
business  conducted  in the United States, Canada and Barbados, on both a direct
and  reinsurance basis through a number of subsidiaries collectively referred to
in  this report as Goran.  The common stock of Goran trades on The Toronto Stock
Exchange  under  the symbol "GNC.TO" and the OTC Bulletin Board under the symbol
"GNCNF.OB."

Goran owns 73.8% of Symons International Group, Inc. ("SIG") which trades on the
OTC  Bulletin  Board  under  the symbol "SIGC.OB."  SIG owns insurance companies
principally  engaged  in  the  nonstandard  automobile  insurance  market.

Superior  Insurance  Company  and  Pafco  General  Insurance  Company underwrite
nonstandard  automobile  insurance in the United States.  Nonstandard automobile
insurance  is  marketed  and  sold through independent agents to drivers who are
unable  to  obtain  coverage  from  insurers  at  standard  or  preferred rates.


<PAGE>
Prior  to 2001, the Company was also engaged in the crop insurance business.  On
June  6, 2001, the Company exited the crop insurance business when IGF Insurance
Company  sold  its crop insurance operations to a third party.  Accordingly, the
financial  statements  included  in  this report reflect the results of the crop
insurance  segment  as  "discontinued  operations."
<PAGE>

Granite  Reinsurance  Company Ltd. underwrites finite (limited risk) reinsurance
in  Bermuda,  the  United  States  and  Canada.


All  dollar  amounts  shown in this report are in U.S. currency unless otherwise
indicated.  The  conversion  rates  between  U.S.  and  Canadian  dollars  for
transactions  occurring  during the year 2002 was 1.57021 and for balances as of
December  31,  2002  the  rate  is  1.57690.
<TABLE>
<CAPTION>



TABLE OF CONTENTS
<S>                                                                                                                             <C>
Financial Highlights . . .  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
Chairman's Report to Stockholders                                                                                                 3
Selected Financial Data. .      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
Management's Discussion and Analysis of Financial Condition and Results of Operations.  . . . . . . . . . . . . . . . . . . . .   5
Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . .  15
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . .  19
Report of Independent Accountants. . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . . . . . . . . .  42
Stockholder Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . . . . . . . . .  43
Board of Directors and Executive Officers. . . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . . . . . . . . .  44
Subsidiaries and Branch Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . . . . . . . . .  45
</TABLE>



<PAGE>
FINANCIAL  HIGHLIGHTS  1
(In  thousands,  except  per  share  data)
For  the  years  ended  December  31,
<TABLE>
<CAPTION>
                                                   2002       2001       2000       1999       1998
                                                 ---------  ---------  ---------  ---------  ---------
<S>                                              <C>        <C>        <C>        <C>        <C>
Gross premiums written. . . . . . . . . . . . .  $111,394   $193,186   $182,099   $236,401   $303,745
Net operating earnings
(loss) from continuing
operations 2. . . . . . . . . . . . . . . . . .  $(18,187)  $(19,011)  $(12,417)  $(49,883)  $    471
Net loss from discontinued
 operations . . . . . . . . . . . . . . . . . .  $     --   $ (2,156)  $(17,041)  $(15,373)  $ (9,421)
Net loss. . . . . . . . . . . . . . . . . . . .  $(29,745)  $(34,093)  $(80,265)  $(62,373)  $(11,936)
Basic operating earnings
 (loss) per share from continuing operations 2.  $  (3.37)  $  (3.34)  $  (2.13)  $  (8.49)  $   0.08
Basic loss per share from
 discontinued operations. . . . . . . . . . . .  $     --   $  (0.38)  $  (2.93)  $  (2.61)  $  (1.61)
Basic loss per share. . . . . . . . . . . . . .  $  (5.51)  $  (5.99)  $ (13.79)  $ (10.61)  $  (2.04)
Stockholders' equity
 (deficit). . . . . . . . . . . . . . . . . . .  $(90,752)  $(89,146)  $(72,668)  $(12,887)  $ 49,725
Return on average equity 3. . . . . . . . . . .  N/A        N/A        N/A        N/A          (21.7%)
Book value (deficit) per
 share. . . . . . . . . . . . . . . . . . . . .  $ (16.82)  $ (15.65)  $ (12.48)  $  (2.19)  $   8.51
Market Value per share. . . . . . . . . . . . .  $   0.22   $   0.61   $   0.34   $   2.00   $  10.38
<FN>
1.   The  financial  statements  of the Company have been prepared in accordance
     with  Canadian  GAAP  presented  in  U.S.  dollars.
2.   Operating  earnings  and  per share amounts exclude amortization, interest,
     taxes,  realized  capital  gains  and  losses,  minority  interest, and any
     extraordinary  items.
3.   Return  on  average  equity  cannot  be  calculated  due to the accumulated
     deficit  in  stockholders'  equity  in  2002,  2001,  2000  and  1999.
</TABLE>


                               [GRAPHIC  OMITED]


                               [GRAPHIC  OMITED]


CORPORATE  STRUCTURE

<PAGE>
------
Chairman's  Report  to  Stockholders
------------------------------------

May  27,  2003

Dear  Fellow  Stockholder:

Despite a difficult market that permeated the insurance industry since September
11,  2001,  we are seeing improvement in our company's operations as a result of
key  changes  we  have  made.

The  company  reached  a pinnacle in its operations in the late 1990's.  We were
writing  premiums  in  excess  of  $500 million and realizing pre-tax profits in
excess  of  $20  million.  The  latter  part  of  that  era  saw a change in the
underwriting  of insurance in those fields that we were most active, nonstandard
auto  insurance  and  crop  insurance.

The  largest  writer  in  the nonstandard field with premiums in the area of $10
billion decided in the latter half of the 90's that it would undertake a program
of  rate  cutting  to  gain  market  share  of  the business.  This forced other
nonstandard  insurers  to  reduce  or  hold  the  rates  at levels that were not
economical in an attempt to maintain business that would be otherwise lost.  The
results  were  that  we,  like  others  in the same field of insurance activity,
struggled  with  increasing  losses.  This  came at a time when the markets were
unable  to  effectively  increase  rates to meet the added cost of deteriorating
loss  experience.

We  cut  costs  of  operations in an effort to produce a profitable portfolio of
this  class  of  business.  We  took  the  dramatic step of releasing employees,
including  several  of  the  top  personnel in the company.  We culminated these
changes in 2002 by appointing Douglas Symons as Chief Executive Officer of Goran
Capital  Inc.

Further,  the company stopped writing business in jurisdictions where rates were
inadequate  and  concentrated on renewing the business that was performing best.
We  received  some help earlier on when the principal writer of nonstandard auto
insurance  decided  that  the  loss of profits they encountered by their zeal to
capture  a larger share of the business was not favoring them.  This return to a
more normal market assisted us, and along with other changes we made, we now see
improving  results.

We  put  the business of IGF on the block two years ago and sold it to a leading
writer  of  this  class  of  insurance.  2002 was their first full year with the
business  they  acquired  from  us.  They were hit with net losses that exceeded
earned  premiums  by  approximately  $50  million, which is an indication of the
feast  or  famine  nature  of  the  crop  insurance  business.

It  has  been a hard grind over the past several years.  Not only have we had to
deal  with  the  matters I mentioned, the insurance industry has been in turmoil
since  September  11,  2001  when  terrorist  losses  exceeded  $150  billion.

We  have  reduced the number of staff from 342 to 209 and our marketing, claims,
and  accounting  departments  have  been  placed under new management.  They are
doing an admirable job and with the strong executive team Douglas has assembled,
I  am  encouraged  that  we  are  on  the  road back to sensibility and profits.

The  Board of Directors has stuck with us through these trying times and I would
be remiss if I did not thank them and congratulate the executives of the company
and  our  employees  for the brightening picture I feel they are bringing to us.




/s/  G.  Gordon  Symons
Chairman
<PAGE>
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 for the
years  ended  December  31.  This information should be read in conjunction with
the  consolidated  financial  statements  of  the Company and the notes thereto,
included  elsewhere  in  this  report.  All  information is in thousands, except
share,  per  share  and  ratio  data.
<TABLE>
<CAPTION>
                                               2002       2001       2000       1999       1998
                                             ---------  ---------  ---------  ---------  ---------
<S>                                          <C>        <C>        <C>        <C>        <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Gross Premiums Written. . . . . . . . . . .  $111,394   $193,186   $182,099   $236,401   $303,745
Net Premiums Earned . . . . . . . . . . . .    41,037    108,197    145,532    261,800    281,276
Fee Income. . . . . . . . . . . . . . . . .    10,318     12,425     14,239     15,335     16,431
Net Investment Income . . . . . . . . . . .     4,390      6,998     12,171     13,125     13,126
Loss from Continuing Operations 4 . . . . .   (29,745)  $(31,937)  $(63,224)  $(47,000)  $ (2,515)
Loss from Discontinued Operations . . . . .        --   $ (2,156)  $(17,041)  $(15,373)  $ (9,421)
                                             ---------  ---------  ---------  ---------  ---------
Net Loss. . . . . . . . . . . . . . . . . .   (29,745)  $(34,093)  $(80,265)  $(62,373)  $(11,936)
                                             =========  =========  =========  =========  =========

PER COMMON SHARE DATA:
Basic Loss from Continuing
  Operations. . . . . . . . . . . . . . . .  $  (5.51)  $  (5.61)  $ (10.86)  $  (8.00)  $  (0.43)
Basic Loss from Discontinued
  Operations. . . . . . . . . . . . . . . .        --   $  (0.38)  $  (2.93)  $  (2.61)  $  (1.61)
Basic Net Loss. . . . . . . . . . . . . . .  $  (5.51)  $  (5.99)  $ (13.79)  $ (10.61)  $  (2.04)
Basic Weighted Average Shares Outstanding .     5,394      5,696      5,822      5,876      5,841

GAAP RATIOS:
Loss and LAE Ratio 1. . . . . . . . . . . .     125.5%      88.0%      78.2%      92.6%      81.2%
Expense Ratio 2 . . . . . . . . . . . . . .      36.8%      37.7%      38.7%      31.5%      23.3%
Combined Ratios 3 . . . . . . . . . . . . .     162.3%     125.7%     116.9%     124.1%     104.5%

CONSOLIDATED BALANCE SHEET DATA:
Investments . . . . . . . . . . . . . . . .  $ 58,479   $113,795   $148,890   $225,168   $236,144
Total Assets. . . . . . . . . . . . . . . .   161,966    376,319    440,032    519,922    570,989
Losses and LAE. . . . . . . . . . . . . . .    72,809     84,876    113,149    157,425    140,484
Trust Preferred Securities. . . . . . . . .    67,994     94,540    112,000    135,000    135,000
Total Shareholders' Equity (Deficit). . . .   (90,752)   (89,146)   (72,668)   (12,887)    49,725
Book Value (Deficit) Per Share. . . . . . .  $ (16.82)  $ (15.65)  $ (12.48)  $  (2.19)  $   8.51
<FN>
1.   Loss  and LAE ratio: The ratio of loss and loss adjustment expenses ("LAE")
     incurred  during  the  period,  as  a  percentage  of  premiums  earned.
2.   Expense  ratio: The ratio of policy acquisition, general and administrative
     expenses  less  billing  fees,  as  a  percentage  of  premiums  earned.
3.   Combined ratio: The sum of the loss and LAE ratio plus the expense ratio as
     a  percentage  of  premiums  earned.
4.   Loss  from continuing operations for the year 2000 includes a write-down of
     $33.5  million  for  goodwill.  See  Note  6  to the consolidated financial
     statements  for  additional  information.
</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  the  Company's operations or
financial  results  constitute  forward-looking statements within the meaning of
the  Private Securities Litigation Reform Act of 1995 (the Act). Forward-looking
statements  include statements which are predictive in nature, which depend upon
or  refer to future events or conditions, which include words such "anticipate,"
"could,"  "feel(s),"  "believes,"  "plan,"  "estimate,"  "expect,"  "should,"
"intend,"  "will,"  and other similar expressions .  In addition, any statements
concerning  future  financial  performance,  ongoing  business  strategies  or
prospects  and  possible  future  Company  actions  which  may  be  provided  by
management  are  also  forward-looking  statements  as  defined  by  the  Act.
Forward-looking  statements  are  based  on current expectations and projections
about  future  events  and 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, but
are  not  limited to,  the effect on customers, agents, employees and others due
to  SIG's  and  its  subsidiaries'  receipt of going concern opinions from their
accountants;  general  economic  conditions,  including prevailing interest rate
levels and stock market performance; factors affecting the Company's nonstandard
automobile  operations  such  as  rate  increase  approval, policy renewals, new
business  written, and premium volume; and the factors described in this section
and  elsewhere  in  this  report.  These  forward-looking  statements  are  not
guaranties  of  future  performance and the Company has no specific intention to
update  these  statements.

OVERVIEW
Goran  Capital  Inc.  (the  "Company"  or "Goran") owns insurance companies that
underwrite  and  market  nonstandard private passenger automobile insurance. The
Company's  principal  insurance company subsidiaries are Pafco General Insurance
Company  ("Pafco"),  Superior  Insurance  Company ("Superior") and IGF Insurance
Company  ("IGF").

STRATEGIC  ALIGNMENT
As  previously  announced, in the fourth quarter of 2000, management initiated a
strategic  review  of  the  Company's U.S. operations. This review resulted in a
plan  to  divest of the Company's crop insurance segment, allowing management to
focus  on  nonstandard  automobile insurance. In June 2001, the Company sold its
crop  insurance  segment  and  adopted  a  plan  to wind-down the remaining crop
insurance  segment  obligations.

Accordingly,  financial  results  of the crop insurance segment are presented as
discontinued  operations  in  the  Company's  financial  statements.  Continuing
operations  of  the  Company  consist  primarily  of  the nonstandard automobile
insurance  segment.

NONSTANDARD  AUTOMOBILE  INSURANCE  OPERATIONS
The  Company's  nonstandard automobile insurance operations are conducted by SIG
and  its  subsidiaries.  Specifically,  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  U.S.  insurance  company subsidiaries offer several
different  policies  that  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, for example, expanding 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>
RESULTS  OF  OPERATIONS

CONSOLIDATED  OVERVIEW
Years  Ended  December  31,  2002  and  2001

The  loss on continuing operations was $(29,745,000) or $(5.51) per share (basic
and diluted) and $(31,937,000) or $(5.61) per share (basic and diluted) for 2002
and  2001,  respectively.  The  loss  before  income  taxes and distributions on
minority  interest  was  $(21,675,000)  and  $(21,568,000)  for  2002  and 2001,
respectively.  Operating earnings (loss) from continuing operations, measured as
income  (loss)  before amortization, interest, taxes, realized capital gains and
losses  and  minority interest was $(18,187,000) or $(3.37) per share (basic and
diluted)  and $(19,011,000) or $(3.34) per share (basic and diluted) in 2002 and
2001,  respectively.  The  loss  from  discontinued  operations  was  $0  and
$(2,156,000)  for  2002  and  2001,  respectively.

Although  the  Company  has  taken  a  number  of  actions  to  address  factors
contributing  to  these  past  losses,  there can be no assurance that operating
losses  will  not  continue.  See  "Liquidity and Capital Resources" for further
discussion of recent trends and uncertainties that are reasonably likely to have
a  material  effect  on  the  Company's  financial  condition  and  results  of
operations.

Year  Ended  December  31,  2000

For  the  year  2000,  the  Company  reported a loss on continuing operations of
$(63,224,000)  or  $(10.86)  per  share  (basic  and  diluted)  which includes a
one-time write down of goodwill in the amount of $33,464,000. Loss before income
taxes  and  distribution  on  minority  interest  was  $(53,347,000).  Operating
earnings  (loss)  from  continuing  operations, measured as income/(loss) before
amortization,  interest,  taxes,  realized  capital  gains  and losses, minority
interest,  and  any  extraordinary items, was $(12,417,000) or $(2.13) per share
(basic  and  diluted).  The loss from discontinued operations was $(17,041,000).

GORAN  CAPITAL  INC.
Goran  Capital  Inc.  is  an  investment  holding  company that holds subsidiary
investments  and  engages  in  the  identification  and  evaluation of potential
investment opportunities.  The net loss was $(922,000) and $(5,187,000) for 2002
and  2001,  respectively.  The  higher  loss  in  2001 is attributable mainly to
higher  legal  costs and an increase in reserves for uncollectibility of certain
loans  during  2001.  Net cash flow was $(2,475,000) and $2,421,000 for 2002 and
2001,  respectively.

SYMONS  INTERNATIONAL  GROUP,  INC.
YEARS  ENDED  DECEMBER  31,  2002  AND  2001

Gross  Premiums  Written
Gross  premiums written decreased 33.1% or $53,317,000 in 2002 from 2001 levels.
Premium  rate  increases of approximately 11.0% were implemented throughout 2002
and  were  offset  by  a  reduction  in  policies in force of 46.9%. The primary
reasons  for  this decline were SIG's withdrawal from certain highly competitive
markets,  additional  strict  underwriting  initiatives  intended  to  increase
profitability,  and  the  regulatory  and  strategic  actions accompanied with a
reduction  in  policies  in  force.

Net  Premiums  Written
Net  premiums  written  represent  the  portion  of  premiums  retained by SIG's
insurance  subsidiaries after consideration for risk sharing through reinsurance
contracts.  As  a  result of declines in surplus in SIG's insurance subsidiaries
and  to  manage  overall  risk  retention,  in 2000 SIG's insurance subsidiaries
entered  into  a  reinsurance agreement to cede a portion of their gross written
premiums  to  National  Union Fire Insurance Company ("National") of Pittsburgh,
Pennsylvania,  an  unrelated  third  party.  During  2002,  SIG's  insurance
subsidiaries  ceded  approximately  71.7% of their gross written premiums on new
and renewal business to reinsurers under a quota share reinsurance contract that
was  effective  January  1,  2000.

Net  Premiums  Earned
Net  premiums  earned decreased 51.1% or $39,285,000 for the year ended December
31,  2002  as  compared  to the same period in 2001. Premiums are earned ratably
over  the  term  of  the  underlying  insurance  contracts. The reduction in net
premiums earned reflects the overall reduction in gross premiums written and the
increase  in  ceded  premiums.

