Exhibit 10.12

                              EMPLOYMENT AGREEMENT


         WHEREAS,   Symons   International  Group,  Inc.  and  its  subsidiaries
(collectively,  the "Company")  considers it essential to its best interests and
the best interests of its  stockholders  to foster the continuous  employment of
its key management  personnel and,  accordingly,  the Company  desires to employ
Carl F. Schnaufer ("You",  "Your"or "Executive"),  upon the terms and conditions
hereinafter set forth; and

         WHEREAS,  the  Executive  desires to  continue  to be  employed  by the
Company, upon the terms and conditions contained herein.

         NOW,  THEREFORE,  in  consideration of the covenants and agreements set
forth below, the parties agree as follows:

1.       Employment

         1.1 Term of Agreement.  The Company agrees to employ  Executive as Vice
President  and Chief  Information  Officer  effective  as of August 14, 1998 and
continuing until August 13, 1999, unless such employment is terminated  pursuant
to Section 3 below;  provided,  however,  that the term of this Agreement  shall
automatically  be extended without further action of either party for additional
one (1) year periods  thereafter  unless the Company or Executive  gives written
notice that it or he does not intend to extend this  Agreement.  Executive shall
give to the Company two (2) months  written  notice prior to the date  Executive
desires to terminate his employment by the Company.  It is expressly  understood
and  agreed  that a notice  of  non-renewal  issued  by the  Company  shall  not
extinguish the  Executive's  non-competition  obligations  pursuant to Section 4
herein.

         1.2 Terms of  Employment.  During the Term, You agree to be a full-time
employee of the Company  serving in the  position  of Vice  President  and Chief
Information Officer of the Company and further agree to devote substantially all
of Your  working  time and  attention to the business and affairs of the Company
and, to the extent necessary to discharge the  responsibilities  associated with
Your position as Vice President and Chief Information Officer of the Company and
to  use  Your  best  efforts  to  perform   faithfully  and   efficiently   such
responsibilities.  Executive shall perform such duties and  responsibilities  as
may be  determined  from time to time by the  Chairman  and/or  Chief  Executive
Officer of the Company of the Company, which duties shall be consistent with the
position of Vice President and Chief Information  Officer of the Company,  which
shall grant Executive authority,  responsibility,  title and standing comparable
to that of the vice president and chief information officer of a stock insurance
holding company of similar  standing.  Your primary place of work will be at the
company's headquarters in Indianapolis, Indiana, but it is understood and agreed
that your duties may require  travel.  In the event you are relocated to another
Company location, the Company agrees to pay for the cost of your move (including
temporary lodging expenses) and to facilitate the sale of your Indianapolis area
home so that you will be  enabled to  purchase  a new home in your new  location
that is  comparable in price to your existing home and have your family join you
at such new location within two (2) months of your transfer or such other period
as is reasonable considering market and location.  Nothing herein shall prohibit
You from


<PAGE>

devoting  Your time to civic  and  community  activities  or  managing  personal
investments,  as long as the foregoing do not interfere with the  performance of
Your duties hereunder.

         1.3  Appointment  and  Responsibility.  The Boards of  Directors of the
Company shall, following the effective date of this Agreement, elect and appoint
Executive as Vice  President  and Chief  Information  Officer.  Consistent  with
Section 1.2 of this Agreement,  Executive shall be primarily responsible for the
information systems of the Company.

2.       Compensation, Benefits and Prerequisites

         2.1 Salary.  Company shall pay Executive a salary,  in equal  bi-weekly
installments, equal to an annualized salary rate of $140,000. Executive's salary
as payable  pursuant to this  Agreement  may be  increased  from time to time as
mutually  agreed upon by Executive  and the Company.  Notwithstanding  any other
provision  of this  Agreement,  Executive's  salary paid by Company for any year
covered by this  Agreement  shall not be less than such salary paid to Executive
for the immediately  preceding  calendar year. All salary and bonus amounts paid
to Executive pursuant to this Agreement shall be in U.S. dollars.

