GORAN CAPITAL INC.
                               2000 Annual Report




Corporate Profile

Goran Capital Inc.  ("Goran") owns subsidiaries  engaged in a number of business
activities.  The most important of these is the property and casualty  insurance
business conducted in 20 U.S. states,  Canada and Barbados, on both a direct and
reinsurance basis through a number of subsidiaries  collectively  referred to in
this  report as Goran.  Goran owns  73.0% of Symons  International  Group,  Inc.
("SIG") which trades on the OTC Bulletin Board under the symbol  "SIGC.OB".  SIG
owns insurance  companies  principally in the nonstandard  automobile  insurance
market.  Superior Insurance Company of Tampa,  Florida;  Pafco General Insurance
Company of  Indianapolis,  Indiana,  and IGF Insurance  Company of Indianapolis,
Indiana  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.

As previously announced,  the Company is currently pursuing the sale of its crop
insurance operations.  Management expects to complete the sale during the second
quarter of 2001.  The financial  statements  included in this report reflect the
results of the crop insurance segment as "discontinued operations".

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

The common stock of Goran trades on The Toronto Stock  Exchange under the symbol
"GNC" and the OTC Bulletin Board under the symbol "GNCNF.OB".

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 2000 was 1.4853 and for  balances as of
December 31, 2000 the rate is 1.4988.

Table of Contents                                                    Page
Financial Highlights                                                   2
President's Report                                                     4
Selected Financial Data                                                6
Management's Discussion and Analysis of Financial
  Condition and Results of Operations                                  7
Consolidated Financial Statements                                      17
Notes to Cosnolidated Financial Statements                             21
Report of Independent Accountants                                      45
Stockholder Information                                                46
Board of Directors and Executive Officers                              47
Subsidiaries and Brach Offices                                         49




<PAGE>


Financial  Highlights  (1) (in  thousands,  except per share data) For the years
ended December 31,
<TABLE>
<CAPTION>

                                                      2000          1999         1998          1997         1996
                                                      ----          ----         ----          ----         ----
<S>                                                    <C>          <C>          <C>           <C>          <C>
Gross premiums written                                 $182,099     $236,401     $303,745      $322,581     $189,317
Net operating earnings (loss) from continuing
operations (2)                                        $(12,417)    $(49,883)         $471       $11,680      $12,756

Net earnings (loss) from discontinued operations      $(17,041)    $(15,373)     $(9,421)       $10,015      $10,495
Net earnings (loss)                                   $(80,265)    $(62,373)    $(11,936)       $12,438      $31,296
Basic operating earnings (loss) per share from
continuing operations (2)                               $(2.13)      $(8.49)        $0.08         $2.09        $2.41
Basic earnings (loss) per share from
discontinued operations                                 $(2.93)      $(2.61)      $(1.61)         $1.79        $1.99
Basic earnings (loss) per share                        $(13.79)     $(10.61)      $(2.04)         $2.22        $5.92
Stockholders' equity (deficit)                        $(72,668)    $(12,887)      $49,725       $60,332      $47,258
Return on average equity (3)                                N/A          N/A      (21.7%)         23.1%       104.3%
Book value (deficit) per share                         $(12.48)      $(2.19)        $8.51        $10.79        $8.94
Market Value per share                                    $0.34        $2.00       $10.38        $29.41       $20.08
Weighted average outstanding shares - basic               5,822        5,876        5,841         5,591        5,286
</TABLE>

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 2000 and 1999.

<PAGE>




                               CORPORATE STRUCTURE
Goran Capital Inc.
Toronto, Ontario
|
-------------------------------------------------------------------------------
|
73% Owned                  100% Owned             100% Owned      100% Owned
Symons International       Granite Reinsurance    Granite         Symons
Group, Inc.,               Company, Ltd.          Insurance       International
Indianapolis, Indiana      Barbados               Company         Group, Inc.,
                                                                  Florida

               |---------------------------------------------------------------|
               IGF Holdings, Inc.      Superior Insurance Group Management, Inc.
                          |                             |
                IGF Insurance   ------------------------------------------------
                                           |                        |
                                      Pafco General          Superior Insurance
                                       Insurance Company     Company
                                                          ||
                                ------------------------------------------------
                                           |                        |
                       Superior Guaranty                    Superior American
                       Insurance Company                    Insurance Company

<PAGE>
President's Report to our Shareholders
--------------------------------------

Dear Fellow Shareholder:

The year 2000 has finally come to a close,  from the financial  statements  that
follow;  it is hard to see the major  changes  that have taken place  within our
group.  I hope that this  letter  and the  following  report  will give you some
insight to the going forward operations.

The loss for 2000  included  a write down of  goodwill  of $33.5  million.  This
combined  with  operating  losses in the  non-standard  auto  insurance of $29.8
million and crop of $17 million  represents  the loss of $80.3 million for 2000.
We feel that we have cleaned out the  cupboard  and it's time to present  better
news to our shareholders.

During the last year we replaced the entire senior and middle  management of our
non-standard  operation,  Superior  Insurance  Group.  The new  management  have
reduced  our  premium  volume by  shedding  under  priced  business  and  poorer
performing  agents.  The premiums we wrote reduced from  $236,401,000 at Dec 31,
1999 to $182,099,000 at Dec. 31, 2000. With reducing volume we needed to cut the
cost of doing business. We closed Tampa's two large offices with staff exceeding
125,  consolidated  these operations into Atlanta and Indianapolis.  Local claim
service  helps reduce loss costs,  for this  reason,  we opened  claims  service
centers with limited staff in Alexandria,  VA, Glendale, CA, and are opening one
in Pennsylvania  soon. These are in addition to Atlanta and Indianapolis  claims
service centers.  We reduced full and part time employees from over 541 to about
390. We increased premium rates for our whole book of business by about 14%. The
higher  priced  business  we are  writing  today will allow us to  increase  our
premium base and start to re grow the business.

We now operate  through  independent  agents in twenty (20) states,  with better
operating  systems that have helped to reduce  overhead  costs.  We offer agents
direct  access  on-line to our policy system and will provide them with point of
sale quoting and binding with on-line real time underwriting in the near future.
The market for non standard and regular auto  insurance has  improved.  Over the
last year the number of suppliers  has reduced with those  remaining  increasing
prices. All automobile  insurance  companies reported much higher loss costs for
2000.  The market is responding  finally by tightening up what they will insure.
This moves drivers to our market.  Most of the insurance  companies  have or are
raising  rates  in  response  to  higher  losses.  The  demand  is  growing  for
non-standard  automobile  insurance,   the  higher  priced  area  of  automobile
insurance.  Growth  comes from more jobless  people  forced into our market as a
result of poor payment habits,  standard  companies  pulling back what they will
insure,  but the biggest demand is coming from the children of the baby-boomers.
It will be the  biggest  source of  drivers  to the  non-standard  market in its
history.

In order to be ready to write this  profitable  business,  we needed to look for
capital to deploy into our nonstandard  unit. The capital markets are shut to us
for now, so is the debt market. We have reinsurers, which helps us to write over
$100 million of our business,  but at a cost. We need to increase the capital of
Superior, and become less dependent on reinsurance. The company has been exposed
to earning  volatility from its crop  operations,  and with limited capital as a
result of past years losses we must reduce this exposure.


<PAGE>



For all of these reasons we have chosen to look for a buyer of the assets of our
crop segment.  We have  recorded the crop  insurance  business as  discontinuing
operations in the following pages and are working with potential  buyers to sell
the assets. We will keep IGF Insurance Company for our auto business.  We expect
to finalize a transaction in the next few months.

Following  a  successful  sale of IGF assets we will be out of the  direct  crop
business. Our companies will be a major player in the fast growing, non-standard
automobile insurance market.

Our  staff  has  gone  through  2 1/2  years  of  tough  sledding,  as have  our
shareholders.  Our  Board  of  Directors  have  worked  to help  management  and
shareholders to turn our fortune around. Our heartfelt thanks to all of you!

Yours truly,


Alan G. Symons
President and Chief Executive Officer




<PAGE>



SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
Years Ended December 31,

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
year 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.
<TABLE>
<CAPTION>

                                                          2000         1999          1998         1997         1996
                                                          ----         ----          ----         ----         ----
Consolidated Statement of Operations Data:
(in   thousands,   except  per  share  amounts  and
ratios) (4)
<S>                                                   <C>          <C>           <C>          <C>          <C>
Gross Premiums Written                                $182,099     $236,401      $303,745     $322,581     $189,317
Net Premiums Earned                                    145,532      261,800       281,276      255,746      185,870
Fee Income                                              14,239       15,335        16,431       15,545        7,614
Net Investment Income                                   12,171       13,125        13,126       12,586        7,564
Income (loss) from Continuing Operations              $(63,224)    $(47,000)      $(2,515)      $2,423       $2,632
Income (loss) from Discontinued Operations            $(17,041)    $(15,373)      $(9,421)     $10,015      $10,495
NET INCOME (LOSS)                                     $(80,265)    $(62,373)     $(11,936)     $12,438      $31,296
                                                      =========    =========     =========     =======      =======
Per Common Share Data:
Basic Income (Loss) from Continuing
 Operations                                             $(10.86)      $(8.00)       $(0.43)       $0.43        $0.50
Basic Income (loss) from Discontinued
 Operations                                              $(2.93)      $(2.61)       $(1.61)       $1.79        $1.99
BASIC NET INCOME (LOSS)                                 $(13.79)     $(10.61)       $(2.04)       $2.22        $5.92
Basic Weighted Average Shares Outstanding                5,822        5,876         5,841        5,591        5,286
GAAP Ratios:
Loss and LAE Ratio (1)                                     78.2%        92.6%         81.2%        76.0%        71.9%
Expense Ratio (2)                                          38.7%        31.5%         23.3%        24.3%        25.4%
COMBINED RATIO (3)                                        116.9%       124.1%        104.5%       100.3%        97.3%
Consolidated Balance Sheet Data:
Investments                                           $148,890     $225,168      $236,144     $231,130     $199,208
Total Assets                                           440,032      519,922       570,989      560,848      381,342
Losses and LAE                                         113,149      157,425       140,484      135,087      109,449
Total Long-Term Debt or Preferred Securities           112,000      135,000       135,000      135,000       48,000
Total Shareholders' Equity (Deficit)                   (72,668)     (12,887)       49,725       60,332       47,258
Book Value (Deficit) Per Share                         $(12.48)      $(2.19)        $8.51       $10.79        $8.94
</TABLE>

(1) Loss and LAE ratio: The ratio of loss and loss adjustment  expenses 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.
<PAGE>



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

FORWARD-LOOKING STATEMENTS

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

Overview

Goran Capital,  Inc. (the "Company" or "Goran") owns insurance  companies  which
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

In December  2000,  management  initiated a  strategic  review of the  Company'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.  (See Note 23 of the financial  statements which discusses results of
the  discontinued  crop  segment.) The plan  includes a sale of certain  revenue
producing  assets of the  Company's  crop segment  along with plans to wind-down
remaining crop 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  consists  of  the  single  nonstandard  automobile
insurance segment. Management believes a transaction to complete the sale of the
crop book of business will be completed in the second quarter of 2001.

Nonstandard  Automobile Insurance Operations

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


<PAGE>



Results of Operations

Overview

2000 Compared to 1999

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 on continuing
operations for the year 1999 was $(47,000,000) or $(8.00) per share. Loss before
income  taxes and  distribution  on  minority  interest  was  $(53,347,000)  and
$(52,033,000) for 2000 and 1999,  respectively.  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)
in 2000 and  $(49,883,000)  or $(8.49)  per share in 1999  (basic and  diluted).
Premium rate  increases and  reductions  in loss ratios are the primary  factors
contributing to the reduction in losses of 2000.

Discontinued  operations  reported losses of $(17,041,000) and $(15,373,000) for
2000 and 1999,  respectively.  Underwriting losses and operation costs in excess
of administrative expense reimbursements contributed to posted losses.

1999 Compared To 1998

The Company reported a loss on continuing operations of $(47,000,000) or $(8.00)
per share (basic and diluted)  compared to a loss on  continuing  operations  of
$(2,515,000)  or $(0.43) per share in (basic and  diluted) in 1998.  Results for
1999 were  negatively  impacted by lower premium volume and a higher loss ratio.
These were the  results of  competitive  pricing in the  nonstandard  automobile
market,  untimely rate filings and problems encountered in implementation of the
Company's  consolidated  systems.  The Company also  increased loss reserves for
prior accident years by approximately  $16.4 million in 1999 due to adverse loss
development.

Years Ended December 31,  2000 and 1999

Gross Premiums Written

Gross  premiums  written have  decreased  23.0% or $54,302,000 in 2000 from 1999
levels.  Premium rate increases of approximately 14% were implemented throughout
2000 which were offset by a reduction in policies in force of 29%. The reduction
in written premiums was further affected by a shift during the second quarter of
2000 to writing a higher mix of six-month  policies while  management  evaluated
rate adequacy.

