FORM 10-K/A

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(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, 1999.

(   )    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 No X

     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 2,834,654 shares of the Registrant's
common stock held by non-affiliates, as of April 3, 2000 was $4,960,645.

         The number of shares of common  stock of the  Registrant,  without  par
value, outstanding as of April 3, 2000 was 5,876,398.


<PAGE>




                                AUDITORS' REPORT

To the Shareholders of Goran Capital Inc.

We  have  audited  the  consolidated   balance  sheets  of  Goran  Capital  Inc.
(incorporated  in Canada) as of  December  31,  1999 and 1998,  and the  related
consolidated  statements of earnings  (loss),  changes in  shareholders'  equity
(deficit), and cash flows for each of the years ended December 31, 999, 1998 and
1997. These  consolidated  financial  statements are the  responsibility  of the
company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

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

In our opinion,  these consolidated  financial statements present fairly, in all
material respects,  the consolidated financial position of Goran Capital Inc. as
of December 31, 1999 and 1998,  and the results of its operations and cash flows
for the years  ended  December  31,  1999,  1998 and 1997,  in  accordance  with
Canadian general accepted accounting principles.

On March 14,,  2000,  except for Note 23 which is as of March 23, 2000,  we also
reported  separately and issued an unqualified  opinion to the  shareholders  of
Goran Capital Inc. on the financial statements for the same period,  prepared in
accordance  with  United  States  of  America  generally   accepted   accounting
principles are reference should be made to that report.

Schwartz Levitsky Feldman, llp
Chartered Accountants

Toronto, Ontario
March 14, 2000, except for Note 23,
 which is as of March 23, 2000






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<TABLE>
<CAPTION>



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

CONSOLIDATED BALANCE SHEETS
                                                                                        1999          1998

ASSETS:
Investments:
Available for sale:
<S>                                                                                 <C>           <C>
Fixed maturities                                                                    $177,171      $194,277
Equity securities                                                                     15,511        13,691
Short-term investments, at amortized cost, which approximates market                  32,634        27,637
Mortgage loans, at cost                                                                1,990         2,100
Other invested assets                                                                    945           890
TOTAL INVESTMENTS                                                                    228,251       238,595
Investments in and advances to related parties                                         1,646         3,495
Reinsurance recoverable on paid and unpaid losses                                     88,293        67,885
Cash and cash equivalents                                                              3,173        15,123
Receivables, net of allowances                                                        92,446       123,690
Prepaid reinsurance premiums                                                          10,259        17,486
Federal income taxes recoverable                                                       6,820        12,711
Deferred policy acquisition costs                                                     13,920        16,332
Future income taxes                                                                        0         5,825
Capital assets, net of accumulated amortization                                       21,967        19,350
Intangible assets                                                                     43,812        46,300
Other assets                                                                           9,335         4,197
TOTAL ASSETS                                                                        $519,922      $570,989


LIABILITIES:

Losses and loss adjustment expenses                                                 $219,918      $207,432
Unearned premiums                                                                     90,007       110,665
Reinsurance payables                                                                  37,603        12,353
Notes payable                                                                         16,929        13,744
Distributions payable on preferred securities                                          4,809         4,809
Other                                                                                 28,543        17,474
TOTAL LIABILITIES                                                                   $397,809      $366,477
Minority interest:
Equity in net assets of subsidiaries                                                      --        19,787
Company obligated mandatorily redeemable preferred stock of trust subsidiary
 holding solely parent debentures                                                    135,000       135,000

SHAREHOLDERS' EQUITY (DEFICIT)

Common Stock                                                                          19,317        19,317
Contributed surplus                                                                    2,775         2,775
Cumulative translation adjustment                                                         13           252
Retained earnings (accumulated deficit)                                              (34,992)       27,381
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                                                 (12,887)       49,725
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                                $519,922      $570,989
The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>

