UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K
(MARK ONE)
( X )    Annual Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the year ended December 31, 2000.

(   )    Transition Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the transition period from ____ to _____.

         Commission File Number:000-24366

                               GORAN CAPITAL INC.
             (Exact name of registrant as specified in its charter)

         CANADA                                                  Not Applicable
         (State or other jurisdiction of    (I.R.S. Employer Identification No.)
         Incorporation or organization)

         2 Eva Road, Suite 200
         Etobicoke, Ontario  Canada                                     M9C 2A8
         (Address of Principal Executive Offices)                     (Zip Code)

         Registrant's telephone number, including area code:
                                                         (416) 622-0660 (Canada)
                                                         (317) 259-6300 (USA)

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

         Securities registered pursuant to Section 12(g) of the Act:      None
                                                                (Title of Class)

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days: Yes X No

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

         The aggregate  market value of the 2,705,554 shares of the Registrant's
common stock held by non-affiliates, as of March 30, 2001 was $2,029,166.

         The number of shares of common  stock of the  Registrant,  without  par
value, outstanding as of March 30, 2001 was 5,776,398.








<PAGE>


Exchange Rate Information

          The Company's accounts and financial statements are maintained in U.S.
Dollars.  In this Report all dollar amounts are expressed in U.S. Dollars except
where otherwise indicated.

         The following table sets forth, for each period indicated,  the average
rates for U.S.  Dollars  expressed  in Canadian  Dollars on the last day of each
month during such period,  the high and the low exchange rate during that period
and the exchange rate at the end of such period, based upon the noon buying rate
in New York City for cable  transfers in foreign  currencies,  as certified  for
customs  purposes  by the  Federal  Reserve  Bank of New York (the "Noon  Buying
Rate").

Foreign Exchange Rates
U.S. to Canadian Dollars
For The Years Ended December 31,


                                1996       1997       1998      1999      2000
Average                         .7339      .7222     .6745     .6724     .6733
Period End                      .7301      .6995     .6532     .6929     .6672
High                            .7472      .7351     .7061     .6929     .6965
Low                             .7270      .6938     .6376     .6625     .6416

Accounting Principles

The financial  information  contained in this document is stated in U.S. Dollars
and is expressed in  accordance  with  Canadian  Generally  Accepted  Accounting
Principles unless otherwise stated.


<PAGE>


GORAN CAPITAL INC.
ANNUAL REPORT ON FORM 10-K
December 31, 2000


PART I
                                                                    PAGE

Item 1.      Business                                                 4

Item 2.      Properties                                              21

Item 3.      Legal Proceedings                                       22

Item 4.      Submission of Matters to a Vote of Security Holders     24


PART II

Item 5.      Market for Registrant's Common Equity and Related
               Shareholder Matters                                   24

Item 6.      Selected Consolidated Financial Data                    24

Item 7.      Management's Discussion and Analysis of Financial
               Condition and Results of Operations                   24

Item 7A.     Quantitative and Qualitative Disclosures
                About Market Risk                                    24

Item 8.      Financial Statements and Supplementary Data             25

Item 9.      Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure                   25


PART III

Item 10.     Directors and Executive Officers of the Registrant      25

Item 11.     Executive Compensation                                  25

Item 12.     Security Ownership of Certain Beneficial Owners
               and Management                                        25

Item 13.     Certain Relationships and Related Transactions          25


PART IV

Item 14.     Exhibits, Financial Statement Schedules, and Reports
                on Form 8-K                                          25


SIGNATURES                                                           34


<PAGE>


PART I

ITEM 1 - BUSINESS

Forward-Looking Statement

         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 of Business

          Goran Capital Inc. ("Goran" or the "Company") is a Canadian  federally
incorporated holding company principally engaged in the business of underwriting
property and casualty insurance through its insurance subsidiaries Pafco General
Insurance Company  ("Pafco"),  Superior  Insurance Company  ("Superior") and IGF
Insurance  Company ("IGF"),  which maintain their  headquarters in Indianapolis,
Indiana.  Goran  owns  approximately  73.0% of a U.S.  holding  company,  Symons
International  Group,  Inc.  ("SIG").  SIG owns  IGF  Holdings,  Inc.  ("IGFH"),
Superior  Insurance Group  Management,  Inc.  ("Superior Group  Management") and
Superior Insurance Group, Inc.  ("Superior Group") which are the holding company
and  management  company for the insurance  subsidiaries.  The operations of SIG
accounts for 94% of Goran's  consolidated  revenues.  Goran's other subsidiaries
include  Granite  Reinsurance  Company Ltd.  ("Granite Re"),  Granite  Insurance
Company ("Granite"),  a Canadian federally licensed insurance company and Symons
International  Group,  Inc.  - Florida  ("SIGF"),  a surplus  lines  underwriter
located in Florida.

         Granite Re is a specialized  reinsurance company that underwrites niche
products such as nonstandard automobile, crop, property casualty reinsurance and
offers  (on a  non-risk  bearing,  fee  basis),  rent-a-captive  facilities  for
Bermudian, Canadian and U.S. reinsurance companies.

         Through a  rent-a-captive  program,  Granite  Re offers  the use of its
capital and its underwriting  facilities to write specific programs on behalf of
its clients,  including  certain  programs ceded from IGF and Pafco.  Granite Re
alleviates the need for its clients to establish their own insurance company and
also offers this facility in an offshore environment.

         Granite sold its book of business in January 1990 to an affiliate which
subsequently  sold  to  third  parties  in  June  1990.  Granite  currently  has
approximately  10  outstanding  claims and  maintains  an  investment  portfolio
sufficient  to support  those  claim  liabilities.  Goran  anticipates  that the
outstanding claims will be settled by the end of 2002.

         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".


<PAGE>


Nonstandard Automobile Insurance

                  Pafco,  IGF,  Superior and Superior's  subsidiaries,  Superior
Guaranty Insurance Company ("Superior Guaranty") and Superior American Insurance
Company  ("Superior  American") are engaged in the writing of insurance coverage
for automobile physical damage and liability policies.  Nonstandard 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 risk. 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.

Products

         The Company offers both liability and physical  damage  coverage in the
insurance  marketplace,  with policies  having terms of three to twelve  months.
Most nonstandard  automobile insurance  policyholders choose the basic limits of
liability  coverage  which,  though  varying from state to state,  generally are
$25,000 per person and $50,000 per accident  for bodily  injury to others and in
the range of $10,000 to $20,000 for damage to other parties' cars or property.

                  The  Company  offers  two  policies,   each  directed   toward
different  classes of risk within the  nonstandard  market.  The Superior Choice
policy  offers  insured a lower cost  alternative  in  exchange  for  restricted
coverage  terms.  The Superior  Standard policy is intended for risks who desire
more traditional auto coverage.

                  Where permitted,  Superior offers a five tier product covering
the  full  spectrum  of  automobile  insurance  customers  from  nonstandard  to
ultra-preferred.   The  focus  of  the  Company's  marketing,  however,  is  the
nonstandard auto insurance agent.

Marketing

         The Company's nonstandard automobile insurance business is concentrated
in the states of Florida, California, Virginia, Indiana and Georgia. The Company
also writes nonstandard  automobile  insurance in fifteen additional states. The
Company  selects  states  for  expansion  or  withdrawal  based on a  number  of
criteria,  including the size of the nonstandard  automobile  insurance  market,
state-wide loss results,  competition,  capitalization  of its companies and the
regulatory climate.  The following table sets forth the geographic  distribution
of gross premiums written for the Company for the periods indicated.


<PAGE>

Goran Capital Inc.
Year Ended December 31,
(in thousands)
<TABLE>
<CAPTION>


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

<S>                                 <C>       <C>            <C>
 Arizona                            $6,228    $10,912        $4,484

 Arkansas                            1,383        804           297

 California                         48,181     29,993        32,480

 Colorado                            8,115      8,238         6,938

 Florida                           107,746     67,459        45,104

 Georgia                            21,575     22,945        13,670

 Illinois                            2,908      1,795           206

 Indiana                            18,735     23,599        12,804

 Iowa                                6,951      4,028         2,023

 Kentucky                            8,108      5,768         5,034

 Mississippi                         5,931      3,515            48

 Missouri                            8,669      4,555         1,929

 Nebraska                            6,803      3,846         1,436

 Nevada                              8,849      6,954         3,707

 Ohio                                2,106      2,096         3,169

 Oklahoma                            3,803      1,921         1,090

 Oregon                              6,390     12,394         4,236

 Tennessee                           1,443      6,840         9,794

 Texas                               7,520      2,641         5,918

 Virginia                           22,288     15,470        20,089

 Washington                              5         --            --

 Total nonstandard auto            303,737    235,773       174,456

 Other property                          8        628             5

 Other assumed reinsurance              --         --         7,638
                                        --         --         -----

 Total                            $303,745   $236,401      $182,099
                                  ========   ========      ========
</TABLE>

         The  Company  markets  its  nonstandard  products  exclusively  through
approximately  7,000 independent  agencies.  The Company has several territorial
managers,  each of whom resides in a specific marketing region and has access to
the  technology  and  software  necessary  to  provide  marketing,   rating  and
administrative support to the agencies in his or her region.

         The Company  attempts to foster strong service  relationships  with its
agencies  and   customers.   The  Company  has  automated   certain   marketing,
underwriting and administrative  functions and has allowed on-line communication
with its agency force.  In addition to delivering  prompt service while ensuring
consistent  underwriting,  the Company  offers rating  software to its agents in
some states which permits them to rate risks in their offices.