Net Premiums Written

Net premiums  written  represent the portion of premiums that are being retained
by  the  Company  after  consideration  for  risk  sharing  through  reinsurance
contracts.  As a result of losses in the Company's insurance subsidiaries and to
manage overall risk retention,  a reinsurance agreement was negotiated to cede a
portion of the gross  written  premiums  to a third  party.  The  Company  ceded
approximately  45% of its  gross  written  premiums  under  such a  quota  share
reinsurance contract that was effective January 1, 2000.

Net Premiums Earned

Premiums are earned ratably over the term of the underlying insurance contracts.
The reduction in net premiums  earned is reflective of the overall  reduction in
gross premiums written and the increase in ceded premiums.


<PAGE>



Fee Income

Fee income is derived from installment  billings and other services  provided to
policyholders.  The  reduction  in fee  income  of  7.1%  in the  year  2000  is
attributed  to the  reduction of insurance  policies in force of 29%,  offset by
earned fee rate increases from 1999.

Net Investment Income

Net  investment  income  decreased  7.3% in 2000 as  compared  to 1999.  This is
reflective  of the  decline  in  invested  assets  during a period of  declining
premiums and the payout of the prior year losses when settled in 2000.

Net Realized Capital Losses

Net realized  capital  losses were  $5,970,000  in 2000 as compared to a gain of
$44,000 in 1999.  Capital losses were realized in 2000 due to a liquidation  and
reinvestment  of a portion  of the equity  portfolio  during the year as well as
continued  liquidation  of  investments  to fund  operations  during a period of
declining premiums.

Losses and LAE

The loss and LAE ratio  (the ratio of claims and loss  adjusting  expenses  as a
percentage of earned  premium) was 78.2% for 2000 as compared to 92.6% for 1999.
The Company estimates accident year 2000 gross loss and LAE ratio to be 85.6% as
compared to its current estimate of 84.8% for accident year 1999.  Accident year
1999 reserves developed favorably during 2000, as a result, the current estimate
for accident year 1999 is 4.5% points lower than  projected as of year-end 1999.
The Company also  experienced  favorable  development on accident years 1998 and
prior.

The Company attributes the favorable development on prior years to actions taken
at the beginning of 2000 to  strengthen  its claims  function.  At that time the
Company replaced its existing claims  management team with new claims management
that improved the  performance  of the claims staff.  The new claims  management
also  evaluated the Company's  claims  practices and  procedures  and eliminated
those that interfered with timely and effective claims settlement.

Policy Acquisition and General and Administrative Expense

The Company reduced policy acquisition and general and  administrative  expenses
for the year 2000 to $70,591,000  or 27.8% from 1999 amounts.  This reduction is
reflective of a 24.8% decline in gross written  premiums,  an increase in ceding
commissions  associated with the quota share reinsurance  contract,  and overall
operating  expense  reductions.  As a  percentage  of net premiums  earned,  the
Company  experienced an increase in its gross expense ratio from 37.3% to 48.5%.
This  increase  was the result of the Company  ceding  approximately  45% of its
gross written premium under a quota share reinsurance contract.

Amortization of Intangibles

Amortization  expense  increased  in 2000  due to an  impairment  charge  on the
carrying  value  of  goodwill   resulting  from  the  Superior  Insurance  Group
Management,   Inc.  ("Superior  Group  Management")  acquisition  in  1997.  The
impairment  charge and amortization  expense  recognized in 2000 on goodwill was
$34,806,000.  Amortization of debt  acquisition  costs of $154,000  comprise the
balance of the year 2000 expense.

Income Tax Expense (Benefit)

The  variance in the rate from the  federal  statutory  rate of 35%,  before the
effect of a valuation  allowance  on deferred tax assets,  is  primarily  due to
nondeductible goodwill amortization and alternative minimum taxes.

At December 31, 2000 the Company's net deferred tax assets are fully offset by a
valuation  allowance.  Therefore,  the Company has not recognized the benefit of
tax losses carried forward.  Earnings in future periods will result in no income
tax expense until the current operating loss carryforwards are utilized.

Years Ended December 31, 1999 and 1998

Gross Premiums Written

Gross  premiums  written  decreased  22.2% or $67,344,000 in 1999 as compared to
1998.  This  reduction is primarily a result of system  implementation  problems
encountered  in  the  Company's   consolidated  operating  systems,  along  with
increased competition in the nonstandard insurance sector.

Net Premiums Written

Net premiums written decreased 18.6% in 1999 as compared to 1998. This reduction
was the  result  of the  reduction  of gross  premiums  written,  offset  by the
recapturing of gross premium ceded in 1998.

Net Premiums Earned

Premiums are earned ratably over the term of the underlying insurance contracts.
The reduction in net premiums  earned is reflective of the overall  reduction in
premiums written.

Fee Income

Fee income is derived from installment  billings and other services  provided to
policyholders.  Fee  income  declined  6.7% in 1999 as a result  of the  overall
reduction  in policies  in force of 16%,  offset by billing and service fee rate
increases put into effect during 1999.

Net Realized Capital Gains (Loss)

In 1999,  the  investment  portfolio  realized  a gain of  $44,000  compared  to
realized  gains  in 1998 of  $3,887,000  which  emanated  from a high  level  of
activity in the equity portfolio in 1998.

Losses and LAE

The loss and LAE ratio was 92.6%  for 1999 as  compared  to 81.2% for 1998.  The
increase  reflects  adverse  development  on  accident  years  1998 and prior of
approximately  6.6%.  The Company's  current  estimate of loss and LAE ratio for
accident  year 1999 is 84.8% as compared  to its  current  estimate of 80.3% for
accident  year 1998.  The increase in the accident  year loss ratio results from
product and pricing decisions and increases in claim frequency.

Policy Acquisition and General and Administrative Expenses

Policy  acquisition  and  general and  administrative  expenses  have  increased
primarily  as a  result  of  problems  encountered  with  the  Company's  policy
administration systems which resulted in higher expenses being incurred in 1999.
As a percentage of net premiums earned,  the Company  experienced an increase in
its  expense  ratio  from  29.2%  in 1998 to 37.3% in  1999.  This  increase  is
attributed to higher expenses as well as a 24.1%  reduction in written  premiums
for 1999.


<PAGE>



Amortization of Intangibles

Amortization of intangibles  includes goodwill from the acquisition of Superior,
additional  goodwill from the  acquisition of the minority  interest  portion of
Superior Group Management formerly, GGS Management Holdings,  Inc. ("GGSH"), and
debt or  preferred  security  issuance  costs.  Amortization  expense in 1999 of
$2,194,000 is an increase of 7.5% over 1998.

Income Tax Expense (Benefit)

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

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

Distributions on Preferred Securities

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

Symons International Group, Inc. - Florida

Goran's  wholly-owned  subsidiary,  Symons  International  Group, Inc. - Florida
("SIGF") is a specialized  surplus lines underwriting unit. SIGF's operations no
longer  fit the  Company's  strategic  operating  plan of  concentrating  on the
business segments of nonstandard  automobile 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.

Non-U.S. Operations

Granite Insurance Company

Granite Insurance Company ("Granite") is a Canadian federally licensed insurance
company  which  is  presently  servicing  its  investment  portfolio  and  a few
outstanding  claims.  Granite stopped writing  business on December 31, 1989 and
sold its book of Canadian business in June 1990. The outstanding claims continue
to be settled in accordance with actuarial estimates with moderate  redundancies
appearing in the most recent year.  Granite's  invested assets decreased to $2.8
million  from $3.0  million in 1999.  This is the result of realized  losses and
assumed  claims paid for the year.  Total net  outstanding  claims  decreased to
$243,000  in 2000 from  $368,000  in 1999.  It is  expected  that the run-off of
outstanding  claims will continue  through 2002.  Granite recorded a net loss of
$117,000 in 2000,  compared to a $179,000  net profit in 1999 and  $403,000  net
loss in 1998.

Granite Reinsurance Company Ltd.

Granite  Reinsurance Company Ltd. ("Granite Re") is managed by Atlantic Security
Ltd. of Bermuda and a corporate services management company in Barbados. Granite
Re  underwrites  finite  risk,  stop loss and quota share  reinsurance,  through
various programs in Bermuda, the United States and Canada. During 2000, 1999 and
1998,  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 $7.8 million, $12.7 million and $21.8 million for 2000,
1999 and 1998,  respectively.  Net  earnings  (loss)  were $7.5  million,  ($.2)
million and $1.1 million in 2000, 1999 and 1998, respectively.  The net earnings
for 2000 is 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 non affiliate.

In 1998,  Granite Re participated in Goran's  nonstandard  automobile  insurance
through a quota share treaty.  On January 1, 1999,  the  nonstandard  automobile
treaty was commuted resulting in a return premium of $11.2 million. There was no
other assumed automobile reinsurance in 1999.

Granite  Re's  capital  and surplus  was $14.7  million  and $6.6  million as of
December 31, 2000 and 1999, respectively.

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

Liquidity and Capital Resources

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

The  primary  source of funds  available  to SIG are fees from  policy  holders,
management fees and dividends from its subsidiaries.

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

The nonstandard  automobile insurance  subsidiaries' primary source of funds are
premiums,  investment  income and proceeds from the maturity or sale of invested
assets.  Such funds are used  principally for the payment of claims,  payment of
claims  settlement  costs,   operating  expenses  (primarily  management  fees),
commissions to independent agents,  premium taxes, dividends and the purchase of
investments.  There is  variability  to cash outflows  because of  uncertainties
regarding settlement dates for liabilities for unpaid losses.  Accordingly,  the
Company maintains  investment programs intended to provide adequate funds to pay
claims.  During 2000 and 1999, due to reduced  premium  volume,  the Company has
liquidated  investments  to pay claims.  The Company  historically  has tried to
maintain duration averages of 3.5 years. However, the reduction in new funds due
to lower premium has and will cause the Company to shorten duration. The Company
may incur cost of selling longer bonds to pay claims. Claim payments tend to lag
premium  receipts.  Due to the  decline  in  premium  volume,  the  Company  has
experienced  a  reduction  in its  investment  portfolio,  but to  date  has not
experienced any problems meeting its obligations for claims payments.

On August  12,  1997,  SIG's  trust  subsidiary  issued  $135  million  in trust
originated preferred securities ("Preferred  Securities") at a rate of 9.5% paid
semi-annually. The Preferred Securities are secured by senior subordinated notes
sold to the trust by SIG.
<PAGE>


The  Preferred  Securities  have a term of 30 years  with  semi-annual  interest
payments of $6.5  million  which  commenced  February 15,  1998.  The  Preferred
Securities may be redeemed in whole or in part after 10 years.

Beginning in February  2000,  SIG has deferred  interest  payments in accordance
with the  terms of the trust  indenture.  SIG may  defer  payment  of any or all
interest payments for up to five years. The unpaid interest  installment amounts
accrue  interest at 9.5%. SIG presently  expects to defer the interest  payments
due in August 2001.

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

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

These  restrictions  currently  apply as SIG's  consolidated  coverage ratio was
(1.52) in 2000,  and will  continue to apply until SIG's  consolidated  coverage
ratio  is in  compliance  with  the  terms  of the  trust  indenture.  SIG is in
compliance with these additional restrictions.

During  2000,  subsidiaries  of Goran  (Granite Re and  Granite)  purchased  $23
million of Preferred Securities.  As of December 31, 2000, the Company had a net
outstanding  balance of $112 million  related to the Preferred  Securities.  The
purchase of Preferred Securities during 2000 by subsidiaries of Goran results in
a $20,973,000 increase to the Company's consolidated stockholders' equity.

Net cash used by operating activities in 2000 aggregated $49,412,000 compared to
$15,968,000  in 1999 due to reduced cash  provided by  operations as a result of
lower premium volumes and continued losses.

The Company  believes cash flows in the nonstandard  automobile  operations from
premiums,  investment income and billing fees are sufficient to meet obligations
to policyholders and operating expenses for the foreseeable  future. This is due
primarily  to the lag time  between  receipt of  premiums  and claims  payments.
Accordingly,  while  there  can be no  assurance  as to the  sufficiency  of the
Company's cash flow in future periods,  the Company  believes that its cash flow
will be sufficient to meet all of the Company's operating expenses and operating
debt  service (not  including  the  Preferred  Securities)  for the  foreseeable
future.

GAAP  stockholders'  equity reflected a deficit of $72.7 million at December 31,
2000,  which does not  reflect  the  statutory  equity  upon  which the  Company
conducts its various insurance operations. The Company's insurance subsidiaries,
after the effects of codification,  had statutory  surplus of approximately  $28
million at December 31, 2000. (See Note 14 for discussion  regarding the effects
of codification on statutory surplus.)