         2.2 Bonus.  The Company  and  Executive  understand  and agree that the
Company expects to achieve  significant growth during the term of this Agreement
and that Executive will make a material  contribution  to that growth which will
require  certain  personal and  familial  sacrifices  on the part of  Executive.
Accordingly,  it is the desire and intention of the Company to reward  Executive
for the attainment of that growth through bonus and other means (including,  but
not limited to,  stock  options,  stock  appreciation  rights and other forms of
incentive  compensation).  Therefore,  the Company will pay Executive a lump-sum
bonus  (subject to normal  withholdings)  within sixty (60)  business  days from
receipt by Company of its consolidated,  annual audited financial  statements in
an amount which shall be  determined  in  accordance  with the  following  Bonus
Table. All amounts used for calculation  purposes in this section shall be based
on the audited, consolidated financial statements of Symons International Group,
Inc. (or any successor  thereto),  with such  financial  statements  having been
prepared in accordance with applicable Generally Accepted Accounting Principles,
applied on a consistent basis with that of prior years.

<TABLE>
<CAPTION>
                                  BONUS TABLE

         If Audited Net                                  % of Annual Salary
         Income (as a % of                               Payable to Executive
         Budgeted Net Income) Is                         As Bonus

         <S>                                                    <C>
         Less Than 75%                                          -0-
         75% or more, but less than 100%                        10%
         100% or more, but less than 125%                       20%
         125% or more                                           30%

</TABLE>

                                       -2-

<PAGE>


         2.3 Employee Benefits.  During the term of this Agreement, You shall be
entitled  to  participate  in all  incentive,  savings,  and  retirement  plans,
practices,  policies, and programs available generally to other employees of the
Company. During the term of this Agreement,  You and/or Your family, as the case
may be, shall be eligible for  participation  in and shall  receive all benefits
under  welfare  benefit  plans,  practices,  policies,  and  programs  available
generally to other employees of the Company.

         2.4  Additional Prerequisites.  During the term of this Agreement,
Company shall provide Executive with:

         (a)  Not less than three(3) weeks paid vacation during each calendar
              year.

         (b)  An automobile allowance of six hundred thirty dollars ($630.00)
              per month.

         (c)  A golfing membership,  including  initiation and monthly fees,
              at a country club as shall be approved by the Chief  Executive
              Officer of Company, in his sole and absolute discretion.

         2.5 Expenses. During the period of his employment hereunder, Executive
shall be entitled to receive  reimbursement from the Company (in accordance with
the policies  and  procedures  in effect for the  Company's  employees)  for all
reasonable travel,  entertainment and other business expenses incurred by him in
connection with his services hereunder.

3.       Termination of Executive's Employment

         3.1 Termination of Employment and Severance Pay. Executive's employment
under  this  Agreement  may be  terminated  by the  Company  at any time for any
reason; provided,  however, that if Executive's employment is terminated for any
reason  other than for cause prior to February 14, 1999,  he shall  receive,  as
severance  pay, an amount  equal to his salary  which would have been  otherwise
payable  from the date of  termination  of  employment  to August 13,  1999.  If
Executive's  employment  is  terminated  subsequent to February 13, 1999 for any
reason other than for cause, he shall receive, as severance pay, an amount equal
to six (6) month's  current  salary.  Further,  if Executive shall be terminated
without cause,  receipt of severance  payments are conditioned upon execution by
Executive  and the  Company  of that  mutual  Agreement  of  Release  and Waiver
attached hereto as Exhibit A. Further,  Executive shall receive severance pay in
accordance with this Section 3.1 if Executive shall terminate this Agreement due
to a breach  thereof by the Company or if  Executive  is directed by the Company
(including,  if  applicable,  any  successor)  to  engage  in any act or  action
constituting  fraud or any  unlawful  conduct  relating  to the  Company  or its
business as may be  determined  by  application  of  applicable  law.  The Chief
Executive  Officer of the  Company  may,  in his sole and  absolute  discretion,
provide  Executive notice of the Company's intent to terminate this Agreement as
of a future date.  In such event,  Executive  shall  receive the right to remain
employed by the Company  for a period of six (6)  months,  in lieu of  severance
payments pursuant to this Section 3.1.

                                       -3-

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         3.2 Cause. For purposes of this Section 3, "cause" shall mean:

         (a)      the Executive being convicted in the United States of America,
                  any State therein,  or the District of Columbia,  or in Canada
                  or any Province therein (each, a "Relevant Jurisdiction"),  of
                  a crime for which the maximum penalty may include imprisonment
                  for one year or longer (a  "felony") or the  Executive  having
                  entered  against him or consenting to any judgment,  decree or
                  order (whether  criminal or otherwise)  based upon  fraudulent
                  conduct or violation of securities laws;