Fee  Income
Fee  income  is derived from installment billings and other services provided to
policyholders.  For the year ended December 31, 2002, fee income decreased 24.0%
or  $2,954,000.  The  reduction  in fee income is attributed to the reduction of
insurance policies in force of 46.9% and the overall decline in written premium.

Net  Investment  Income
Net investment income decreased 34.1% or $2,147,000 in 2002 as compared to 2001.
This  decrease  reflects  the  decline  in  invested  assets  during a period of
declining  premiums,  the  liquidation  of  investments to pay prior year losses
settled  in 2002 and to settle the reinsurance payable to National. Furthermore,
return  on investments deteriorated due to a highly volatile market dominated by
unfavorable  economic  conditions  due  to  the  worldwide  recession.

Net  Realized  Capital  Losses
Net realized capital losses were $(2,807,000) and $(1,185,000) in 2002 and 2001,
respectively.  Capital  losses resulted primarily from the continued liquidation
of  longer duration fixed income securities in 2002 in order to fund operational
expenses,  claim  payments  and  reinsurance  payments  to AIG under unfavorable
market  conditions and permanent impairment of other than temporary investments.

Losses  and  Loss  Adjustment  Expenses
SIG's loss and LAE ratio for the year ended December 31, 2002, was 127.9% of net
premiums  earned as compared to 91.5% of net premiums earned for 2001. A portion
of  LAE,  unallocated  loss adjustment expense ("ULAE"), is not ceded as part of
the  quota  share  reinsurance  contract  mentioned  above  and  accounts  for
approximately 5 points of the increased loss ratio in 2002 with the remainder of
the  increase  due  to  adverse  loss  experience.

Policy  Acquisition  and  General  and  Administrative  Expense
SIG  reduced  policy acquisition and general and administrative expenses for the
year  2002  to  $20,677,000  from  the 2001 level of $40,535,000, a reduction of
approximately  49.0%.  This  reduction  reflects  the  decline  in gross written
premiums,  an  increase  in  ceding  commissions associated with the quota share
reinsurance  contract  and overall operating expense reduction initiatives. As a
percentage of gross premiums earned, SIG experienced a decrease in its operating
expense  ratio,  net  of  fee  income,  from  36.7%  in  2001  to 30.1% in 2002.

Amortization  of  Deferred  Financing  Costs
Amortization  expense  totaled  $171,000  for  the years-ended December 2002 and
2001.

Income  Taxes
At  December 31, 2002, SIG's net deferred tax assets were fully offset by a 100%
valuation  allowance  that  resulted  in  no  tax  benefit  in  2002.

YEARS  ENDED  DECEMBER  31,  2001  AND  2000

Gross  Premiums  Written
Gross  premiums  written decreased 7.7% or $13,369,000 in 2001 from 2000 levels.
Premium  rate  increases of approximately 24.8% were implemented throughout 2001
that  were  offset  by a reduction in policies in force of 23.3%. The decline in
gross  premiums  also  resulted  from  SIG's  exit of certain highly competitive
markets  and  instituting  other  underwriting  initiatives intended to increase
profitability,  which  had  the effect of reducing premium. Regulatory action in
certain  states  also  limited  premiums  written.

Net  Premiums  Written
Net  premiums  written  represent  the portion of premiums retained by SIG after
consideration  for  risk  sharing  through reinsurance contracts. As a result of
losses  in  SIG's  insurance  subsidiaries and to manage overall risk retention,
SIG's  insurance  subsidiaries  entered  into  a reinsurance agreement to cede a
portion  of  their  gross  written premiums to a third party. During 2001, SIG's
insurance  subsidiaries  ceded approximately 54% of their gross written premiums
on  new  and renewal business to the reinsurers, under a quota share reinsurance
contract  that  was  effective  January  1,  2000.  In addition, SIG's insurance
subsidiaries  ceded  a  portion  of  their unearned premium reserve bringing the
total  cession  to  79%  in  2001.


<PAGE>
Net  Premiums  Earned
Net  premiums  earned decreased 44.1% or $60,759,000 for the year ended December
31,  2001  as  compared  to the same period in 2000. Premiums are earned ratably
over  the  term  of  the  underlying  insurance  contracts. The reduction in net
premiums  earned is reflected of the overall reduction in gross premiums written
and  the  increase  in  ceded  premiums.

Fee  Income
Fee  income  is derived from installment billings and other services provided to
policyholders.  For the year ended December 31, 2001, fee income decreased 13.0%
or  $1,845,000  as  compared  to  the  same period in 2000. The reduction in fee
income  was  attributed to the reduction of insurance policies in force of 23.3%
and  the  overall  decline  in  written  premium.

Net  Investment  Income
Net investment income decreased 37.6% or $3,788,000 in 2001 as compared to 2000.
This  decrease  reflected  the  decline  in  invested  assets during a period of
declining  premiums  and the liquidation of investments to pay prior year losses
settled in 2001. Furthermore, return on investments deteriorated due to a highly
volatile  market  dominated  by  unfavorable  economic  conditions  due  to  the
worldwide  recession  and  effects  from  the  September 2001 terrorist attacks.

Net  Realized  Capital  Losses
Net realized capital losses were $(1,185,000) and $(5,972,000) in 2001 and 2000,
respectively.  Capital  losses  resulted from the liquidation of longer duration
fixed  income securities in 2001 in order to rebalance the investment activities
in  the portfolio. These transactions resulted in higher cash proceeds that were
reinvested  in shorter duration investment instruments. Capital losses were also
realized  due to the continued liquidation of investments to fund operations and
claim  payments  under  unfavorable  market  conditions.

Losses  and  Loss  Adjustment  Expenses
SIG's  loss and LAE ratio for the year ended December 31, 2001, was 91.5% of net
premiums  earned as compared to 82.3% of net premiums earned for 2000. A portion
of  LAE,  ULAE,  is  not  ceded  as part of the quota share reinsurance contract
mentioned  above  and  accounts for approximately 4 points of the increased loss
ratio  in  2001  with the reminder of the increase due to adverse  loss expense.

Policy  Acquisition  and  General  and  Administrative  Expense
SIG  reduced  policy acquisition and general and administrative expenses for the
year  2001  to  $40,535,000  from  the 2000 level of $67,538,000, a reduction of
approximately  40%.  This  reduction  is  reflected the decline in gross written
premiums,  an  increase  in  ceding  commissions associated with the quota share
reinsurance  contract  and overall operating expense reduction initiatives. As a
percentage of gross premiums earned, SIG experienced a decrease in its operating
expense  ratio,  net  of  fee income, from 38.8% in 2000 to 36.7% in 2001.  This
decrease  in  the  expense  ratio  is  the  result  of reduced operating expense
initiatives  and  an increase in ceding commissions earned under the quota share
reinsurance  contract.

Amortization  of  Intangibles
Amortization  expense decreased nearly 100%, or $34,806,000, in 2001 as compared
to  2000  as  the  goodwill  was  written  to  zero  at  December  31,  2000.

Income  Taxes
At  December 31, 2001, SIG's net deferred tax assets were fully offset by a 100%
valuation  allowance  that  resulted  in  no  tax  benefit  in  2001.

SYMONS  INTERNATIONAL  GROUP  (FLORIDA),  INC.
Goran's  wholly  owned  subsidiary,  Symons  International Group (Florida), Inc.
("SIGF"),  is  primarily  engaged  in  the  operation  of  a  property/casualty
insurance  brokerage  and  a  flood  insurance  brokerage.  The  property
casualty/insurance  brokerage  operations were acquired effective on November 1,
2001  via  an  asset  purchase transaction. The net commission revenue from this
operation  was  $802,000  in  2002.

Historically,  SIGF  was  a specialized surplus lines underwriting unit. By late
1998,  SIGF's operations no longer fit the Company's strategic operating plan of
concentrating  on  the  business  segments  of  nonstandard  automobile  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.
The premium volume from this operation was $1,218,000, $1,619,000 and $6,427,000
as of December 31, 2000, 1999 and 1998, respectively.  The net loss was $48,000,
$861,000  and  $2,937,000  as of December 31, 2000, 1999 and 1998, respectively.

GRANITE  INSURANCE  COMPANY
Granite Insurance Company ("Granite") is a Canadian federally licensed insurance
company  which  is  presently  servicing  its  investment  portfolio  and  one
outstanding  claim.  Granite  stopped  writing  business  on  December 31, 1989.
Granite sold its book of Canadian business in January 1990 to an affiliate which
was  subsequently  sold  to  third  parties in June 1990. The outstanding claims
continue  to  be  settled  in  accordance  with  actuarial estimates.  Granite's
invested assets decreased to $2.3 million at December 31, 2002 from $2.5 million
at  December 31, 2001. This was the result of claims and operating expenses paid
during  2002.  Total net outstanding claims were $42,000 and $88,000 at December
31, 2002 and 2001, respectively.  Management expects that the run-off of the one
outstanding claim will be completed by 2004.  Granite recorded a net gain (loss)
of  $(367,000),  $827,000  and  $(117,000) in 2002, 2001 and 2000, respectively.

GRANITE  REINSURANCE  COMPANY  LTD.
During  2002  Granite  Reinsurance  Company  Ltd.  ("Granite Re") was 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  2002,  2001 and 2000, Granite Re participated in certain quota share and
stop  loss  programs  for the now discontinued crop operations.   These programs
were  in  accordance  with  third  party  placements.

Net  premiums  earned  were $3.5 million in 2002, $31.5 million in 2001 and $7.8
million  in 2000.  Net earnings (loss) were $(1.6) million in 2002, $0.5 million
in  2001  and  $7.5  million  in 2000.  The net earnings for 2000 were primarily
related  to  favorable  development  in  the  losses incurred on its quota share
reinsurance,  which  is  assumed from a related insurer and interest income on a
book  of  business  assumed  from  a  nonaffiliate.

Granite  Re's  capital  and  surplus  was  $12.1 million and $14.8 million as of
December  31,  2002  and  2001,  respectively.

LIQUIDITY  AND  CAPITAL  RESOURCES
The primary source of funds for Goran is through dividend and other funding from
Granite  Re.

The  primary sources of funds for SIG are fees from policyholders and management
fees  from  SIG's  subsidiaries.

Superior  Insurance Group, Inc. ("Superior Group") collects billing fees charged
to Pafco policyholders who elect to make their premium payments in installments,
and  managing  general  agent  ("MGA")  fees  charged to Superior policyholders.
Superior Group also receives management fees under its management agreement with
its  insurance  subsidiaries.  When the Florida Department of Insurance ("FDOI")
approved  the  acquisition of Superior by Superior Group, 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
FDOI,  which  restriction  expired  in  April  2000.  As  a result of regulatory
actions  taken  by  the Indiana Department of Insurance ("IDOI") with respect to
Pafco  and  IGF, those subsidiaries may not pay dividends without prior approval
by  the  IDOI.  Pafco  cannot pay extraordinary dividends, within the meaning of
the  Indiana Insurance Code, without the prior approval of the Indiana Insurance
Commissioner.  The  management fees charged to Pafco and Superior are subject to
review  by  the  IDOI  and  FDOI,  respectively.

The  nonstandard  automobile  insurance subsidiaries' primary source of funds is
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, premium taxes, dividends and the purchase of
investments.  There  is  variability  in  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.  Due  to  reduced  premium  volume  during 2002 and 2001, SIG liquidated
investments  to  pay  claims.  SIG  historically  has tried to maintain duration
averages of 3.5 years.  However, the reduction in new funds due to lower premium
volume  caused  SIG  to  shorten  the duration of its investments. SIG may incur
additional  costs  in selling longer term bonds to pay claims, as claim payments
tend  to  lag  premium  receipts.  Due  to  the  decline  in premium volume, SIG
experienced  a  reduction  in  its  investment  portfolio,  but  to date has not
experienced  any  problems  meeting  its  obligations  for  claims  payments.


<PAGE>
On  August  12,  1997,  SIG  issued through a wholly owned trust subsidiary $135
million aggregate principal amount in trust originated preferred securities (the
"Preferred  Securities").  The Preferred Securities have a term of 30 years with
semi-annual  interest payments of $6.4 million that commenced February 15, 1998.
SIG  may  redeem the Preferred Securities in whole or in part 10 years after the
issue  date.

SIG  elected  to  defer  the  semi-annual  interest payments due in February and
August  2000,  2001  and  2002.  SIG  elected  to defer the semi-annual interest
payments  due  in  February  2003. SIG expects to continue this practice through
2003  and 2004. The unpaid interest installment amounts accrue interest at 9.5%.

The  following  table  sets  forth  (in  thousands)  SIG's obligations under the
Preferred  Securities  as  of  December  31,  2002:
<TABLE>
<CAPTION>

                                           Payments due by Period
                                     Less than  1 - 3   3 - 5  More than
Contractual Obligation          Total  1 year   years   years   5 years
<S>                              <C>    <C>      <C>     <C>    <C>
Interest payments under the
 Preferred Securities          $378,929   -  $   96,779  $25,650  $256,500
Principal payments under the
 Preferred Securities          $135,000   -           -        -  $135,000
</TABLE>

SIG  may  continue  to  defer  the  semi-annual  interest  payments for up to an
aggregate  of  five  (5)  years  as permitted by the indenture for the Preferred
Securities.  All  of  the  deferred  interest (approximately $84 million, if all
payments  due  in  2003  and  2004  are deferred) will become due and payable in
February  2005.  SIG  relies  on  the payment of finance and service fees by its
subsidiaries  to  fund  its operations, including its payment of interest on the
Preferred Securities.  Certain state regulators, including the FDOI, have issued
orders  prohibiting  SIG's  subsidiaries  from  paying such fees to SIG.  In the
event  such  orders  continue,  SIG  may not have sufficient revenue to fund its
operations  or  to  pay the deferred interest on the Preferred Securities.  Such
failure to pay could result in a default under the indenture and acceleration of
the  payment  of  the  Preferred  Securities.

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

-    SIG  may  not  incur  additional  indebtedness  or  guarantee  additional
     indebtedness.
-    SIG  may  not  make  certain  restricted payments including making loans or
     advances  to  affiliates,  repurchasing common stock or paying dividends in
     excess  of  a  stated  limitation.
-    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
(0.95)  in  2002,  and  will continue to apply until SIG's consolidated coverage
ratio  complies  with  the terms of the trust indenture. SIG complied with these
additional  restrictions  as of December 31, 2001 and 2002 and was in compliance
as  of  May  9,  2003.

Net  cash  used  by  the  Company's  operating  activities was $(68,801,000) and
$(23,490,000)  in  2002  and  2001,  respectively.

Beginning  in  the fourth quarter of 2001 and continuing in January and February
2002, SIG experienced sustained adverse loss experience on a substantial portion
of its new business written in certain markets. In late February and early March
2002,  SIG  commenced further analysis of loss ratios by individual agency and a
review  of claim settlement procedures. Based on this and other analysis, during
2002  SIG  took  a  number  of  actions  to  improve  its financial position and
operating  results  including:

-    Eliminated  reinstatements  in all markets, i.e., upon policy cancellation,
     the  insured  must obtain a new policy at prevailing rates and underwriting
     guidelines;
-    Terminated  or  placed  on  new-business-moratorium  several hundred agents
     whose loss ratios were abnormally high when compared to the average for the
     remaining  agents  (these  agents  accounted for approximately 16% of SIG's
     total  gross  written  premium  in  2001);
-    Increased  underwriting  requirements  in  certain markets including higher
     down  payments,  new  policy  fees,  and  shorter  policy  terms;
-    Hired  a  new  vice  president  of  claims  with  significant  auto  claims
     experience  to  improve  the  claims  function.

The  above  actions  were  followed  by:

-    Replacement  of  the  president  of  the  non-standard automobile business;
-    Consolidation of all underwriting activities, premium accounting and agency
     licensing  to  Indianapolis,  IN  from  Atlanta,  GA;
-    Closing  of  regional offices in Denver, CO; Virginia Beach and Alexandria,
     VA;  Glendale,  CA  and  Jacksonville,  FL;
-    Replacement  of  the  claims  department  national  litigation  manager;
-    Replacement  of  the  marketing  manager  and  the  product  manager;
-    Heavy  focus  on  the  improvement  of  process  and  customer service; and
-    Continued  transition  to  an  improved  policy  processing  system.

Shareholders'  equity reflected a deficit of $(90,752,000) at December 31, 2002,
which does not reflect the statutory surplus upon which the Company conducts its
various  insurance  operations.  The  Company's U.S. insurance subsidiaries, not
including IGF, had statutory surplus of approximately $13.0 million as reflected
in  the  Company's  U.S.  insurance  subsidiaries'  annual  statutory  financial
statements  filed on February 28, 2003.   Following the inclusion in the reserve
amounts  pursuant  to  the  consulting  actuary's  analysis,  SIG's  insurance
subsidiaries  had  statutory surplus of $3.0 million as of December 31, 2002. In
May  2003,  pursuant  to  a reserve analysis completed by the consulting actuary
engaged by BDO Seidman, LLP, the Company's and SIG's independent auditor, it was
determined  that  the  loss  and  LAE  reserves  of Superior and Pafco should be
increased  as  of  December  31,  2002.  These  reserve  adjustments, along with
resulting  adjustments  to the permitted carrying values of certain assets, were
recorded  in  the 2002 audited statutory financial statements filed for Superior
and  Pafco  with  the  FDOI  and  the  IDOI,  respectively.

     EFFECTS  OF  INFLATION
     Due  to  the  short term that claims are outstanding in the majority of the
product  lines  the  Company  underwrites, inflation does not pose a significant
risk  to  the  Company.

SIGNIFICANT  ACCOUNTING  POLICIES
The  Company's  financial  statements  reflect  the selection and application of
accounting  policies  that  require management to make significant estimates and
assumptions.  Management  believes  that  the most critical judgment area in the
application of its accounting policies is the reserves for losses and LAE. These
reserves  include  estimates  for  reported  unpaid  losses  and  LAE and losses
incurred  but  not  reported.  These  reserves are not discounted.  Reserves are
established  using individual case-basis evaluations 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 make
reasonable  provisions for unpaid loss and LAE obligations, those provisions are
necessarily  based  on estimates and are subject to 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  gross  reserve  for losses and LAE is reported net of
anticipated receipts for salvage and subrogation. See Note 7 to the Consolidated
Financial  Statements for additional disclosure regarding the reserve for losses
and  LAE. The variation between the estimated loss and LAE and actual experience
can  be  material.