Effects of Inflation

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

<PAGE>



Primary Differences Between GAAP and SAP

The financial  statements contained herein have been prepared in conformity with
GAAP which differ from  Statutory  Accounting  Practices  ("SAP")  prescribed or
permitted for insurance  companies by  regulatory  authorities  in the following
respects:  (i)  certain  assets  are  excluded  as  "Nonadmitted  Assets"  under
statutory  accounting;  (ii)  costs  incurred  by the  Company  relating  to the
acquisition  of new  business are expensed  for  statutory  purposes;  (iii) the
investment in wholly-owned  subsidiaries  is  consolidated  for GAAP rather than
valued on the  statutory  equity  method.  The net income or loss and changes in
unassigned surplus of the subsidiaries is reflected in net income for the period
rather  than  recorded  directly  to  unassigned  surplus;  (iv) fixed  maturity
investments  are  reported  at  amortized  cost or market  value  based on their
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 not recognized on a statutory  basis;  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
("Codification"),  which replaces 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 which
impacts the Company's insurance subsidiaries will, among other things, limit the
statutory  carrying value of electronic data  processing  equipment and deferred
tax assets in determining statutory surplus. The consolidated  statutory surplus
of insurance  subsidiaries  as of December 31, 2000 is $39.4 million.  Effective
January 1, 2001, the consolidated statutory surplus was reduced by $11.4 million
to $28.0 million, giving recognition to the new accounting principles.

SFAS No. 133,  Accounting for  Derivative  Instruments  and Hedging  Activities,
issued in June 1998, requires companies to recognize all derivative contracts as
either  assets or  liabilities  in the balance sheet and to measure them at fair
value.  If  certain  conditions  are  met,  a  derivative  may  be  specifically
designated as a hedge,  the objective of which is to match the timing of gain or
loss  recognition  on the hedging  derivative  with the  recognition  of (1) the
changes in the fair value of the hedge asset or liability that are  attributable
to the  hedged  risk  or (2)  the  earnings  effect  of  the  hedged  forecasted
transaction.  For a derivative not designated as a hedging instrument,  the gain
or loss is  recognized  in income in the  period of  change.  SFAS No.  133,  as
amended by SFAS No. 137 and 138, is effective for all fiscal  quarters of fiscal
years  beginning after June 15, 2000. The impact of SFAS No. 133 does not have a
material effect on the Company's financial position or results of operations.

In March 2000, the Financial  Accounting  Standards Board issued  Interpretation
No.  44  ("FIN  44"),  Accounting,  for  Certain  Transactions  Involving  Stock
Compensation,  an  interpretation  APB  Opinion  No.  25. FIN 44  clarifies  the
application of Opinion No. 25 for (a) the definition of employee for purposes of
applying  Opinion  No.  25,  (b) the  criteria  for  determining  whether a plan
qualifies as a non-compensatory plan, (c) the accounting consequences of various
modifications  to the  previously  fixed  stock  option  or  award,  and (d) the
accounting  for  an  exchange  of  stock  compensation   awards  in  a  business
combination.  FIN 44 is effective  July 2, 2000, but certain  conclusions  cover
specific  events that occur after either December 15, 1998, or January 12, 2000.
The impact of FIN 44 did not have a material  effect 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
which prescribe the kind, quality and concentration of investments.  In general,
these laws and  regulations  permit  investments,  within  specified  limits and
subject to certain qualifications,  in federal, state and municipal obligations,
corporate bonds, preferred and common securities, real estate mortgages and real
estate.  The Company's  investments in real estate and mortgage loans  represent
1.5% of the Company's aggregate  investments.  The investment  portfolios of the
Company at December 31, 2000, consisted of the following (in thousands):
<TABLE>
<CAPTION>

                                                                            Cost or
        Type of Investment                                               Amortized Cost   Market Value

Fixed maturities:
    United  States  Treasury  securities  and  obligations  of  United
<S>                                                                          <C>              <C>
      States government corporation and agencies                             $59,389          $59,742
    Obligations of states and political subdivisions                             241              242
    Corporate securities                                                      48,197           45,933
                                                                              ------           ------
Total Fixed Maturities                                                       107,827          105,917
Equity Securities:
    Common Stocks                                                             20,268           18,690
Short-Term investments                                                        17,594           17,480
Mortgage loans                                                                 1,870            1,870
Other invested assets                                                          1,331            1,331
                                                                               -----            -----
Total Investments                                                           $148,890         $145,288
                                                                            ========         ========
</TABLE>

The following  table sets forth  composition  of the fixed  maturity  securities
portfolio of the Company by time to maturity as of December 31 (in thousands):
<TABLE>
<CAPTION>

                                                       2000                               1999
                                                       ----                               ----
                                                            Percent Total                      Percent Total
Time to Maturity                            Market Value      Market Value      Market Value     Market Value
----------------                            ------------      ------------      ------------     ------------

<S>                                              <C>                 <C>              <C>                <C>
1 year or less                                   $11,792             11.1%            $3,599             2.1%
More than 1 year through 5 years                  42,966              40.6            87,820             52.1
More than 5 years through 10 years                14,825              14.0            38,266             22.7
More than 10 years                                22,724              21.5            35,641             21.2
                                                  ------              ----            ------             ----
                                                  92,307              87.2           165,326             98.1
Mortgage-backed securities                        13,610              12.8             3,239              1.9
                                                  ------              ----             -----              ---
Total                                           $105,917            100.0%          $168,565           100.0%
                                                ========            ======          ========           ======
</TABLE>

The  following  table  sets forth the  ratings  assigned  to the fixed  maturity
securities of the Company as of December 31 (in thousands):
<TABLE>
<CAPTION>

                                                       2000                               1999
                                                       ----                               ----
                                                            Percent Total                      Percent Total
---------------------------------------     Market Value      Market Value      Market Value     Market Value
                                            ------------      ------------      ------------     ------------
Rating (1)

<S>                                              <C>                 <C>            <C>                 <C>
Aaa or AAA                                       $68,717             64.9%          $104,275            61.9%
Aa or AA                                           3,861               3.6             3,381              2.0
A                                                 12,515              11.8            24,957             14.8
Baa or BBB                                        14,861              14.0            21,576             12.8
Ba or BB                                           5,148               4.9            13,674              8.1
Other below investment grade                         815                .8               702               .4
                                                     ---                --               ---               --
Total                                           $105,917            100.0%          $168,565           100.0%
                                                ========            ======          ========           ======
</TABLE>

(1)  Ratings  are  assigned  by  Standard  &  Poor's  Corporation,  and when not
available, are based on ratings assigned by Moody's Investors Service, Inc..
<PAGE>
The  investment  results of the Company for the periods  indicated are set forth
below (in thousands):
<TABLE>
<CAPTION>

                                                                      Years Ended December 31,
                                                              2000               1999              1998

<S>                                                           <C>               <C>                <C>
Net investment income (1)                                     $12,171           $13,125            $13,126
Average investment portfolio (2)                             $187,243          $232,947           $231,417
Pre-tax return on average investment portfolio                   6.5%              5.6%               5.7%
Net realized gains (losses)                                  $(5,970)               $44             $3,887
</TABLE>

(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.

If interest  rates were to increase 10% from the  December 31, 2000 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 investment  through active investment  management  utilizing
third-party  professional  administrators,  in accordance  with  pre-established
investment policy guidelines  established and reviewed regularly by the Board of
Directors of the Company.  Accordingly,  the entire  portfolio of fixed maturity
securities  is  available  to be sold in response to changes in market  interest
rate;  changes in relative  values of individual  securities  and asset sectors;
changes in prepayment risks;  changes in credit quality; and liquidity needs, as
well as other factors.

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

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

                            Interest Rate Sensitivity
                      Principal Amount by Expected Maturity
                              Average Interest Rate
                           (U.S. dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                              Fair Value
                                                                                    There-after                12/31/00
                                                                                    -----------                --------
                            2001        2002        2003       2004        2005                     Total
                            ----        ----        ----       ----        ----                     -----
Assets
<S>                         <C>          <C>         <C>       <C>         <C>          <C>         <C>          <C>
Available for sale          $13,637      $7,380      $9,655    $15,891     $10,004      $51,260     $107,827     $105,917
Average interest rate          7.5%        7.9%        6.7%       6.9%        7.0%         7.0%         7.1%         7.2%

Liabilities
Preferred securities             --          --          --         --                 $112,000     $112,000      $16,800
Average interest rate            --          --          --         --                     9.5%         9.5%         9.5%


</TABLE>

<PAGE>



CONSOLIDATED FINANCIAL STATEMENTS
as of December 31, 2000 and 1999
(U.S. dollars in thousands, except share data)

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                        2000         1999
ASSETS:
Investments:
<S>                                                                                 <C>          <C>
Fixed maturities                                                                    $107,827     $174,097
Equity securities                                                                     20,268       15,511
Short-term investments, at amortized cost, which approximates market                  17,594       32,634
Mortgage loans, at cost                                                                1,870        1,990
Other invested assets                                                                  1,331          936
                                                                                       -----          ---
TOTAL INVESTMENTS                                                                    148,890      225,168
Investments in and advances to related parties                                         4,254        1,646
Cash and cash equivalents                                                              3,230        2,215
Receivables, net of allowances of $1,940 and $1,479                                   54,370       68,523
Reinsurance recoverable on paid and unpaid losses, net                                44,843        4,790
Prepaid reinsurance premiums                                                          24,774          878
Deferred policy acquisition costs                                                      6,454       13,908
Property and equipment, net of accumulated depreciation                               12,400       15,655
Intangible assets                                                                      4,983       40,116
Other assets                                                                           3,784        2,415
Assets of discontinued operations                                                    132,050      144,608
                                                                                     -------      -------
TOTAL ASSETS                                                                        $440,032     $519,922
                                                                                    ========     ========

LIABILITIES AND STOCKHOLDER'S DEFICIT
LIABILITIES:
Losses and loss adjustment expenses                                                 $113,149     $157,425
Unearned premiums                                                                     62,386       80,561
Reinsurance payables                                                                  63,632        5,490
Distributions payable on preferred securities                                         15,263        4,809
Other                                                                                 14,904       23,525
Liabilities of discontinued operations                                               131,366      125,999
                                                                                     -------      -------
TOTAL LIABILITIES                                                                    400,700      397,809
                                                                                     -------      -------

Commitments and Contingencies
Minority Interest:
Company-obligated  mandatorily  redeemable  preferred  stock of trust  subsidiary
    holding solely parent                                                            112,000      135,000

STOCKHOLDERS' EQUITY (DEFICIT):

Common Stock                                                                          19,132       19,317
Contributed surplus                                                                   23,748        2,775
Cumulative translation adjustment                                                       (291)          13
Retained deficit                                                                    (115,257)     (34,992)
                                                                                    ---------     --------
TOTAL STOCKHOLDERS' DEFICIT                                                          (72,668)     (12,887)
                                                                                     --------     --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                         $440,032     $519,922
                                                                                    ========     ========
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>


<PAGE>


CONSOLIDATED  FINANCIAL  STATEMENTS for the years ended December 31, 2000, 1999,
and 1998  (U.S.  dollars  in  thousands,  except  per share  data)  CONSOLIDATED
STATEMENTS OF EARNINGS (LOSS)
<TABLE>
<CAPTION>
                                                                                      2000           1999        1998
                                                                                      ----           ----        ----
<S>                                                                               <C>            <C>          <C>
Gross premiums written                                                            $182,099       $236,401     $303,745
Less ceded premiums                                                                (78,637)         7,361       (4,106)
                                                                                   --------         -----       -------
    NET PREMIUMS WRITTEN                                                          $103,462       $243,762     $299,639
                                                                                  ========       ========     ========
    NET PREMIUMS EARNED                                                           $145,532       $261,800     $281,276
Fee income                                                                          14,239         15,335       16,431
Net investment income                                                               12,171         13,125       13,126
Net realized capital gain (loss)                                                    (5,970)            44        3,887
                                                                                    -------            --        -----
    TOTAL REVENUES                                                                 165,972        290,304      314,720
                                                                                   -------        -------      -------
Expenses:
    Losses and loss adjustment expenses                                            113,768        242,408      228,342
    Policy acquisition and general and administrative expenses                      70,591         97,735       82,020
    Amortization of intangibles                                                     34,960          2,194        2,040
                                                                                    ------          -----        -----
    TOTAL EXPENSES                                                                 219,319        342,337      312,402
                                                                                   -------        -------      -------
    INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY      (53,347)       (52,033)       2,318
                                                                                   --------       --------       -----
        INTEREST
Income taxes:
    Current income tax expense (benefit)                                               487           (765)       6,167
    Deferred income tax expense (benefit)                                           (2,636)         7,183       (4,896)
                                                                                    -------         -----       -------
    TOTAL INCOME TAXES                                                              (2,149)         6,418        1,271
                                                                                    -------         -----        -----
    INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST              (51,198)       (58,451)       1,047
Minority Interest:
    Earnings in consolidated subsidiary                                                 --         19,787        4,849
    Distributions on preferred securities, net of tax of $0 in 2000, $4,489
    in 1999 and $4,529 in 1998                                                     (12,026)        (8,336)      (8,411)
                                                                                   --------        -------      -------
    LOSS FROM CONTINUING OPERATIONS                                                (63,224)       (47,000)      (2,515)
Discontinued Operations:
    Loss from operations of discontinued segment, less applicable income           (16,141)       (15,373)      (9,421)
    taxes of $0 in 2000 and 1999 and $(3,277) in 1998
    Loss on disposal of discontinued segment less applicable taxes of nil             (900)            --           --
LOSS FROM DISCONTINUED OPERATIONS                                                  (17,041)       (15,373)      (9,421)
                                                                                   --------       --------      -------
NET LOSS                                                                          $(80,265)      $(62,373)    $(11,936)
                                                                                  =========      =========    =========
Weighted average shares outstanding - basic and fully diluted                        5,822          5,876        5,841
                                                                                     =====          =====        =====
Net loss from continuing operations per share - basic and fully diluted            $(10.86)        $(8.00)       $(0.43)
                                                                                   ========        =======       =======
Net loss of discontinued operations per share - basic and fully diluted             $(2.93)        $(2.61)      $(1.61)
                                                                                    =======        =======      =======
Net loss per share - basic and fully diluted                                       $(13.79)       $(10.61)      $(2.04)
                                                                                   ========       ========      =======
The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