<PAGE>



         Most of the  Company's  agents  have  the  authority  to sell  and bind
insurance  coverages in accordance with  procedures  established by the Company,
which is a common practice in the nonstandard automobile insurance business. The
Company reviews all coverages bound by the agents promptly and generally accepts
coverages  which  fall  within  its  stated  underwriting   criteria.   In  most
jurisdictions,  the  Company  has the right  within a  specified  time period to
cancel any policy even if the risk falls within its underwriting  criteria.  The
Company  compensates its agents by paying a commission  based on a percentage of
premiums produced.

         The Company  believes  having  five  individual  companies  licensed in
various  states allows it the  flexibility to engage in  multi-tiered  marketing
efforts in which specialized  automobile  insurance products are directed toward
specific  segments of the market.  Since certain state insurance laws prohibit a
single  insurer  from  offering  similar  products  with  different   commission
structures  or, in some cases  premium  rates,  it is necessary to have multiple
licenses  in  certain   states  in  order  to  obtain  the  benefits  of  market
segmentation.  The Company intends to continue the expansion of the marketing of
its multi-tiered  products into other states and to obtain multiple licenses for
its subsidiaries in these states to permit maximum flexibility in designing rate
and commission structures.

Underwriting

         The Company utilizes many factors in determining its rates. Some of the
characteristics  used are  type,  age and  location  of the  vehicle,  number of
vehicles per policyholder,  number and type of convictions or accidents,  limits
of  liability,  deductibles,  and,  where allowed by law,  credit,  age, sex and
marital  status of the insured.  The rate approval  process varies from state to
state, some which allow filing and immediate use of rates,  while others require
approval by the state's insurance department prior to the use of the rates.

         Underwriting  results of insurance companies are frequently measured by
their combined  ratios.  However,  investment  income,  federal income taxes and
other  non-underwriting  income or expense  are not  reflected  in the  combined
ratio. The profitability of property and casualty insurance companies depends on
income  from  underwriting,  investment  and  service  operations.  Underwriting
results are generally  considered  profitable  when the combined  ratio is under
100%  and  unprofitable   when  the  combined  ratio  is  over  100%.  Refer  to
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" for a further discussion on the combined ratio.

         In  an  effort  to  maintain  and  improve  underwriting  profits,  the
territorial  managers  monitor loss ratios of the agencies in their  regions and
meet  periodically  with the agencies in order to address any adverse  trends in
loss ratios.

Claims

         The Company's  nonstandard  automobile claims department handles claims
on a regional basis from its Indianapolis,  Indiana;  Atlanta,  Georgia;  Tampa,
Florida;  Orange  and  Riverside,  California;  Alexandria,  Virginia;  and Bala
Cynwyd, Pennsylvania locations.

         The Company retains independent appraisers and adjusters for estimating
physical  damage  claims and limited  elements of  investigation.  In 2000,  the
Company began  training its own  adjusters in  California  and Virginia to write
automobile damage appraisals.

         Claims settlement authority levels are established for each adjuster or
manager based on the employee's  ability and level of experience.  Upon receipt,
each  claim  is  reviewed  and  assigned  to an  adjuster  based on the type and
severity of the claim.  All  claim-related  litigation  is  monitored  by a home
office  supervisor  or  litigation  manager.  The claims  policy of the  Company
emphasizes  prompt  and  fair  settlement  of  meritorious  claims,  appropriate
reserving for claims and controlling claims adjustment expenses.


<PAGE>


Reinsurance

         The Company  follows the  customary  industry  practice of reinsuring a
portion of its risks and paying for that protection based upon premiums received
on all policies subject to such  reinsurance.  Insurance is ceded principally to
reduce  the  Company's  exposure  on  large  individual  risks  and  to  provide
protection  against  large  losses,   including  catastrophic  losses.  Although
reinsurance  does not  legally  discharge  the ceding  insurer  from its primary
obligation to pay the full amount of losses  incurred under policies  reinsured,
it does render the reinsurer liable to the insurer to the extent provided by the
terms of the reinsurance treaty. As part of its internal procedures, the Company
evaluates the financial condition of each prospective  reinsurer before it cedes
business  to that  carrier.  Based on the  Company's  review of its  reinsurers'
financial  health and  reputation  in the  insurance  marketplace,  the  Company
believes  its  reinsurers  are  financially  sound and that they can meet  their
obligations to the Company under the terms of the reinsurance treaties.

         In  2000,  Pafco  and  Superior  maintained  casualty  excess  of  loss
reinsurance on their nonstandard  automobile insurance business covering 100% of
losses on an individual  occurrence  basis in excess of $200,000 up to a maximum
of $5,000,000.

         Amounts recoverable from reinsurers relating to nonstandard  automobile
operations as of December 31, 2000 follows (in thousands):
<TABLE>
<CAPTION>

                                                                                           Reinsurance
                                                                                        Recoverables as of
  Reinsurers                                                 A.M. Best Rating         December 31, 2000 (1)
<S>                                                              <C>                            <C>
  National Union Fire Ins Comp of Pittsburg, PA                     A++                         65,539
  Gerling Global Reins Corp of America                               A                             532
  Lloyds of London                                               Not Rated                         630
</TABLE>

(1)      Only   recoverables   greater  than  $200,000  are  shown.   Total
         nonstandard automobile reinsurance recoverables as of December 31,
         2000 were approximately $66,901,000.
(2)      An A.M. Best Rating of "A++" is the highest of 15 ratings. An A.M. Best
         Rating  "A" is the third  highest of 15  ratings

          Effective  January  1,  2000,  Pafco  and  Superior  entered  into  an
automobile  quota share agreement with National Union Fire Insurance  Company of
Pittsburgh (A.M. Best rated A++). The amount of cession for Pafco is variable up
to a maximum  of 75% and $5  million  in any one  quarter  and for  Superior  is
variable  up to a maximum of 75% and $11  million in any one quarter for all new
business,  renewal  business and in force unearned  premium  reserves.  In 2000,
Pafco and Superior ceded 48% of their nonstandard automobile premiums under this
treaty.

         On  April  29,  1996,  Pafco  also  entered  into  a 100%  quota  share
reinsurance  agreement  with  Granite  Re,  whereby  all of  Pafco's  commercial
business from 1996 and  thereafter  was ceded  effective  January 1, 1996.  This
agreement was in effect during 2000.

          Neither  Pafco  nor  Superior  has any  facultative  reinsurance  with
respect to its nonstandard automobile insurance business.
Competition

          The Company  competes  with both large  national and smaller  regional
companies in each state in which it operates.  The Company's competitors include
other companies, which serve the agency market, as well as companies, which sell
insurance  directly to customers.  Direct  writers may have certain  competitive
advantages over agency writers, including increased name recognition,  increased
loyalty of their customer base and, potentially,  reduced acquisition costs. The
Company's  primarily  competitors are Progressive  Casualty  Insurance  Company,
Guaranty  National  Insurance  Company,  Integon  Corporation  Group,  Deerbrook
Insurance  Company (a member of the Allstate  Insurance Group) and the companies
of the American  Financial Group.  Generally,  these  competitors are larger and
have greater financial  resources than the Company.  The nonstandard  automobile
insurance  business is price  sensitive and certain  competitors  of the Company
have from time to time,  decreased  their prices in an apparent  attempt to gain
market  share.  The  year  2000  was  preceded  by two  years  of  severe  price
competition for nonstandard  automobile insurance.  The market began to see some
rate increases in 2000.

Recent Developments

          After  experiencing  continued  operating  losses  in its  nonstandard
automobile  operations  throughout  1999, the Company  decided to, in the latter
part of 1999,  implement  significant  changes in its auto  operations to affect
improvement  in its operating  results.  Effective  January 10, 2000 the Company
engaged Gene Yerant as the President of its nonstandard  automobile  operations.
Mr.  Yerant's  focus in his  position  with the  Company  is to return  the auto
operations to  profitability  by improving  efficiency and  effectiveness in all
aspects of the operation.

          Since his  engagement,  Mr. Yerant has effected a number of management
changes designed to improve operations, including hiring a new Chief Information
Officer,  a Vice  President  of  Sales  and  Product  Management  for  the  auto
operations  and certain other key claims and operating  positions.  During 2000,
the Company raised rates,  redesigned the auto insurance product,  reduced staff
and closed the Tampa processing center.
Reserves for Losses and Loss Adjustment Expenses

         Loss reserves are estimates, established at a given point in time based
on facts  then  known,  of what  the  Company  projects  its  exposure  to be in
connection with incurred losses.  Loss adjustment expense reserves are estimates
of the ultimate  liability  associated  with the expense of settling all claims,
including investigation and litigation costs. The Company's actual liability for
losses and loss adjustment  expense at any point in time will be greater or less
than these estimates.

         The Company  maintains  reserves for the eventual payment of losses and
loss  adjustment  expenses with respect to both reported and unreported  claims.
Nonstandard  automobile  reserves  for  reported  claims  are  established  on a
case-by-case  basis. The reserving process takes into account the type of claim,
policy provisions relating to the type of loss, and historical payments made for
similar claims.

         Loss and loss  adjustment  expense  reserves  for claims that have been
incurred  but not  reported  are  estimated  based on many  variables  including
historical and statistical information,  inflation, legal developments, economic
conditions,  trends in claim severity and frequency and other factors that could
affect the adequacy of loss reserves.

         The Company's  recorded reserves for losses and loss adjustment expense
reserves at the end of 2000 are  certified  by the  Company's  chief  actuary in
compliance with insurance regulatory requirements.

         The following loss reserve  development  table  illustrates  the change
over time of reserves  established  for loss and loss  expenses as of the end of
the  various  calendar  years  for the  nonstandard  automobile  segment  of the
Company.  The table includes the loss reserves  acquired from the acquisition of
Superior in 1996 and the related loss reserve development thereafter.  The first
section shows the reserves as originally reported at the end of the stated year.
The second section,  reading down,  shows the cumulative  amounts paid as of the
end of  successive  years  with  respect  to the  reserve  liability.  The third
section,  reading down, shows the re-estimates of the original  recorded reserve
as of the end of each  successive  year  which  is a result  of sound  insurance
reserving  practices of addressing  new emerging facts and  circumstances  which
indicate  that a  modification  of the prior  estimate  is  necessary.  The last
section  compares  the latest  re-estimated  reserve to the  reserve  originally
established,  and indicates  whether or not the original reserve was adequate or
inadequate to cover the estimated costs of unsettled claims.