PRIMARY  DIFFERENCES  BETWEEN  GAAP  AND  SAP
The  financial statements contained herein have been prepared in conformity with
Canadian  Generally  Accepted  Accounting  Principles ("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  in which 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 National Association of Insurance
Commissioners  ("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
recognized  as  specified  by  statutory  guidance;  and  (vii)  credits  for
reinsurance  are  recorded  only  to  the  extent  considered  realizable.

NEW  ACCOUNTING  STANDARDS
The  NAIC  adopted  the Codification of Statutory Accounting Principles guidance
(the  "Codification"),  which  replaced  the Accounting Practices and Procedures
manual, as the NAIC's primary guidance on statutory accounting effective January
1,  2001.  The  IDOI and the FDOI have adopted the Codification.  The changes in
statutory  accounting  principles  resulting from codification that affected the
Company's  U.S.  insurance subsidiaries, among other things, limit the statutory
carrying  value  of electronic data processing equipment and deferred tax assets
in  determining  statutory  surplus.

In  June  2001, the Financial Accounting Standards Board (the "Board") finalized
FASB  Statements  No.  141,  Business  Combinations, No. 142, Goodwill and Other
Intangible  Assets, and No. 143, Accounting for Asset Retirement Obligations. In
August  2001,  the  Board  issued  FASB  Statement  No.  144, Accounting for the
Impairment  or Disposal of Long-lived Assets. In December 2002, the Board issued
FASB Statement No. 148, Accounting for Stock-Based Compensation - Transition and
Disclosure.  These  new  standards are effective in 2002 and are not expected to
have  a  material  impact  on  the  Company's  financial  position or results of
operations.

QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK
Insurance  company  investments must comply with applicable laws and regulations
that  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  investment  portfolios  of  the  Company  at  December  31,  2002,
consisted  of  the  following  (in  thousands):
<TABLE>
<CAPTION>
<S>                                                      <C>              <C>
                                                            Cost or
Type of Investment. . . . . . . . . . . . . . . . . . .  Amortized Cost   Market Value
-------------------------------------------------------  ---------------  -------------
Fixed maturities:
United States Treasury securities and other obligations
 of the United States government or its agencies. . . .  $        17,814  $      18,355
Obligations of states and political subdivisions. . . .            4,863          5,041
Corporate securities. . . . . . . . . . . . . . . . . .           13,358         13,720
                                                         ---------------  -------------
Total fixed maturities. . . . . . . . . . . . . . . . .           36,035         37,116
Equity securities:
Common stocks . . . . . . . . . . . . . . . . . . . . .           10,778          7,331
Short-term investments. . . . . . . . . . . . . . . . .            8,495          8,495
Other investments . . . . . . . . . . . . . . . . . . .            3,171          3,171
                                                         ---------------  -------------
Total investments . . . . . . . . . . . . . . . . . . .  $        58,479  $      56,113
                                                         ===============  =============
</TABLE>
The  following table sets forth the composition of the fixed maturity securities
portfolio  of the Company by time to maturity as of December 31, (in thousands):
<TABLE>
<CAPTION>
                                                               2002                2001
                                                               -------            -------
  Time to Maturity                                    Market Value  Percent  Market Value  Percent
----------------------                               -------------  ------   ------------  -------
<S>                                                        <C>         <C>      <C>         <C>
1 year or less                                         $  9,234      24.9%     $ 7,998     10.2%
More than 1 year through 5 years                         12,077      32.5       26,343     33.6
More than 5 years through 10 years                        7,512      20.2       20,554     26.2
More than 10 years                                        3,288       8.9        4,091      5.2
                                                        --------    -------     -------   -------
                                                         32,111      86.5       58,986     75.2
Mortgage-backed securities                                5,005      13.5       19,380     24.8
                                                        --------    -------     -------   -------
Total                                                  $ 37,116     100.0%     $78,366    100.0%
                                                       ========    =======     =======    =======
</TABLE>

<PAGE>

The  following  table  sets  forth  the  ratings  assigned to the fixed maturity
securities  of  the  Company  as  of  December  31,  (in  thousands):
<TABLE>
<CAPTION>
                                                                 2002                 2001
                                                                ------               -------
Rating1                                                Market Value  Percent  Market Value  Percent
----------------------------                      ----------------  --------  --------     -------
<S>                                                       <C>           <C>      <C>         <C>
Aaa or AAA                                              $ 25,045     67.5%    $51,754       66.1%
Aa or AA                                                     971      2.6       3,357        4.3
A                                                          4,262     11.4       9,655       12.3
Baa or BBB                                                 5,479     14.8       7,617        9.7
Ba or BB                                                     281      0.8       4,883        6.2
Other below investment grade                               1,078      2.9       1,100        1.4
                                                         --------  ------      -------      -----
Total                                                   $ 37,116   $100.0%     $78,366       100%
                                                        ========   =======     =======      =====
<FN>

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

</TABLE>


The  investment  results  of the Company for the periods indicated are set forth
below  (in  thousands):

<TABLE>
<CAPTION>
                                                        Years Ended December 31,
                                                    2002            2001         2000
                                                 ----------       ---------    ---------
<S>                                              <C>                 <C>          <C>
Net investment income 1 . . . . . . . . . . . .  $       3,794   $  6,998      $ 12,171
Average investment portfolio 2. . . . . . . . .  $      86,137   $131,343      $187,243
Pre-tax return on average investment portfolio.           4.4%       5.3%          6.5%
Net realized gains (losses) . . . . . . . . . .  $      (2,806)  $ (1,177)    $ (5,970)
<FN>
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>

If  interest  rates  were to increase 10% from the December 31, 2002 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.

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 investments 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
rates,  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 in
public  companies.


<PAGE>
The  following  table  provides  information  about  the  Company's  financial
instruments  that  are  sensitive  to changes in interest rates. The Company has
assumed  its available for sale securities are similar enough to aggregate those
securities  for  presentation  purposes. The table presents principal cash flows
and  related  weighted-average interest rates for investment securities and debt
obligations  by  expected  maturity  date  (in  thousands).
<TABLE>
<CAPTION>
                                                 Cost or Amortized Cost
                        --------------------------------------------------------------------Market
                        2003     2004     2005     2006     2007     Thereafter    Total     Value
                       -------  -------  -------  -------  -------  ------------  --------  -------
<S>                    <C>       <C>      <C>      <C>       <C>      <C>           <C>       <C>
ASSETS
Available for sale. .  $9,018   $4,428   $4,456   $4,728   $2,928   $    10,477   $36,035   $37,116
Average interest rate   6.80%    7.20%    6.45%    5.95%    5.95%         6.98%     6.25%     6.25%

LIABILITIES
Preferred securities.      --       --       --       --       --   $    67,994   $67,994   $ 4,533
Average interest rate      --       --       --       --       --          9.5%      9.5%      9.5%
</TABLE>


REVISED  ESTIMATE  OF  LOSS  RESERVES  RECORDED  IN  PRIOR  YEARS

SIG  revised  its  estimate of the loss reserves recorded in prior years. At the
end of 2001, SIG's net loss and LAE reserves for nonstandard auto insurance were
$50,542,000.  As  claims  that  occurred  prior  to year-end 2001 were reported,
investigated and settled during 2002, SIG reevaluated and, as necessary, revised
its  estimates  of  loss reserves. Based on current information, reserves at the
end of 2001 should have been $63,317,000.   In part the reserve increase was the
result of an unanticipated increase in claim frequency during the fourth quarter
of 2001. Because of the normal lag between the occurrence of an accident and the
reporting  of  that  accident,  SIG  did not realize its claim frequency for the
fourth  quarter  of  2001  had increased until those claims were reported during
2002.  SIG  believes  that  the  frequency increase was caused by an increase in
miles  driven  which  resulted  from  (1) a significant decrease in the price of
gasoline,  (2)  a  reluctance of people to fly on commercial airlines because of
the  September  11,  2001  terrorist  attacks,  and (3) a general improvement in
economic  conditions.  In  addition, during 2002 Superior experienced an unusual
number  of  reopened  claims from older accident quarters.  At year-end 2001 SIG
believed  that  these  claims  were  closed  with  no outstanding liability.  In
response  to  this  unusual  activity SIG took appropriate action to enhance its
claims  function.

In  May 2003, pursuant to a reserve analysis completed by the consulting actuary
engaged by BDO Seidman, LLP, the Company's and SIG's independent auditor, it was
determined  that  the  loss  and  LAE  reserves  of Superior and Pafco should be
increased  as  of  December  31,  2002.  These  reserve  adjustments, along with
resulting  adjustments  to the permitted carrying values of certain assets, were
recorded  in  the 2002 audited statutory financial statements filed for Superior
and  Pafco  with the FDOI and the IDOI. In the statutory financial statements of
the  Company's  U.S. insurance subsidiaries, the estimates of gross loss and LAE
reserves  were  $59,971,000  and  of net loss and LAE reserves were $37,886,000.
Following  the  adjustment  pursuant  to  the consulting actuary's analysis, the
revised  estimates  of gross loss and LAE reserves were $67,204,000 and net loss
and  LAE  reserves  were  $43,145,000.  These  reserves are based on analysis of
historical  data.  Based  on  actions  taken  to  enhance  SIG's claim function,
management  anticipates that the majority of claims will be adjusted and settled
more  quickly  which  will  reduce  the  overall  costs  while those claims of a
questionable  nature will be investigated more thoroughly. Also, SIG is focusing
on  reducing  defense  costs  and  is  negotiating  more  favorable  rates  from
attorneys.  Finally,  SIG is taking steps to increase the amounts of salvage and
subrogation  it collects as an offset to paid losses while reducing the expenses
associated  with  collecting  those  amounts.

The  business  written  by  the  Company  did  not expose it to highly uncertain
exposures  such  as  claims  for  asbestos-related  illnesses,  environmental
remediation  or  product  liability.  The surplus lines insurance written by the
Company  also  did  not  include  these  types  of  highly  uncertain exposures.

<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED  BALANCE  SHEETS
As  of  December  31,  2002  and  2001
(U.S.  dollars  in  thousands,  except  share  data)
                                                                                  2002        2001
                                                                               ----------  ----------
<S>                                                                            <C>         <C>
ASSETS:
Investments:
    Fixed maturities. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  36,035   $  77,325
    Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .     10,778      21,610
    Short-term investments, at amortized cost, which approximates market. . .      8,495      13,266
    Mortgage loans, at cost . . . . . . . . . . . . . . . . . . . . . . . . .          -           -
    Other invested assets . . . . . . . . . . . . . . . . . . . . . . . . . .      3,171       1,594
                                                                               ----------  ----------
Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     58,479     113,795
Investments in and advances to related parties. . . . . . . . . . . . . . . .         83       1,130
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . .      2,131      11,263
Receivables, net of allowances of $1,526 and $1,940 . . . . . . . . . . . . .     28,302      47,441
Reinsurance recoverable on paid and unpaid losses, net. . . . . . . . . . . .     24,628      29,284
Prepaid reinsurance premiums. . . . . . . . . . . . . . . . . . . . . . . . .     25,470      40,039
Deferred policy acquisition costs . . . . . . . . . . . . . . . . . . . . . .          -         763
Property and equipment, net of accumulated depreciation . . . . . . . . . . .      7,084       9,907
Deferred securities issuance costs. . . . . . . . . . . . . . . . . . . . . .      2,119       4,376
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      3,309       2,421
Assets of discontinued operations . . . . . . . . . . . . . . . . . . . . . .     10,361     115,900
                                                                               ----------  ----------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 161,966   $ 376,319
                                                                               ==========  ==========

LIABILITIES AND STOCKHOLDER'S DEFICIT:
LIABILITIES:
    Losses and loss adjustment expenses . . . . . . . . . . . . . . . . . . .  $  72,809   $  84,876
    Unearned premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . .     35,797      59,216
    Reinsurance payables. . . . . . . . . . . . . . . . . . . . . . . . . . .     17,128      58,868
    Distributions payable on preferred securities . . . . . . . . . . . . . .     24,793      23,252
Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      4,250       7,250
    Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     15,673      21,563
    Liabilities of discontinued operations. . . . . . . . . . . . . . . . . .     14,274     115,900
                                                                               ----------  ----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    184,724     370,925
                                                                               ----------  ----------
MINORITY INTEREST:
Company-obligated mandatorily redeemable preferred stock of trust subsidiary
 holding solely parent debentures . . . . . . . . . . . . . . . . . . . . . .     67,994      94,540
                                                                               ----------  ----------
STOCKHOLDERS' DEFICIT:
Common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     18,502      18,502
Contributed surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     70,864      42,465
Cumulative translation adjustment . . . . . . . . . . . . . . . . . . . . . .     (1,023)       (763)
Retained (deficit). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (179,095)   (149,350)
                                                                               ----------  ----------
TOTAL STOCKHOLDERS' (DEFICIT) . . . . . . . . . . . . . . . . . . . . . . . .    (90,752)    (89,146)
                                                                               ----------  ----------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) . . . . . . . . . . . . . . . .  $ 161,966   $ 376,319
                                                                               ==========  ==========
</TABLE>
The  accompanying  notes  are  an  integral  part  of the consolidated
financial statements.

<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED  STATEMENTS  OF  OPERATIONS
For  the  years  ended  December  31,  2002,  2001,  and  2000
(U.S.  dollars  in  thousands,  except  per  share  data)
                                                                               2002        2001       2000
                                                                             ---------  ----------  ---------
<S>                                                                          <C>        <C>         <C>
Gross premiums written. . . . . . . . . . . . . . . . . . . . . . . . . . .  $111,394   $ 193,186   $182,099
Less ceded premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (77,403)   (106,324)   (78,637)
                                                                             ---------  ----------  ---------
NET PREMIUMS WRITTEN. . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 33,991   $  86,862   $103,462
                                                                             =========  ==========  =========
NET PREMIUMS EARNED . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 41,037   $ 108,197   $145,532
Fee income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    10,318      12,425     14,239
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . .     4,390       6,998     12,171
Other income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     3,000       1,750          -
Net realized capital gain (loss). . . . . . . . . . . . . . . . . . . . . .    (3,402)     (1,177)    (5,970)
                                                                             ---------  ----------  ---------
TOTAL REVENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    55,343     128,193    165,972
                                                                             ---------  ----------  ---------
Expenses:
Losses and loss adjustment expenses . . . . . . . . . . . . . . . . . . . .    51,513      95,216    113,768
Policy acquisition and general and administrative expenses. . . . . . . . .    25,419      53,165     70,591
Amortization of deferred securities issuance costs and intangibles. . . . .        86       1,380     34,960
                                                                             ---------  ----------  ---------
TOTAL EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    77,018     149,761    219,319
                                                                             ---------  ----------  ---------
LOSS FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND MINORITY INTEREST. . . . . . . . . . . . . . . . . . . . .   (21,675)    (21,568)   (53,347)
                                                                             ---------  ----------  ---------
Income taxes:
Current income tax expense (benefit). . . . . . . . . . . . . . . . . . . .         -           -        487
Deferred income tax expense (benefit) . . . . . . . . . . . . . . . . . . .         -           -     (2,636)
                                                                             ---------  ----------  ---------
TOTAL INCOME TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .         -           -     (2,149)
                                                                             ---------  ----------  ---------
LOSS FROM CONTINUING OPERATIONS BEFORE
MINORITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (21,675)    (21,568)   (51,198)
Minority interest:
Earnings in consolidated subsidiary . . . . . . . . . . . . . . . . . . . .         -           -         --
Distributions on preferred securities, net of tax of nil in 2002 and 2001,
 $4,489 in 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (8,070)    (10,369)   (12,026)
                                                                             ---------  ----------  ---------
LOSS FROM CONTINUING OPERATIONS . . . . . . . . . . . . . . . . . . . . . .   (29,745)    (31,937)   (63,224)
Discontinued operations:
Loss on disposal of discontinued segment less applicable taxes of nil . . .         -           -       (900)
Loss from operations of discontinued segment, less applicable income
 taxes of nil in 2002, 2001 and 1999. . . . . . . . . . . . . . . . . . . .         -      (2,156)   (16,141)
                                                                             ---------  ----------  ---------
LOSS FROM DISCONTINUED OPERATIONS . . . . . . . . . . . . . . . . . . . . .         -      (2,156)   (17,041)
                                                                             ---------  ----------  ---------
NET LOSS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $(29,745)  $ (34,093)  $(80,265)
                                                                             =========  ==========  =========
Weighted average shares outstanding - basic and fully diluted . . . . . . .     5,394       5,696      5,822
                                                                             =========  ==========  =========
Net loss from continuing operations per share - basic and fully diluted . .  $  (5.51)  $   (5.61)  $ (10.86)
                                                                             =========  ==========  =========
Net loss of discontinued operations per share - basic and fully diluted . .  $      -   $   (0.38)  $  (2.93)
                                                                             =========  ==========  =========
Net loss per share - basic and fully diluted. . . . . . . . . . . . . . . .  $  (5.51)  $   (5.99)  $ (13.79)
                                                                             =========  ==========  =========
</TABLE>

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

<PAGE>


<TABLE>
<CAPTION>
CONSOLIDATED  STATEMENTS  OF  CHANGES  IN  STOCKHOLDERS'  EQUITY  (DEFICIT)
for  the  years  ended  December  31,  2002,  2001  and  2000
(U.S.  dollars  in  thousands,  except  number  of  shares)
                                                                      Retained    Cumulative     Total
                                      Common Stocks     Contributed  Earnings  Translation  Stockholders'
                                     Shares     Amount     Surplus    (Deficit)   Adjustment    Equity
                                    ----------  ---------  ---------  ----------  ------------  ---------
<S>                                <C>         <C>        <C>        <C>         <C>           <C>
Balance at January 1, 2000. . . .  5,876,398   $ 19,317   $  2,775   $ (34,992)  $        13   $(12,887)
                                   ==========  =========  =========  ==========  ============  =========
Preferred securities purchase . .                           20,973                               20,973
Purchase of common shares . . . .   (100,000)      (185)                                           (185)
Comprehensive income (loss):
Net loss. . . . . . . . . . . .                                   .    (80,265)
Change in cumulative translation
 adjustment . . . . . . . . . . .                                                       (304)
                                                                        ______          _____   _______
Comprehensive income (loss) . . .                                      (80,265)         (304)   (80,569)
                                   ----------  ---------  ---------  ----------   -----------   -------
Balance at December 31, 2000. . .  5,776,398   $ 19,132   $ 23,748   $(115,257)  $      (291)  $(72,668)
                                   ==========  =========  =========  ==========  ============  =========