<PAGE>


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

                                                                                         1999           1998        1997
<S>                                                                                  <C>            <C>          <C>
Gross premiums written                                                               $473,687       $546,771     $448,982
Less ceded premiums                                                                 $(217,188)     $(184,665)   $(167,086)
    NET PREMIUMS WRITTEN                                                             $256,499       $362,106     $281,896
    NET PREMIUMS EARNED                                                              $276,040       $342,177     $276,540
Fee income                                                                             15,791         20,203       17,821
Net investment income                                                                  13,418         13,401       12,777
Net realized capital gain                                                                  65          4,104        9,393
    TOTAL REVENUES                                                                    305,314        379,885      316,531
Expenses:
    Losses and loss adjustment expenses                                               276,633        280,892      210,999
    Policy acquisition and general and administrative expenses                         97,950        103,926       63,344
    Interest expense                                                                      620            163        3,087
    Amortization of intangibles                                                         2,687          2,379        1,197
    TOTAL EXPENSES                                                                    377,890        387,360      278,627
    EARNINGS (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST AND UNDERNOTED          (72,576)        (7,475)      37,904
        ITEMS
Income taxes:

    Current                                                                            (6,617)        (1,706)      12,720
    Future                                                                              7,865           (332)      (1,124)
    TOTAL INCOME TAXES                                                                  1,248         (2,038)      11,596
    NET EARNINGS (LOSS) BEFORE MINORITY INTEREST AND UNDERNOTED ITEMS
                                                                                      (73,824)        (5,437)      26,308
Minority Interest                                                                     (19,787)        (4,849)       7,205
Distributions on preferred securities, net of tax                                       8,336          8,411        3,120
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS                                        (62,373)        (8,999)      15,983
Net earnings (loss) from discontinued operations                                         ----         (2,937)      (3,545)
NET EARNINGS (LOSS)                                                                  $(62,373)      $(11,936)     $12,438
Weighted average shares outstanding - Basic                                         5,876,398      5,841,329    5,590,576
Earnings (loss) per share from continuing operations                                  $(10.61)       $(1.54)         $2.86
Earnings (loss) per share from continuing operations - fully diluted                  $(10.61)       $(1.54)         $2.70
Net earnings (loss) per share                                                         $(10.61)       $(2.04)         $2.22
Net earnings (loss) per share - fully diluted                                         $(10.61)       $(2.04)         $2.12
The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>

<PAGE>


CONSOLIDATED FINANCIAL STATEMENTS
for the years ended  December 31, 1999,  1998,  and 1997 (in  thousands,  except
number of shares)  CONSOLIDATED  STATEMENTS OF CHANGES IN  SHAREHOLDERS'  EQUITY
(DEFICIT)
<TABLE>
<CAPTION>

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

BALANCE AT JANUARY 1, 1997
<S>                                     <C>          <C>              <C>         <C>            <C>            <C>
                                        5,405,820    $17,416          $2,775      $27,401        $(334)         $47,258

Net earnings                                                                       12,438                        12,438
Change in Cumulative Translation
Adjustment                                                                                           42              42
Issuance of common shares                 324,456        594                                                        594
BALANCE AT DECEMBER 31, 1997             ________    _______      __________     ________     _________       _________
                                        5,730,276     18,010           2,775       39,839         (292)          60,332

Net loss                                                                         (11,936)                      (11,936)
Change in Cumulative Translation
Adjustment                                                                                          544             544
Issuance of common shares                 215,922      1,533                                                      1,533
Purchase of common shares                (69,800)      (226)                        (522)                         (748)
BALANCE AT DECEMBER 31, 1998           __________    _______       _________     ________      ________        ________
                                        5,876,398     19,317           2,775       27,381           252          49,725

Net earnings (loss)                                                              (62,373)                      (62,373)
Change cumulative translation
adjustment                                                                                        (239)           (239)
BALANCE AT DECEMBER 31, 1999            _________    _______       _________     ________     _________      __________
                                        5,876,398    $19,317          $2,775    $(34,992)           $13       $(12,887)