<PAGE>



         The loss reserve development table is cumulative and, therefore, ending
balances  should not be added since the amount at the end of each  calendar year
includes activity for both the current and prior years.

         The reserve  for losses and loss  expenses  is an  accumulation  of the
estimated amounts necessary to settle all outstanding  claims as of the date for
which the reserve is stated.  The reserve and payment data shown below have been
reduced for estimated  subrogation and salvage recoveries.  The Company does not
discount its reserves for unpaid losses and loss expenses. No attempt is made to
isolate  explicitly  the  impact of  inflation  from the  multitude  of  factors
influencing the reserve estimates though inflation is implicitly included in the
estimates.  The Company regularly updates its reserve forecasts by type of claim
as new facts become known and events occur which affect unsettled claims.


<PAGE>


Goran Capital Inc.
Nonstandard Automobile Insurance Only
For The Years Ended December 31, (in thousands)
<TABLE>
<CAPTION>

                    1990    1991     1992     1993     1994        1995        1996         1997        1998       1999     2000
                 ------- ------- --------  ------- --------   ---------   ---------    ---------    --------    -------   ------

Gross reserves
<S>               <C>     <C>     <C>       <C>     <C>        <C>         <C>          <C>
for unpaid        $27,403 $25,248 $ 71,748  $79,551 $101,185   $ 121,661   $ 141,260    $ 103,441
losses and LAE
Deduct
reinsurance        12,581  10,927    9,921    8,124   16,378       6,515       3,167       18,709
recoverable
Reserve for
unpaid losses
and LAE, net of   $15,923 $15,682 $ 17,055   14,822   14,321      61,827      71,427       84,807     115,146    138,093   84,732
reinsurance
Paid cumulative
as of:
One Year Later      7,695   7,519   10,868    8,875    7,455      42,183      59,410       62,962      85,389     81,444     --
Two Years Later    10,479  12,358   15,121   11,114   10,375      53,350      79,319       89,285     111,042       --       --
Three Years        12,389  13,937   16,855   13,024   12,040      58,993      86,298       98,469        --         --       --
Later
Four Years Later   13,094  14,572   17,744   13,886   12,822      61,650      89,166         --          --         --       --
Five Years Later   13,331  14,841   18,195   14,229   13,133      62,621        --           --          --         --       --
Six Years Later    13,507  14,992   18,408   14,330   13,375        --          --           --          --         --       --
Seven Years        13,486  15,099   18,405   14,426     --          --          --           --          --         --       --
Later
Eight Years        13,567  15,095   18,460     --       --          --          --           --          --         --       --
Later
Nine Years Later   13,566  15,135     --       --       --          --          --           --          --         --       --
Ten Years Later    13,586    --       --       --       --          --          --           --          --         --       --
Liabilities
re-estimated as
of:
One Year Later     13,888  14,453   17,442   14,788   13,365      59,626      82,011       97,905     131,256    124,012     --
Two Years Later    13,343  14,949   18,103   13,815   12,696      60,600      91,743      104,821     128,302       --       --
Three Years        13,445  15,139   18,300   14,051   13,080      63,752      91,641      105,011        --         --       --
Later
Four Years Later   13,514  15,218   18,313   14,290   13,485      63,249      91,003         --          --         --       --
Five Years Later   13,589  15,198   18,419   14,499   13,441      63,233        --           --          --         --       --
Six Years Later    13,612  15,114   18,533   14,523   13,592        --          --           --          --         --       --
Seven Years        13,529  15,157   18,484   14,584     --          --          --           --          --         --       --
Later
Eight Years        13,573  15,145   18,508     --       --          --          --           --          --         --       --
Later
Nine Years Later   13,574  15,165     --       --       --          --          --           --          --         --       --
Ten Years Later    13,595    --       --       --       --          --          --           --          --         --       --
Net cumulative
(deficiency) or     2,328     517   (1,453)     238      729      (1,406)    (19,576)     (20,204)    (13,156)    14,081     --
redundancy
Expressed as a
percentage of
unpaid losses        14.8%    3.4%    (8.4%)    2.0%     6.1%       (2.3%)     (28.3%)      (23.6%)     (14.3%)     10.2%    --
and LAE

Revaluation of gross losses and LAE as of
year-end 2000:

    Cumulative Gross Paid as of Year-end 2000            26,949    24,390    71,484       94,108     107,074      87,873      81,702
    Gross liabilities re-estimated as of                 27,287    24,953    73,522       99,890     123,060     136,131     125,968
    year-end 2000
    Gross cumulative (deficiency) or redundancy             116       295    (1,774)     (20,339)    (21,875)    (14,470)     15,292
</TABLE>

<PAGE>

Activity in the  liability  for unpaid  loss and loss  adjustment  expenses  for
nonstandard automobile insurance is summarized below:


Reconciliation of Nonstandard Auto Reserves
<TABLE>
<CAPTION>
                                         2000            1999             1998

<S>                                    <C>            <C>             <C>
Balance at January 1                   $152,455       $134,024        $118,988
    Less Reinsurance Recoverables        13,527         17,844          34,181
                                         ------         ------          ------
    Net Balance at January 1            138,928        116,180          84,807

Incurred related to
  Current Year                          127,497        214,606         204,818
  Prior Years                          (14,118)         16,367          13,098
                                       --------         ------          ------
  Total Incurred                        113,379        230,973         217,916

Paid Related to
    Current Year                         85,334        122,380         123,581
    Prior Years                          82,108         85,845          62,962
                                         ------         ------          ------
    Total Paid                          167,442        208,225         186,543

Net Balance at December 31               84,865        138,928         116,180
Plus Reinsurance Balance                 23,252         13,527          17,844
                                         ------         ------          ------
Balance at December 31                 $108,117       $152,455        $134,024
</TABLE>

Ratings
          A.M.  Best has  currently  assigned a "B-" rating to  Superior,  a "C"
rating to Pafco and an "NA-3" rating to IGF.

         A.M.  Best's  ratings  are  based  upon  a  comprehensive  review  of a
company's  financial  performance,   which  is  supplemented  by  certain  data,
including  responses  to A.M.  Best's  questionnaires,  phone  calls  and  other
correspondence between A.M. Best analysts and company management, quarterly NAIC
filings,  state insurance department  examination reports, loss reserve reports,
annual  reports,  company  business  plans and other  reports  filed  with state
insurance  departments.  A.M. Best undertakes a quantitative  evaluation,  based
upon profitability,  leverage and liquidity, and a qualitative evaluation, based
upon the  composition  of a company's  book of  business or spread of risk,  the
amount,   appropriateness   and   soundness   of   reinsurance,   the   quality,
diversification  and estimated  market value of its assets,  the adequacy of its
loss reserves and policyholders'  surplus,  the soundness of a company's capital
structure,  the extent of a company's  market  presence and the  experience  and
competence of its  management.  A.M.  Best's  ratings  represent an  independent
opinion of a company's financial strength and ability to meet its obligations to
policyholders.  A.M.  Best's  ratings are not a measure of  protection  afforded
investors.  "B-" and "C" ratings are A.M.  Best's  eighth and  eleventh  highest
rating classifications,  respectively,  out of fifteen ratings. A "B-" rating is
awarded to insurers  which, in A.M.  Best's  opinion,  "have,  on balance,  fair
financial  strength,  operating  performance and market profile when compared to
the standards established by the A.M. Best Company" and "have an ability to meet
their current  obligations to  policyholders,  but their  financial  strength is
vulnerable to adverse changes in underwriting  and economic  conditions".  A "C"
rating is awarded to insurers which, in A. M. Best's opinion, "have, on balance,
weak financial strength,  operating performance and market profile when compared
to the standards  established  by the A.M. Best Company" and "have an ability to
meet their current obligations to policyholders, but their financial strength is
very vulnerable to adverse changes in underwriting and economic conditions".  An
"NA-3" is a "rating procedure inapplicable" category.


<PAGE>



Regulation

General

         The  Company's  insurance  businesses  are  subject  to  comprehensive,
detailed regulation  throughout the United States, under statutes which delegate
regulatory,   supervisory   and   administrative   powers  to  state   insurance
commissioners.  The primary  purpose of such  regulations and supervision is the
protection of  policyholders  and claimants  rather than  stockholders  or other
investors.  Depending on whether an insurance  company is domiciled in the state
and whether it is an admitted or non-admitted insurer, such authority may extend
to such things as (i) periodic reporting of the insurer's  financial  condition;
(ii) periodic financial  examination;  (iii) approval of rates and policy forms;
(iv) loss reserve adequacy; (v) insurer solvency; (vi) the licensing of insurers
and their  agents;  (vii)  restrictions  on the payment of  dividends  and other
distributions;  (viii)  approval  of changes in  control;  and (ix) the type and
amount of permitted investments.

         The losses,  adverse trends and uncertainties  discussed in this report
have been and  continue  to be matters of concern to the  domiciliary  and other
insurance  regulators  of the  Company's  operating  subsidiaries.  See  "Recent
Regulatory  Developments" and "Risk Based Capital  Requirements" below and "RISK
FACTORS."

Recent Regulatory Developments

         To address Indiana  Department of Insurance  ("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 would result in lower premium  volume and management  fees payable
     to Superior  Insurance Group,  Inc.  ("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. On April
24, 2000 the IDOI  concluded its  previously  disclosed  target  examination  of
Pafco,  covering loss reserves,  pricing and reinsurance and no action was taken
thereon.