Preferred securities purchase . .         --         --     18,717                               18,717
Purchase of common shares . . . .   (382,700)      (218)                                           (218)
Reclassification of organization
expense . . . . . . . . . . . .            .       (412)                                           (412)
Comprehensive income (loss):
Net loss. . . . . . . . . . . . .                                      (34,093)
Change in cumulative translation
 adjustment . . . . . . . . . .                                                  .      (472)
                                                                       ______          _____    _______
Comprehensive income (loss) . . .                                      (34,093)         (472)   (34,565)
                                   ----------  ---------  ---------  ----------   -----------   -------
Balance at December 31, 2001. . .  5,393,698   $ 18,502   $ 42,465   $(149,350)  $      (763)  $(89,146)
                                   ==========  =========  =========  ==========  ============  =========

Preferred securities purchase . .                           28,399                               28,399
Comprehensive income (loss):
Net loss. . . . . . . . . . . . .                                      (29,745)
Change in cumulative translation
 adjustment . . . . . . . . . . .                                                       (260)
                                                                        ______         _____    _______
Comprehensive income (loss) . . .                                      (29,745)         (260)   (30,005)
                                   ----------  ---------  ---------  ----------  -----------   --------
Balance at December 31, 2002. . .  5,393,698   $ 18,502   $ 70,864   $(179,095)  $    (1,023)  $(90,752)
                                   ==========  =========  =========  ==========  ============  =========
</TABLE>

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


<TABLE>
<CAPTION>

CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
For  the  years  ended  December  31,  2002,  2001  and  2000
(U.S.  dollars  in  thousands)
                                                                              2002       2001       2000
                                                                            ---------  ---------  ---------
<S>                                                                         <C>        <C>        <C>
Cash flows from operating activities
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $(29,745)  $(34,093)  $(80,265)
Adjustments to reconcile net loss to net cash provided by (used in)
 operations:
Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . .        --         --         --
Depreciation, amortization, impairment and other . . . . . . . . . . . . .     3,745      3,892     38,983
Deferred income tax expense. . . . . . . . . . . . . . . . . . . . . . . .        --         --     (2,635)
Net realized capital (gain) loss . . . . . . . . . . . . . . . . . . . . .     3,402      1,177      5,970
Net changes in operating assets and liabilities (net of assets acquired):
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    19,139      6,929     14,153
Reinsurance recoverable on losses, net . . . . . . . . . . . . . . . . . .     4,656     15,559    (40,053)
Prepaid reinsurance premiums . . . . . . . . . . . . . . . . . . . . . . .    14,569    (15,265)   (23,896)
Deferred policy acquisition costs. . . . . . . . . . . . . . . . . . . . .       763      5,691      7,454
Other assets and liabilities . . . . . . . . . . . . . . . . . . . . . . .    (6,778)     7,509     (9,816)
Losses and loss adjustment expenses. . . . . . . . . . . . . . . . . . . .   (12,067)   (28,273)   (44,276)
Unearned premiums. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (23,419)    (3,170)   (18,175)
Reinsurance payables . . . . . . . . . . . . . . . . . . . . . . . . . . .   (41,740)    (4,764)    58,142
Distribution payable on preferred securities . . . . . . . . . . . . . . .     5,471      7,989     10,454
  Deferred income. . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (3,000)     7,250         --
Net assets from discontinued operations. . . . . . . . . . . . . . . . . .    (3,797)     6,079     34,548
                                                                            ---------  ---------  ---------
Net cash provided by (used in) operations: . . . . . . . . . . . . . . . .   (68,801)   (23,490)   (49,412)
                                                                            ---------  ---------  ---------

Cash flow from investing activities net of assets acquired:
Net sales (purchases) of short-term investments. . . . . . . . . . . . . .     4,771      4,328     15,040
Proceeds from sales, calls and maturities of fixed maturities. . . . . . .    75,108     67,105     77,641
Purchases of fixed maturities. . . . . . . . . . . . . . . . . . . . . . .   (30,437)   (35,105)   (10,181)
Proceeds from sales of equity securities . . . . . . . . . . . . . . . . .    10,374     12,707     16,736
Purchase of equity securities. . . . . . . . . . . . . . . . . . . . . . .    (3,824)   (12,494)   (25,408)
Proceeds from repayment of mortgage loans. . . . . . . . . . . . . . . . .        --      1,870        120
Purchase of property and equipment . . . . . . . . . . . . . . . . . . . .      (681)    (1,314)    (1,663)
Net investing activities from discontinued operations. . . . . . . . . . .     5,663     (5,306)      (150)
Net proceeds from sales (purchases) of other investments . . . . . . . . .    (2,013)      (217)      (415)
                                                                            ---------  ---------  ---------
Net cash provided by (used in) investing activities: . . . . . . . . . . .    58,961     31,574     71,720
                                                                            ---------  ---------  ---------

Cash flow from financing activities net of assets acquired:
Purchase of affiliate preferred securities . . . . . . . . . . . . . . . .    (2,395)    (2,497)    (2,027)
Other financing activities . . . . . . . . . . . . . . . . . . . . . . . .         9       (630)        --
Redemption of share capital. . . . . . . . . . . . . . . . . . . . . . . .        --         --       (185)
Net financing activities from discontinued operations. . . . . . . . . . .     2,047        (48)   (16,473)
Loans from and (repayments to) related parties . . . . . . . . . . . . . .     1,047      3,124     (2,608)
                                                                            ---------  ---------  ---------
Net cash provided by (used in) financing activities: . . . . . . . . . . .       708        (51)   (21,293)
                                                                            ---------  ---------  ---------

Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . .    (9,132)     8,033      1,015
Cash and cash equivalents, beginning of year . . . . . . . . . . . . . . .    11,263      3,230      2,215
                                                                            ---------  ---------  ---------
Cash and cash equivalents, end of year . . . . . . . . . . . . . . . . . .     2,131   $ 11,263   $  3,230
                                                                            =========  =========  =========
</TABLE>



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

<PAGE>
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
described  in  "Basis  of  Presentation"  below.

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

a.     BASIS OF PRESENTATION: The consolidated financial statements are prepared
in  accordance  with  Canadian  Generally  Accepted  Accounting  Principles.  In
addition,  the  consolidated  financial  statements are also used to satisfy the
Company's  financial  filing  requirements  in  the  U.S.  Consequently,  the
consolidated  financial  statements include disclosures that are not necessarily
required  under  Canadian  GAAP  and  contain references to U.S. GAAP accounting
pronouncements.  Note  20,  presents a reconciliation of Canadian and U.S. GAAP.

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

     1.   Symons  International  Group, Inc. ("SIG") is a 73.8% owned subsidiary
          of  Goran.  SIG's  subsidiaries  are  as  follows:

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

               Superior  Insurance  Group,  Inc.  ("Superior  Group"),  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

     -    IGF  Insurance  Company  ("IGF"),  an  insurance  company domiciled in
               Indiana  (See  Note  23);

     2.   Granite  Reinsurance  Company  Ltd.  ("Granite  Re"),  a  finite  risk
          reinsurance  company  domiciled  in  Barbados.

     3.   Granite  Insurance  Company ("Granite"), a Canadian federally licensed
          insurance  company.

     4.   Symons  International  Group  (Florida),  Inc.  ("SIGF"),  a  Florida
          domestic  corporation.

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. Actual results could
     differ  from  those  estimates.

c.   SIGNIFICANT  ESTIMATES:  The  most  significant  estimates in the Company's
     balance sheet are the determination of prepaid policy acquisition costs and
     the  reserve  for  insurance  losses  and loss adjustment expenses ("LAE").
     Management's  estimate  of  prepaid  policy  acquisition  costs is based on
     historical  studies  and  assumptions  made  regarding  costs  incurred.
     Management's  estimate  of  insurance  losses and LAE is based on past loss
     experience  and consideration of current claim trends as well as prevailing
     social,  economic  and  legal  conditions. Actual results could differ from
     those  estimates.

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

e.   INVESTMENTS:  Fixed  maturities  and  equity  securities  are  carried  at
     amortized  cost  for  fixed maturities and cost for equity securities. Real
     estate  is  carried  at  cost, less an allowance for depreciation. Mortgage
     loans  are  carried  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.

f.   CASH AND CASH EQUIVALENTS: For presentation in 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.

g.   DEFERRED  POLICY  ACQUISITION  COSTS: Deferred policy acquisition costs are
     comprised  of  agents'  commissions, premium taxes, certain other costs and
     investment  income 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.

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

i.   INTANGIBLE  ASSETS: Intangible assets consist primarily of debt acquisition
     costs  and,  prior  to  2001, goodwill. Deferred debt acquisition costs are
     amortized  over the term of the debt. Prior to 2000, goodwill was amortized
     over  a  25-year  period  on  a  straight-line  basis based on management's
     estimate  of the expected benefit period. See Note 6 regarding the goodwill
     impairment  charge  recorded  in  2000.

j.   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. See Note 6 regarding the
     goodwill impairment charge recorded in 2000. Any long-lived assets held for
     disposal  are reported at the lower of carrying amounts or fair value, less
     expected  costs  to  sell.

k.   LOSSES  AND  LOSS  ADJUSTMENT EXPENSES: Reserves for losses and LAE include
     estimates  for  reported  unpaid  losses  and  LAE,  including  a  portion
     attributable  to  losses incurred but not reported. These reserves have not
     been  discounted.  Reserves  are  established  using  individual case-basis
     evaluations  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  make  reasonable
     provisions  for  unpaid  loss  and  LAE  obligations,  those provisions are
     necessarily  based  on estimates and are subject to 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 gross reserve for losses and LAE is reported
     net  of  anticipated  receipts for salvage and subrogation of approximately
     $4,535,000  and  $5,822,000  at  December  31, 2002 and 2001, respectively.

l.   PREFERRED  SECURITIES:  Preferred  Securities  represent  company-obligated
     mandatorily  redeemable securities of SIG's trust subsidiary holding solely
     parent  debentures  and  are  reported  at  their  liquidation  value under
     minority  interest.  Distributions  on these securities are charged against
     consolidated  earnings.

m.   INCOME  TAXES:  The  Company  uses  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.  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.

n.   REINSURANCE:  Reinsurance  premiums,  commissions,  and reserves related to
     reinsured  business are accounted for on a 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.

o.   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. As the Company has reported losses in 2002,
     2001,  and  2000,  common  stock  equivalents are anti-dilutive. Therefore,
     fully  diluted  earnings per share is the same as basic earnings per share.

p.   STOCK-BASED  COMPENSATION:  As  discussed  further  in note 18, the Company
     accounts  for  stock-based  employee compensation using the intrinsic value
     method  under  APB  Opinion 25, "Accounting for Stock Issued to Employees,"
     and  related  interpretations  as permitted under SFAS 148, "Accounting for
     Stock-Based  Compensation  -  Transition  and  Disclosure"  ("SFAS  148").
     Accordingly  no  compensation  expense is recognized if the market price of
     the  underlying  stock  does  not  exceed the exercise price at the date of
     grant. However, SFAS 123, "Accounting for Stock-Based Compensation," ("SFAS
     123")  as  amended  by  SFAS  148 requires the Company to present pro forma
     information  as  if it had accounted for its stock-based compensation under
     the  fair  value  method  of  SFAS 123. The following table illustrates the
     effect  on  net income and earnings per share as if the Company had applied
     the  fair  value recognition provisions of SFAS 123 to stock-based employee
     compensation.

<TABLE>
<CAPTION>
                                                            2002       2001       2000
                                                          ---------  ---------  ---------
<S>                                                       <C>        <C>        <C>
Net (loss) as reported . . . . . . . . . . . . . . . . .  $(29,745)  $(31,937)  $(63,224)
Add: Compensation expense for stock-based
compensation included in reported net income,
net of related tax effects . . . . . . . . . . . . . . .        --         --         --
Deduct: Total stock-based compensation expense
determined under fair-value-based method, net of related
tax effects. . . . . . . . . . . . . . . . . . . . . . .      (164)      (706)      (452)
                                                          ---------  ---------  ---------
Pro forma net income . . . . . . . . . . . . . . . . . .  $(29,909)  $(32,643)  $(63,676)
                                                          =========  =========  =========

Earnings per share:
Basic, as reported . . . . . . . . . . . . . . . . . . .  $  (5.51)  $  (5.99)  $ (13.79)
Basic, pro forma . . . . . . . . . . . . . . . . . . . .  $  (5.54)  $  (6.11)  $ (13.86)

Diluted, as reported . . . . . . . . . . . . . . . . . .  $  (5.51)  $  (5.99)  $ (13.79)
Diluted, pro forma . . . . . . . . . . . . . . . . . . .  $  (5.54)  $  (6.11)  $ (13.86)
</TABLE>


Q.   NEW  ACCOUNTING  PRONOUNCEMENTS:  In  June  2001,  the Financial Accounting
     Standards  Board  (the "Board") finalized FASB Statements No. 141, Business
     Combinations,  No.  142, Goodwill and Other Intangible Assets, and No. 143,
     Accounting  for  Asset  Retirement  Obligations.  In August 2001, the Board
     issued FASB Statement No. 144, Accounting for the Impairment or Disposal of
     Long-lived  Assets.  In December 2002, the FASB issued SFAS 148, Accounting
     for  Stock-Based Compensation - Transition and Disclosure which amends SFAS
     123,  Accounting  for  Stock-Based  Compensation.  These  new standards are
     effective  in  2002  and  will  not have a material impact on the Company's
     financial  position  or  results  of  operations.

R.   RECLASSIFICATIONS:  Certain  amounts  from  prior  periods  have  been
     reclassified  to  allow  for  comparability  to  the  2002  presentation.

2.   CORPORATE  REORGANIZATION  AND  ACQUISITIONS:  On  August  12,  1997,  SIG
     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  was  assigned  to goodwill as the fair market value of
     assets  and  liabilities  approximated  their  carrying  value.  See Note 6
     regarding  the  goodwill  impairment  charge  recorded  in  2000.

     Effective  on November 1, 2001, SIGF acquired the assets of a property
     casualty  insurance  brokerage located in Boca Raton, Florida. The purchase
     price  of  the  assets  was  $150,000.

<PAGE>

3.
INVESTMENTS:
Investments  are  summarized  as  follows  (in  thousands):
<TABLE>
<CAPTION>
                                                      Cost or
                                                    Amortized            Unrealized     Market
December 31, 2002 (in thousands)                       Cost             Gain  (Loss)     Value
                                                    ----------         -------------   -------
<S>                                                 <C>               <C>               <C>
Fixed Maturities:
U.S. Treasury securities and other obligations of
 the U.S. government or its agencies . . . . . . .  $   17,814  $        541  $     -   $18,355
Obligations of states and political subdivisions .       4,863           183       (5)    5,041
Corporate securities . . . . . . . . . . . . . . .      13,358         1,211     (849)   13,720
                                                    ----------  ------------  --------  -------
Total fixed maturities . . . . . . . . . . . . . .      36,035         1,935     (854)   37,116
Equity securities. . . . . . . . . . . . . . . . .      10,778           126   (3,573)    7,331
Short-term investments . . . . . . . . . . . . . .       8,495            --       --     8,495
Other investments. . . . . . . . . . . . . . . . .       3,171            --       --     3,171
                                                    ----------  ------------  --------  -------
Total Investments. . . . . . . . . . . . . . . . .  $   58,479  $      2,061  $(4,427)  $56,113
                                                    ==========  ============  ========  =======
</TABLE>

<TABLE>
<CAPTION>
                                                     Cost or
                                                    Amortized            Unrealized     Market
December 31, 2001 (in thousands)                       Cost             Gain  (Loss)     Value
                                                    ----------         -------------   -------
<S>                                                 <C>               <C>               <C>
Fixed Maturities:
U.S. Treasury securities and other obligations of
 the U.S. government or its agencies . . . . . . .  $   29,982  $        609  $  (381)  $ 30,210
Obligations of states and political subdivisions .      17,536         1,949      (47)    19,438
Corporate securities . . . . . . . . . . . . . . .      29,807           501   (1,590)    28,718
                                                    ----------  ------------  --------  --------
Total fixed maturities . . . . . . . . . . . . . .      77,325         3,059   (2,018)    78,366
Equity securities. . . . . . . . . . . . . . . . .      21,610           377   (3,664)    18,323
Short-term investments . . . . . . . . . . . . . .      13,266            --       --     13,266
Other investments. . . . . . . . . . . . . . . . .       1,594            --       --      1,594
                                                    ----------  ------------  --------  --------
Total Investments. . . . . . . . . . . . . . . . .  $  113,795  $      3,436  $(5,682)  $111,549
                                                    ==========  ============  ========  ========
</TABLE>


At  December  31,  2002,  The  Standard & Poor's Corporation or Moody's Investor
Services,  Inc  considered approximately 96.3% of the Company's fixed maturities
investment grade.  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, 2002, by contractual maturity, are shown in the table that follows. Expected
maturities  will  differ  from contractual maturities because borrowers may have
the  right  to call or prepay obligations with or without penalty and securities
may  have  to  be  liquidated  to  cover  operational  losses  (in  thousands):
<TABLE>
<CAPTION>
                                        Amortized Cost   Market Value
                                        ---------------  -------------
<S>                                     <C>              <C>
Maturity:
Due in one year or less. . . . . . . .  $         9,018  $       9,234
Due after one year through five years.           11,712         12,077
Due after five years through ten years            7,513          7,512
Due after ten years. . . . . . . . . .            2,964          3,288
Mortgage-backed securities . . . . . .            4,828          5,005
                                        ---------------  -------------
Total. . . . . . . . . . . . . . . . .  $        36,035  $      37,116
                                        ===============  =============
</TABLE>


Gains and losses realized on sales of investments are as follows (in thousands):