CONSOLIDATED FINANCIAL STATEMENTS
for the years ended December 31, 2000, 1999 and 1998 (U.S. dollars in thousands, except number of shares)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

                                             Common Stock
                                                                                   Retained     Cumulative       Total
                                                                   Contributed     (Deficit)   Transulation  Stockholders'
                                           Shares      Amount        Surplus       Earnings     Adjustment       Equity

<S>                                       <C>          <C>               <C>         <C>            <C>            <C>
BALANCE AT JANUARY 1, 1998                 5,730,276    $18,010           $2,775      $39,839        $(292)         $60,332

Comprehensive Income:
Net Loss                                          --         --               --     (11,936)            --        (11,936)
Change in Cumulative Translation
Adjustment                                        --         --               --           --           544             544
Issuance of common shares                    215,922      1,533               --           --            --           1,533
Purchase of common shares                   (69,800)      (226)               --        (522)            --           (748)
                                                                                                         --
BALANCE AT DECEMBER 31, 1998               5,876,398    $19,317           $2,775      $27,381          $252         $49,725
                                           =========    =======           ======      =======          ====         =======

Comprehensive Income:
Net Loss                                          --         --               --     (62,373)            --        (62,373)
Change in Cumulative Translation
Adjustment                                        --         --               --           --         (239)           (239)
BALANCE AT DECEMBER 31, 1999               5,876,398    $19,317           $2,775    $(34,992)           $13       $(12,887)
                                           =========    =======           ======    =========           ===       =========

Comprehensive Income:
Net Loss                                          --         --               --     (80,265)            --        (80,265)
Preferred Securities purchase                     --         --           20,973           --            --          20,973
Change in Cumulative Translation
Adjustment                                        --         --               --           --         (304)           (304)
Purchase of common shares                  (100,000)      (185)               --           --            --           (185)
BALANCE AT DECEMBER 31, 2000               5,776,398    $19,132          $23,748   $(115,257)        $(291)       $(72,668)
                                           =========    =======          =======   ==========        ======       =========

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

</TABLE>


<PAGE>


CONSOLIDATED FINANCIAL STATEMENTS
for the years ended December 31, 2000, 1999 and 1998 (U.S. dollars in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                2000            1999           1998
                                                                                ----            ----           ----
Cash flows from operating activities
<S>                                                                            <C>             <C>           <C>
    Net loss                                                                   $(80,265)       $(62,373)     $(11,936)
    Adjustments to reconcile net earnings (loss) to net cash provided
        from operations:
        Minority interest                                                            --         (19,787)       (4,849)
        Depreciation, amortization, impairment and other                         38,983           5,858         4,209
        Deferred income tax expense                                              (2,635)          4,177           138
        Net realized capital (gain) loss                                          5,970             (22)       (3,887)
        Gain on sale of capital assets                                               --              --          (267)
        Net changes in operating assets and liabilities (net of assets
        acquired):
           Receivables                                                           14,153          (6,114)       (3,653)
           Reinsurance recoverable on losses, net                               (40,053)         20,922        30,048
           Prepaid reinsurance premiums                                         (23,896)          5,443        21,475
           Federal income taxes recoverable (payable)                                --          11,379        (8,618)
           Deferred policy acquisition costs                                      7,454           2,424        (4,483)
           Other assets and liabilities                                          (9,816)          7,256        (2,447)
           Losses and loss adjustment expenses                                  (44,276)         16,941         5,397
           Unearned premiums                                                    (18,175)        (17,368)      (11,873)
           Reinsurance payables                                                  58,142          15,329       (24,638)
           Distribution payable on preferred securities                          10,454              --            --
           Net assets from discontinued operations                               34,548             (33)       32,004
                                                                                 ------             ----       ------
NET CASH PROVIDED/(USED) BY OPERATIONS                                          (49,412)        (15,968)       16,620
                                                                                --------        --------       ------
    Cash flow from investing activities net of assets acquired:
        Net sales (purchases) of short-term investments                          15,040         (13,211)       (8,807)
        Proceeds from sales, calls and maturities of fixed maturities            77,641         206,742       123,508
        Purchases of fixed maturities                                           (10,181)       (182,453)     (142,114)
        Proceeds from sales of equity securities                                 16,736          11,215        69,379
        Purchase of equity securities                                           (25,408)         (9,850)      (42,909)
        Proceeds from repayment of mortgage loans                                   120              75           123
        Purchase of property and equipment                                       (1,663)         (6,414)       (4,870)
        Purchase of minority interest and subsidiaries                               --              --        (1,208)
        Net investing activities from discontinued operations                      (150)         (1,385)       (7,060)
        Net proceeds from sales (purchases) of other investments                   (415)         (2,161)         (791)
                                                                                   -----         -------         -----
NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES                                 71,720           2,558       (14,749)
                                                                                 ------           -----       --------
    Cash flow from financing activities net of assets acquired:
       Purchase of affiliate preferred securities                                (2,027              --            --
        Proceeds from issue of share capital                                         --              --           356
        Redemption of share capital                                                (185)             --          (748)
        Net financing activities from discontinued operations                   (16,473)          4,954           164
        Loans from and (repayments to) related parties                           (2,608)             80        (1,601)
                                                                                 -------             --        -------
NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES:
                                                                                (21,293)          5,034        (1,829)
                                                                                --------          -----        -------
Increase (decrease) in cash and cash equivalents                                  1,015          (8,376)           42
Cash and cash equivalents, beginning of year                                      2,215          10,591        10,549
                                                                                  -----          ------        ------
Cash and cash equivalents, end of year                                           $3,230          $2,215       $10,591
                                                                                 ======          ======       =======

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</TABLE>


<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 follows:

Symons International Group, Inc. ("SIG") is a 73% owned subsidiary of Goran. The
Company  operates in one  segment  which is the sale of  nonstandard  automobile
insurance.  The Company's  crop insurance  operations  were  discontinued  as of
December 31, 2000.  The  Company's  products  are marketed  through  independent
agents and brokers. Its insurance subsidiaries are licensed in 35 states.

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

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

     Superior  Insurance Group Management,  Inc ("Superior Group  Management") 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);

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

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

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

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

c.   Significant  Estimates:  The most  significant  estimates in the  Company's
     balance sheet are the  determination of prepaid policy  acquisition  costs,
     the reserve for  insurance  losses and loss  adjustment  expenses,  and the
     reserve  estimated for discontinued  operations.  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 loss  adjustment  expenses  is  based  on past  loss
     experience and  consideration of current claim trends as well as prevailing
     social,  economic and legal  conditions.  Although  management's  estimates
     currently are not expected to change in the foreseeable  future,  the costs
     the Company  will  ultimately  incur could differ from the amounts that are
     assumed to be incurred based on the assumptions made.

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

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

     Fixed  maturities  and equity  securities are carried at amortized cost for
fixed maturities and cost for equity securities.

     Real estate at cost, less allowances for depreciation.

     Mortgage loans at outstanding principal balance.

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

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

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

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 and the  straight-line  method for other  property and equipment over
     their  estimated  useful lives ranging from five to seven years.  Asset and
     accumulated  depreciation  accounts  are relieved  for  dispositions,  with
     resulting gains or losses reflected in net income.

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

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 their carrying  amounts or fair value
     less cost to sell.

k.   Losses and Loss Adjustment  Expenses:  Reserves for losses and loss
     adjustment  expenses include estimates for reported unpaid
     losses and loss  adjustment  expenses  and for  estimated  losses and loss
     adjustment  expenses  that have been  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 its unpaid loss and loss  adjustment  expense
     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
     of the estimated  amount of a claim becomes known during
     the course of its  settlement.  The gross  reserves  for losses and loss
     adjustment  expenses  are  reported  net of  anticipated
     receivables for salvage and subrogation of approximately $6,983,000 and
     $8,506,000 at December 31, 2000 and 1999, respectively.

l.   Preferred  Securities:  Preferred  Securities  represent  company-obligated
     mandatorily  redeemable  securities  of  a  trust subsidiary  of SIG
     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  utilizes the liability method of accounting for
     deferred income taxes. Under the liability method, companies will establish
     a deferred  tax  liability or asset for the future tax effects of temporary
     differences  between  book and taxable  income.  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.   Accounting Changes:  In June 1998  SFAS No.  133,  as  amended,
     "Accounting  for  Derivative  Instruments  and  Hedging
     Activities"  was issued,  to be effective for fiscal quarters and
     fiscal years beginning after June 15, 2000. The Company does not
     have any derivative  instruments or hedging  activities,  therefore
     there has been no material  impact on the Company's  financial
     statements or notes thereto.

     In  March  2000,   the   Financial   Accounting   Standards   Board  issued
     Interpretation  No. 44 ("Fin 44"),  Accounting,  for  Certain  Transactions
     Involving Stock Compensation,  an interpretation APB Opinion No. 25. FIN 44
     clarifies  the  application  of Opinion  No. 25 for (a) the  definition  of
     employee  for  purposes of applying  Opinion No. 25, (b) the  criteria  for
     determining  whether a plan qualifies as a  non-compensatory  plan, (c) the
     accounting  consequences of various  modifications  to the previously fixed
     stock  option or award,  and (d) the  accounting  for an  exchange of stock
     compensation awards in a business combination.  FIN 44 is effective July 2,
     2000, but certain conclusions cover specific events that occur after either
     December 15, 1998, or January 12, 2000. The impact of FIN 44 did not have a
     material  effect  on  the  Company's   financial  position  or  results  of
     operations.

p.   Earnings Per Share:  The  Company's  basic  earnings per share calculations
     are based upon the  weighted  average  number of
     shares of common stock  outstanding  during each period.
     Common stock  equivalents are  anti-dilutive,  therefore,  fully diluted
     earnings per share is the same as basic earnings per share.


q.   Reclassifications:  Amounts from prior periods have been reclassified for
     comparability to the 2000 presentation.


2.   Corporate Reorganization and Acquisitions:

On August 12, 1997,  the Company  purchased the remaining  minority  interest in
Superior Group Management for $61 million in cash. The excess of the acquisition
price over the minority interest  liability 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.


<PAGE>



3.   Investments:

Investments are summarized as follows:
<TABLE>
<CAPTION>

                                                      Cost or                                   Estimated
--------------------------------------------------  Amortized             Unrealized             Market
                                                        Cost               Gain Loss              Value
December 31, 2000 (in thousands)

Fixed Maturities:
U.S.  Treasury  securities and obligations of U.S.
    government corporations and agencies
<S>                                                    <C>              <C>          <C>         <C>
                                                       $59,389          $541         $(188)      $59,742
Obligations of states and political subdivisions           241             1            --           242
Corporate securities                                    48,197           177        (2,441)       45,933
                                                        ------           ---        -------       ------
    TOTAL FIXED MATURITIES                             107,827           719        (2,629)      105,917
Equity securities                                       20,268         1,754        (3,332)       18,690
Short-term investments                                  17,594            --          (114)       17,480
Mortgage loans                                           1,870            --            --         1,870
Other invested assets                                    1,331            --            --         1,331
                                                         -----            --            --         -----

    TOTAL INVESTMENTS                                 $148,890        $2,473       $(6,075)     $145,288
                                                      ========        ======       ========     ========

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

Fixed Maturities:
U.S.  Treasury  securities and obligations of U.S.
    government corporations and agencies               $61,554          $103        $(2,741)    $58,916
Obligations of states and political subdivisions            42            --             (4)         38
Corporate securities                                   112,501            14         (2,904)    109,611
                                                       -------            --         -------    -------
    TOTAL FIXED MATURITIES                             174,097           117         (5,649)    168,565
                                                       -------           ---         -------    -------
Equity securities                                       15,511           884         (2,840)     13,555
Short-term investments                                  32,634            --             --      32,634
Mortgage loans                                           1,990            --             --       1,990
Other invested assets                                      936            --             --         936
                                                           ---            --             --         ---

    TOTAL INVESTMENTS                                 $225,168        $1,001        $(8,489)   $217,680
                                                      ========        ======        ========   ========

</TABLE>

At December 31, 2000,  94.4% of the Company's  fixed  maturities were considered
investment grade by Standard & Poors  Corporation or Moody's Investor  Services,
Inc.  Securities  with quality  ratings Baa and above are considered  investment
grade securities. In addition, the Company's investments in fixed maturities did
not contain any significant geographic or industry concentration of credit risk.