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

</TABLE>

<PAGE>


CONSOLIDATED FINANCIAL STATEMENTS
for the years ended December 31, 1999, 1998, and 1997 (in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
 <TABLE>
<CAPTION>
                                                                              1999            1998           1997
Cash flows from operating activities
<S>                                                                             <C>             <C>            <C>
    Net earnings (loss)                                                         (62,373)        (11,936)       12,438
    Adjustments to reconcile net earnings (loss) to net cash provided
        from operations:
        Minority interest                                                       (19,787)         (4,849)        7,205
        Amortization and other                                                    7,722           6,032         5,258
        Future income tax expense (benefit)                                       8,462          (3,727)       (1,124)
        Loss (gain) on sale of investments                                          (65)         (4,104)       (9,393)
        Gain on sale of capital assets                                               --            (267)           --
        Net changes in operating assets and liabilities (net of assets
        acquired):
           Receivables                                                           31,244         (11,427)       (6,395)
           Reinsurance recoverable on losses                                    (20,208)         40,321       (61,311)
           Prepaid reinsurance premiums                                           7,227          19,121       (21,624)
           Federal income taxes recoverable                                       5,891               0             0
           Deferred policy acquisition costs                                      2,412          (4,483)        2,011
           Other assets and liabilities                                           3,055         (11,836)       (4,083)
           Losses and loss adjustment expenses                                   12,486          54,561        25,826
           Unearned premiums                                                    (20,658)         (7,951)       27,409
           Reinsurance payables                                                  25,250         (48,770)       37,810
NET CASH PROVIDED FROM (USED IN) OPERATIONS                                     (19,542)         10,685        14,027
    Cash flow from investing activities net of assets acquired:
        Purchase of minority interest and subsidiaries                                0          (1,208)      (61,000)
        Net sales (purchases) of short-term investments                         (13,168)         (8,807)       11,638
        Proceeds from sales, calls and maturities of fixed maturities           206,208         129,951       227,604
        Purchases of fixed maturities                                          (182,453)       (148,417)     (268,542)
        Proceeds from sales of equity securities                                 11,215          69,379        36,101
        Purchase of equity securities                                            (9,850)        (42,909)      (35,558)
        Net proceeds from (purchase) sales of other investments                  (2,045)           (390)           41
        Purchase of capital assets                                               (7,278)         (9,348)       (5,803)
        Cash paid for NACU                                                           --          (3,000)           --
        Other, net                                                                  (71)             --         1,130
NET CASH PROVIDED FROM (USED IN) INVESTING ACTIVITIES                             2,558         (14,749)      (94,389)
    Cash flow from financing activities net of assets acquired:
        Proceeds from issuance of preferred securities                               --              --       129,877
        Proceeds from issue of share capital                                         --             356           594
        Redemption of share capital                                                  --            (748)           --
        Proceeds from (payments made on) term debt                                3,185           7,855       (43,818)
        Proceeds from consolidated subsidiary minority interest owner                --              --         2,354
        Loans from and (repayments to) related parties                            1,849          (1,600)           --
NET CASH PROVIDED FROM FINANCING ACTIVITIES                                       5,034           5,863        89,007
Increase (decrease) in cash and cash equivalents                                (11,950)          1,799         8,645
Cash and cash equivalents, beginning of year                                     15,123          13,324         4,679
Cash and cash equivalents, end of year                                            3,173          15,123        13,324

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


<PAGE>






GORAN CAPITAL INC AND SUBSIDIARIES
-------------------------------------------------------------------

1.   Nature of Operations and Significant Accounting Policies:

These  consolidated  financial  statements have been prepared in accordance with
accounting principles generally accepted in Canada.

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

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

SIG's wholly-owned subsidiaries are as follows:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

a.    Basis of Presentation:  The consolidated  financial  statements  include
      the accounts,  after  intercompany  eliminations,  of Goran and its
      subsidiary companies.

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

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

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

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

     Real estate-at cost, less allowances for depreciation.

     Mortgage loans-at outstanding principal balance.