<TABLE>
<CAPTION>
                         2002      2001      2000
                       --------  --------  --------
<S>                    <C>       <C>       <C>
Proceeds from sales .  $85,482   $81,682   $94,497
Gross gains realized.  $ 2,503   $   547   $ 1,361
Gross losses realized  $(5,905)  $(1,724)  $(7,331)
</TABLE>


Net  investment  income  for  the  years  ended  December  31 are as follows (in
thousands):
<TABLE>
<CAPTION>
                                  2002     2001      2000
                                 -------  -------  --------
<S>                              <C>      <C>      <C>
Fixed maturities. . . . . . . .  $4,426   $6,202   $ 9,342
Equity securities . . . . . . .    (489)     174       344
Cash and short-term investments     231      697     1,269
Mortgage loans. . . . . . . . .      --       65        --
Other . . . . . . . . . . . . .      59      769     1,318
                                 -------  -------  --------
Total investment income . . . .   4,228    7,907    12,273
Investment expenses . . . . . .    (434)    (909)     (102)
                                 -------  -------  --------
Net investment income . . . . .  $3,794   $6,998   $12,171
                                 =======  =======  ========
</TABLE>

Investments  with  a  market  value of approximately $16,338,000 and $17,115,000
(amortized cost of approximately $16,190,000 and $16,799,000) as of December 31,
2002  and  2001,  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.
Policy  acquisition  costs  both  acquired  and  deferred,  and  the     related
amortization  charged  to  income  were  as  follows  (in  thousands):
<TABLE>
<CAPTION>
                              2002       2001       2000
                            ---------  ---------  ---------
<S>                         <C>        <C>        <C>
Balance, beginning of year  $    763   $  6,454   $ 13,908
Costs deferred during year    18,861     28,056     29,999
Amortization during year .   (19,624)   (33,747)   (37,453)
                            ---------  ---------  ---------
Balance, end of year . . .  $      -   $    763   $  6,454
                            =========  =========  =========
</TABLE>

5.   PROPERTY  AND  EQUIPMENT:  Property  and  equipment  at  December  31  are
     summarized  as  follows  (in  thousands):

<TABLE>
<CAPTION>
                                 2002    Accumulated     2002     2001
                                 Cost    Depreciation    Net      Net
                                -------  -------------  ------  ------
<S>                             <C>      <C>            <C>     <C>
Land . . . . . . . . . . . . .  $   100  $           -  $  100  $  100
Buildings. . . . . . . . . . .    4,279          1,877   2,402   2,655
Office furniture and equipment    2,249          1,824     425     815
Automobiles. . . . . . . . . .      102             72      30      47
Computer equipment . . . . . .   14,870         10,743   4,127   6,290
                                -------  -------------  ------  ------
Total. . . . . . . . . . . . .  $21,599  $      14,516  $7,084  $9,907
                                =======  =============  ======  ======
</TABLE>

Accumulated  depreciation  at  December  31, 2001 was $11,126,000.  Depreciation
expense related to property and equipment for the years ended December 31, 2002,
2001  and  2000  was  $3,661,000;  $3,741,000  and  $3,507,000,  respectively.

6.     INTANGIBLE  ASSETS:
In  accordance  with  SFAS No. 121, "Accounting for the Impairment of Long-lived
Assets",  SIG  determined  in  2000  that  the  carrying  value of goodwill that
resulted from the     acquisition of Superior Group Management exceeded its fair
value.  This  determination  was  made  after     considering  the  series  of
continued  losses  which  the  company  had  experienced,  the  reduction in the
volume  of  premiums  written and an evaluation of future cash flows. Based upon
this  assessment, a     charge of $33,464,000 was recorded in the fourth quarter
of  2000  to  write-off  the remaining carrying     value of the goodwill.  This
charge  is  included  as  amortization  expense  in  the  accompanying financial
statements  for  2000.


<PAGE>
Intangible  assets  at  December  31  are  as  follows  (in  thousands):
<TABLE>
<CAPTION>

                     2002   Accumulated     2002     2001
                     Cost   Amortization    Net      Net
                    ------  -------------  ------  ------
<S>                 <C>     <C>            <C>     <C>
Deferred debt
 acquisition costs  $2,585  $         466  $2,119  $4,376
                    ======  =============  ======  ======
</TABLE>


Accumulated  amortization  at  December  31,  2001  was  $755,000.  Amortization
expense related to deferred debt acquisition costs and intangible assets for the
years  ended  December  31,  2002,  2001  and  2000  was $86,000, $1,380,000 and
$34,960,000,  respectively.

7.     UNPAID  LOSSES  AND  LOSS  ADJUSTMENT  EXPENSES  (IN  THOUSANDS):
Activity in the liability for unpaid losses and LAE is summarized as follows (in
thousands):

<TABLE>
<CAPTION>
                                2002      2001      2000
                               -------  --------  ---------
<S>                            <C>      <C>       <C>
Balance at January 1. . . . .  $84,876  $113,149  $157,425
Less reinsurance recoverables   28,889    19,979     3,411
                               -------  --------  ---------
Net balance at January 1. . .   55,987    93,370   154,014
                               -------  --------  ---------
Incurred related to:
Current year. . . . . . . . .   38,497    94,556   132,781
Prior years . . . . . . . . .   13,016       660   (19,013)
                               -------  --------  ---------
Total Incurred. . . . . . . .   51,513    95,216   113,768
                               -------  --------  ---------
Paid related to:
Current year. . . . . . . . .   19,211    69,917    89,612
Prior years . . . . . . . . .   38,682    62,682    84,800
                               -------  --------  ---------
Total paid. . . . . . . . . .   57,893   132,599   174,412
                               -------  --------  ---------
Net balance at December 31. .   49,607    55,987    93,370
Plus reinsurance recoverables   23,202    28,889    19,779
                               -------  --------  ---------
Balance at December 31. . . .  $72,809  $ 84,876  $113,149
                               =======  ========  =========
</TABLE>


Reserve  estimates are regularly adjusted in subsequent reporting periods as new
facts  and  circumstances  emerge  to  indicate that 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  operations  in  the period when the need for the adjustment
becomes  known.  The  foregoing  reconciliation  indicates  unfavorable  reserve
development  of  $13,016,000  on  the  December 31, 2001 reserves.  See "Revised
Estimate  of  Loss Reserves recorded in Prior Years" above for an explanation of
the  adverse  2001  reserve  development.

The  anticipated  effect  of  inflation is implicitly considered when estimating
losses  and LAE liabilities.  While anticipated price increases due to inflation
are  considered  in  estimating  the ultimate claims costs, increases in average
claim  severities  is  caused  by  a  number  of factors.  Future severities are
projected  based  on  historical  trends  adjusted  for  implemented  changes in
underwriting  standards,  policy  provisions,  claims  management  practices and
procedures  and  general  economic  trends.  Anticipated  severity  trends  are
monitored  relative  to  actual  development  and  are  modified  if  necessary.

Liabilities  for  loss and LAE have been established when sufficient information
has  been  developed to indicate the involvement of a specific insurance policy.
In addition, reserves have been established to cover additional exposure on both
known  and  unasserted  claims.

<PAGE>
8.     PREFERRED  SECURITIES:
On  August 12, 1997, SIG's trust subsidiary issued $135 million in     preferred
securities  ("Preferred Securities") bearing interest at an annual rate of 9.5%.
The  principal  assets     of the 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.
Expenses  of  the  issue aggregated $5.1 million and the portion attributable to
Preferred Securities held by unrelated parties is amortized over the term of the
Preferred  Securities.

The  Preferred  Securities  represent  SIG-obligated  mandatorily  redeemable
securities  of  a  trust  subsidiary holding solely parent debentures and have a
term  of  30  years  with  semi-annual interest payments commencing February 15,
1998.  SIG  may  redeem  the  Preferred  Securities in whole or in part after 10
years.  The  annual  Preferred Security obligations of approximately $13 million
per  year  were  to  be  funded  from  SIG's  nonstandard  automobile management
company's  management  and  billing fees in excess of its operating costs. Under
the  terms  of  the  indenture,  SIG  is permitted to defer semi-annual interest
payments for up to five years. SIG elected to defer the interest payments due in
February  and  August  2000,  2001  and  2002  and February 2003. SIG expects to
continue  this  practice  through  2003  and  2004. All of the deferred interest
(approximately  $84  million, if all payments due in 2003 and 2004 are deferred)
will  become  due  and  payable  in  February 2005. SIG relies on the payment of
finance  and  service fees by its subsidiaries to fund its operations, including
its  payment  of interest on the Preferred Securities. Certain state regulators,
including  the  Florida  Department  of  Revenue  ("FDOI"),  have  issued orders
prohibiting  SIG's  subsidiaries from paying such fees to SIG. In the event such
orders  continue,  SIG may not have sufficient revenue to fund its operations or
to  pay  the  deferred interest on the Preferred Securities. Such failure to pay
could result in a default under the indenture and acceleration of the payment of
the  Preferred  Securities.

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"). 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:

-    SIG  may  not  incur  additional  indebtedness  or  guarantee  additional
     indebtedness.
-    SIG  may  not  make  certain  restricted payments including making loans or
     advances  to  affiliates,  repurchasing common stock or paying dividends in
     excess  of  a  stated  limitation.
-    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
(0.95)  in  2002,  and  will continue to apply until SIG's consolidated coverage
ratio  complies  with  the terms of the trust indenture. SIG complied with these
additional  restrictions  as of December 31, 2001 and 2002 and was in compliance
as  of  May  9,  2003.

During  2002,  Granite  Re  purchased  Preferred  Securities bearing a principal
amount  of  $26,500,000.  During 2001, Granite Re purchased Preferred Securities
bearing  a  principal amount of $17,460,000. During 2000, Granite Re and Granite
purchased  Preferred  Securities  bearing  principal  amounts of $18,000,000 and
$5,000,000,  respectively.  As  a  result,  the  Company's  balance  sheet as of
December  31,  2002  presents a net Preferred Securities balance of $67,994,000.
The  Company's  total purchases of Preferred Securities resulted in a cumulative
increase of $68,089,000 to the Company's consolidated stockholders' equity as of
December  31,  2002.

9.     CAPITAL  STOCK:
The  Company's  authorized  share  capital  consists  of:

-    First  Preferred  shares:  An unlimited number of first preferred shares of
     which  none  are  outstanding  at  December  31,  2002  and  2001.
-    Common  Shares: An unlimited number of common shares of which 5,393,698 and
     5,776,398  were outstanding as of December 31, 2002 and 2001, respectively.
     The Company did not issue any common shares during either 2002 or 2001. The
     Company  purchased  382,700  of  its  common  shares  for  an  aggregate
     consideration of $218,000 during 2001. The Company purchased 100,000 of its
     common  shares  for  an  aggregate  consideration  of $185,000 during 2000.

10.     INCOME  TAXES:
Goran  and  Granite  file  separate  Canadian  income  tax returns. SIGF files a
separate  U.S.  federal income tax return. 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. Granite Re is exempt from
income  tax for a period of 15 years from October 25, 1990.  Thereafter, Granite
Re  will  be subject to tax at a rate of 2% on the first Bds $250,000 of taxable
income  and zero percent in respect of all other taxable income in excess of Bds
$250,000.

A  reconciliation  of  the  differences between federal tax computed by applying
applicable  jurisdictional statutory rates to income before income taxes and the
income  tax  provision  is  as  follows  (in  thousands):
<TABLE>
<CAPTION>
                                                     2002      2001      2000
                                                   --------  --------  ---------
<S>                                                <C>       <C>       <C>
Computed income taxes (benefit) at statutory rate  $(7,929)  $(7,975)  $(17,981)
Goodwill. . . . . . . . . . . . . . . . . . . . .       --        --     12,176
Other . . . . . . . . . . . . . . . . . . . . . .      395     3,377     (4,154)
Tax exempt (income) loss. . . . . . . . . . . . .      840      (223)    (3,443)
                                                   --------  --------  ---------
Total . . . . . . . . . . . . . . . . . . . . . .  $(6,694)  $(4,821)  $(13,402)
Valuation allowance . . . . . . . . . . . . . . .    6,694     4,821     11,253
                                                   --------  --------  ---------
Income tax expense. . . . . . . . . . . . . . . .  $    --   $    --   $ (2,149)
                                                   ========  ========  =========
</TABLE>

The  net  deferred  tax  asset at December 31, 2002 and 2001 is comprised of the
following  (in  thousands):
<TABLE>
<CAPTION>
                                              2002       2001
                                            ---------  ---------
<S>                                         <C>        <C>
Deferred tax assets:
Unpaid losses and loss adjustment expenses  $  1,131   $  1,358
Unearned premiums. . . . . . . . . . . . .       656      1,159
Allowance for doubtful accounts. . . . . .     2,430      2,582
Unrealized losses on investments . . . . .        --        926
Net operating loss carryforwards . . . . .    22,535     23,268
Capital loss carryforwards . . . . . . . .     8,478      5,544
Accrued interest payable . . . . . . . . .    17,229     11,621
Other. . . . . . . . . . . . . . . . . . .     2,359      2,004
                                            ---------  ---------
                 Deferred tax assets . . .  $ 54,818   $ 48,462
                                            ---------  ---------
Deferred tax liabilities:
Deferred policy acquisition costs. . . . .  $    713   $   (168)
Other. . . . . . . . . . . . . . . . . . .      (877)    (1,157)
                                            ---------  ---------
Deferred tax liabilities . . . . . . . . .  $   (164)  $ (1,325)
                                            ---------  ---------
                                            $ 54,654   $ 47,137
                 Valuation allowance . . .   (54,654)   (47,137)
                                            ---------  ---------
                 Net deferred tax assets .  $     --   $     --
                                            =========  =========
</TABLE>

At  December  31, 2002 and 2001 the Company's net deferred tax assets were 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 corresponding portion of remaining net
deferred  tax  assets  will  then  be  recognized.


<PAGE>
As  of  December  31, 2002, the Company has unused net operating loss carryovers
available  as  follows  (in  thousands):

<TABLE>
<CAPTION>

<S>             <C>       <C>       <C>     <C>
                          Goran &
Year expiring.  SIG       Granite   SIGF    Total
                --------  --------  ------  -------
2003 . . .         . .  $  4,609           $  4,609
2004 . . . . .               687                687
2005 . . . . .             1,266              1,266
2006 . . . . .             1,445              1,445
2007 . . . . .             1,835              1,835
2008 . . . . .             3,895              3,895
2009 . . . . .             1,216              1,216
2017 . . . . .                   $  4,368     4,368
2018 . . . . .                      1,295     1,295
2019 . . . . .$ 21,030        --      600    21,630
2020 . . . . .  17,095        --       45    17,140
2021 . . . . .                         75        75
2022 . . . . .                        225       225
Capital Losses      --     9,614       --     9,614
                --------  --------  ------  -------
Total. . . . .  $ 38,125  $ 24,567  $6,928  $69,300
                ========  ========  ======  =======
</TABLE>

SIG's U.S. Federal income tax filings for years prior to 2000 have been examined
by  the  U.S.  Internal  Revenue  Service.

11.     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,  2002  and  thereafter,  excluding renewal options (in thousands):
<TABLE>
<CAPTION>
Year Ending December 31:
<S>                       <C>
2003 . . . . . . . . . .  $773
2004 . . . . . . . . . .   549
2005 . . . . . . . . . .   423
2006 . . . . . . . . . .   147
2007 and Thereafter. . .   104
</TABLE>


Rental  expense  charged  to  operations  in  2002,  2001  and  2000 amounted to
$1,063,000,  $1,749,000  and  $1,848,000,  respectively,  including amounts paid
under  short-term  cancelable  leases.

12.     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.  The  Company  remains  contingently liable with
respect  to  reinsurance  ceded, 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.  In
addition,  the  Company  assumes  reinsurance  on  certain  risk.

Approximately  88%  of  uncollateralized  amounts recoverable are with companies
which  maintain  an A.M. Best rating of at least A+. Management believes amounts
recoverable  from  reinsurers  are  collectible.

Superior  commuted  the  accident year 2001 and 2000 portions of the reinsurance
treaty  with  National  Union  Fire  Insurance  Company  of  Pittsburgh,  PA
("National").  Superior  recognized  the  amounts  received  from  National as a
reduction of losses and LAE paid (thereby increasing losses and LAE incurred) to
recognize  the  effect  of  releasing  National  from  its obligations under the
treaty. There was no effect on premiums earned, losses incurred, LAE incurred or
commission  in  the  current  year  income  statement  due  to this commutation.

IGF  sold  100% of its 2001 crop year business to Acceptance Insurance Companies
Inc. ("Acceptance"), effective June 6, 2001. The agreements are without recourse
as they relate to the net profit or loss on the 2001 crop year book of business.
The  sale  was  approved  by  the  Indiana  Department  of  Insurance.

Reinsurance  activity  for  2002,  2001  and  2000  is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
                               Direct    Assumed     Ceded        Net
                              --------  ---------  ----------  ---------
           2002
         --------
<S>                           <C>       <C>        <C>         <C>
Premiums written . . . . . .  $111,327  $     67   $ (77,403)  $ 33,991
Premiums earned. . . . . . .   129,370       212     (88,545)    41,037
Incurred losses and LAE. . .   114,056       147     (62,690)    51,513
Commission expenses (income)    11,038        (1)    (24,656)   (13,619)

          2001
          --------
Premiums written . . . . . .  $191,915  $  1,271   $(106,324)  $ 86,862
Premiums earned. . . . . . .   163,828     2,484     (58,115)   108,197
Incurred losses and LAE. . .   132,532     2,616     (39,932)    95,216
Commission expenses (income)    18,979       151     (25,716)    (6,586)

          2000
        --------
Premiums written . . . . . .  $176,264  $  5,835   $ (78,637)  $103,462
Premiums earned. . . . . . .   195,360     4,918     (54,746)   145,532
Incurred losses and LAE. . .   150,101     4,828     (41,161)   113,768
Commission expenses (income)    21,234     1,041     (14,043)     8,232
</TABLE>


Amounts  recoverable  from  reinsurers relating to SIG's insurance subsidiaries'
unpaid  losses  and LAE were $22,087,000 and $30,181,000 as of December 31, 2002
and 2001, respectively.  These amounts are reported as assets and are not netted
against  the liability for loss and LAE in the accompanying Consolidated Balance
Sheets.