The amortized  cost and estimated  market value of fixed  maturities at December
31,  2000,  by  contractual  maturity,  are  shown in the table  which  follows.
Expected  maturities will differ from contractual  maturities  because borrowers
may have the right to call or prepay  obligations  with or without  penalty  (in
thousands):



<PAGE>

<TABLE>
<CAPTION>


                                                                                     Estimated Market
                                                                      Amortized Cost          Value

Maturity:
<S>                                                                         <C>                <C>
    Due in one year or less                                                 $11,801            $11,792
    Due after one year through five years                                    44,101             42,966
    Due after five years through ten years                                   15,162             14,825
    Due after ten years                                                      23,283             22,724
    Mortgage-backed securities                                               13,480             13,610
                                                                             ------             ------
TOTAL                                                                      $107,827           $105,917
                                                                           ========           ========

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

                                                                     2000       1999           1998
                                                                     ----       ----           ----

Proceeds from sales                                               $94,497        $218,032      $193,010
Gross gains realized                                               $1,361          $3,351       $10,684
Gross losses realized                                             $(7,331)       $(3,307)      $(6,797)

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

                                                                 2000            1999              1998
                                                                 ----            ----              ----

Fixed maturities                                                   $9,342     $12,150           $11,699
Equity securities                                                     344         401               596
Cash and short-term investments                                     1,269       1,232             1,286
Mortgage loans                                                         --         152               173
Other                                                               1,318        (173)               32
                                                                    -----        -----               --
Total investment income                                            12,273      13,762            13,786
Investment expenses                                                 (102)        (637)            (660)
                                                                    -----        -----            -----
Net investment income                                             $12,171     $13,125           $13,126
                                                                  =======     =======           =======

</TABLE>
  Investments with a market value of $16,042,000 and $20,639,000 (amortized cost
  of  $15,993,000   and   $20,652,000)   as  of  December  31,  2000  and  1999,
  respectively,  were on deposit in the United  States and Canada.  The deposits
  are required by various insurance  departments and others to support licensing
  requirements and certain reinsurance contracts, respectively.

4.   Deferred Policy Acquisition Costs:

Policy  acquisition  costs are  capitalized  and amortized  over the life of the
policies.  Policy  acquisition  costs are those  costs  directly  related to the
issuance  of  insurance  policies  including  commissions,  premium  taxes,  and
underwriting  expenses net of  reinsurance  commission  income on such policies.
During  1999 the  Company  changed  its method of  calculating  deferred  policy
acquisition  costs by  including  investment  income in the  computation.  Prior
period calculations did not consider investment income. The effect of the change
was to increase policy  acquisition  costs by approximately  $4,071,000 in 1999.
Policy   acquisition   costs  both  acquired  and  deferred,   and  the  related
amortization charged to income were as follows (in thousands):

                                        2000            1999           1998
                                        ----            ----           ----

Balance, beginning of year               $13,908      $16,332        $11,849
Costs deferred during year                29,999       40,241         56,041
Amortization during year                (37,453)      (42,665)       (51,558)
                                        --------      --------       --------
Balance, end of year                      $6,454      $13,908        $16,332
                                          ======      =======        =======

5.   Property and Equipment:

Property and equipment at December 31 are summarized as follows (in thousands):
<TABLE>
<CAPTION>

                                                                 Accumulated
                                                   2000 Cost     Depreciation      2000 Net     1999 Net
                                                   ---------     ------------      --------     --------

<S>                                                       <C>              <C>           <C>          <C>
Land                                                      $100             $ --          $100         $100
Buildings                                                4,361            1,397         2,964        2,749
Office furniture and equipment                           3,899            2,960           939        1,669
Automobiles                                                110               46            64          103
Computer equipment                                      14,112            5,779         8,333       11,034
                                                        ------            -----         -----       ------
Total                                                  $22,582          $10,182       $12,400      $15,655
                                                       =======          =======       =======      =======

</TABLE>

Accumulated  depreciation  at  December  31, 1999 was  $9,720,000.  Depreciation
expense related to property and equipment for the years ended December 31, 2000,
1999 and 1998 were $3,507,000 $3,414,000 and $1,668,000, respectively.

6.   Intangible Assets:

In accordance with generally  accepted  accounting  principles,  the Company has
determined the carrying value of goodwill that resulted from the  acquisition of
Superior Group Management  exceeds its fair value and an impairment charge equal
to the  carrying  value  should  be  recorded  as of  December  31,  2000.  This
determination  was made  considering  the series of  continued  losses which the
company has  experienced,  the reduction in the volume of premiums  written,  as
well as an evaluation of future cash flows. Based on the assessment, a charge of
$33,464,000  was  recorded  in the  fourth  quarter  of  2000 to  write-off  the
remaining  carrying  value of the related  goodwill.  Such charge is included as
amortization of intangibles expense in the accompanying financial statements.

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

                                                                 Accumulated
                                                   2000 Cost     Depreciation      2000 Net     1999 Net
                                                   ---------     ------------      --------     --------

<S>                                                    <C>              <C>            <C>         <C>
Goodwill                                               $39,471          $38,262        $1,209      $35,044
Deferred debt costs                                      4,342              568         3,774        4,718
Other                                                    1,293            1,293            --          354
                                                         -----            -----            --          ---
                                                       $45,106          $40,123        $4,983      $40,116
                                                       =======          =======        ======      =======
</TABLE>

Accumulated  amortization at December 31, 1999 was $5,163,000.  Amortization and
impairment expense related to intangible assets for the years ended December 31,
2000, 1999 and 1998 was $34,960,000, $2,194,000 and $2,040,000 respectively.


<PAGE>



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

Activity in the  liability  for unpaid  losses and loss  adjustment  expenses is
summarized as follows (in thousands):
<TABLE>
<CAPTION>

                                                                               2000       1999        1998
                                                                               ----       ----        ----

<S>                                                                        <C>           <C>         <C>
Balance at January 1                                                       $157,425      $140,484    $135,087
Less reinsurance recoverables                                                 3,411         1,301       8,631
                                                                              -----         -----       -----
    NET BALANCE AT JANUARY 1                                                154,014       139,183     126,456
                                                                            -------       -------     -------
Incurred related to:
Current year                                                                132,781       217,686     214,743
Prior years                                                                 (19,013)       24,722      13,599
                                                                            --------       ------      ------
    TOTAL INCURRED                                                          113,768       242,408     228,342
                                                                            -------       -------     -------
Paid related to:
Current year                                                                 89,612       126,526     129,947
Prior years                                                                  84,800       101,051      85,668
                                                                             ------       -------      ------
    TOTAL PAID                                                              174,412       227,577     215,615
                                                                            -------       -------     -------
    NET BALANCE AT DECEMBER 31                                               93,370       154,014     139,183
Plus reinsurance recoverables                                                19,779         3,411       1,301
                                                                             ------         -----       -----
    BALANCE AT DECEMBER 31                                                 $113,149      $157,425    $140,484
                                                                           ========      ========    ========
</TABLE>

Reserve estimates are regularly adjusted in subsequent reporting periods, as new
facts and  circumstances  emerge which 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  earnings  in the  period  when the need for the  adjustment
becomes  apparent.  The foregoing  reconciliation  indicates  favorable  reserve
development  of  $19,013,000  on the December 31, 1999,  reserves and  deficient
reserve  developments  of  $24,722,000  and  $13,599,000  on the  reserves as of
December  31, 1998 and  December  31,  1997,  respectively.  The 1998  deficient
reserve  development  occurred  primarily due to  volatility  in the  historical
trends for nonstandard  automobile  business as the result of significant growth
during 1996 and 1997. The 1999 deficient reserve development  resulted primarily
from a higher than  expected  frequency and severity on  nonstandard  automobile
claims.  The  favorable  reserve  development  during 2000 resulted from a major
restructuring  and  strengthening  of  the  claims  function  effective  at  the
beginning  of 2000.  At that  time the  Company  replaced  its  existing  claims
management team with new claims  management that improved the performance of the
claims staff. The new claims management  implemented practices and procedures to
improve the effectiveness and timeliness of claims settlement.

The  anticipated  effect of inflation is implicitly  considered  when estimating
losses  and  loss  adjustment  expenses  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 loss  adjustment  expenses have been  established  when
sufficient  information  has been  developed to indicated 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. Company-Obligated Mandatorily Redeemable Preferred Stock of Trust Subsidiary
    Holding Soley Parent Debentures:

On August 12, 1997, SIG's wholly owned trust  subsidiary  issued $135 million in
preferred   securities   ("Preferred   Securities")  at  a  rate  of  9.5%  paid
semi-annually.   The  principal  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 are
amortized over the term of the Preferred Securities (30 years).

The Preferred  Securities  represent  company-obligated  mandatorily  redeemable
securities of subsidiary  holding solely parent debentures and have a term of 30
years with  semi-annual  interest  payments  commencing  February 15, 1998.  The
Preferred Securities may be redeemed in whole or in part by the holders after 10
years. The annual Preferred  Security  obligations of approximately  $13 million
per year is funded from SIG's nonstandard  automobile  management  company.  The
nonstandard  auto funds are the result of management  and billing fees in excess
of operating costs. Under the terms of the indenture,  SIG is permitted to defer
semi-annual  interest  payments  for up to five years.  SIG has elected to defer
interest  payments  beginning in February 2000.  SIG presently  intends to defer
interest payment due in August 2001.

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

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

These  restrictions  currently  apply as SIG's  consolidated  coverage ratio was
(1.52) in 2000,  and will  continue to apply until SIG's  consolidated  coverage
ratio  is in  compliance  with  the  terms  of the  trust  indenture.  SIG is in
compliance with these additional restrictions.

During 2000, subsidiaries of Goran (Granite Reinsurance Company Ltd. and Granite
Insurance Company) purchased $23 million of Preferred Securities. As of December
31, 2000, the Company had a net  outstanding  balance of $112 million related to
the Preferred  Securities.  The purchase of the Preferred Securities during 2000
by  subsidiaries  of Goran  results in a  $20,973,000  increase to the Company's
consolidated stockholders' equity.

9.       Capital Stock

The Company's authorized share capital consists of:

(a)      First Preferred shares

An unlimited  number of first preferred  shares of which none are outstanding at
December 31, 2000 and 1999.

(b)      Common Shares

An unlimited  number of common shares of which  5,776,398 are  outstanding as at
December 31, 2000 (1999 -  5,876,398).  During 1999 and 2000 the Company did not
issue any common  shares.  During  2000,  the Company  purchased  100,000 of its
common shares for an aggregate consideration of $185,000.


<PAGE>



10.      Income Taxes:

The  Company  and  its  subsidiaries  have  net  operating  loss  carryovers  of
$87,653,000.  Of that amount, $66,250,000 is attributable to SIG, $14,879,000 is
attributable  to  Goran  and  its  non  U.S.  subsidiaries,  and  $6,524,000  is
attributable  to SIGF a U.S.  subsidiary  which  does  not  qualify  for  filing
consolidated  tax returns with SIG.  These losses are usable only against future
income in these respective operating units.

As of December 31, 2000,  the Company has unused net operating  loss  carryovers
available as follows (in thousands):
<TABLE>
<CAPTION>

                                   Goran & Non
                                      U.S.
  Years ending not later than December 31:          SIG        Subsidiaries        SIGF        Total
                                                    ---        ------------        ----        -----

<S>                                                <C>           <C>                         <C>
      2001                                                        $1,537                      $1,537
      2002                                          $126             865                         991
      2003                                                         1,120                       1,120
      2004                                                           511                         511
      2005                                                         1,659                       1,659
      2006                                                         1,113                       1,113
      2007                                                           602                         602
      2017                                                                       $4,368        4,368
      2018                                                                        1,295        1,295
      2019                                        31,859              --            861       32,720
      2020                                        34,265              --             --       34,265
      Capital Losses                                  --           7,472             --        7,472
                                                      --           -----             --        -----
          TOTAL                                  $66,250         $14,879         $6,524      $87,653
                                                 =======         =======         ======      =======
</TABLE>

SIG files a consolidated  U.S.  federal income tax return with its  wholly-owned
subsidiaries.   Intercompany  tax  sharing   agreements   between  SIG  and  its
wholly-owned subsidiaries provide that income taxes will be allocated based upon
separate return  calculations  in accordance  with the Internal  Revenue Code of
1986, as amended.