         (b)      the Executive's  being indicted for, charged with or otherwise
                  the subject of any formal  proceeding  (criminal or otherwise)
                  in connection with any felony, fraudulent conduct or violation
                  of securities  laws, in a case brought by a law enforcement or
                  securities  regulatory  official,  agency  or  authority  in a
                  Relevant Jurisdiction;

         (c)      the Executive  engaging in fraud,  or engaging in any unlawful
                  conduct  relating  to the Company or its  business,  in either
                  case  as   determined   under   the   laws  of  any   Relevant
                  Jurisdiction;

         (d)      the Executive breaching any provision of this Agreement;

         (e)      gross negligence or willful misconduct by the Executive in the
                  performance of his duties hereunder; or
                  failure of the  Executive  to follow the written  directive of
                  the Chief  Executive  Officer  of the  Company or the Board of
                  Directors  of the  Company  such  that the  activities  of the
                  Executive are detrimental to the business operations.

         3.3 Change of Control.  Notwithstanding  any other  provisions  of this
Agreement,  if (i) a Change of Control  shall occur  during the initial one year
term of this  Agreement ; and (ii) prior to  February  14,  1999  Executive  (a)
receives a Notice of  Non-Renewal,  (b) is terminated  for any reason other than
for cause,  or (c) Company  (including its  successors,  if any) is in breach of
this Agreement,  then Executive shall continue to receive his current salary (in
bi-weekly  payments) until the date Executive  shall commence  employment with a
firm or  entity  other  than  the  Company;  provided,  however,  in such  event
Executive  shall  continue  to  receive  a portion  of his  current  salary  (in
bi-weekly  payments) only to the extent that his salary with such firm or entity
is less than his current salary payable under the terms of this Agreement but in
any event such payments shall terminate no later than August 14, 1999.

         If a Change of Control shall occur and  subsequent to February 13, 1999
Executive (a) receives a Notice of Non-Renewal, (b) is terminated for any reason
other than for cause, or (c) Company  (including its  successors,  if any) is in
breach of this  Agreement,  then Executive shall continue to receive his current
salary  (in  bi-weekly   payments)  until  the  date  Executive  shall  commence
employment with a firm or entity other than the Company;  provided,  however, in
such

                                       -4-

<PAGE>


event  Executive  shall  continue to receive a portion of his current salary (in
bi-weekly  payments) only to the extent that his salary with such firm or entity
is less than his current salary payable under the terms of this  Agreement,  but
in no event  shall  such  payments  continue  for a period  in excess of six (6)
months from the date of termination of Executive's employment with the Company.

         The receipt by  Executive  of payment  pursuant to this  Section 3.3 is
specifically conditioned,  and no payments pursuant to this Section 3.3 shall be
made to  Executive  if he is, at the time of his  termination,  in breach of any
provision  (specifically  including,  but not limited to, the provisions of this
Agreement  pertaining to non-competition and  confidentiality) of this Agreement
and, further,  if such payments have already begun, the continuation of payments
to  Executive  pursuant to this  Section  3.3 shall cease at the time  Executive
shall fail to comply with the non-competition and confidentiality  provisions of
Article 4 herein.  It is expressly  understood and agreed that the amount of any
payment to Executive required pursuant to this Section 3.3 shall be reduced (but
not below  zero) by any  compensation  received by  Executive  during the period
called for in this Section 3.3.

         A Change of Control  shall mean the  inability of the Symons  family to
cause the  election of a majority of the  members of the Board of  Directors  of
Goran  Capital  Inc.,  Symons  International  Group,  Inc.  or their  respective
successors.

         3.4 Disability. So long as otherwise permitted by law, if Executive has
become permanently disabled from performing his duties under this Agreement, the
Company's  Chairman  of the  Board,  may,  in  his  discretion,  determine  that
Executive  will not return to work and  terminate  his  employment  as  provided
below. Upon any such termination for disability,  Executive shall be entitled to
such disability,  medical, life insurance, and other benefits as may be provided
generally  for  disabled  employees  of  Company  during  the  period he remains
disabled.  Permanent  disability  shall be  determined  pursuant to the terms of
Executive's long term disability  insurance  policy provided by the Company.  If
Company elects to terminate this Agreement  based on such permanent  disability,
such termination shall be for cause.

         3.5  Indemnification.  Executive  shall be indemnified by Company (and,
where  applicable,   its  subsidiaries)  to  the  maximum  extent  permitted  by
applicable law for actions  undertaken for, or on behalf of, the Company and its
subsidiaries.