13.     RELATED  PARTY  TRANSACTIONS:
The  Company  and  its  subsidiaries have entered into transactions with various
related  parties,  including  transactions  with Symons International Group Ltd.
("SIGL"),  the  Company's  majority  shareholder.

The  following  balances  were  outstanding  at  December  31  (in  thousands):
<TABLE>
<CAPTION>
                                                       2002       2001
                                                     ---------  ---------
<S>                                                  <C>        <C>
Gross amounts due from (to) directors and officers.  $  1,705   $  3,772
Other gross amounts due from (to) related parties .    10,460      8,844
                                                     ---------  ---------
Gross receivables (payables). . . . . . . . . . . .  $ 12,165   $ 12,616
Reserve for uncollectibility. . . . . . . . . . . .   (12,082)   (11,486)
                                                     =========  =========
Net receivables (payables). . . . . . . . . . . . .  $     83   $  1,130
                                                     =========  =========
</TABLE>


The  following  transactions  occurred  with  related parties in the years ended
December  31  (in  thousands):
<TABLE>
<CAPTION>
                                                    2002    2001    2000
                                                    -----  ------  ------
<S>                                                 <C>    <C>     <C>
Consulting fees charged by various related parties  $ 864  $ 800   $1,895
Management fees charged by SIGL. . . . . . . . . .  $ 400  $(100)  $  900
</TABLE>


Approximately  86%  and  91% of the amounts due from officers and directors were
non-interest-bearing  on  December  31,  2002  and  2001,  respectively.

SIG  paid $1,846,000 in 2000 for consulting and other services to a vendor owned
in  part  by  a relative of certain directors of the Company. The consulting and
other services were for the conversion of SIG's nonstandard automobile operating
system.  SIG  capitalized  these  costs  as  part  of its nonstandard automobile
operating system. Approximately 90% of these payments were for services provided
by  consultants  and  vendors  unrelated  to  the  Company.

In  1989,  the Company fully reserved a loan owed by a subsidiary of SIGL.  SIGL
guaranteed  the loan and pledged shares of Goran ("escrowed shares") as security
for  the  loan.  The  outstanding loan balance was $3,340,000 (Canadian dollars)
for  the periods ending December 31, 2002 and 2001.  This loan balance continues
to  be  guaranteed  by SIGL and is secured with 100,000 shares of Goran owned by
SIGL.

The  Company  leases  office space in Canada from Tritech Financial Systems Inc.
("Tritech"). Tritech is owned by a relative of certain directors of the Company.
The  rent  paid  was  $34,000,  $35,000  and  $40,000  for  2002, 2001 and 2000,
respectively.

In  1999, Granite Re issued a performance bond in favor of Tritech in the amount
of  $328,000.  In  August 2000 the creditor called the bond. The bond is secured
by a guarantee from Tritech, a personal guarantee from its president (a relative
of  certain directors of the Company) and 50,000 shares of Goran's common stock.
Tritech  is  paying  interest  on  the  outstanding  balance  at a rate of 7.5%.
Interest  received during the years ended December 31, 2002 and 2001 was $24,600
and  $24,600,  respectively.

Superior  Group  obtained a line of credit from Granite Re in the amount of $2.5
million  and  $1 million in December 31, 2001 and October 2002, respectively. At
December 31, 2002, $2.98 million was outstanding under the line. This note bears
interest  at  the  rate  of prime plus 5.25% for a total of 9.5% at December 31,
2002.  Interest  only payments are due monthly. Of the $2.98 million outstanding
at December 31, 20002, $2.5 million is due December 20, 2004 and $480,000 is due
November  30,  2004.

14.     REGULATORY  MATTERS:
Two  of  the  Company's  insurance  company  subsidiaries,  Pafco  and  IGF, are
domiciled  in  Indiana  and  prepare  their  statutory  financial  statements in
accordance  with  accounting  practices  prescribed  or permitted by the Indiana
Department  of Insurance ("IDOI").  While neither Pafco nor IGF has surplus from
which  to  pay dividends, statutory requirements place limitations on the amount
of  funds  that  can  be remitted to the Company from Pafco and IGF. The Indiana
statute  allows 10% of surplus in regard to policyholders or 100% of net income,
whichever is greater, to be paid as dividends only from earned surplus; however,
the  consent  orders with the IDOI, described below, prohibit the payment of any
dividends by Pafco and IGF.  Another insurance company subsidiary, Superior, and
Superior's  insurance  company  subsidiaries,  Superior  American  and  Superior
Guaranty,  are  domiciled  in  Florida  and  prepare  their  statutory financial
statements  in  accordance  with accounting practices prescribed or permitted by
the  FDOI.  The  Florida  statute  also  contains limitations with regard to the
payment  of dividends. Superior, Superior American and Superior Guaranty may pay
dividends  of  up to 10% of surplus or 100% of net income, whichever is greater,
from  earned  surplus.  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.

On  June  6,  2001,  IGF  sold substantially all of its crop insurance assets to
Acceptance.  On June 29, 2001, following the sale of IGF's crop insurance assets
and  as  a result of losses experienced by IGF in its crop insurance operations,
the  IDOI and IGF entered into a consent order (the "Consent Order") relating to
IGF.  IGF has discontinued writing new business and its operations are presently
in  run  off.  The IDOI has continued to monitor the status of IGF.  The Consent
Order  prohibits  IGF  from  taking  any  of the following actions without prior
written  consent  of  the  IDOI:

-    Sell  or  encumber  any  of  its  assets,  property,  or business in force;
-    Disburse  funds,  except to pay direct unaffiliated policyholder claims and
     normal  operating  expenses  in the ordinary course of business (which does
     not  include  payments  to affiliates except for the reimbursement of costs
     for  running IGF by the Company, and does not include payments in excess of
     $10,000);
-    Lend  its  funds  or  make  investments,  except  in  specified  types  of
     investments;
-    Incur  debts  or  obligations, except in the ordinary course of business to
     unaffiliated  parties;
-    Merge  or  consolidate  with  another  company;
-    Enter  into  new,  or  amend  existing,  reinsurance  agreements;
-    Complete,  enter  into  or  amend  any  transaction  or arrangement with an
     affiliate,  and
-    Disburse  funds  or  assets  to  any  affiliate.

The  Consent  Order  also  requires IGF to provide the IDOI with monthly written
updates  and  immediate  notice  of  any material change regarding the status of
litigation  with  Continental  Casualty  Company,  statutory reserves, number of
non-standard automobile insurance policies in-force by state, and reports of all
non-claims  related  disbursements.  IGF's  failure  to  comply with the Consent
Order  could  cause  the  IDOI  to  begin proceedings to have a rehabilitator or
liquidator  appointed  for IGF or to extend the provisions of the Consent Order.

Pafco has been subject to an agreed to order of the IDOI since February 17, 2000
that  requires  Pafco,  among  other  matters,  to:

-    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.
-    Reduce  its  monthly  auto premium writings, or obtain additional statutory
     capital or surplus, such that the 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.
-    Continue  to  comply  with  prior  IDOI  agreements  and  orders to correct
     business  practices  under  which  Pafco  must  provide  monthly  financial
     statements  to  the  IDOI,  obtain  prior  IDOI  approval  of  reinsurance
     arrangements  and  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 conditions could
result  in  the  IDOI  requiring further reductions in Pafco's permitted premium
writings  or  in  the  IDOI  instituting  future  proceedings  against  Pafco.
Restrictions on premium writings result in lower premium volume. Management fees
payable  to  Superior Group are based on gross written premium; therefore, lower
premium  volume  results  in  reduced  management fees paid by Pafco to Superior
Group.

In March 2000, Pafco agreed with the Iowa Department of Insurance ("IADOI") that
it  would  not  write  any new non-standard business in Iowa, until such time as
Pafco has reduced its overall non-standard automobile policy counts in the state
or:

-    Has  increased  surplus,  or
-    Has  achieved  a net written premium to surplus ratio of less than three to
     one,  or
-    Has  surplus  reasonable  to  its  risk.

Pafco has continued to service existing policyholders and renew policies in Iowa
and  provide  policy  count  information  on a monthly basis in conformance with
IADOI  requirements.

Superior  and  Pafco provide monthly financial information to the departments of
insurance in certain states in which they write business at the states' request.


<PAGE>
On  July  7, 2000, the FDOI issued a notice of its intent to issue an order (the
"Notice") which principally addressed certain policy and finance fee payments by
Superior  to  Superior  Group.  A  formal  administrative  hearing to review the
Notice  and  a  determination  that  the order contemplated by the Notice not be
issued  was  held  in  February  2001.  The  administrative  law judge entered a
recommended  order on June 1, 2001 that was acceptable to the Company. On August
30,  2001,  the  FDOI  rejected the recommended order and issued its final order
which the Company believes improperly characterized billing and policy fees paid
by  Superior to Superior Group.  On September 28, 2001, Superior filed an appeal
of  the  final  order to the Florida District Court of Appeal. On March 4, 2002,
the FDOI filed a petition in the Circuit Court of the Second Judicial Circuit in
and  for  Leon  County,  Florida  seeking  court enforcement of the FDOI's final
order. Superior filed a motion with the FDOI for stay of the FDOI's final order.
Superior  also  filed a motion for stay with the District Court of Appeal, which
was  denied pending a ruling from the FDOI.  On April 5, 2002 the FDOI granted a
stay  of  the final order that was conditional upon the cessation of the payment
of  billing  fees by Superior to Superior Group and the posting of a $15 million
appeal  bond.  Superior  did  not  agree to the conditions imposed by the FDOI's
conditional  stay.  On  May  6,  2002  Superior filed a motion with the District
Court  of Appeal seeking a stay of the final order pending Superior's appeal or,
in  the  alternative,  a consolidation of the FDOI's enforcement action with the
pending appeal.  On June 19, 2002, the District Court of Appeal entered an order
which  struck the FDOI's conditional requirement for the stay that Superior post
a  $15  million  appeal  bond.  However,  the order denied Superior's request to
consolidate  the appeal with the enforcement action.  On September 26, 2002, the
District  Court  of Appeal affirmed the final order of the FDOI.  On October 31,
2002  the  Circuit Court entered a final order which granted the FDOI's petition
for  enforcement of the FDOI's final order and which requires Superior to comply
with  the  FDOI  final  order.

In  accordance  with  the FDOI's final order, Superior ceased payment of finance
and service fees as of October 1, 2002 and has requested repayment from Superior
Group of $15 million of finance and service fees paid from 1997 through 1999 and
additional finance and service fees paid thereafter in the approximate amount of
$20  million.  Without the payment of finance and service fee income to Superior
Group or an amendment to the management agreement or reallocation of operational
responsibilities,  Superior Group could not operate profitably.  Accordingly, on
October  1,  2002,  Superior  Group discontinued the provision of certain claims
services  to Superior.  Superior is currently exchanging proposals with the FDOI
to  establish  an  acceptable repayment plan in accordance with the final order.

On  September  10,  2002,  the FDOI filed a petition in the Circuit Court of the
Second  Judicial  Circuit  in  and for Leon County, Florida for an order to show
cause  and  notice  of automatic stay which sought the appointment of a receiver
for  the  purpose  of rehabilitation of Superior.  The court entered an order to
show  cause,  temporary injunction and notice of automatic stay on September 13,
2002 and a hearing was held on October 24, 2002.  On November 1, 2002, the court
entered  an order that denied the FDOI's petition for appointment of a receiver.
On  November 8, 2002, the FDOI filed a motion for rehearing, which was denied on
December  17,  2002.

On  November  20,  2002,  the FDOI issued a notice and order to show cause which
seeks to suspend or revoke Superior's certificate of authority principally based
upon  allegations  that  Superior did not comply with the FDOI's August 30, 2001
final order during the pendency of the appeal of the order to the District Court
of  Appeal.  Superior  believes  that  it has fully and timely complied with the
final order and that the action brought by the FDOI is barred by res judicata  A
formal  administrative hearing to review the notice and a determination that the
order or administrative action contemplated by the notice not be issued was held
in  May  2003.  The  administrative  law  judge has not yet issued a recommended
order,  which  the  FDOI  may  accept  or  reject.

On  March  21,  2003,  the  FDOI  filed  a Motion for Enforcement of Final Order
Granting  Petition  to  Enforce Agency Action  (the "Motion for Enforcement") in
the Circuit Court of the Second Judicial Circuit in and for Leon County, Florida
which  sought to hold Superior in contempt for failure to comply with the FDOI's
final  order  during  the  pendency of Superior's appeal to the Florida District
Court of Appeal. On May 7, 2003 a hearing was held on the Motion for Enforcement
and  an  order  has  not  yet  been  issued.

On  October  9,  2001,  the  State Corporation Commission of Virginia ("Virginia
Commission")  issued  an  order  to  take  notice  regarding an order suspending
Superior's  license  to write business in that state.  An administrative hearing
for  a  determination  that the suspension order not be issued was held March 5,
2002.  On  May  3,  2002, the hearing examiner issued his report and recommended
that  Superior's  license not be suspended and that Superior file its risk based
capital  plans and monthly and quarterly financial information with the Virginia
Bureau  of  Insurance  ("Bureau").  On  June  19,  2002  the Virginia Commission
entered  an  order which adopted the findings of the hearing examiner, continued
the  matter  until  such time as the Bureau requests further action and requires
the  continued  monitoring of the financial condition of Superior by the Bureau.
On  October  11,  2002,  the Virginia Commission filed an administrative Rule to
Show  Cause.  A hearing was scheduled for November 18, 2002 to determine whether
Superior's  license  to  transact  insurance  business  in  Virginia  should  be
suspended.  Because  of  Superior's  improved  financial condition, the Virginia
Commission  continued  the  hearing  indefinitely.  The  nonstandard  automobile
insurance  policies  written in Virginia by Superior accounted for approximately
14.5%  and  13.1% of the total gross written premiums of the Company in 2002 and
2001,  respectively.

The  Company's U.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 or other state insurance
regulators  in  a mutually satisfactory manner could result in future regulatory
actions  or  proceedings  that  materially  and  adversely  affect  the Company.

Risk-Based  Capital  Requirements
In  order  to enhance the regulation of insurer solvency, the NAIC has adopted a
formula  and  model law to implement risk-based capital ("RBC") requirements for
property  and  casualty  insurance  companies designed to assess minimum capital
requirements  and  to  raise  the  level  of  protection  that statutory surplus
provides  for  policyholder  obligations, Indiana and Florida have substantially
adopted  the  NAIC  model law and Indiana directly, and Florida indirectly, have
adopted  the  NAIC  model  formula.  The  RBC  formula for property and casualty
insurers:  (i  )  underwriting,  which  encompasses  the  risk  of  adverse loss
developments  and inadequate pricing; (ii) declines in asset values arising from
credit  risk; (iii) declines in asset values arising from investment risks; (iv)
off-balance  sheet  risk  arising  from  adverse  experience from non-controlled
asset, guarantees for affiliates, contingent liabilities and reserve and premium
growth.  Pursuant  to the model law, insurers having less statutory surplus that
that  required  by  the  RBC  calculation  will be subject to varying degrees of
regulatory  action,  depending  on  the  level  of  capital  inadequacy.

The  RBC  model law provides for four levels of regulatory action. The extent of
regulatory  intervention  and  action  increases  as the level of surplus to RBC
decreases.  The  first level, the Company Action Level (as defined by the NAIC),
requires  and insurer to submit a plan of corrective actions to the regulator if
surplus  falls  below  200%  of  the  RBC amount. The Regulatory action level re
quires  an  insurer  to submit a plan containing corrective actions and requires
the relevant insurance commissioner to perform and examination or other analysis
and  issue a corrective order if surplus falls below 150% of the RBC amount. The
Authorized  Control  Level  gives the relevant insurance commissioner the option
either  to  take  the aforementioned actions or to rehabilitate or liquidate the
insurer  if  surplus  falls  below  70%  of  the  RBC  amount.

At  the time of filing of the unaudited annual statutory financial statements of
the  Company's  U.S.  insurance  subsidiaries with the FDOI and the IDOI for the
year  ended  December 31, 2002, the RBC calculations for Pafco and Superior were
in  excess  of  200%  of  the  RBC  amount, a level which requires no corrective
action.  The  RBC  calculation  for IGF as of December 31, 2002 was in excess of
100%  of  the  RBC  amount,  which  is  above  the  authorized  control  level.

In  May 2003, pursuant to a reserve analysis completed by the consulting actuary
engaged  by  BDO  Seidman, LLP, the Company's and SIG's independent auditor, the
loss  and  LAE  reserves of Superior and Pafco were increased as of December 31,
2002.  These  reserve  adjustments,  along  with  resulting  adjustments  to the
permitted carrying values of certain assets of Superior, investments in Superior
American  and  Superior  Guaranty,  were  recorded in the 2002 audited statutory
financial  statement  filed  for  Superior  and  Pafco  with  the FDOI and IDOI,
respectively.  Based on the adjusted audited statutory financial statements, the
surplus  for Superior fell below 70% of the RBC amount and the surplus level for
Pafco  was  above  150%  of the RBC amount as of December 31, 2002. As a result,
there  may be additional regulatory actions taken by the insurance regulators in
states  in  which  the  companies  write  business.

The  NAIC  Insurance  Regulatory  Information  System  ("IRIS")  was  developed
primarily  to  assist  state  insurance departments in executing their statutory
mandate  to oversee the financial condition of insurance companies.  IRIS ratios
consist  of  twelve  ratios with defined acceptable ranges.  They are used as an
initial  screening  process  for  identifying  companies  that may be in need of
special  attention.  Companies that have several ratios that fall outside of the
acceptable  range  are  selected  for  closer  review  by the NAIC.  If the NAIC
determines  that  more  attention  may  be  warranted,  one  of  five  priority
designations  is  assigned and the insurance department of the state of domicile
is  then  responsible  for  follow-up  action.

Based  on  the December 31, 2002 statutory financials filed with the NAIC, Pafco
had  values outside of the acceptable ranges for five IRIS tests. These included
the  two-year overall operating ratio, the investment yield ratio, the change in
surplus  ratio,  the  liabilities  and  liquid  assets  ratio, and the estimated
current  reserve  deficiency  to  policyholders'  surplus  ratio.