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

                                                                           2000          1999         1998
                                                                           ----          ----         ----
<S>                                                                      <C>         <C>              <C>
Computed income taxes (benefit) at statutory rate                        $(17,981)   $(15,682)        $474
Goodwill and acquisition costs                                             12,176         779          503
Other                                                                      (4,154)       (619)      (1,318)
Tax Exempt (Income) Loss                                                   (3,443)         88          689
                                                                           -------         --          ---
                                                                          (13,402)    (15,434)         348
Valuation allowance change                                                 11,253      21,852          923
                                                                           ------      ------          ---
Income Tax Expense (Benefit)                                              $(2,149)     $6,418       $1,271
                                                                          ========     ======       ======

</TABLE>


<PAGE>



The net  deferred  tax asset at December  31, 2000 and 1999 is  comprised of the
following (in thousands):
<TABLE>
<CAPTION>
                                                                                      2000       1999

Deferred tax assets:
<S>                                                                                 <C>         <C>
    Unpaid losses and loss adjustment expenses                                      $2,899      $3,443
    Unearned premiums and prepaid insurance                                          2,633       5,563
    Allowance for doubtful accounts                                                  1,302       1,022
    Unrealized losses on investments                                                 1,378       2,637
    Net operating loss carryforwards                                                25,764      22,605
    Other                                                                            8,758         303
                                                                                     -----         ---
        DEFERRED TAX ASSETS                                                        $42,734     $35,573
                                                                                   -------     -------

Deferred tax liabilities:
Deferred policy acquisition costs                                                  $(2,259)    $(4,872)
Other                                                                                 (892)       (799)
                                                                                      -----       -----
        DEFERRED TAX LIABILITIES                                                   $(3,151)    $(5,671)
                                                                                   --------    --------
                                                                                   $39,583     $29,902
        VALUATION ALLOWANCE                                                         39,583     (29,902)
                                                                                    ------     --------
        NET DEFERRED TAX ASSETS                                                        $--         $--
                                                                                       ===         ===
</TABLE>

At December  31, 2000 and 1999 the  Company's  net deferred tax assets are fully
offset by a  valuation  allowance.  The  Company  will  continue  to assess  the
valuation allowance and to the extent it is determined that such allowance is no
longer  required,  the tax benefit of the remaining net deferred tax assets will
be recognized in the future.

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, 2000 and thereafter, excluding renewal options (in thousands):

Year Ending December 31:
2001                                                                  $1,680
2002                                                                   1,677
2003                                                                     809
2004                                                                      38
2005 and Thereafter                                                        0

Rental  expense  charged  to  operations  in 2000,  1999 and  1998  amounted  to
$1,848,000, $2,370,000 and $1,742,000 respectively, including amounts paid under
short-term cancelable leases.


<PAGE>



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.  In addition,  the Company  assumes  reinsurance on
certain  risks.  The  Company  remains   contingently  liable  with  respect  to
reinsurance,  which  would  become an ultimate  liability  of the Company in the
event that such  reinsuring  companies  might be unable,  at some later date, to
meet their obligations under the reinsurance agreements.

Reinsurance  activity for 2000, 1999 and 1998,  which includes  reinsurance with
related parties, is summarized as follows (in thousands):
<TABLE>
<CAPTION>

                         2000                               Gross          Ceded          Net
                         ----                               -----          -----          ---

<S>                                                      <C>            <C>          <C>
Premiums written                                         $182,099       $(78,637)    $103,462
Premiums earned                                           200,278        (54,746)     145,532
Incurred losses and loss adjustment expenses              154,929        (41,161)     113,768
Commission expenses (income)                               22,275        (14,043)       8,232

                         1999

Premiums written                                          236,401          7,361      243,762
Premiums earned                                           254,445          7,355      261,800
Incurred losses and loss adjustment expenses              239,035          3,373      242,408
Commission expenses (income)                               27,985            435       28,420

                         1998

Premiums written                                          303,745         (4,106)     299,639
Premiums earned                                           317,787        (36,511)     281,276
Incurred losses and loss adjustment expenses              242,033        (13,691)     228,342
Commission expenses (income)                               50,658        (11,875)      38,783
</TABLE>

Amounts   recoverable  from  reinsurers  relating  to  unpaid  losses  and  loss
adjustment  expenses were $19,779,000 and $3,411,000 as of December 31, 2000 and
1999,  respectively.  These  amounts  are  reported as assets and are not netted
against the liability for loss and loss adjustment  expenses in the accompanying
Consolidated Balance Sheets.

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"), Goran's majority shareholder.


<PAGE>



The following balances were outstanding at December 31 (in thousands):

                                                      2000         1999

Advances to related parties:
Due from directors and officers                      $2,054        $999
Other receivables from related parties                2,200         647
                                                      -----         ---
    Total Receivables                                $4,254      $1,646
<TABLE>
<CAPTION>
                                                     ------      ------

The  following  transactions  occurred  with related  parties in the years ended
December 31 (in thousands):

                                                                                2000       1999       1998
                                                                                ----       ----       ----
Other related party transactions:
<S>                                                                            <C>        <C>       <C>
Consulting fees charged by various related parties                             $1,895     $3,652    $3,134
Management fees charged by SIGL                                                   900        201       203
</TABLE>

Approximately,  half of the amounts due from officers and directors are interest
bearing loans. The Company paid  $1,846,000,  $3,112,000 and $2,832,000 in 2000,
1999, and 1998, respectively,  for consulting and other services relative to the
conversion to the Company's nonstandard automobile operating system. The Company
has  capitalized  these costs as part of its  nonstandard  automobile  operating
system.  Approximately  90% of  these  payments  are for  services  provided  by
consultants  and vendors  unrelated  to the  Company.  During  1998,  1999 and a
portion  of  2000  Stargate  Solutions  ("Stargate")  managed  the  work  of the
unrelated  consultants and vendors and, as compensation for such work,  retained
approximately  10% of the  payments  referred to above in return for  management
services  provided.  During  1998,  Stargate was owned  beneficially  by certain
directors  of the Company and a relative of those  directors.  Also  included in
consulting  fees to related  parties is nil and  $520,000  and $270,000 in 2000,
1999 and 1998, respectively,  for payments to Onex, Inc., an officer of whom was
on the Company's Board of Directors, with regard to employment matters.

In 1989,  the Company wrote off a loan owed by a subsidiary of SIGL.  SIGL,  the
majority  shareholder of Goran,  guaranteed the loan and pledged shares of Goran
("escrowed  shares") as security for the loan. The  outstanding  loan balance is
$3,340,000 (Canadian dollars) for the periods ending December 31, 2000 and 1999.
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 a related  party,  a relative of
certain directors. The rent paid was $40,000 and $10,000 as of December 31, 2000
and 1999, respectively.

In 1999,  Granite Re issued a  performance  bond in favor of  Tritech  Financial
Systems Inc. ("Tritech") in the amount of $328,000.  In August 2000 the creditor
called  the bond.  Tritech is owned by a relative  of certain  directors  of the
Company.  The bond is secured by a guarantee from Tritech,  a personal guarantee
from its president 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 in 2000
was $6,150.

14.      Regulatory Matters:

Pafco  and  IGF,  domiciled  in  Indiana,   prepare  their  statutory  financial
statements in accordance  with accounting  practices  prescribed or permitted by
the Indiana  Department  of Insurance  ("IDOI").  Statutory  requirements  place
limitations  on the amount of funds which can be  remitted  to the Company  from
Pafco  and  IGF.  The  Indiana  statute  allows  10% of  surplus  as  regard  to
policyholders  or  100%  of net  income,  whichever  is  greater,  to be paid as
dividends only from earned surplus.  The Superior  Insurance  Company  entities,
domiciled in Florida, prepare their statutory financial statements in accordance
with accounting  practices  prescribed or permitted by the Florida Department of
Insurance ("FDOI").  In the consent order approving the acquisition of Superior,
the FDOI  prohibited  Superior  from paying any dividends for four years without
the prior  written  approval of the FDOI.  The dividend  restriction  expired in
April 2000. Florida statute also contains  limitations with regard to payment of
dividends.  Superior  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.

The  NAIC  has   promulgated   risk-based   capital   (RBC)   requirements   for
property/casualty  insurance  companies  to evaluate  the  adequacy of statutory
capital and surplus in relation to investment and insurance risks, such as asset
quality, asset and liability matching,  loss reserve adequacy and other business
factors.  Regulatory  compliance  is  determined  by  a  ratio  (Ratio)  of  the
enterprise's  regulatory total adjusted capital,  as defined by the NAIC, to its
authorized control level RBC, as defined by NAIC.  Generally,  a Ratio in excess
of 200% of authorized  control  level RBC requires no corrective  actions by the
company or regulators.

Based upon the foregoing formula,  as of December 31, 2000, RBC calculations for
IGF, Superior and Pafco were in excess of 200%.

To address IDOI concerns  relating to Pafco, on February 17, 2000,  Pafco agreed
to an order under which the IDOI may monitor more closely the ongoing operations
of Pafco. Among other matters, Pafco must:

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

o    Reduce its monthly auto premium writings,  or obtain  additional  statutory
     capital or surplus, such that the 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. 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.

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

Pafco's inability or failure to comply with any of the above could result in the
IDOI requiring  further  reductions in Pafco's  permitted premium writings or in
the IDOI instituting future proceedings  against Pafco. As reported on April 24,
2000 the IDOI concluded its target examination of Pafco, covering loss reserves,
pricing and reinsurance and no action was taken thereon.

Pafco informed the Iowa Department of Insurance  (IADOI) of its decision to stop
writing  new  automobile  business  in Iowa while  Pafco  reviews and revises it
program in the state. Pafco has agreed with the IADOI that it will not write any
new  nonstandard  business,  until such time as Pafco has  reduced  its  overall
nonstandard  automobile policy counts in the state or has: (i) increased surplus
or; (ii) a net  written  premium to surplus  ratios less than three to one;  and
(iii) 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.

With  regard  to IGF and as a result  of the  losses  experienced  by IGF in the
discontinued crop insurance operations,  IGF has agreed with the IDOI to provide
monthly financial statements and consult monthly with the IDOI, and obtain prior
approval  for  affiliated  party  transactions.  On  January  24,  2000 the IDOI
concluded its target examination of IGF regarding 1998 loss reserves principally
related to AgPI and no  further  action by IGF was  required  as a result of the
examination.

The FDOI has concluded its market conduct, data processing,  year 2000 readiness
and financial  examinations  as of June 30, 1999 and no  significant  action was
taken as a result.  The financial review of Superior for the year ended December
31,  1999 by the FDOI has  been  completed  and no  report  has yet been  issued
thereon.

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  Insurance Group, Inc.  ("Superior  Group"),  another subsidiary of the
Company.  A formal  hearing to review the  Notice and a  determination  that the
order  contemplated  by the  Notice  not be issued was held  February,  2001.  A
recommended order has not yet been rendered by the administrative law judge. The
FDOI could reject findings in a recommended order and issue an order which could
restrict  Superior from paying certain billing and policy fees to Superior Group
and include a requirement that Superior Group repay to its subsidiary, Superior,
billing  and policy fees from prior  years in an amount of  approximately  $35.2
million.  A  restriction  on the ability of  Superior to pay future  billing and
policy fees to Superior  Group may  necessitate  that the Company  take  certain
actions,  which may be subject to regulatory approvals,  to reallocate operating
revenues and expenses  between its  subsidiaries.  The Company would  vigorously
contest the issuance of any such order.

Pafco,  IGF and  Superior  also provide  monthly  financial  information  to the
departments  of insurance in certain  states in which they write  business,  and
Pafco and IGF have  agreed to obtain IDOI prior  approval of any new  affiliated
party transactions.

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

IGF recorded certain  reinsurance  transactions  related to the now discontinued
crop insurance business transacted with the federal government in a manner which
differs from  prescribed  statutory  accounting  practices.  This is a permitted
practice by IDOI which has no effect on statutory surplus or net income.

Net  loss of the  insurance  subsidiaries,  as  determined  in  accordance  with
statutory accounting  practices ("SAP"),  was $17.1 million,  $32.3 million, and
$21.5 million, for 2000, 1999, and 1998,  respectively.  Consolidated  statutory
capital  and  surplus  was  approximately  $39.4  million  and $57.1  million at
December 31, 2000 and 1999, respectively.

The NAIC adopted the Codification of Statutory  Accounting  Principles  guidance
("Codification"),  which replaces the Accounting Practices and Procedures manual
as the NAIC's  primary  guidance on statutory  accounting  effective  January 1,
2001. The IDOI and FDOI have adopted Codification.

The changes in statutory accounting principles resulting from codification which
impacts the Company's insurance subsidiaries will, among other things, limit the
statutory  carrying value of electronic data  processing  equipment and deferred
tax assets in determining statutory surplus. The consolidated  statutory surplus
of insurance  subsidiaries  as of December 31, 2000 is $39.4 million.  Effective
January 1, 2001, the consolidated statutory surplus was reduced by $11.4 million
to $28.0 million, giving recognition to the new accounting principles.