4.       Non-Competition, Confidentiality and Trade Secrets

         4.1  Noncompetition.  In consideration  of the Company's  entering into
this Agreement and the  compensation  and benefits to be provided by the Company
to You hereunder,  and further in  consideration of Your exposure to proprietary
information of the Company, You agree as follows:

         (a)      Until the date of  termination or expiration of this Agreement
                  for any reason  (the "Date of  Termination")  You agree not to
                  enter into  competitive  endeavors  and not to  undertake  any
                  commercial activity which is contrary to the best interests of
                  the Company or its affiliates, including, directly or

                                       -5-

<PAGE>

                  indirectly,  becoming an employee,  consultant,  owner (except
                  for passive  investments  of not more than one percent (1%) of
                  the  outstanding  shares of, or any other equity  interest in,
                  any  company  or  entity   listed  or  traded  on  a  national
                  securities  exchange  or  in  an  over-the-counter  securities
                  market),   officer,   agent  or  director   of,  or  otherwise
                  participating in the management, operation, control or profits
                  of (a) any  firm  or  person  engaged  in the  operation  of a
                  business engaged in the acquisition of insurance businesses or
                  (b) any firm or person which either  directly  competes with a
                  line or lines of business of the Company  accounting  for five
                  percent (5%) or more of the Company's gross sales, revenues or
                  earnings  before taxes or derives five percent (5%) or more of
                  such  firm's or  person's  gross  sales,  revenues or earnings
                  before taxes from a line or lines of business  which  directly
                  compete with the  Company.  Notwithstanding  any  provision of
                  this Agreement to the contrary,  You agree that Your breach of
                  the provisions of this Section 4.1(a) shall permit the Company
                  to terminate Your employment for cause.

         (b)      If  Your  employment  is  terminated  by  You,  or by  reason
                  of  Your Dsability,  by  the  Company  for  cause,  or
                  pursuant  to  a  notice  of non-renewal as outlined in Section
                  1.1,  then for two (2) years after the Date of Termination,
                  You agree not to become,  directly or indirectly,  an
                  employee,  consultant, owner (except for passive investments
                  of not more than one percent (1%) of the outstanding shares
                  of, or any other  equity interest in, any company or entity
                  listed  or  traded  on a  national securities exchange or in
                  an over-the-counter  securities market), officer, agent or
                  director of, or otherwise to participate in the  management,
                  operation,  control  or  profits  of,  any firm or  person
                  which directly competes with a business of the Company which
                  at the Date of  Termination produced any class of products or
                  business accounting for five percent (5%) or more of the
                  Company's gross sales,  revenues or earnings before taxes at
                  which the Date of Termination derived five  percent (5%) or
                  more of such firm's or person's gross sales, revenues or
                  earnings  before taxes. It is expressly agreed and understood
                  that this Section 4.1(b) shall not apply to a public 
                  accounting or consulting firm.

         (c)      You acknowledge and agree that damages for breach of the
                  covenant not to compete in this Section 4.1 will be difficult
                  to determine and will not afford a full and adequate remedy,
                  and therefore agree that the Company shall be entitled to an
                  immediate injunction and restraining order (without the
                  necessity of a bond) to prevent such breach or threatened or
                  continued breach by You and any persons or entities acting for
                  or with You, without having to prove damages, and to all costs
                  and expenses (if a court or arbitrator determines that the
                  Executive has breached the covenant not to compete in this
                  Section 4.1, including reasonable attorneys' fees and costs,
                  in addition to any other remedies to which the Company may be
                  entitled at law or in equity.  You and the Company agree that
                  the provisions of this covenant not to compete are reasonable
                  and necessary for the operation of the Company and its

                                       -6-

<PAGE>

                  subsidiaries. However, should any court or arbitrator
                  determine that any provision of this covenant not to compete
                  is unreasonable, either in period of time, geographical area,
                  or otherwise,  the parties  agree that this  covenant  not to
                  compete should be interpreted and enforced to the maximum
                  extent which such court or arbitrator deems reasonable.

     4.2  Confidentiality.  You shall not  knowingly  disclose  or reveal to any
unauthorized  person,  during  or after  the  Term,  any  trade  secret or other
confidential  information (as outlined in the Indiana Uniform Trade Secrets Act)
relating to the  Company or any of its  affiliates,  or any of their  respective
businesses or principals, and You confirm that such information is the exclusive
property of the Company and its  affiliates.  You agree to hold as the Company's
property all memoranda,  books,  papers,  letters and other data, and all copies
thereof or therefrom, in any way relating to the business of the Company and its
affiliates, whether made by You or otherwise coming into Your possession and, on
termination  of Your  employment,  or on demand of the  Company at any time,  to
deliver the same to the Company.