Based  on  the  December  31,  2002  statutory  financials  filed with the NAIC,
Superior  had  values outside of the acceptable ranges for six IRIS tests. These
included  the  surplus aid to policyholders' surplus ratio, the two-year overall
operating  ratio,  the change in surplus ratio, the liabilities to liquid assets
ratio, the one-year reserve development to policyholders' surplus ratio, and the
two-year  reserve  development  to  policyholders'  surplus  ratio.

As  of  December  31,  2002, IGF had values outside of the acceptable ranges for
five  IRIS  tests. These included the change in net writings ratio, the two-year
overall  operating ratio, the change in surplus ratio, the liabilities to liquid
assets  ratio,  and  the  agent's  balances  to  policyholders'  surplus  ratio.

15.  COMMITMENTS  AND  CONTINGENCIES:
Superior  Guaranty  is  a defendant in a case filed on November 26, 1996, in the
Circuit  Court  for  Lee County, Florida entitled Raed Awad v. Superior Guaranty
Insurance  Company,  et  al.,  Case No. 96-9151 CA LG.  The case purported to be
brought on behalf of a class consisting of purchasers of insurance from Superior
Guaranty.  The plaintiffs alleged that Superior Guaranty charged premium finance
service  charges  in violation of Florida law.  The parties have reached a class
settlement  which  has  been  approved  by  the court that is not expected to be
material  to  Superior  Guaranty.

As  previously reported, IGF, which is a wholly owned subsidiary of the Company,
had been a party to a number of pending legal proceedings and claims relating to
agricultural  production  interruption  insurance  policies (the "AgPI Program")
which  were sold during 1998. All of the policies of insurance which were issued
in the AgPI Program were issued by and under the name of Mutual Service Casualty
Insurance  Company  ("MSI"), a Minnesota corporation with its principal place of
business  located  in Arden Hills, Minnesota.  Sales of this product resulted in
large  underwriting  losses  by  IGF.

Approximately  $29  million  was paid through December 31, 2002 in settlement of
legal proceedings and policyholder claims related to the AgPI Program.  All AgPI
policyholder  claims  were  settled  during 2000. However, on January 12, 2001 a
case  was  filed in the Superior Court of California, County of Fresno, entitled
S&W  Seed Company, Dudley Silveira, Ric Blanchard and Darrell Silveira v. Mutual
Service  Casualty  Insurance  Company,  IGF  Insurance  Company,  and  Dibuduo &
Defendis  Insurance  Agency, Inc.; Case No. OICE CG 00137.  The case was brought
by four AgPI policyholders who had previously settled their AgPI claims pursuant
to  binding  settlement  agreements  who  now  seek  additional  compensation by
asserting through litigation that IGF and the third party carrier paid less than
the  policy  limits  they  were promised when they purchased the policy and that
each  settling  policyholder was forced to accept the lesser amount due to their
economic  duress  -  a legal theory recognized in California if certain elements
can  be  established.  The plaintiff's amended their complaint four times during
2002.  A  demurrer to the fourth amended complaint was filed by MSI and a motion
to  strike  was  filed by IGF, which were denied. IGF filed a motion for summary
judgment  to  dismiss  the claims in the plaintiff's fourth amended complaint on
the  basis  that releases previously executed by the plaintiffs are binding. The
court  granted  the  motion  for  summary judgment. The cross claims between the
selling brokers and MSI and IGF remain pending.  The trial is scheduled to begin
in  August  2003.

Superior  Guaranty  is  a  defendant  in a case filed on October 8, 1999, in the
Circuit  Court for Manatee County, Florida entitled Patricia Simmons v. Superior
Guaranty  Insurance  Company,  Case  No. 1999 CA-4635.  The case purported to be
brought on behalf of a class consisting of purchasers of insurance from Superior
Guaranty.  The  Plaintiff  alleged  that  the  defendant  charged  interest  in
violation of Florida law. The parties have settled the case in an amount that is
not  material  to  the  Company's  financial  condition.

The  Company  is a defendant in a case filed on February 23, 2000, in the United
States District Court for the Southern District of Indiana entitled Robert Winn,
et  al. v. Symons International Group, Inc., et al., Cause No. IP 00-0310-C-B/S.
Other  parties  named  as  defendants are SIG, three individuals who were or are
officers  or  directors of the Company or of SIG, PricewaterhouseCoopers LLP and
Schwartz  Levitsky  Feldman, LLP. The case purports to be brought on behalf of a
class  consisting of purchasers of the Company's stock or SIG's stock during the
period  February  27, 1998, through and including November 18, 1999.  Plaintiffs
allege,  among  other  things, that defendants misrepresented the reliability of
the  Company's  reported  financial  statements,  data  processing and financial
reporting  systems,  internal controls and loss reserves in violation of Section
10(b) of the Securities Exchange Act of 1934 (the "1934 Act") and SEC Rule 10b-5
promulgated  thereunder. The individual defendants are also alleged to be liable
as  "controlling  persons"  under  Sec.20  (a)  of  the 1934 Act.  As previously
reported in the Company's September 30, 2002 Form 10-Q, the Company, SIG and the
individual  defendants  entered  into  an  agreement  with  the  plaintiffs  for
settlement.  The settlement is subject to certain terms and conditions and court
approval.

As  previously  reported,  SIG  and  two of its subsidiaries, IGFH and IGF, were
parties  to a "Strategic Alliance Agreement" dated February 28, 1998 (the "SAA")
with  Continental  Casualty  Company  ("CNA"),  pursuant  to  which IGF acquired
certain  crop insurance operations of CNA. The obligations of SIG, IGFH, IGF and
CNA under the SAA are the subject of an action filed on June 4, 2001 and pending
in  United  States  District  Court  for  the  Southern  District  of  Indiana,
Indianapolis Division.  Claims have also been asserted in the action against the
Company,  Granite  Re, Pafco, Superior and certain members of the Symons family.
Discovery  is proceeding.  Although the Company continues to believe that it has
claims  against  CNA  and  defenses  to  CNA's claims which may offset or reduce
amounts owing by the Company or its affiliates to CNA, there can be no assurance
that  the  ultimate resolution of the claims asserted by CNA against the Company
and  its  affiliates  will not have a material adverse effect upon the Company's
and  its  affiliates'  financial  condition  or  results  of  operations.

Superior  was  a  defendant  in a case filed on May 8, 2001 in the United States
District  Court  Southern  District of Florida entitled The Chiropractic Centre,
Inc.  v. Superior Insurance Company, Case No. 01-6782.  The case purported to be
brought  on behalf of a class consisting of healthcare providers improperly paid
discounted  rates  on  services  to  patients  based  upon  a preferred provider
contract  with  a  third  party.  The plaintiff alleged that Superior breached a
third  party  beneficiary  contract, committed fraud and engaged in racketeering
activity  in  violation of federal and Florida law by obtaining discounted rates
offered  by  a  third  party  with  whom  the plaintiff contracted directly.  On
September 30, 2002, the court issued an administrative order which dismissed the
case.  The court's order administratively closing the case could be temporary or
permanent.  Superior  believes  that the allegations of wrongdoing as alleged in
the  complaint  were  without  merit  and  in  the event the order is temporary,
Superior  intends  to  vigorously  defend  the  claims  brought  against  it.

IGF  is a defendant in a case filed on December 31, 2002 in the Circuit Court of
Greene County, Missouri entitled Kevin L. Stevens v. Wilkerson Insurers, et al.,
Case  No.  102CC5135.  Other  parties named as defendants are the Company, SIGF,
Granite  Re,  Superior  Group  Management, Superior, Superior American, Superior
Guaranty,  Pafco  and three individuals who were or are officers or directors of
the  Company.  Motions  to dismiss The Company, SIGF, Granite Re, Superior Group
Management,  Superior,  Superior  American,  Superior Guaranty and certain named
individuals for lack of personal jurisdiction are pending.  The case purports to
be  brought on behalf of an IGF insured seeking to recover alleged damages based
on  allegations  of bad faith, negligent claims handling and breach of fiduciary
duties  with  respect  to a claim which arose from an accident caused by the IGF
insured.  IGF  believes  that  the  allegations  of wrongdoing as alleged in the
complaint  are without merit and intends to vigorously defend the claims brought
against  it.

See  Note  14  to the Consolidated Financial Statements, Regulatory Matters, for
additional  contingencies  involving  insurance  regulatory  matters.

The  Company  and  its  subsidiaries  are  named  as defendants in various other
lawsuits  relating  to  their  business  and  arising  in the ordinary course of
business.  Legal  actions arise from claims made under insurance policies issued
by  the  Company's  subsidiaries.  The  Company,  through  its  claims reserves,
reserves for both the amount of estimated damages attributable to these lawsuits
and  the  estimate  costs of litigation.  The Company believes that the ultimate
disposition  of  these  lawsuits  will  not  materially  affect  the  Company's
operations  or  financial  position.

<PAGE>
16.     SUPPLEMENTAL  CASH  FLOW  INFORMATION:
Cash paid/(received) for income taxes and interest are summarized as follows (in
thousands):
<TABLE>
<CAPTION>


                                                               2002   2001     2000
                                                               -----  -----  --------
<S>                                                            <C>    <C>    <C>
Cash paid/(received) for federal income taxes, net of refunds  $  --  $  --  $(6,134)
Cash paid for interest. . . . . . . . . . . . . . . . . . . .  $  --  $  --  $    --
</TABLE>


17.     DISCLOSURES  ABOUT  FAIR  VALUES  OF  FINANCIAL  INSTRUMENTS:
The  following  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.

1.   Fixed  Maturity,  Equity Securities, and Other Investments: Fair values for
     fixed  maturity  and  equity  securities are based on quoted market prices.
2.   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.
3.   Short-term  Debt:  The carrying value for short-term debt approximates fair
     value.
4.   Preferred  Securities:  There  is  not  an  active market for the Preferred
     Securities;  however,  the estimated market value of the entire issue as of
     December  31,  2002  was  approximately  $9,000,000.

18.     STOCK  OPTION  PLANS:
In  June  1986, Goran adopted the Goran Capital Inc. 1986 Share Option Plan (the
"Goran  Share  Option  Plan").  The  Goran  Share Option Plan provides Goran the
authority  to  grant  nonqualified  stock options and incentive stock options to
officers  and key employees of Goran and its subsidiaries and nonqualified stock
options  to  non-employee  directors  of Goran.  Options have been granted at an
exercise  price  equal  to  the  fair market value of the Goran stock at date of
grant.  The  outstanding  stock  options  vest and become exercisable at varying
terms  ranging  from  immediate vesting to equal installments over terms up to 5
years.

Information  regarding  the  Goran  Share  Option  Plan  is summarized below (in
Canadian  dollars):
<TABLE>
<CAPTION>
                                         2002              2001               2000
                                        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 year. . . . . . . . .   791,187   $ 2.09  195,937   $ 8.36   660,708   $14.17
Granted . . . . . . . . . . .    26,000   $ 0.35  633,750   $ 0.90   100,000   $ 2.35
Exercised . . . . . . . . . .        --       --       --       --        --       --
Forfeited/Surrendered . . . .  (388,437)  $ 3.34  (38,500)  $14.16  (564,771)  $14.15
                               ---------          --------          ---------
Outstanding at the end of the
 Year . . . . . . . . . . . .   428,750   $ 0.85  791,187   $ 2.09   195,937   $ 8.36
                               =========          ========          =========
Options exercisable at year
 End. . . . . . . . . . . . .   340,917   $ 0.89  682,520   $ 2.29    88,605   $14.62
Available for future grant. .   442,250       --   79,813       --   675,063       --
</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.


<PAGE>
Information  regarding  the  SIG  Stock  Option  Plan  is  summarized  below:
<TABLE>
<CAPTION>
                                           2002                2001                 2000
                                         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 year . . .  1,271,333   $0.8283  1,344,833   $0.9400    213,033   $6.3125
Granted . . . . . . . . . .         --        --         --        --  1,287,000   $0.5436
Exercised . . . . . . . . .         --        --         --        --         --        --
Forfeited/Surrendered . . .   (386,333)  $1.4650    (73,500)  $2.8474   (155,200)  $5.0391
                             ----------           ----------           ----------
Outstanding at the end of
 the year . . . . . . . . .    885,000   $0.5503  1,271,333   $0.8283  1,344,833   $0.9400
                             ==========           ==========           ==========
Options exercisable at year
 end. . . . . . . . . . . .    590,167   $ .5520    465,333   $1.3180     73,500   $6.3125
Available for future grant.    615,000        --    228,667        --    155,167        --
</TABLE>

<TABLE>
<CAPTION>
                                                  Options                Options
                                                 Outstanding         Exercisable
                                    Weighted      weighted              Weighted
                                     Average      Average                Average
  Range of            Number        Remaining     Exercise     Number   Exercise
Exercise Prices   Outstanding  Life (in years)    Price    Exercisable     Price
----------------  -----------  ---------------    -------  -----------   ------
<S>               <C>          <C>              <C>        <C>          <C>
0.50 - $0.8750.      884,500              7.4  $  0.5477      763,000  $  0.5477
6.3125. . . . .          500              5.5  $  6.3125          500  $  6.3125
                  -----------                              -----------
                     885,000              7.4                 763,500
                  ============                                ========
</TABLE>

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.

Information  regarding  the  Superior  Group  Management  Stock  Option  Plan is
summarized  below:
<TABLE>
<CAPTION>

                                          2002             2001            2000
                                        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 year. . . . . . . . .   83,332   $57.65  83,432   $54.42  92,232   $51.75
Granted . . . . . . . . . . .       --       --      --       --      --       --
Forfeited . . . . . . . . . .  (55,555)  $57.65    (100)  $57.65  (8,800)  $51.48
                               --------          -------          -------
Outstanding at the end of the
 year . . . . . . . . . . . .   27,777   $57.65  83,332   $57.65  83,432   $54.42
                               ========          =======          =======
Options exercisable at year
 end. . . . . . . . . . . . .   27,777   $57.65  83,332   $57.65  66,726   $54.42
Available for future grant. .   83,334       --  27,779       --  27,679       --
</TABLE>


<TABLE>
<CAPTION>
                                                  Options               Options
                                                Outstanding         Exercisable
                                   Weighted      weighted               Weighted
                                   Average       Average                 Average
Range of            Number        Remaining      Exercise     Number    Exercise
Exercise Prices   Outstanding  Life (in years)    Price    Exercisable    Price
----------------  -----------  ---------------   --------- -----------   -------
<S>               <C>          <C>              <C>        <C>          <C>
44.17 . . . . .       13,889              3.1  $   44.17       13,889  $   44.17
71.14 . . . . .       13,888              3.1  $   71.14       13,888  $   71.14
</TABLE>

The  Company  accounts for stock-based employee compensation using the intrinsic
value  method  under  APB  Opinion  No.  25,  "Accounting  for  Stock  Issued to
Employees"  and interpretations as permitted under SFAS No. 148, "Accounting for
Stock-Based  Compensation  -  Transition  and  Disclosure"  ("SFAS  148").
Accordingly, no compensation cost is recorded if the current market price of the
underlying  stock  does  not exceed the exercise price at the date of grant. See
Note  1  for a pro forma disclosure of the affect stock-based compensation would
have  had  on  net  loss and net loss per share had the Company applied the fair
value  accounting  provisions  of SFAS 123  to stock-based employee compensation
and  non-employee  director  compensation.

For  purposes  of  applying  SFAS  123,  the fair value of each option grant was
estimated  using  the  Black-Scholes  option-pricing  model  with  the following
assumptions:
<TABLE>
<CAPTION>
                                        SIG      Goran      SIG     Goran   SIG      Goran
                                        2002     2002      2001     2001    2000     2000
                                       Grants   Grants    Grants  Grants   Grants    Grants
                                       ------  ---------  ------  -----------  -----------
<S>                                    <C>      <C>        <C>     <C>      <C>         <C>
Risk-free interest rates                  ---    2.28%     ---     2.34%    5.00%      5.00%
Dividend yields                           ---     ---      ---     ---       ---        ---
Volatility factors                        ---     132%     ---      156%     106%       106%
Weighted average expected life            ---   3 years    --- 2.6 years 4.0 years 5.0 years
Weighted average fair value per share     ---   $ 0.22     ---    $ 0.68    $  0.40  $  1.31
</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.

19.     QUARTERLY  FINANCIAL  INFORMATION  (UNAUDITED):
Quarterly  financial  information  is  as  follows  (in  thousands):
<TABLE>
<CAPTION>


                                                 First     Second    Third     Fourth      Total
                                                --------  --------  --------  ---------  ---------
<S>                                             <C>       <C>       <C>       <C>        <C>
            2002
Gross written premiums . . . . . . . . . . . .  $45,082   $23,626   $17,618   $ 25,068   $111,394
Net premiums written . . . . . . . . . . . . .   14,109     7,656     4,337      7,889     33,991
Net premiums earned. . . . . . . . . . . . . .   13,093    11,892     7,757      8,295     41,037
Total revenues . . . . . . . . . . . . . . . .   17,273    15,594    12,557      9,919     55,343
Net operating earnings (loss) from continuing
 operations 1. . . . . . . . . . . . . . . . .   (3,246)   (5,686)   (1,744)    (7,511)   (18,187)
Net loss from continuing operations. . . . . .   (5,967)   (8,386)   (3,322)   (12,070)   (29,745)
Basic operating earnings (loss) per share from
 continuing operations 1 . . . . . . . . . . .    (0.60)    (1.05)    (0.32)     (1.39)     (3.37)
Net loss from continuing operations per share
- basic and diluted. . . . . . . . . . . . . .    (1.11)    (1.56)    (0.62)     (2.24)     (5.51)

<PAGE>
                                                  First     Second    Third     Fourth    Total
                                                --------  --------  --------  ---------   -------
             2001
Gross written premiums . . . . . . . . . . . .  $48,338   $49,950   $27,348   $ 67,550   $193,186
Net premiums written . . . . . . . . . . . . .   16,945    27,702    14,684     27,531     86,862
Net premiums earned. . . . . . . . . . . . . .   18,844    26,411    22,943     39,999    108,197
Total revenues . . . . . . . . . . . . . . . .   22,912    31,444    29,671     44,166    128,193
Net operating earnings (loss) from continuing
 Operations 1. . . . . . . . . . . . . . . . .   (5,803)   (1,338)   (6,677)    (5,193)   (19,011)
Net loss from continuing operations. . . . . .   (9,547)   (3,940)   (9,041)    (9,409)   (31,937)
Basic operating earnings (loss) per share from
 Continuing operations 1 . . . . . . . . . . .    (1.00)     (.23)    (1.16)      (.95)     (3.34)
Net loss from continuing operations per share
- basic and diluted. . . . . . . . . . . . . .    (1.65)     (.68)    (1.57)     (1.71)     (5.61)
<FN>

1.   Operating  earnings  (loss)  and  per  share  amounts exclude amortization,
     interest,  taxes,  realized capital gains and losses, minority interest and
     any  extraordinary  items.
</TABLE>

20.     RECONCILIATION  OF  CANADIAN  AND  UNITED  STATES  GENERALLY  ACCEPTED
ACCOUNTING  PRINCIPLES  ("GAAP")
The  consolidated  financial statements are prepared in accordance with Canadian
GAAP.  Material  differences between Canadian and U.S. GAAP are described below.
There  were  no  material  differences  in net earnings or earnings per share in
2002,  2001  and  2000.