<PAGE>



15.      Commitments and Contingencies:

SIG, IGFH and IGF are parties to a Strategic  Alliance  Agreement  ("SAA") dated
February 28, 1998 with Continental  Casualty Company  (referred to in the SAA as
"CNA").  By letter dated January 3, 2001, CNA gave notice pursuant to the SAA of
its exercise of the "Put Mechanism"  under the SAA effective  February 19, 2001.
According to the SAA, upon exercise of the Put  Mechanism,  IGFH is obligated to
pay CNA an  amount  equal to 5.85  times an  amount  equal to  "Average  Pre Tax
Income" as defined by the SAA.  The SAA  further  provides  that  within 30 days
after exercise of the put, IGF will execute a promissory note payable six months
after the  exercise of the Put  Mechanism in the  principal  amount equal to the
amount owed,  as  specified  by the SAA. In a letter  dated March 20, 2001,  CNA
advised SIG, IGFH and IGF that it calculated the principal  amount due CNA to be
$26,265,403.  IGF does not agree with this amount. CNA also has asserted a claim
for amounts allegedly due under certain reinsurance  agreements with the Company
for the 2000 crop year.  SIG, IGFH and IGF believe they have claims  against CNA
and defenses to CNA's  exercise of the Put  Mechanism  that may offset or reduce
amounts owed by the Company to CNA. Moreover, SIG, IGFH and IGF believe that the
impending sale of IGF's crop insurance  business may provide an opportunity  for
the parties to resolve their claims. However, there can be no assurance that the
ultimate resolution of the claims asserted by CNA will not have material adverse
effects on SIG's, IGFH's and IGF's financial condition or results of operations.

On  February  23,  2000,  a  complaint  for class  action was filed  against the
Company,  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 ("1934 Act") and SEC Rule 10b-5 promulgated thereunder. The
individual  defendants  are also alleged to be liable as  "controlling  persons"
under ss.20(a) of the 1934 Act. The Company and the individual  defendants filed
a motion to dismiss the amended,  consolidated  complaint for failure to state a
claim and for  failure to plead with  particularity  as required by Fed. R. Civ.
P.9(b) and the Private Securities  Litigation Reform Act of 1995. The accounting
firms also filed  motions to dismiss.  Briefing on the motions was  completed on
December 18, 2000, and the motions presently are pending before the court.

IGF,  several  brokers  and a third  party  carrier  are  parties to a number of
pending  legal  proceedings  relating  to  agricultural  business  interrruption
policies  ("AgPI")  sold  during  1998 by the now  discontinued  crop  insurance
segment.  During 2000 all claims by the  policyholders in the AgPI lawsuits were
settled by the third party  carrier of the policies.  In January  2001,  one new
case was filed by four policyholders who had previously fully settled their AgPI
claims through  binding  settlement  agreements.  Discovery is  proceeding.  IGF
remains a  defendant/cross-claimant  relating  to cross  claims in six  lawsuits
pending in  California  state court (King and Fresno  counties) and discovery is
proceeding.  Over the objections of IGF, the third party carrier settled some of
the AgPI cases for amounts in excess of policy  limits.  IGF and Mutual  Service
Casualty Insurance Company,  the third party carrier of the AgPI policies,  have
submitted  their claims  against each other related to the AgPI  settlements  to
binding  arbitration.  As of December  31,  2000,  IGF had paid an  aggregate of
approximately   $28,900,000  to  AgPI   policyholders  of  which   approximately
$5,200,000 was incurred during 2000. The unpaid reserves for AgPI as of December
31, 2000 were  $10,912,000.  Certain of the settlements  made by the third party
carrier exceeded  established  reserves for the particular  cases involved.  The
Company does not believe it will  ultimately be responsible  for the full amount
of the  settlement  amounts  paid  by the  third  party  carrier.  Based  on the
information  presently  available,  the Company believes that it has recognized,
through loss and LAE payments and reserves,  its ultimate loss exposure  related
to AgPI.  The Company  believes  its  financial  reserves  for the  lawsuits are
sufficient to cover the resulting  liability,  if any, that may arise from these
matters.  However,  there  can  be no  assurance  that  the  Company's  ultimate
liability  for AgPI  related  claims  will not be  materially  greater  than the
aggregate  $39.8 million in gross losses  already  recorded in the  consolidated
financial  statements  related  to this  product  and will  not have a  material
adverse effect on the Company's results of operations or financial condition.

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

Two assertions have been made in Florida against Superior Guaranty  purported to
be  brought  on behalf of a class of  persons  alleging  to be  charged  service
charges or finance  charges in  violation of Florida law. The Company has agreed
to  class  certification  of  one  of the  actions.  The  class  is  limited  to
individuals  allegedly  aggrieved  from four  years  prior to the  filing of the
complaint,  which would exclude the  plaintiff in the other action.  The Company
believes that it has  substantially  complied with the premium financing statute
and intends to vigorously defend any potential loss under both of these actions.

An assertion has been made in Florida against  Superior  purported to be brought
on behalf of a class consisting of healthcare  providers that rendered treatment
to and obtained a valid assignment of benefits from Superior.  The court granted
Superior's  motion to dismiss  the  amended  complaint  and  indicated  that the
allegations of the plaintiff's  amended  complaint were  inappropriate for class
certification.  The plaintiff alleges that Superior reduced or denied claims for
medical  expenses  payable to the plaintiff  without  first  obtaining a written
report in violation of Florida law.  The  plaintiff  also alleges that  Superior
inappropriately  reduced  the amount of  benefits  payable to the  plaintiff  in
breach of Superior's contractual obligations to the plaintiff. Superior believes
the  allegations of wrongdoing in violation of law are without merit and intends
to vigorously defend the claims brought against it.

The California Department of Insurance ("CDOI") advised the Company in 1998 that
it is  reviewing  a possible  assessment  which  could  total $3  million.  This
possible  assessment  relates  to  the  charging  of  brokers  fees  charged  to
policyholders by independent agents who placed business with Superior.  The CDOI
indicated  that  such  broker  fees  charged  by the  independent  agent  to the
policyholder  were improper and requested  reimbursement to the policyholders by
Superior.  The Company did not receive any of these  broker  fees.  There was no
action by the CDOI  during  2000  regarding  the broker  fees.  As the  ultimate
outcome of this potential assessment is not deemed probable, the Company has not
accrued  any  amount  in its  consolidated  financial  statements.  Although  an
assessment has not been formally made by the CDOI,  the Company will  vigorously
defend any potential assessment and believes it will prevail.

In 2000 a product of the discontinued  crop operation was underwritten  insuring
the revenue received by potato producers from their 2000 harvest. The policy was
designed to augment the  multiperil  crop  insurance  program for potatoes.  The
ultimate  liability  from  those  policies  will not be known  until the  entire
harvest has been sold in August.  Because the price of potatoes at year-end  had
dropped below the expected  price,  the Company  established a $4,500,000  gross
loss  reserve for its unpaid loss  obligations  on this  product.  The  ultimate
liability may vary from this estimate.

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

16.      Supplemental Cash Flow Information:

Cash paid/(received) for income taxes and interest are summarized as follows (in
thousands):
<TABLE>
<CAPTION>

                                                                               2000         1999        1998
                                                                               ----         ----        ----

      Cash  paid/(received)  for federal income taxes,  net of refunds
<S>                                                                        <C>         <C>            <C>
      refunds                                                              $(6,134)    $(17,952)      $1,752
      Cash paid for interest on trust preferred                               $  --      $12,825     $12,825


</TABLE>

<PAGE>



17.      Disclosures About Fair Values of Financial Instruments:

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

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

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

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

               d)   Preferred Securities:  There is not an active market for the
                    Preferred Securities; however, the estimated market value as
                    of December 31, 2000 was $16,800,000.


18.      Stock Option Plans:

In June 1986,  Goran  adopted the Goran Capital Inc. 1986 Stock Option Plan (the
"Goran  Stock Option  Plan").  The Goran Stock  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.  On June 15,  1999,  all Goran  options  granted at an exercise  price in
excess of  CDN$14.70,  were repriced to CDN$14.70  per share.  In 2000,  certain
officers  and  non-employee  directors of Goran  surrendered  a total of 515,771
stock options.

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

                                                        2000                       1999                      1998
                                                      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       660,708       $14.17       695,572       $29.92      546,856       $17.86
 year
Granted                                     100,000        $2.35            --           --      363,970       $36.57
Exercised                                        --           --            --           --    (215,254)       $10.53
Forfeited/Surrendered                     (564,771)       $14.15      (34,864)       $14.69           --           --
                                          ---------       ------      --------       ------           --           --
Outstanding at the end of the year          195,937        $8.36       660,708       $14.17      695,572       $29.92
                                            =======        =====       =======       ======      =======       ======
Options exercisable at year end              88,605       $14.62       619,035       $14.18      569,126       $29.82
Available for future grant                  675,063           --       210,292           --      175,428           --


</TABLE>

<PAGE>



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

Information regarding the SIG Stock Option Plan is summarized below:
<TABLE>
<CAPTION>

                                                        2000                        1999                      1998
                                                      Weighted                    Weighted                  Weighted
                                                       Average                     Average                   Average
                                                      Exercise                    Exercise                  Exercise
                                          Shares        Price        Shares         Price       Shares        Price
                                          ------        -----        -------        -----       ------        -----

Outstanding  at the  beginning of the
<S>                                         <C>          <C>          <C>            <C>        <C>            <C>
 year                                       213,033      $6.3125      1,457,833      $6.3125    1,000,000      $6.3125
Granted                                   1,287,000       0.5436             --       6.3125      478,000       6.3125
Exercised                                                               (1,667)       6.3125      (4,332)       6.3125
Forfeited/Surrendered                     (155,200)       5.0391    (1,243,133)       6.3125     (15,835)       6.3125
                                          ---------       ------    -----------       ------     --------       ------
Outstanding at the end of the year        1,344,833       0.9400        213,033       6.3125    1,457,833       6.3125
                                          =========       ======        =======       ======    =========       ======
Options exercisable at year end              73,500      $6.3125        120,366      $6.3125      760,289      $6.3125
Available for future grant                  155,167                   1,286,967                    42,167

                                                                         Options                        Options
                                                                       Outstanding                    Exercisable
                                                        Weighted         weighted                       Weighted
                                                        Average          Average                        Average
                                        Number      Remaining Life    Exercise Price     Number      Exercise Price
                                                              -----            -----                          -----
Range of Exercise Prices             Outstanding       (in years)                      Exercisable
------------------------             -----------       ----------                      -----------
         $0.50 - $0.8750              1,253,000               9.4             $.5448             --              --
             $6.3125                     91,833               6.9            $6.3125         73,500         $6.3125
                                         ------               ---                            ------
                                      1,344,833               9.2                            73,500
                                      =========               ===                            ======

</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.


<PAGE>



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

                                                      2000                       1999                      1998
                                                    Weighted                   Weighted                  Weighted
                                                     Average                   Average                    Average
                                                    Exercise                   Exercise                  Exercise
                                         Shares       Price       Shares        Price        Shares        Price
                                         ------       -----       ------        -----        ------        -----
Outstanding  at the  beginning of the
<S>                                        <C>          <C>          <C>           <C>          <C>          <C>
 year                                      92,232       $51.75       94,732        $51.75       95,282       $51.75
Granted                                        --           --           --            --           --           --
Forfeited                                 (8,800)       $51.48      (2,500)        $51.75        (550)        51.75
                                          -------       ------      -------        ------        -----        -----
Outstanding at the end of the year         83,432       $54.42       92,232        $51.75       94,732       $51.75
                                           ======       ======       ======        ======       ======       ======
Options exercisable at year end            66,726                    42,448                     24,601
Available for future grant                 27,679                    18,879                     16,379

                                                                         Options                        Options
                                                                       Outstanding                    Exercisable
                                                        Weighted         weighted                       Weighted
                                                        Average          Average                        Average
                                        Number      Remaining Life    Exercise Price     Number      Exercise Price
                                                              -----            -----                          -----
Range of Exercise Prices             Outstanding       (in years)                      Exercisable
------------------------             -----------       ----------                      -----------
              $44.17                        41,717           5.3 yrs          $44.17         33,364          $44.17
         $58.79 - $64.67                    41,715           5.3 yrs          $64.66         33,362          $64.66
</TABLE>

The Company applies U.S. Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" and related  interpretation in accounting for its
stock option plans.  Accordingly,  no compensation  cost has been recognized for
such plans.  Had compensation  cost been determined,  based on fair value at the
grant dates for options  granted  under the  Company  stock  option plan as well
under both the SIG Stock  Option Plan and the GGS Stock Option Plan during 2000,
1999 and 1998 consistent  with the method of U.S. SFAS No. 123,  "Accounting for
Stock-Based  Compensation",  the Company's  pro-forma net earnings and pro-forma
earnings per share for the years ended  December  31, 2000,  1999 and 1998 would
have been as follows:
<TABLE>
<CAPTION>

                                           2000          2000         1999          1999         1998         1998
                                            As           Pro-          As           Pro-          As          Pro-
                                         Reported       Forma       Reported       Forma       Reported       Forma
Earnings (loss) from continuing
<S>                                       <C>           <C>          <C>           <C>           <C>          <C>
operations                                $(63,224)     $(63,676)    $(47,000)     $(50,596)     $(2,515)     $(5,485)
Basic and fully diluted EPS from
continuing operations                      $(10.86)      $(10.94)      $(8.00)       $(8.61)      $(0.43)      $(0.94)
Net earnings (loss)                       $(80,265)     $(80,717)    $(62,373)     $(65,969)    $(11,936)    $(14,906)
Basic and fully diluted EPS                $(13.79)      $(13.86)     $(10.61)      $(11.23)      $(2.04)      $(2.55)
</TABLE>