<PAGE>



         As previously  reported Pafco informed the Iowa Department of Insurance
("IADOI")  on October 10, 2000 of its  decision to stop  writing new  automobile
business in Iowa while Pafco reviews and revises its 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 ratio of 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.

         As  previously  disclosed,  with  regard  to IGF and as a result of the
losses experienced by IGF from the discontinued crop insurance  operations,  IGF
has agreed with the IDOI to provide  monthly  financial  statements  and consult
monthly  with the IDOI,  and to  obtain  prior  approval  for  affiliated  party
transactions.  IGF continues to consult  regularly  with the IDOI  regarding the
status  of the  impending  sale of the crop  segment  and the  nonstandard  auto
business  written by IGF. On January 24, 2000 the IDOI concluded its target exam
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 Florida  Department of Insurance  ("FDOI") has concluded its market
conduct, data processing, year 2000 readiness and financial examinations 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.  Superior  is  required  to submit
monthly financial information to the FDOI, including a demonstration that it has
not exceeded a ratio of net written premiums to surplus of four to one.

         As previously  reported the FDOI issued a notice of its intent to issue
an order on July 7, 2000 (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  administrative
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.

Insurance Holding Company Regulation

         The  Company  also is  subject  to  laws  governing  insurance  holding
companies in Florida and Indiana,  where its insurance company  subsidiaries are
domiciled.  These  laws,  among  other  things,  (i) require the Company to file
periodic  information with state regulatory  authorities  including  information
concerning its capital  structure,  ownership,  financial  condition and general
business operations; (ii) regulate certain transactions between the Company, its
affiliates and IGF, Pafco,  Superior,  Superior  American and Superior  Guaranty
(the "Insurers"),  including the amount of dividends and other distributions and
the terms of surplus notes;  and (iii) restrict the ability of any one person to
acquire  certain  levels  of  the  Company's  voting  securities  without  prior
regulatory approval.

         Any purchaser of 10% or more of the outstanding  shares of common stock
of the  Company  would be  presumed  to have  acquired  control of Pafco and IGF
unless the Indiana  Commissioner  of  Insurance  ("Indiana  Commissioner")  upon
application,  has determined otherwise. In addition, any purchaser of 5% or more
of the  outstanding  shares of common  stock of the Company  will be presumed to
have acquired  control of Superior unless the Florida  Commissioner of Insurance
("Florida Commissioner"), upon application, has determined otherwise.


<PAGE>



         Dividend payments by the Company's  insurance  subsidiaries are subject
to restrictions  and limitations  under  applicable law, and under those laws an
insurance  subsidiary may not pay dividends to the Company  without prior notice
to, or approval by, the subsidiary's  domiciliary insurance regulator.  The 1996
FDOI consent order approving the Company's  acquisition of Superior,  prohibited
Superior from paying any  dividends for four years from the date of  acquisition
without prior approval.  This restriction  expired in April 2000. As a result of
regulatory  actions  taken by the IDOI  with  respect  to Pafco  and IGF,  those
subsidiaries  may not pay dividends to the Company without prior approval by the
IDOI (see "Recent Regulatory Developments" above). Further, payment of dividends
may  be  constrained  by  business  and  regulatory  considerations,  and  state
insurance  laws  and  regulations  require  that  the  statutory  surplus  of an
insurance  company  following  any dividend or  distribution  by such company be
reasonable  in relation to its  outstanding  liabilities  and  adequate  for its
financial  needs.  Accordingly,  there can be no assurance  that the IDOI or the
FDOI would permit any of the Company's  insurance  subsidiaries to pay dividends
at this time or in the future (see "RISK FACTORS").

         While the non-insurance  company  subsidiaries are not subject directly
to the dividend and other  distribution  limitations,  insurance holding company
regulations  govern the amount  which a  subsidiary  within the holding  company
system may charge any of the Insurers for services  (e.g.,  management  fees and
commissions).  These  regulations may affect the amount of management fees which
may be paid by Pafco and Superior to Superior Group  (formerly,  GGS Management,
Inc.).  The management  agreement  between the Company and Pafco was assigned to
Superior  Group and provides for an annual  management fee equal to 15% of gross
premiums.  A similar management  agreement with a management fee of 17% of gross
premiums was entered into between  Superior and Superior Group.  There can be no
assurance  that  either  the IDOI or the FDOI will not in the  future  require a
reduction in these management fees.

         In addition,  neither Pafco nor IGF may engage in any transaction  with
an affiliate, including the Company, without the prior approval of the IDOI (see
"Recent Regulatory Developments" above).

Underwriting and Marketing Restrictions

         During the past  several  years,  various  regulatory  and  legislative
bodies  have  adopted  or  proposed  new laws or  regulations  to deal  with the
cyclical  nature of the insurance  industry,  catastrophic  events and insurance
capacity  and  pricing.  These  regulations  include (i) the creation of "market
assistance plans" under which insurers are induced to provide certain coverages;
(ii)  restrictions  on the ability of insurers  to rescind or  otherwise  cancel
certain policies in mid-term;  (iii) advance notice  requirements or limitations
imposed for certain policy non-renewals;  and (iv) limitations upon or decreases
in rates permitted to be charged.

Insurance Regulatory Information System

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

         During 2000, Pafco had values outside of the acceptable ranges for four
IRIS tests.  These  included  the change in net  writings  ratio,  the  two-year
overall operating ratio, the liabilities to liquid assets ratio and the two-year
reserve  development  ratio. Pafco failed the first two tests due primarily to a
high loss ratio.

         During 2000,  Superior had values outside of the acceptable  ranges for
six IRIS tests.  These included the net premium to surplus ratio,  change in net
writings ratio, surplus aid to surplus ratio, two-year overall operating ratios,
change in surplus ratio, and the liabilities to liquid assets ratio.

         During 2000, IGF had values outside of the acceptable ranges for eleven
of the twelve IRIS tests.

Risk-Based Capital Requirements

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

         The RBC model law provides for four levels of  regulatory  action.  The
extent of regulatory  intervention  and action increases as the level of surplus
to RBC falls.  The first  level,  the  Company  Action  Level (as defined by the
NAIC),  requires  an  insurer  to  submit a plan of  corrective  actions  to the
regulator if surplus falls below 200% of the RBC amount.  The Regulatory  Action
Level  requires an insurer to submit a plan  containing  corrective  actions and
requires the relevant insurance  commissioner to perform an examination or other
analysis  and issue a  corrective  order if surplus  falls below 150% of the RBC
amount. The Authorized  Control Level gives the relevant insurance  commissioner
the  option  either to take the  aforementioned  actions or to  rehabilitate  or
liquidate the insurer if surplus falls below 100% of the RBC amount.  The fourth
action  level  is the  Mandatory  Control  Level  which  requires  the  relevant
insurance commissioner to rehabilitate or liquidate the insurer if surplus falls
below 70% of the RBC amount. Based on the foregoing formulae, as of December 31,
2000, the RBC calculations for IGF, Superior, and Pafco were in excess of 200%.

Guaranty Funds; Residual Markets

         The  insurance  company  subsidiaries  also may be  required  under the
solvency  or  guaranty  laws of most  states in which  they do  business  to pay
assessments (up to certain  prescribed  limits) to fund  policyholder  losses or
liabilities of insolvent or rehabilitated insurance companies. These assessments
may be deferred or forgiven  under most guaranty laws if they would  threaten an
insurer's  financial strength and, in certain  instances,  may be offset against
future  premium  taxes.   Some  state  laws  and  regulations   further  require
participation by the insurance company subsidiaries in pools or funds to provide
some types of insurance  coverages which they would not ordinarily  accept.  The
Company  recognizes  its  obligations  for  guaranty  fund  assessments  when it
receives  notice that an amount is payable to the fund.  The ultimate  amount of
these assessments may differ from that which has already been assessed.

         It is not possible to predict the future  impact of changing  state and
federal  regulation  on the Company's  operations  and there can be no assurance
that laws and  regulations  enacted in the future  will not be more  restrictive
than existing laws.

Canadian Federal Income Tax Considerations

          This  summary is based upon the current  provisions  of the Income Tax
Act (Canada) (the  "Canadian Tax Act"),  the  regulations  thereunder,  proposed
amendments thereto publicly announced by the Department of Finance, Canada prior
to the date hereof and the provisions of the  Canada-U.S.  Income Tax Convention
(1980) (the "Convention") as amended by the Third Protocol (1995).

          Amounts in respect of common  shares  paid or credited or deemed to be
paid or credited as, on account or in lieu of payment of, or in satisfaction of,
dividends to a shareholder who is not a resident in Canada within the meaning of
the  Canadian  Tax Act  will  generally  be  subject  to  Canadian  non-resident
withholding tax. Such withholding tax is levied at a basic rate of 25% which may
be reduced  pursuant to the terms of an applicable tax treaty between Canada and
the country of resident of the non-resident.

          Currently,  under the  Convention,  the rate of Canadian  non-resident
withholding tax on the gross amount of dividends  beneficially owned by a person
who is a resident of the United States for the purpose of the Convention and who
does not have a  "permanent  establishment"  or  "fixed  base" in Canada is 15%.
However, where such beneficial owner is a company which owns at least 10% of the
voting stock of the company, the rate of such withholding is 5%.

          A purchase for  cancellation  of common  shares by the Company  (other
than a purchase of common  shares by the Company on the open  market)  will give
rise to a deemed dividend under the Canadian Tax Act equal to the amount paid by
the  Company on the  purchase  in excess of the  paid-up  capital of such shares
determined in accordance  with the Canadian Tax Act. Any such dividend deemed to
have been  received  by a person  not  resident  in Canada  will be  subject  to
nonresident  withholding tax as described  above.  The amount of any such deemed
dividend  will reduce the proceeds of  disposition  to a holder of common shares
for  purposes  of  computing  the amount of his  capital  gain or loss under the
Canadian Tax Act.