1.   Receivables  from sale of capital stock: The SEC Staff Accounting Bulletins
     require  that  accounts  or  notes  receivable  arising  from  transactions
     involving  capital  stock  be  presented  as  deductions from stockholders'
     equity  and  not  as assets. Accordingly, in order to comply with U.S. GAAP
     stockholders'  equity  would  be reduced by $1,258,000 at December 31, 2002
     and  2001,  to reflect the loans due from certain stockholders which relate
     to  the  purchase  of  common  shares  of  the  Company.

2.   Unrealized  gain  (loss) on investments: U.S. GAAP requires that unrealized
     gains  and  losses  on  investment portfolios be included as a component in
     determining  stockholders'  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,
     stockholders'  equity  would  be decreased by $2,366,000 and $2,246,000 for
     the  years  ended  December  31,  2002  and  2001,  respectively.

3.   Discontinued  operations:  U.S. GAAP requires the netting of all assets and
     liabilities  of  discontinued  operations and the presentation of those net
     assets  as  a  single  line item in the consolidated balance sheets for all
     periods  presented.  There  is  no  impact  on  stockholders'  equity.

4.   Changes  in  stockholder's equity: A reconciliation of stockholders' equity
     (deficit)  from  Canadian  GAAP  to U.S. GAAP is as follows (in thousands):
<TABLE>
<CAPTION>
                                                           2002       2001
                                                         ---------  ---------
<S>                                                      <C>        <C>
Stockholders' equity in accordance with Canadian GAAP .  $(84,941)  $(89,146)
Add (deduct) effect of difference in account for:
    Receivables from sale of capital stock (see note a)    (1,258)    (1,258)
    Unrealized gain (loss) on investments (see note b).    (2,366)    (2,246)
                                                         ---------  ---------
Stockholders' equity in accordance with U.S. GAAP . . .  $(88,565)  $(92,650)
                                                         =========  =========
</TABLE>


5.     Comprehensive  Income:     U.S.  GAAP  requires  the  presentation  of  a
statement  of  comprehensive  income.  Canadian  GAAP does not require a similar
disclosure.  The  Company's  comprehensive  income is as follows (in thousands):
<TABLE>
<CAPTION>
                                                  2002       2001
                                                ---------  ---------
<S>                                             <C>        <C>
Net Income (Loss) per Statement of Operations.  $(29,745)  $(34,093)
Purchase of Preferred Securities . . . . . . .    28,399     18,717
Change in cumulative translation adjustment. .      (260)      (472)
Unrealized gain (loss) on investments. . . . .    (2,366)    (2,246)
                                                ---------  ---------
Comprehensive Income (Loss). . . . . . . . . .  $ (3,972)  $(18,094)
                                                =========  =========
</TABLE>


21.
<PAGE>
MANAGEMENT'S  PLANS
SIG  reported  net  losses  of $(35.3) million and $(32.9) million for the years
2002 and 2001, respectively, and is a party to a number of legal proceedings and
claims.  While  shareholders'  equity  at  December  31,  2002  is  a deficit of
approximately  $(179)  million,  SIG  has  partially  offsetting  thirty-year
mandatorily  redeemable trust preferred stock outstanding of $135 million, which
are not due for redemption until 2027. Accumulated interest of approximately $84
million  will  be  due in February 2005. SIG's insurance subsidiaries, excluding
IGF,  have  statutory  surplus  of  approximately  $3.0  million. Management has
initiated  substantial  changes in operational procedures in an effort to return
SIG  to profitable levels and to improve its financial condition. SIG has and is
continuing to raise its rates in a market environment where increasing rates and
withdrawal from the market by other companies show positive trends for improving
profitability  of  nonstandard  automobile  insurance  underwriters.

During  January  and  February  2002,  SIG  experienced  sustained  adverse loss
experience  on  a  substantial  portion  of  its new business written in certain
markets.  In  late February and early March 2002, SIG commenced further analysis
of loss ratios by individual agency and a review of claim settlement procedures.
Based  upon this and other analysis, SIG took a number of actions to improve the
financial  position  and  operating  results  of  SIG  including:

-    Eliminated  reinstatements  in all markets, i.e., upon policy cancellation,
     the  insured  must obtain a new policy at prevailing rates and underwriting
     guidelines;
               - Terminated or placed on new business moratorium several hundred
          agents  whose  loss  ratios  were abnormally high when compared to the
          average  for  the  remaining  agents  (these  agents  accounted  for
          approximately  16%  of  the  total  gross  written  premium  in 2001);
-    Increased  underwriting  requirements  in certain markets including: higher
     down  payments,  new  policy  fees,  and  shorter  policy  terms;
-    Hired  a  consultant  with  significant  auto  claims  experience to review
     processes  and  suggest  modifications  to  the  claims  function.

The  above  actions  were  followed  by:

-    Replacement  of  the  president  of  the  non-standard automobile business;
-    Hiring  of  an  experienced  vice  president  of  claims;
-    Consolidation  of all underwriting, premium accounting and agency licensing
     activities  in  Atlanta,  GA  into  Indianapolis,  IN;
-    Closing  of  regional offices in Denver, CO; Virginia Beach and Alexandria,
     VA;  Glendale,  CA;  and  Jacksonville  ,  FL;
-    Replacement  of  the  national  litigation  manager;
-    Replacement  of  the  marketing  manager  and  the  product  manager;
-    Heavy  focus  on  the  improvement  of  process  and  customer  service;
-    Continued  transition  to  an  improved  policy  processing  system.

These  actions  resulted in improved operations and a lower expense ratio. SIG's
employee  staffing  level decreased 40% from 346 to 209 at December 31, 2001 and
2002,  respectively.  SIG  continues to review all job functions in an effort to
improve  efficiencies.

Management  believes  that  despite  the  historical  losses, it has developed a
business  plan  that can improve SIG's operating results and financial condition
in  2003.

22.     DISCONTINUED  OPERATIONS
As previously announced, IGF sold its crop insurance operations to Acceptance on
June  6,  2001.  This  business  was  predominantly  written  through  IGF.  The
divestiture  of the crop insurance segment transferred ownership of certain crop
insurance  accounts,  effective  with  the  2001  crop  cycle.

Management  does  not  expect  any remaining crop business to be material to the
consolidated  financial  statements  and  accordingly has discontinued reporting
crop  insurance as a business segment. The results of the crop insurance segment
have  been  reflected  as  "Discontinued  Operations"  in  the  accompanying
consolidated  financial  statements.

Summarized  results  of  operations  and  financial  position  for  discontinued
operations  were  as  follows  (in  thousands):
<TABLE>
<CAPTION>

                                                              Year Ended December 31,
                                                             2002      2001       2000
                                                           --------  ---------  ---------
<S>                                                        <C>       <C>        <C>
Gross premiums written. . . . . . . . . . . . . . . . . .  $  (314)  $256,722   $241,748
                                                           ========  =========  =========
Net premiums written. . . . . . . . . . . . . . . . . . .  $    (5)  $   (308)  $ 26,466
                                                           ========  =========  =========

       Net premiums earned. . . . . . . . . . . . . . . .  $     8   $   (308)  $ 26,531
       Net investment and fee income. . . . . . . . . . .    1,058      1,657      1,229
       Net realized capital gain. . . . . . . . . . . . .   (2,935)       799         10
                                                           --------  ---------  ---------
Total revenues. . . . . . . . . . . . . . . . . . . . . .   (1,869)     2,148     27,770
                                                           --------  ---------  ---------

       Loss and loss adjustment expenses. . . . . . . . .      204      3,559     40,690
       Policy acquisition and general and administrative
      expenses. . . . . . . . . . . . . . . . . . . . . .   (2,073)       654      2,059
       Interest and amortization expense. . . . . . . . .       --         91      1,162
                                                           --------  ---------  ---------
Total expenses. . . . . . . . . . . . . . . . . . . . . .   (1,869)     4,304     43,911
                                                           --------  ---------  ---------

Loss before income taxes. . . . . . . . . . . . . . . . .       --     (2,156)   (16,141)

Income taxes:
        Current income tax (benefit). . . . . . . . . . .       --         --         --
        Deferred income tax expense . . . . . . . . . . .       --         --         --
Total income tax expense (benefit). . . . . . . . . . . .       --         --         --

Loss from operations of discontinued segment. . . . . . .       --         --    (16,141)
Loss on disposal of discontinued segment. . . . . . . . .       --     (2,156)      (900)
                                                           --------  ---------  ---------
Net loss from discontinued operations . . . . . . . . . .  $    --   $ (2,156)  $(17,041)
                                                           ========  =========  =========
</TABLE>



<PAGE>
-------------------------------------------------------------------------------
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  a  system  of  internal  controls, which is designed to
provide  reasonable  assurance  that  accounting  records  are  reliable  and to
safeguard the Company's assets.  The independent accounting firm of BDO Seidman,
LLP  has audited and reported on the Company's consolidated financial statements
for 2002, 2001 and 2000. 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.


                               [GRAPHIC  OMITED]


                               [GRAPHIC  OMITED]


Douglas  H.  Symons
Chief  Executive  Officer
June  3,  2003
<PAGE>
BOARD  OF  DIRECTORS  AND  STOCKHOLDERS  OF  GORAN  CAPITAL  INC.


Goran  Capital  inc.
Toronto,  Canada

We  have  audited  the accompanying consolidated balance sheets of Goran Capital
Inc.  and subsidiaries (the "Company") as of December 31, 2002 and 2001, and the
related  consolidated  statements of operations, changes in stockholders' equity
(deficit)  and  cash flows for the years ended December 31, 2002, 2001 and 2000.
These  financial  statements are the responsibility of the Company's management.
Our  responsibility is to express an opinion on these financial statements based
on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of America and Canada.  Those standards require that we
plan  and  perform  the  audit  to obtain reasonable assurance 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 provide a reasonable basis for our
opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all material respects, the consolidated financial position of Goran
Capital  Inc. and subsidiaries at December 31, 2002 and 2001, and the results of
their  operations  and  their  cash flows for the years ended December 31, 2002,
2001  and  2000  in  conformity with accounting principles generally accepted in
Canada.





/s/  BDO  SEIDMAN,  LLP
Grand  Rapids,  Michigan
May  9,  2003




COMMENTS  BY  AUDITOR  FOR  U.S.  READERS ON CANADA - U.S. REPORTING DIFFERENCES

In  the  United States, reporting standards for auditors require the addition of
an  explanatory  paragraph  (following the opinion paragraph) when the financial
statements  are affected by conditions and events that cast substantial doubt on
the company's ability to continue as a going concern, such as those described in
Notes  14, 15 and 21 to the financial statements. Our report to the stockholders
dated  May  9, 2003 is expressed in accordance with Canadian reporting standards
which  do  not permit a reference to such events and conditions in the auditors'
report  when  these  are  adequately  disclosed  in  the  financial  statements.





/s/  BDO  SEIDMAN,  LLP
Grand  Rapids,  Michigan
May  9,  2003

<PAGE>
STOCKHOLDER  INFORMATION

Registrar  and  Transfer  Agent                                   Independent
Public  Accountants
CIBC  Mellon  Trust  Company               BDO  Seidman  LLP
Toronto,  Ontario     Grand  Rapids,  Michigan

Annual  Meeting  of  Stockholders
2  Eva  Road,  Suite  200
Toronto,  Ontario  Canada  M9C  2A8
July  8,  2003
10:00  A.M.  (EDT)

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, 2002, 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
As  of  July  1, 2001 Goran Capital Inc.'s common stock began trading on the OTC
Bulletin  Board  under  the  symbol  GNCNF.OB.  Prior to this date Goran Capital
Inc.'s  stock  was  traded  on  the  NASDAQ Stock Market's National Market.  The
shares  also  trade  on  the  Toronto  Stock  Exchange.

As  of  December  31,  2002  there were approximately 100 common stockholders of
record,  including  many brokers holding shares for the individual clients.  The
number  of  individual  stockholders  on  the  same date is estimated to be 800.

The number of commons shares outstanding on December 31, 2002 totaled 5,393,698.
Information relating to the common shares is available through the Toronto Stock
Exchange  and  the  U.S. OTC Bulletin Board.  The following table sets forth the
high and low closing sale prices for the common shares for each quarter of 2002,
2001  and  2000.
<TABLE>
<CAPTION>

                             TORONTO STOCK EXCHANGE
<S>               <C>            <C>           <C>
                   2002         2001         2000
QUARTER ENDED  High    Low   High    Low   High   Low
-------------  -----  -----  -----  -----  -----  ----
March 31. . .  $1.35  $0.70  $2.70  $0.90  $4.15  $1.50
June 30 . . .  $0.80  $0.45  $1.75  $0.80  $3.50  $1.75
September 30.  $0.50  $0.25  $1.15  $0.53  $2.84  $1.95
December 31 .  $0.70  $0.14  $1.25  $0.60  $2.25  $ .50
</TABLE>

                     U.S. OTC BULLETIN BOARD TRADING PRICES
<TABLE>
<CAPTION>


<S>                  <C>        <C>          <C>
                    2002        2001         2000
QUARTER ENDED   High.  Low   High   Low    High   Low
-------------  -----  -----  -----  -----  -----  ----
March 31. . .  $0.85  $0.41  $1.88  $0.75  $2.88  $1.05
June 30 . . .  $0.43  $0.32  $1.14  $0.58  $2.44  $1.16
September 30.  $0.25  $0.18  $0.80  $0.35  $1.95  $1.25
December 31 .  $0.42  $0.08  $0.81  $0.41  $1.38  $0.34
</TABLE>

U.S.  OTC  Bulletin  Board quotations reflect inter-dealer prices without retail
mark-up,  mark-down  or  commission  and  may not represent actual transactions.
Goran  Capital  Inc.  did  not declare or pay cash dividends on its common stock
during  the  years  ended  December 31, 2002, 2001 and 2000.  Goran Capital Inc.
does  not  plan  to  pay  cash  dividends on its common stock in the foreseeable
future.  See  Management's  Discussion  and  Analysis of Financial Condition and
Results of Operations and the Notes to the Consolidated Financial Statements for
additional  discussion  regarding  restrictions  on  the  payment  of dividends.


<PAGE>
Shareholder  inquiries  should  be  directed  to:
DOUGLAS  H.  SYMONS
President,  Chief  Executive  Officer  and  Secretary
Goran  Capital  Inc.
Tel:  (317)  259-6413
E-mail:  dsymons@sigins.com

BOARD  OF  DIRECTORS

G.  GORDON  SYMONS
Chairman  of  the  Board
Goran  Capital  Inc.
Symons  International  Group,  Inc.

DOUGLAS  H.  SYMONS
President,  Chief  Executive  Officer  and  Secretary
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  President,  Vision  2120,  Inc.

RON  L.  FOXCROFT
President,  Fluke  Transportation  Group

ROBERT  C.  WHITING
President,  Prime  Advisors,  Inc.


EXECUTIVE  OFFICERS

DOUGLAS  H.  SYMONS
President,  Chief  Executive  Officer,  Chief  Operating  Officer  and Secretary
Goran  Capital  Inc.
President,  Chief  Executive  Officer  and  Secretary
Symons  International  Group,  Inc.

JOHN  G.  PENDL
Vice  President,  Chief  Financial  Officer  and  Treasurer
Goran  Capital  Inc.

<PAGE>

COMPANY,  SIG  AND  SUBSIDIARY  OFFICES


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

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

<PAGE>

SIG  CORPORATE  OFFICE
Symons  International  Group,  Inc.
4720  Kingsway  Drive
Indianapolis,  Indiana  46205
Tel:  317-259-6300
Fax:  317-259-6395
Website:  www.sigins.com
          --------------



OTHER  SUBSIDIARY  OFFICES


<PAGE>
Superior  Insurance  Group,  Inc.
4720  Kingsway  Drive
Indianapolis,  Indiana  46205
Tel:  317-259-6300
Fax:  317-259-6395
Website:  www.sigauto.com
          ---------------

Pafco  General  Insurance  Company
4720  Kingsway  Drive
Indianapolis,  Indiana  46205
Tel:  317-259-6300
Fax:  317-259-6395

Superior  Insurance  Company
4720  Kingsway  Drive
Indianapolis,  Indiana  46205
Tel:  317-259-6300
Fax:  317-259-6395

Superior  Insurance  Company
280  Interstate  North  Circle,  N.W.,  Suite  500
Atlanta,  Georgia  30339
Tel:  770-952-4885
Fax:  770-988-8583


IGF  Insurance  Company
4720  Kingsway  Drive
Indianapolis,  Indiana  46205
Tel:  317-259-6300
Fax:  317-259-6395

Superior  Insurance  Company  -  Claims  Office
1745  West  Orangewood  Road,  Suite  210
Orange,  California  92826
Tel:  714-978-6811
Fax:  714-978-0353

Superior  Insurance  Company  -  Claims  Office
5483  W.  Waters  Avenue,  Suite  1200
Tampa,  Florida  33634
Tel:  813-887-4878
Fax:  813-243-0268

Superior  Insurance  Company-  Claims  Office
4500  PGA  Boulevard,  Suite  304A
Palm  Beach  Gardens,  Florida  33418
Tel:  561-622-7831
Fax:  561-622-9741