     Any ideas,  processes,  characters,  productions,  schemes,  titles, names,
formats,  policies,   adaptations,   plots,  slogans,   catchwords,   incidents,
treatment,  and dialogue which You may conceive,  create,  organize,  prepare or
produce during the period of Your  employment and which ideas,  processes,  etc.
relate to any of the  businesses  of the Company,  shall be owned by the Company
and its  affiliates  whether  or not You should in fact  execute  an  assignment
thereof to the Company, but You agree to execute any assignment thereof or other
instrument or document  which may be reasonably  necessary to protect and secure
such rights to the Company.

5.   Miscellaneous

     5.1  Amendment.  This  Agreement may be amended only in writing,  signed by
both parties.

     5.2 Entire Agreement.  This Agreement contains the entire  understanding of
the  parties  with regard to all matters  contained  herein.  There are no other
agreements,  conditions  or  representations,  oral  or  written,  expressed  or
implied,  with regard to the  employment of Executive or the  obligations of the
Company  or the  Executive.  This  Agreement  supersedes  all  prior  employment
contracts and non-competition agreements between the parties.

     5.3 Notices.  Any notice required to be given under this Agreement shall be
in writing and shall be delivered either in person or by certified or registered
mail, return receipt requested.
Any notice by mail shall be addressed as follows:

     If to the Company, to:
     Chief Executive Officer
     Symons International Group, Inc.
     4720 Kingsway Drive
     Indianapolis, Indiana 46205

                                       -7-

<PAGE>

     If to Executive, to:
     Carl F. Schnaufer
     948 Queensbury Drive
     Noblesville, Indiana 46060

or to such other  addresses  as one party may  designate in writing to the other
party from time to time.

     5.4 Waiver of Breach.  Any waiver by either  party of  compliance  with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any  other  provision  of this  Agreement,  or of any  subsequent
breach by such party of a provision of this Agreement.

     5.5 Validity.  The invalidity or  unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

     5.6 Governing  Law. This  Agreement  shall be  interpreted  and enforced in
accordance  with the laws of the  State of  Indiana,  without  giving  effect to
conflict of law principles.

     5.7  Headings.  The headings of articles  and sections  herein are included
solely for  convenience  and  reference  and shall not  control  the  meaning or
interpretation of any of the provisions of this Agreement.

     5.8  Counterparts.  This Agreement may be executed by either of the parties
in counterparts,  each of which shall be deemed to be an original,  but all such
counterparts shall constitute a single instrument.

     5.9  Survival.  Company's  obligations  under  Section 3.1 and  Executive's
obligations under Section 4 shall survive the termination and expiration of this
Agreement in accordance  with the specific  provisions of those  Paragraphs  and
Sections and this  Agreement in its entirety shall be binding upon, and inure to
the benefit of, the successors and assigns of the parties hereto.

     5.10 Miscellaneous.  No provision of this Agreement may be modified, waived
or  discharged  unless such  waiver,  modification  or discharge is agreed to in
writing and signed by You and such officer as may be specifically  designated by
the  Board.  No waiver by either  party  hereto at any time of any breach by the
other party hereto of, or  compliance  with,  any condition or provision of this
Agreement  to be  performed  by such  other  party  shall be  deemed a waiver of
similar  or  dissimilar  provisions  or  conditions  at the same or at any prior
subsequent time.

                                       -8-

<PAGE>


     IN WITNESS WHEREOF,  the parties have executed this Agreement  effective as
of the date set forth above.

                        SYMONS INTERNATIONAL GROUP, INC.
                        ("Company")


                        By:__________________________________
                        Title:_______________________________

State of Indiana           )
                           ) SS:
County of Marion           )

     Before me the  undersigned,  a Notary  Public for Marion  County,  State of
Indiana,  personally appeared  ______________________________,  and acknowledged
the execution of this instrument this _______ day of August, 1998.

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


                        CARL F. SCHNAUFER
                        ("Executive")



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



State of Indiana           )
                           ) SS:
County of Marion           )   

     Before me the  undersigned,  a Notary  Public for Marion  County,  State of
Indiana, personally appeared Carl F. Schnaufer and acknowledged the execution of
this instrument this _______ day of ___________________, 1998.

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


                                       -9-

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