          A holder of common  shares who is not a resident of Canada  within the
meaning of the  Canadian  Tax Act will not be subject to tax under the  Canadian
Tax Act in  respect  of any  capital  gain on a  disposition  of  common  shares
(including on a purchase by the Company) unless such shares  constitute  taxable
Canadian  property of the  shareholder  for purposes of the Canadian Tax Act and
such  shareholder  is not  entitled to relief  under an  applicable  tax treaty.
Common  shares will  generally not  constitute  taxable  Canadian  property of a
shareholder who is not a resident of Canada for purposes of the Canadian Tax Act
in any taxation year in which such  shareholder  owned common shares unless such
shareholder  uses or holds or is deemed to use or hold such  shares in or in the
course of carrying  on business in Canada or, a share of the capital  stock of a
corporation  resident  in  Canada,  that is not  listed  on a  prescribed  stock
exchange or a share that is listed on prescribed stock exchange,  if at any time
during the five year period immediately  preceding the disposition of the common
shares  owned,  either alone or together with persons with whom he does not deal
at arm's  length,  not less  than 25% of the  issued  shares of any class of the
capital stock of the Company. In any event, under the Convention,  gains derived
by a resident of the United  States from the  disposition  of common shares will
generally not be taxable in Canada unless 50% or more of the value of the common
shares is derived principally from real property situated in Canada.

U.S. Federal Income Tax Considerations

                  The  following is a general  summary of certain  U.S.  federal
income  tax  consequence  to  U.S.  Holders  of  the  purchase,   ownership  and
disposition of common shares. This summary is based on the U.S. Internal Revenue
Code  of  1986,  as  amended  (the  "Code"),  Treasury  Regulations  promulgated
thereunder,  and judicial and administrative  interpretations thereof, all as in
effect on the date hereof and all of which are subject to change.  This  summary
does not  address  all  aspects  of U.S.  federal  income  taxation  that may be
relevant to a  particular  U.S.  Holder based on such U.S.  Holder's  particular
circumstances.  In  particular,  the following  summary does not address the tax
treatment  of U.S.  Holders  who are  broker  dealers  or who own,  actually  or
constructively,  10% or more of the  Company's  outstanding  voting  stock,  and
certain  U.S.  Holders  (including,  but not  limited to,  insurance  companies,
tax-exempt  organizations,  financial  institutions  and persons  subject to the
alternative minimum tax) may be subject to special rules not discussed below.

                  For U.S. federal income tax purposes,  a U.S. Holder of common
shares  generally  will  realize,  to the extent of the  Company's  current  and
accumulated  earnings  and  profits,  ordinary  income  on the  receipt  of cash
dividends on the common shares equal to the U.S.  dollar value of such dividends
on the  date of  receipt  (based  on the  exchange  rate on such  date)  without
reduction for any Canadian  withholding tax. Dividends paid on the common shares
will not be eligible for the dividends received  deduction  available in certain
cases  to U.S.  corporations.  In the case of  foreign  currency  received  as a
dividend that is not converted by the recipient into U.S. dollars on the date of
receipt,  a U.S.  Holder will have a tax basis in the foreign  currency equal to
its U.S. dollars value on the date of receipt.  Any gain or loss recognized upon
a subsequent  sale or other  disposition of the foreign  currency,  including an
exchange for U.S. dollars,  will be ordinary income or loss.  Subject to certain
requirements  and  limitations  imposed by the Code, a U.S.  Holder may elect to
claim the  Canadian tax withheld or paid with respect to dividends on the common
shares either as a deduction or as a foreign tax credit against the U.S. federal
income tax  liability of such U.S.  Holder.  The  requirements  and  limitations
imposed by the Code with  respect to the  foreign  tax  credit are  complex  and
beyond the scope of this summary,  and consequently,  prospective  purchasers of
common  shares should  consult with their own tax advisors to determine  whether
and to what extent they would be entitled to such credit.

          For U.S.  federal  income tax  purposes,  upon a sale or exchange of a
common share, a U.S.  Holder will recognize gain or loss equal to the difference
between the amount  realized on such sale or exchange  and the tax basis of such
common  share.  If a common share is held as a capital  asset,  any such gain or
loss will be capital gain or loss, and will be long-term capital gain or loss if
the U.S. Holder has held such common share for more than one year.

          Under current Treasury regulations, dividends paid on the common share
to U.S.  Holders  will not be subject to the 31% U.S.  backup  withholding  tax.
Proposed  Treasury  regulations  which are not yet in effect and which will only
apply prospectively,  however, would subject dividends paid on the common shares
through a U.S. or U.S.  related broker to the 31% U.S.  backup  withholding  tax
unless certain  information  reporting  requirements are satisfied.  Whether and
when  such  proposed  Treasury  regulations  will  become  effective  cannot  be
determined at this time. The payment of proceeds of a sale or other  disposition
of common shares in the U.S.  through a U.S. or U.S.  related  broker  generally
will be  subject  to U.S.  information  reporting  requirements  and may also be
subject to the 31% U.S. backup withholding tax, unless the U.S. Holder furnishes
the broker with a duly completed and signed Form W-9. Any amounts withheld under
the U.S. backup  withholding  tax rules may be refunded or credited  against the
U.S.  Holder's U.S.  federal  income tax  liability,  if any,  provided that the
required information is furnished to the U.S. Internal Revenue Service.

Employees

         At  March  1,  2001  the   Company   and  its   subsidiaries   employed
approximately  385 full and  part-time  employees.  The  Company  believes  that
relations with its employees are excellent.

RISK FACTORS

          The following factors, in addition to the other information  contained
in this report should be considered in evaluating the Company and its prospects.

          The Terms of the Strategic Alliance Agreement May Adversely Affect the
Company's Financial Condition and Results of Operations

         As previously reported, SIG and two of its subsidiaries,  IGF Holdings,
Inc.  ("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 in the principal amount equal to the amount
owed, as specified by the SAA. In a letter dated March 20, 2001, CNA advised SIG
that it calculated the principal amount due CNA to be $26,265,403.  CNA also has
asserted a claim for amounts allegedly due under certain reinsurance  agreements
with IGF for the 2000 crop year.

         SIG believes it has claims  against CNA and defenses to CNA's  exercise
of the Put Mechanism  that may offset or reduce  amounts owed to CNA.  Moreover,
the Company  believes that the impending sale of IGF's crop  insurance  business
may provide an  opportunity  for the parities 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 the Company's,  IGFH's and IGF's
financial condition or results of operations.

Significant Losses Have Been Reported and May Continue

          The  Company   reported   losses   from   continuing   operations   of
$(63,224,000) for the year 2000 compared to losses from continuing operations of
$(47,000,000) for 1999. Results from continuing operations before the effects of
income  tax,  minority   interest  and  amortization   expense  were  losses  of
$(18,387,000)  and $(49,839,000)  for 2000 and 1999,  respectively.  Losses from
continuing   operations  had  decreased  from  1999  largely  due  to  favorable
developments in loss ratios and actions taken to reduce operating expenses.  The
Company  is  continuing  to  seek  and  implement   rate   increases  and  other
underwriting actions to further improve profitability.  A number of systems have
been  automated  and service  problems  have been  eliminated  or  significantly
reduced.  Although the Company has taken a number of actions to address  factors
contributing  to these past  losses,  there can be no assurance  that  operating
losses will not continue.

Recent and Further Regulatory Actions May Affect the Company's Future Operations

         The  Company's   insurance   company   subsidiaries,   their   business
operations,  and their transactions with affiliates,  including the Company, are
subject to extensive  regulation  and  oversight  by the IDOI,  the FDOI and the
insurance regulators of other states in which the insurance company subsidiaries
write business.  Moreover,  the insurance company subsidiaries' losses,  adverse
trends and  uncertainties  discussed in this report have been and continue to be
matters of concern to the  domiciliary  and other  insurance  regulators  of the
Company's insurance company  subsidiaries and have resulted in enhanced scrutiny
and  regulatory  actions  by  several  regulators.   See  "Regulation  -  Recent
Regulatory  Developments"  and "Risk-Based  Capital  Requirements" . The primary
purpose of insurance  regulation is the protection of policyholders  rather than
stockholders.  Failure to resolve  issues  with the IDOI and the FDOI,  and with
other  regulators,  in a manner  satisfactory  to the Company  could  impair the
Company's  ability  to  execute  its  business  strategies  or  result in future
regulatory actions or proceedings that otherwise materially and adversely affect
the Company's operations.

The Company is Subject to a Number of Pending Legal Proceedings

         As discussed  elsewhere  in this  report,  the Company is involved in a
number  of  pending  legal  proceedings  (see  Part I - Item  3).  Most of these
proceedings remain in the early stages.  Although the Company believes that many
of the  allegations  of  wrongdoing  are without merit and intends to vigorously
defend  the claims  brought  against  it,  there can be no  assurance  that such
proceedings  will  not  have  a  materially  adverse  effect  on  the  Company's
operations.

The Terms of the Trust Preferred Securities May Restrict The Company's Ability
to Act

          SIG has issued  through a wholly owned trust  subsidiary  $135 million
aggregate principal amount in trust originated preferred securities  ("Preferred
Securities").  The  Preferred  Securities  have a term of 30 years  with  annual
interest payments of 9.5% paid  semi-annually.  The obligations of the Preferred
Securities  are funded  from the  Company's  nonstandard  automobile  management
company.  SIG has elected to defer the semi-annual  interest payment,  beginning
February  2000 and may  continue to defer such payment for up to an aggregate of
five years as permitted by the indenture for the Preferred Securities.  Although
there is no present  default  under the  indenture  which would  accelerate  the
payment  of the  Preferred  Securities,  the  indenture  contains  a  number  of
convenants  which  may  restrict  SIG's  ability  to act in  the  future.  These
covenants  include  restrictions  on SIG's ability to: incur or guarantee  debt;
make payment to affiliates; repurchase its common stock; pay dividends on common
stock; and increase its level of certain investments other than investment grade
fixed income  securities.  There can be no assurance that  compliance with these
restrictions and other provisions of the indenture for the Preferred  Securities
will not adversely affect the cash flow of SIG and therefore, the Company.