<PAGE>



The  fair  value of each  option  grant  used for  purposes  of  estimating  the
pro-forma  amounts  summarized  above is  estimated  on the grant date using the
Black-Scholes  option-pricing  model with the weighted  average  assumptions for
2000 and 1998 shown on the following table:
<TABLE>
<CAPTION>

                                                  SIG        Goran        SIG        Goran
                                                  2000        2000        1998        1998
                                                 Grants      Grants      Grants      Grants
<S>                                                 <C>         <C>         <C>         <C>
Risk-free interest rates                            5.00%       5.00%       5.53%       5.40%
Dividend yields                                       ---         ---         ---         ---
Volatility factors                                   106%        106%         41%         41%
Weighted average expected life                  4.0 years   5.0 years   2.5 years   3.2 years
Weighted average fair value per share               $0.40       $1.31       $7.20       $5.73
</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:
<TABLE>
<CAPTION>

(in thousands)                                                    First      Second       Third       Fourth          Total
                                                                  -----      ------       -----       ------          -----
                           2000
<S>                                                             <C>         <C>         <C>          <C>           <C>
Gross written premiums                                          $59,859     $30,032     $45,852      $46,356       $182,099
Net premiums written                                             31,859      20,163      32,180       19,260        103,462
Net premiums earned                                              44,467      38,483      34,176       28,406        145,532
Total revenues                                                   51,903      43,153      37,524       33,392        165,972
Net operating  earnings (loss) from  continuing  operations
(1)                                                             (3,544)     (3,320)     (7,573)        2,020       (12,417)
Net loss from continuing operations                             (7,422)     (8,473)    (13,523)     (33,806)       (63,224)
Basic  operating  earnings (loss) per share from continuing
operations (1)                                                   (0.60)      (0.56)      (1.31)         0.34         (2.13)
Net loss from  continuing  operations per share - basic and
diluted                                                          (1.26)      (1.45)      (2.35)       (5.80)        (10.86)

                           1999
Gross written premiums                                          $61,299     $66,346     $57,484      $51,272       $236,401
Net premiums written                                             65,658      67,517      56,052       54,535        243,762
Net premiums earned                                              68,184      70,453      60,848       62,315        261,800
Total revenues                                                   74,836      77,300      66,824       71,344        290,304
Net operating  earnings (loss) from  continuing  operations
(1)                                                               2,699    (12,134)    (17,881)     (22,567)       (49,883)
Net loss from continuing operations                             (1,957)     (6,910)     (6,020)     (32,113)       (47,000)
Basic  operating  earnings (loss) per share from continuing
operations (1)                                                     0.46      (2.06)      (3.04)       (3.85)         (8.49)
Net loss from  continuing  operations per share - basic and
diluted                                                          (0.33)      (1.17)      (1.03)       (5.47)         (8.00)
</TABLE>


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

In the fourth quarter of 2000, the Company recorded an impairment charge related
to goodwill of $33.5 million.

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

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


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

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 difference in net earnings or earnings per share in 2000,
1999 and 1998.

(a)      Receivables from sale of capital stock

The SEC Staff  Accounting  Bulletins  require that accounts or notes  receivable
arising  from  transactions  involving  capital  stock  should be  presented  as
deductions from stockholders' equity and not as assets. Accordingly, in order to
comply with U.S. GAAP  stockholders'  equity would be reduced by $1,258,000  and
$300,000 at December 31, 2000 and December 31, 1999, respectively to reflect the
loans due from  certain  stockholders  which  relate to the  purchase  of common
shares of the Company.

(b)      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 $3,602,000 and by $4,868,000
for the years ended December 31, 2000 and 1999, respectively.

(c)      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.

(d)      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>

                                                                      2000             1999
<S>                                                                    <C>             <C>
Stockholders' equity in accordance with Canadian GAAP                  $(72,668)       $(12,887)
Add (deduct) effect of difference in account for:
    Receivables from sale of capital stock (see note a)                  (1,258)           (300)
    Unrealized gain on investments (see note b)                          (3,602)         (4,868)
                                                                         -------         -------
Stockholders' equity in accordance with U.S. GAAP                      $(77,528)       $(18,055)
                                                                       =========       =========
</TABLE>




<PAGE>



21.      Subsequent Events

On February 19, 2001, CNA exercised a Put Mechanism under the SAA with SIG, IGFH
and IGF. See Note 15 - Commitments and Contingencies  for additional  discussion
regarding the effect of the Put Mechanism.

22.      Management's Plans

The Company  reported,  net losses of $80.3  million  and $62.4  million for the
years 2000 and 1999 respectively. While the stockholders' equity at December 31,
2000  is a  deficit  of  approximately  $72.7  million,  SIG has a  thirty  year
mandatorily  redeemable  preferred  stock  outstanding  of  $112  million  at an
interest rate of 9.5%. The Preferred Securities are not due for redemption until
2027. The insurance  subsidiaries have statutory surplus of approximately  $39.4
million upon which the Company conducts its insurance  operations ($28.0 million
of statutory surplus after codification).  Management has initiated  substantial
changes  in  operational  procedures  in an  effort  to return  the  Company  to
profitable  levels and to improve  its  financial  condition.  Early in the year
2000, the nonstandard auto insurance segment hired a new President,  a new Chief
Information Officer,  and pricing and claims management.  The Company has and is
continuing to raise its rates in a market environment where increasing rates and
withdrawal  from the  market  by  other  companies  shows  positive  trends  for
improving profitability of nonstandard automobile underwriters.

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

23.      Discontinued Operations

In December  2000, the Company  initiated the  divestiture of its crop insurance
segment.  This business was predominantly  written through IGF. The transaction,
if  completed,  will  transfer  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  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 of the crop insurance segment were as follows:
<TABLE>
<CAPTION>

Statements of Earnings (Losses)
(in thousands)
Year Ended December 31,                                                   2000            1999            1998

<S>                                                                     <C>             <C>             <C>
Gross premiums written                                                  $241,748        $237,286        $243,026
                                                                        ========        ========        ========
Net premiums written                                                     $26,466         $12,737         $62,467
                                                                         =======         =======         =======

     Net premiums earned                                                 $26,531         $14,240         $60,901
     Net investment and fee income                                         1,229             749           4,047
     Net realized capital gain                                                10              21             217
                                                                              --              --             ---
Total revenues                                                            27,770          15,010          65,165

     Loss and loss adjustment expenses                                    40,690          34,225          52,550
     Policy acquisition and general and administrative expenses            2,059             215          21,906
     Interest and amortization expense                                     1,162           1,113             502
                                                                           -----           -----             ---
Total expenses                                                            43,911          35,553          74,958

Loss before income taxes                                                 (16,141)        (20,543)         (9,793)

Income taxes:
     Current income tax (benefit)                                             --          (5,852)         (7,873)
     Deferred income tax expense                                              --             682           4,564
                                                                              --             ---           -----
Total income taxes                                                            --          (5,170)         (3,309)
                                                                              --          -------         -------

Loss from operations of discontinued segment                             (16,141)        (15,373)         (6,484)
Loss on disposal of discontinued segment                                    (900)             --              --
                                                                            -----             --              --
Net loss from discontinued operations                                   $(17,041)       $(15,373)        $(6,484)
                                                                        =========       =========        ========

Net Assets of Discontinued Operations:  (in thousands)                      2000
                                                                            ====

Assets:
Cash and invested assets                                                  $2,822
Receivables, net of allowance for doubtful accounts                       22,491
Reinsurance recoverable on paid and unpaid losses, net                    84,242
Prepaid reinsurance premiums                                              10,361
Property and equipment, net of accumulated depreciation                    5,730
Intangible assets                                                          4,280
Other assets                                                               2,124
                                                                           -----
Assets of discontinued operations                                       $132,050
                                                                        ========

Liabilities:
Losses and loss adjustment expenses                                       70,848
Unearned premiums                                                         10,361
Reinsurance Payables                                                      41,143
Notes payable                                                              1,534
Other liabilities                                                          7,480
                                                                           -----
Liabilities of discontinued operations                                  $131,366
                                                                        ========
</TABLE>

In December 1997, the Company  discontinued the operations of SIGF whose book of
business was subsequently sold on January 1, 1999.  Accordingly,  the results of
these  operations have been accounted for separately from the results of ongoing
operations.  The net loss from  discontinued  operations was $2,937 for the year
ended December 31, 1998.


<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 accounting principles generally accepted in Canada which involve
the use of  judgement  and  estimates  in  applying  the  accounting  principles
selected.  Other financial  information in this Annual Report is consistent with
that in the consolidated financial statements.

The Company maintains systems of internal controls which are designed to provide
reasonable  assurance that accounting records are reliable and to safe-guard the
Company's  assets.  The  independent  accounting  firm of BDO  Seidman,  LLP has
audited and reported on the  Company's  consolidated  financial  statements  for
2000.  Their opinion is based upon an audit conducted by them in accordance with
generally  accepted auditing standards to obtain assurance that the consolidated
financial statements are free of material misstatements.

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


/s/ Alan G. Symons
Chief Executive Officer
March 13, 2001


<PAGE>






Board of Directors And Stockholders of Goran Capital Inc.

Goran Capital Inc.
Toronto, Canada

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

We conducted our audit 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.

In our opinion,  the 2000 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, 2000,  and the results of
their  operations  and their cash flows for the year then ended,  in  conformity
with accounting principles generally accepted in Canada.

The  consolidated  financial  statements as at December 31, 1999 and for each of
the  two  years  in  the  period  ended   December   31,  1999,   prior  to  the
reclassifications  made to  reflect  the  Company's  crop  insurance  segment as
discontinued  operations,  were audited by the other  auditros who  expressed an
opinion without  reservation on those statements in their report dated March 14,
2000,  except for Note 23,  which is as of March 23,  2000.  We have audited the
reclassifications to the 1999 and 1998 consolidated  financial statements and in
our opinion, such  reclassifications,  in all material respects, are appropriate
and have been properly applied.




BDO SEIDMAN, LLP
Grand Rapids, Michigan
Mach 13, 2001


<PAGE>


Stockholder Information

Registrar and Transfer Agent
CIBC Mellon Trust Company
Toronto, Ontario

Independent Public Accountants
BDO Seidman LLP
Grand Rapids, Michigan

Annual Meeting of Stockholders
2 Eva Road, Suite 200
Toronto, Ontario  Canada  M9C 2A8
May 31, 2001
10:00 A.M.

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, 2000, 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, 2000 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, 2000 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 at 1,000.

The number of commons shares outstanding on December 31, 2000 totaled 5,776,398.
Information  relating to the common  shares is  available  through OTC  Bulletin
Board and the Toronto Stock  Exchange.  The following  table sets forth the high
and low closing sale prices for the common shares for each quarter of 2000, 1999
and 1998.

                             TORONTO STOCK EXCHANGE
<TABLE>
<CAPTION>


                                                            2000                 1999                1998

                                                       High       Low       High      Low       High      Low

Quarter Ended

<S>   <C>                                              <C>       <C>       <C>       <C>       <C>       <C>
March 31                                               $4.15     $1.50     $12.37    $7.73     $31.93    $25.84

June 30                                                $3.50     $1.75     $9.75     $7.06     $29.61    $23.89

September 30                                           $2.84     $1.95     $12.78    $7.40     $28.10    $20.38

December 31                                            $2.25      $.50     $8.74     $1.95     $21.40    $8.04
</TABLE>

<PAGE>



                              STOCK TRADING PRICES
<TABLE>
<CAPTION>


                                                            2000                 1999                1998

                                                       High       Low       High      Low       High      Low

Quarter Ended

<S>                                                    <C>       <C>       <C>       <C>       <C>       <C>
March 31                                               $2.88     $1.05     $10.73    $8.38     $31.50    $25.25

June 30                                                $2.44     $1.16     $10.19    $7.31     $30.50    $23.50

September 30                                           $1.95     $1.25     $13.25    $7.75     $28.50    $19.75

December 31                                            $1.38      $.34     $8.38     $2.00     $21.06    $8.00
</TABLE>

Goran  Capital  Inc.  did not declare or pay cash  dividends on its common stock
during the years ended  December 31, 2000 and 1999.  Goran Capital Inc. does not
plan to pay  cash  dividends  on its  common  stock in the  foreseeable  future.
Shareholder Inquiries

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

Board of Directors

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

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

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

J. Ross Schofield
President
Schofield Insurance Brokers

David B. Shapira
President Medbers Limited

John K. McKeating
Former Partner
Vision 2120, Inc.

Executive Officers

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

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

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

Gene Yerant
Executive Vice President
Goran Capital Inc.
Symons International Group, Inc.
Chief Operating  Officer and President
Superior Insurance Group, Inc.



<PAGE>



Company, Subsidiaries and Branch Offices

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

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


<PAGE>


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

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

Pafco General 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

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


Superior Insurance Company
6303 Little River Turnpike
Suite 220
Alexandria, Virginia  22312
703-916-8001

Opens May 15th
Superior Insurance
150 Monument Road, Suite 610
Bala Cynwyd, Pennsylvania  19004-1701
No Phone Available At This Time

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