<PAGE>



Uncertain Pricing and Profitability

         One  of  the  distinguishing  features  of the  property  and  casualty
industry is that its  products  are priced  before  losses are  reported and its
costs are known.  Premium rate levels are related in part to the availability of
insurance  coverage,  which  varies  according  to the level of  surplus  in the
industry.

         Increases in surplus have generally been accompanied by increased price
competition  among property and casualty  insurers.  The nonstandard  automobile
insurance  business in recent years has  experienced  very  competitive  pricing
conditions and there can be no assurance as to the Company's  ability to achieve
adequate  pricing.  Changes  in case law,  the  passage of new  statutes  or the
adoption  of  new  regulations  relating  to  the  interpretation  of  insurance
contracts can retroactively and dramatically  affect the liabilities  associated
with known risks after an  insurance  contract is in place.  New  products  also
present special issues in establishing appropriate premium levels in the absence
of a base of experience with such products' performance. The level of claims can
not be accurately  determined for periods after the sale of policies,  therefore
reserves are  estimated and these  estimates are used to set price,  if they are
low then resulting rates could be inadequate.

         The number of competitors  and the similarity of products  offered,  as
well as  regulatory  constraints,  limit the  ability of property  and  casualty
insurers to increase prices in response to declines in profitability.  In states
which require prior approval of rates,  it may be more difficult for the Company
to achieve premium rates which are commensurate with the Company's  underwriting
experience with respect to risks located in those states. Accordingly, there can
be no assurance  that these rates will be sufficient to produce an  underwriting
profit.

         The reported  profits and losses of a property  and casualty  insurance
company are also determined,  in part, by the  establishment of, and adjustments
to, reserves reflecting  estimates made by management as to the amount of losses
and loss  adjustment  expenses  ("LAE") that will  ultimately be incurred in the
settlement of claims.  The ultimate  liability of the insurer for all losses and
LAE  reserved  at any given  time  will  likely be  greater  or less than  these
estimates, and material differences in the estimates may have a material adverse
effect on the  insurer's  financial  position or results of operations in future
periods.

Nature of Nonstandard Automobile Insurance Business

         The  nonstandard  automobile  insurance  business  is  affected by many
factors  which  can cause  fluctuation  in the  results  of  operations  of this
business. Many of these factors are not subject to the control of the Company.

         The size of the nonstandard  market can be  significantly  affected by,
among other factors,  the  underwriting  capacity and  underwriting  criteria of
standard automobile insurance carriers. In addition, an economic downturn in the
states in which the Company writes  business could result in fewer new car sales
and  less  demand  for  automobile  insurance.   These  factors,  together  with
competitive  pricing and other  considerations,  could result in fluctuations in
the Company's underwriting results and net income.

Highly Competitive Business

         Nonstandard automobile insurance is a highly competitive business. Many
of the Company's  competitors  have  substantially  greater  financial and other
resources than the Company,  and there can be no assurance that the Company will
be able to compete effectively against such competitors in the future.


<PAGE>



         The  Company  competes  with both large  national  writers  and smaller
regional  companies.  The Company's  competitors  include other companies which,
like the Company,  serve the  independent  agency  market,  as well as companies
which sell  insurance  directly to  customers.  Direct  writers may have certain
competitive   advantages   over  agency   writers,   including   increased  name
recognition,  loyalty  of the  customer  base  to the  insurer  rather  than  an
independent  agency and,  potentially,  reduced  acquisition costs. In addition,
certain competitors of the Company have from time to time decreased their prices
in an apparent  attempt to gain market  share.  Also, in certain  states,  state
assigned risk plans may provide nonstandard  automobile  insurance products at a
lower price than private insurers.

Reliance Upon Reinsurance

         In order to reduce risk and to increase its underwriting  capacity, the
Company  purchases  reinsurance.  Reinsurance  does not  relieve  the Company of
liability  to its  insureds  for the risks  ceded to  reinsurers.  As such,  the
Company is subject to credit risk with respect to the risks ceded to reinsurers.
Although the Company places its reinsurance with  reinsurers,  which the Company
generally  believes  to  be  financially   stable,  a  significant   reinsurer's
insolvency or inability to make payments under the terms of a reinsurance treaty
could have a material  adverse  effect on the Company's  financial  condition or
results of operations.

         The amount and cost of reinsurance available to companies  specializing
in property and casualty  insurance  are subject,  in large part,  to prevailing
market conditions beyond the control of such companies. The Company's ability to
provide  insurance  at  competitive  premium  rates  and  coverage  limits  on a
continuing  basis  depends upon its ability to obtain  adequate  reinsurance  in
amounts and at rates that will not adversely affect its competitive position.

         Due to continuing market uncertainties  regarding reinsurance capacity,
no assurances  can be given as to the Company's  ability to maintain its current
reinsurance  facilities,  which generally are subject to annual renewal.  If the
Company  is  unable  to renew  such  facilities  upon  their  expiration  and is
unwilling to bear the associated increase in net exposures, the Company may need
to reduce the levels of its underwriting commitments.

ITEM 2 - PROPERTIES

Headquarters
          The  headquarters for the company is located at 2 Eva Road, Suite 200,
Tobicoke, Ontario, Canada in leased space.

         The Company's  U.S.  headquarters  and SIG are located at 4720 Kingsway
Drive,  Indianapolis  Indiana.  All  corporate  administration,  accounting  and
management  functions are contained at this  location.  Pafco is also located at
4720 Kingsway Drive, Indianapolis,  Indiana in a building which is owned 100% by
Pafco with no  encumbrances.  The building is an 80,000  square foot  multilevel
structure;  approximately 50% of which is utilized by the Company. The remaining
space is leased to third  parties  at a price of  approximately  $10 per  square
foot.

Superior

          Superior's  operations are conducted at leased  facilities in Atlanta,
Georgia;  Marietta,  Georgia;  Tampa,  Florida;  Orange,  California;  Glendale,
California;  Bala Cynwyd,  Pennsylvania and Alexandria,  Virginia. Under a lease
term that extends  through  February 2003,  Superior  leases office space at 280
Interstate North Circle,  N.W., Suite 500, Atlanta,  Georgia.  Superior occupies
43,338  square feet at this  location.  Superior  occupies  office space at 1400
South  Marietta  Parkway,   Suite  105,   Marietta,   Georgia  and  consists  of
approximately  2,500  square feet of space leased for a term  extending  through
August 2003.  Superior  occupies an office  located at 5483 West Waters  Avenue,
Suite 1200, Tampa,  Florida and consists of approximately  33,861 square feet of
space leased for a term extending  through December 2007.  Superior  occupies an
office at 1745 West Orangewood,  Orange,  California consisting of approximately
3,264  square  feet  leased  for a term  extending  through  May 2001.  Superior
occupies an office at 700 North Central Avenue, Glendale,  California consisting
of approximately  2,015 square feet leased for a term extending through November
2005.   Superior   occupies  an  office  at  150  Monument  Road,  Bala  Cynwyd,
Pennsylvania  consisting of approximately 3,031 square feet for a term extending
through April, 2003.  Superior occupies an office at 6303 Little River Turnpike,
Suite 220,  Alexandria,  Virginia  consisting of approximately 3,300 square feet
for a term extending through October 2003.  Underwriting,  customer service, and
administration  activities are housed at the Atlanta location. Claims activities
are split between Atlanta,  Tampa, Orange,  Glendale, Bala Cynwyd and Alexandria
locations.  The Tampa location processes all PIP claims.  Claims property damage
training is  performed  at the  Marietta  location.  Accounting  activities  are
performed at the headquarters location in Indianapolis, Indiana.

         The Company  considers all of its properties  suitable and adequate for
its current operations.

ITEM 3 - LEGAL PROCEEDINGS

         Superior  Guaranty is a defendant in a case filed on November 26, 1996,
in the Circuit  Court for Lee County,  Florida  entitled  Raed Awad v.  Superior
Guaranty Insurance Company, et al., Case No. 96-9151 CA LG. The case purports to
be brought on behalf of a class  consisting  of  purchasers  of  insurance  from
Superior Guaranty.  Plaintiffs allege that the defendant charged premium finance
service charges in violation of Florida law. Superior Guaranty believes that the
allegations  of  wrongdoing  as alleged in the  complaint  are without merit and
intends to vigorously defend the claims brought against it.

         IGF is a party to a number of pending legal  proceedings  relating to a
policy ("AgPI") offered in the now discontinued crop insurance  operations.  See
Note  14  "Commitments  and   Contingencies"   in  the  consolidated   financial
statements.  During  2000 all  remaining  claims  by  policyholders  in the AgPI
lawsuits  were  settled.  On January 12,  2001 a case was filed in the  Superior
Court of  California,  County  of  Fresno,  entitled  S&W Seed  Company,  Dudley
Silveira,  Ric  Blanchard  and  Darrell  Silveira  v.  Mutual  Service  Casualty
Insurance  Company,  IGF  Insurance  Company,  and Dibuduo & Defendis  Insurance
Agency,  Inc.;  Case  No.  OICE CG  00137.  The case was  brought  by four  AgPI
policyholders  who had previously  settled their AgPI claims pursuant to binding
settlement agreements who now seek additional  compensation by asserting through
litigation  that IGF and the third party carrier  directly  and/or through their
agents made false representations, among other things, regarding AgPI. Discovery
is proceeding. IGF remains a defendant/cross-claimant in six lawsuits pending in
California  state court (King and Fresno counties) only relating to cross claims
and discovery is proceeding. Over the objections of IGF, the third party carrier
settled in 2000 some of  policyholder  claims in the AgPI  cases for  amounts in
excess of the 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 these  settlements to binding  arbitration.  As of
December 31, 2000, IGF had paid an aggregate of  approximately  $28.9 million to
the  policyholders  involved in these legal  proceedings of which  approximately
$5.2 million was incurred  during 2000.  The unpaid  reserves as of December 31,
2000 were $10,912,000.  The Company believes that it has meritorious defenses to
any  claims in  excess  of the  amounts  it has  already  paid and that the loss
payments made and LAE reserves  established with respect to the claims from AgPI
as of December 31, 2000,  are adequate with regard to all of the policies  sold.
However,  there can be no assurance that the Company's  ultimate  liability with
respect to these and any future legal  proceedings  involving such policies will
not have a material  adverse  effect on the  Company's  results of operations or
financial position.

          Superior  Guaranty is a defendant  in a case filed on October 8, 1999,
in the Circuit Court for Manatee County,  Florida  entitled  Patricia Simmons v.
Superior Guaranty Insurance Company, Case No. 1999 CA-4635. The case purports to
be brought on behalf of a class  consisting  of  purchasers  of  insurance  from
Superior Guaranty.  The Plaintiff alleges that the defendant charged interest in
violation of Florida law.  Superior  Guaranty  believes that the  allegations of
wrongdoing  as  alleged  in the  complaint  are  without  merit and  intends  to
vigorously defend the claims brought against it.
<PAGE>



         Superior is a defendant in a case filed February 4, 2000 in the Circuit
Court for Dade  County,  Florida  entitled  Medical  Re-Hab  Center v.  Superior
Insurance  Company.  The  case  purports  to be  brought  on  behalf  of a class
consisting  of (i)  healthcare  providers  that  rendered  treatment to Superior
insureds  and  claimants  of  Superior  insureds  and  (ii)  such  insureds  and
claimants.  The plaintiff alleges that Superior reduced medical benefits payable
and  improperly  calculated  interest in  violation  of Florida law. The Company
believes the claim is without merit and intends to vigorously defend the charges
brought against it.

         The Company is a defendant in a case filed on February 23, 2000, in the
United  States  District  Court for the  Southern  District of Indiana  entitled
Robert Winn, et al. v. Symons  International  Group,  Inc., et al., Cause No. IP
00-0310-C-B/S.  Other parties named as defendants are SIG, three individuals who
were   or   are   officers   or   directors   of   the   Company   or  of   SIG,
PricewaterhouseCoopers LLP and Schwartz Levitsky Feldman, LLP. The case purports
to be brought on behalf of a class  consisting  of  purchasers  of the Company's
stock or SIG's stock during the period February 27, 1998,  through and including
November  18, 1999.  Plaintiffs  allege,  among other  things,  that  defendants
misrepresented the reliability of the Company's  reported financial  statements,
data  processing and financial  reporting  systems,  internal  controls and loss
reserves in violation of Section  10(b) of the  Securities  Exchange Act of 1934
("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.

         On July 7,  2000,  the FDOI  issued a notice of its  intent to issue an
order (the "Notice") which principally  addresses certain policy and finance fee
payments  by  Superior  to  Superior  Group,  and  financial  reporting  issues,
including disclosure of intercompany transactions.  An administrative hearing to
review the Notice and a determination  that the order contemplated by the Notice
not be issued was held in 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 intends to vigorously contest the issuance of any such
order;  however,  there can be no assurance that an order,  if issued,  will not
have a  material  adverse  effect on the  Company's  results  of  operations  or
financial position.

         Superior  is a  defendant  in a case filed  September  15,  2000 in the
Circuit  Court for Lee  County,  Florida  entitled  Charles L.  Fulton,  D.C. v.
Superior  Insurance  Company,  Case No.  00-7546 CA LG. The case 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  Insurance  Company'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.


<PAGE>



         The California  Department of Insurance ("CDOI") advised the Company in
1998 that it was reviewing a possible  assessment  which could total $3 million.
The Company does not believe it will owe anything for this possible  assessment.
This possible  assessment  relates to brokers fees charged to  policyholders  by
independent  agents who placed  business with  Superior.  The CDOI has indicated
that such broker fees charged by the independent  agent to the policyholder were
improper and has requested reimbursement to the policyholders from Superior. The
Company did not receive any of such brokers fees.  Although the  assessment  has
not been  formally  made by the CDOI,  the Company  will  vigorously  defend any
potential assessment and believes it will prevail.

         The Company's  insurance  subsidiaries  are parties to other litigation
arising in the  ordinary  course of  business.  The  Company  believes  that the
ultimate resolution of these lawsuits will not have a material adverse effect on
its  financial  condition or results of  operations.  The  Company,  through its
claims reserves,  reserves for both the amount of estimated damages attributable
to these lawsuits and the estimated costs of litigation.

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

         None.

EXECUTIVE OFFICERS OF THE REGISTRANT

         Presented below is certain information regarding the executive officers
of the  Company  who are not also  directors.  Their  respective  ages and their
respective positions with the Company are listed as follows:

Name                           Age          Position

Gregg Albacete                 38           Vice President and Chief Information
                                              Officer of SIG

Earl R. Fonville               37           Vice President, Chief Financial
                                               Officer and Treasurer of the
                                               Company and SIG

          Mr.  Albacete  has  served as Vice  President  and  Chief  Information
Officer of SIG since January,  2000. Mr.  Albacete  served as Vice President and
Chief  Information  Officer of Leader Insurance from December,  1987 to January,
2000.  From March  1982 to  February  1985 Mr.  Albacete  worked  for  Transport
Insurance. Prior to that time, Mr. Albacete was a self-employed consultant.

          Mr. Fonville,  has served as Vice President,  Chief Financial  Officer
and Treasurer of the Company since  September  2000.  Mr.  Fonville  served from
October 1999 to August 2000 various insurance organizations providing consulting
services in the areas of accounting and finance. During the period from November
1993 to September 1999, Mr. Fonville served as Vice President, Corporate Auditor
with Acordia,  Inc. and Vice President,  Chief  Financial  Officer of Acordia of
Lexington.

PART II

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

         Information  regarding  the  trading  market for the  Company's  common
stock,  the range of selling prices for each  quarterly  period since January 1,
1999, and the  approximate  number of holders of common stock as of December 31,
2000 and other  matters is  included  under the  caption  "Market  and  Dividend
Information"  on pages 46 and 47 of the 2000 Annual Report,  included as Exhibit
13, which information is incorporated herein by reference.


<PAGE>


ITEM 6 - SELECTED FINANCIAL DATA

         The data  included  on page 6 of the 2000  Annual  Report,  included as
Exhibit 13, under "Selected Financial Data" is incorporated herein by reference.

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

         The  discussion  entitled   "Management   Discussion  and  Analysis  of
Financial  Condition  and  Results of  Operations"  included  in the 2000 Annual
Report on pages 7 through 16  included as Exhibit 13 is  incorporated  herein by
reference.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The discussion entitled  "Quantitative and Qualitative  Disclosures About Market
Risk" is included  in the 2000 Annual  report on pages 14 through 16 included as
Exhibit 13 is incorporated herein by reference.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The  consolidated  financial  statements  in the  2000  Annual  Report,
included as Exhibit  13, and listed in Item 14 of this  Report are  incorporated
herein by reference from the 2000 Annual Report.

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

        None.

PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The  information  required  by this  Item  regarding  Directors  of the
Company is incorporated  herein by reference to the Company's  definitive  proxy
statement  for its 2000  annual  meeting of common  stockholders  filed with the
Commission pursuant to Regulation 14A (the "2000 Proxy Statement").

ITEM 11 - EXECUTIVE COMPENSATION

         The  information  required  by this  Item  is  incorporated  herein  by
reference to the Company's 2000 Proxy Statement.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  information  required  by this  Item  is  incorporated  herein  by
reference to the Company's 2000 Proxy Statement.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  information  required  by this  Item  is  incorporated  herein  by
reference to the Company's 2000 Proxy Statement.

PART IV

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

         The documents listed below are filed as a part of this Report except as
otherwise indicated:
<TABLE>
<CAPTION>

1.       Financial Statements.  The following described consolidated financial statements found on the pages of the 2000 Annual
              Report indicated below are incorporated into Item 8 of this Report by reference.

              Description of Financial Statement Item Location in 2000 Annual Report

<S>                                                                             <C>
                Report of Independent Accountants                               Page 45

                Consolidated Balance Sheets, December 31,
                  2000 and 1999                                                 Page 17

                Consolidated Statements of Earnings, Years
                  Ended December 31, 2000, 1999 and 1998                        Page 18

                Consolidated Statements of Changes In
                  Stockholders' Equity, Years Ended
                  December 31, 2000, 1999 and 1998                              Page 19

                Consolidated Statements of Cash Flows,
                  Years Ended December 31, 2000, 1999 and 1998                  Page 20

                Notes to Consolidated Financial Statements,
                  Years Ended December 31, 2000, 1999 and 1998         Page 21 through 43

2.       Financial Statement Schedules.  The following financial statement schedules are included beginning on Page 27.

               Report of Independent Accountants

                 Schedule II - Condensed Financial Information of Registrant

                 Schedule IV - Reinsurance

                 Schedule V - Valuation and Qualifying Accounts

                 Schedule VI - Supplemental Information Concerning Property - Casualty Insurance Operations


3.       Exhibits.  The Exhibits set forth on the Index to Exhibits are incorporated herein by reference.

              Reports on Form 8-K.  None.

</TABLE>


<PAGE>


Board of Directors and Stockholders of
Goran Capital  Inc. and Subsidiaries

The audit  referred  to in our report  dated  March 13,  2001,  relating  to the
consolidated financial statements of Goran Capital Inc. and subsidiaries,  which
is incorporated in Item 8 of this Form 10-K by reference to the annual report to
stockholders  for the year ended  December  31, 2000  included  the audit of the
financial  statement schedules listed in the accompanying index. These financial
statement  schedules are the  responsibility  of the Company's  management.  Our
responsibility is to express an opinion on these financial  statement  schedules
based upon our audit.

In our  opinion  such  financial  statement  schedules  present  fairly,  in all
material respects, the information set forth therein.



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





<PAGE>


GORAN CAPITAL INC.- CONSOLIDATED
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES.

The  information  required  by this  schedule  is included in note 3 of Notes to
Consolidated Financial Statement.

GORAN CAPITAL INC.
SCHEDULE II - CONDENSED  FINANCIAL  INFORMATION OF REGISTRANT As Of December 31,
1999 and 2000 (In Thousands)
<TABLE>
<CAPTION>

ASSETS                                                         1999        2000
                                                           --------    --------

Assets:
<S>                                                        <C>         <C>
    Cash and Short-term Investments                        $    213    $    197
    Loans to Related Parties                                  2,723       3,698
    Capital and Other Assets                                     26          68
    Investment in Subsidiaries, at Cost                      10,295      10,738
                                                           --------    --------
Total Assets                                               $ 13,257    $ 14,701
                                                           ========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
    Loans from Related Parties and Other Liabilities       $  2,735    $  5,705
                                                           --------    --------
Total Liabilities                                             2,735       5,705
                                                           --------    --------

Stockholders' Equity:
    Common Shares                                            19,017      18,165
    Cumulative Translation Adjustment                           931       1,509
    Deficit                                                  (9,426)    (10,678)
                                                           --------    --------
Total Stockholders' Equity                                   10,522       8,996
                                                           --------    --------
Total Liabilities and Stockholders' Equity                 $ 13,257    $ 14,701
                                                           ========    ========

</TABLE>



<PAGE>


GORAN CAPITAL INC.
SCHEDULE  II -  CONDENSED  FINANCIAL  INFORMATION  OF  REGISTRANT  STATEMENT  OF
EARNINGS (LOSS) AND  ACCUMULATED  DEFICIT For The Years Ended December 31, 1998,
1999 and 2000 (In Thousands)
<TABLE>
<CAPTION>

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

Revenues
<S>                                                       <C>         <C>              <C>
Management Fees                                           $    108    $     75         $--
Net Investment Income                                           40          46           5
                                                          --------    --------    --------
     Total Revenues                                            148         121           5
                                                          --------    --------    --------
Expenses:
General, Administrative, Acquisition Expenses and Taxes      1,380       1,233       1,257
                                                          --------    --------    --------
     Total Expenses                                          1,380       1,233       1,257
                                                          --------    --------    --------
Net Loss                                                    (1,232)     (1,112)     (1,252)
Other-Purchase of Common Shares                               (522)       --          --
Deficit, Beginning of Year                                  (6,560)     (8,314)     (9,426)
                                                          --------    --------    --------
Deficit End of Year                                       $ (8,314)   $ (9,426)   $(10,678)
                                                          ========    ========    ========
</TABLE>


<PAGE>


GORAN CAPITAL INC.
SCHEDULE II - CONDENSED FINANCIAL  INFORMATION OF REGISTRANT For The Years Ended
December 31, 1998, 1999 and 2000 (In Thousands)
<TABLE>
<CAPTION>

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

Cash Flows from Operations
<S>                                              <C>        <C>        <C>
Net Loss                                         $(1,232)   $(1,112)   $(1,252)
Items Not Involving Cash:
    Decrease (Increase) in Accounts Receivable       560     (2,118)      (975)
      Decrease (Increase) in Other Assets            779       (166)      (485)
    Increase (Decrease) in Accounts Payable          613      2,735      2,970
    Translation Adjustment                          (230)      (436)       (89)
                                                 -------    -------    -------
Net Cash Provided (Used) by Operations               490     (1,097)       169
                                                 -------    -------    -------
Cash Flows From Financing Activities:
    Purchase of Common Shares                       (748)      --         (185)
      Issue of Common                               (675)     1,077       --
                                                 -------    -------    -------
Net Cash Provided by Financing Activities         (1,423)     1,077       (185)
                                                 -------    -------    -------
Net Increase (Decrease) in Cash                     (933)       (20)       (16)
Cash at Beginning of Year                          1,166        233        213
                                                 -------    -------    -------
Cash at End of Year                              $   233    $   213    $   197
                                                 =======    =======    =======
Cash Resources are Comprised of:
Cash                                             $   104    $    73    $    56
Short-Term Investments                               129        140        141
                                                 -------    -------    -------
                                                 $   233    $   213    $   197
                                                 =======    =======    =======


</TABLE>


<PAGE>


GORAN CAPITAL INC.
SCHEDULE II - CONDENSED FINANCIAL  INFORMATION OF REGISTRANT For The Years Ended
December 31, 1998, 1999 and 2000

Basis of Presentation

The  condensed  financial  information  should be read in  conjunction  with the
consolidated  financial statements of Goran Capital Inc. The condensed financial
information  includes the accounts and  activities  of the parent  company which
acts as the holding company for the insurance subsidiaries.

GORAN CAPITAL INC.- CONSOLIDATED
SCHEDULE IV - REINSURANCE
For The Years Ended December 31, 1998, 1999 and 2000
(In Thousands)
<TABLE>
<CAPTION>

<S>                                        <C>           <C>          <C>
Property and Liability Insurance           1998          1999         2000

Direct Amount                         $ 284,426     $ 227,774    $ 168,626
                                      ---------     ---------    ---------
Assumed From Other Companies             19,319         8,627       13,473
                                      ---------     ---------    ---------
Ceded to Other Companies                 (4,106)        7,361      (78,637)
                                      ---------     ---------    ---------
Net Amounts                           $ 299,639     $ 243,762    $ 103,462
                                      =========     =========    =========
Percentage of Amount Assumed to Net         6.4%          3.5%        13.0%
                                      ---------     ---------    ---------
</TABLE>



<PAGE>


GORAN CAPITAL INC.- CONSOLIDATED  SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
For The Years Ended December 31, 1998, 1999 and 2000 (In Thousands)
<TABLE>
<CAPTION>


                                                     1998                    1999                    2000
                                                Allowance for           Allowance for            Allowance for
                                              Doubtful Accounts       Doubtful Accounts        Doubtful Accounts

Additions:

<S>                                                         <C>                     <C>                      <C>
Balance at Beginning of Period                              $1,297                  $4,953                   $1,479

Charged to Costs and Expenses(1)                             6,259                   6,134                    9,623

Charged to Other Accounts                                      ---                     ---                      ---

Deductions from Reserves                                     2,603                   9,608                    9,162
                                                             -----                   -----                    -----

Balance at End of Period                                    $4,953                  $1,479                   $1,940
                                                            ======                  ======                   ======
</TABLE>

(1)      The Company  continually  monitors  the adequacy of its  allowance  for
         doubtful  accounts  and  believes  the  balance  of such  allowance  at
         December 31, 1998, 1999 and 2000 was adequate.


<PAGE>


GORAN  CAPITAL  INC.-  CONSOLIDATED  SCHEDULE  VI  -  SUPPLEMENTAL   INFORMATION
CONCERNING PROPERTY - CASUALTY INSURANCE OPERATIONS For The Years Ended December
31, 1998, 1999 and 2000 (In Thousands)
<TABLE>
<CAPTION>

          Deferred   Reserves   Discount,  Unearned    Earned      Net           Claims and       Amorti-zatiPaid       Premiums
          Policy     for        if any,    Premiums    Premiums    Invest-menAdjustment Expenses  of         Claims     Written
          AcquisitionUnpaid     deducted                           Income         Incurred        Deferred   and
          Costs      Claims                                                      Related to:      Policy     Claim
                     and                                                                          Acqui-sitioAdjust-
                     Claim                                                                        Costs      ment
                     Adjust-                                                                                 Expense
                     ment
                     Expense

Consolidated property - casualty entities                                    Current    Prior
                                                                             Years      Years

<S>       <C>        <C>                 <C>         <C>         <C>       <C>        <C>        <C>        <C>        <C>
1998      16,332     140,484    ---      97,930      281,276     13,126    214,743    13,599     51,558     215,615    303,745

1999      13,908     157,425    ---      80,561      261,800     13,125    217,686    24,722     42,665     227,577    236,401

2000      6,454      113,149    ---      62,386      145,532     12,171    132,781    (19,013)   37,453     174,412    182,099

</TABLE>


Note: All amounts in the above table are net of the effects of  reinsurance  and
related  commission  income,  except for net investment  income  regarding which
reinsurance is not applicable,  premiums written, reserves for unpaid claims and
claim  adjustment  expense  and  unearned  premiums  which are stated on a gross
basis.


<PAGE>




SIGNATURES

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

                                                     GORAN CAPITAL INC.


April 17, 2001                                       By:  /s/ Alan G. Symons
                                                       Chief Executive Officer

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

(1) Principal Executive Officer:


/s/ Alan G. Symons
Chief Executive Officer


(2) Principal Financial Officer:


/s/ Earl R. Fonville
Vice President and Chief Financial Officer,
Principal Accounting Officer


(3) The Board of Directors:


/s/ G. Gordon Symons                                 /s/ J. Ross Schofield
Chairman of the Board                                    Director


/s/ John K. McKeating                               /s/ Douglas H. Symons
Director                                                Director


/s/ David B. Shapira                                /s/ Alan G. Symons
Director                                                Director



<PAGE>