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

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

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

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

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

i.   Losses and Loss Adjustment  Expenses:  Reserves for losses and loss
     adjustment  expenses include  estimates for reported unpaid losses and loss
     adjustment  expenses and for  estimated  losses  incurred but not reported.
     These  reserves  have  not been  discounted.  The  Company's  loss and loss
     adjustment  expense  reserves  include  an  aggregate   stop-loss  program.
     Reserves  are  established  using  individual   case-basis  valuations  and
     statistical analysis as claims are reported. Those estimates are subject to
     the effects of trends in loss  severity  and  frequency.  While  management
     believes the  reserves are  adequate,  the  provisions  for losses and loss
     adjustment  expenses are necessarily  based on estimates and are subject to
     considerable variability.  Changes in the estimated reserves are charged or
     credited to operations as additional information on the estimated amount of
     a claim becomes known during the course of its settlement. The reserves for
     losses and loss adjustment expenses are reported net of the receivables for
     salvage and  subrogation of  approximately  $8,506,000  and  $10,684,000 at
     December 31, 1999 and 1998, respectively.

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

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

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

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

n.       Certain  Accounting  Policies for Crop Insurance  Operations:  In 1996,
     IGF  instituted a policy of recognizing  (i) 35% of its estimated  multiple
     peril crop insurance  (MPCI) gross  premiums  written for each of the first
     and  second  quarters,  20% for the third  quarter  and 10% for the  fourth
     quarter;  (ii)  commission  expense  at the  applicable  rate of MPCI gross
     premiums written  recognized;  and (iii) Buy-up Expense  Reimbursement at a
     rate of 25% in 1999,  27% in 1998,  and 29% in 1997 of MPCI gross  premiums
     written  recognized  along  with  normal  operating  expenses  incurred  in
     connection  with premium  writings.  In the third quarter,  if a sufficient
     volume of policyholder  acreage reports have been received and processed by
     IGF, IGF's policy is to recognize MPCI gross premiums written for the first
     nine months  based on a reestimate  which takes into  account  actual gross
     premiums  processed.  If  an  insufficient  volume  of  policies  has  been
     processed,  IGF's policy is to  recognize  in the third  quarter 20% of its
     full  year  estimate  of  MPCI  gross   premiums   written,   unless  other
     circumstances  require a different approach.  The remaining amount of gross
     premiums written is recognized in the fourth quarter,  when all amounts are
     reconciled.  IGF recognizes MPCI underwriting gain or loss during the first
     and second  quarters,  as well as the third quarter,  reflecting IGF's best
     estimate of the amount of such gain or loss to be  recognized  for the full
     year, based on, among other things,  historical  results,  plus a provision
     for   adverse   developments.   In  the  third  and  fourth   quarters,   a
     reconciliation amount is recognized for the underwriting gain or loss based
     on final premium and latest available loss information.

o.   Comparative  Figures:  Certain  Comparative  figures have been reclassified
     to conform with the basis of presentation  adopted in 1999.

p.   Accounting Changes:  In the consolidated financial statements,  the Company
     has adopted the following pronouncements:

     Segmented   Information  -  Canadian  Institute  of  Chartered  Accountants
     ("CICA")  Handbook  Section  1701 and United  States  Financial  Accounting
     Standards  Board  ("FASB")  Statement of  Accounting  Standard No. 131; the
     adoption of these  standards is consistent  with the  Company"s  previously
     established segment disclosures.

     Income Taxes - CICA Handbook  Section 3465; the standard is consistent with
     FASB Statement of Financial  Accounting  Standard No. 109  "Accounting  for
     Income Taxes". These standards require an asset and liability approach that
     takes into account changes in tax rates when valuing the future tax amounts
     reported in the balance sheet.  Valuation  allowances are established  when
     necessary,  to reduce  future  tax  assets  to the  amount  expected  to be
     realized.  Income tax  expense is the tax  payable  or  refundable  for the
     period plus or minus the change  during the period in future tax assets and
     liabilities.

     Losses and Loss Adjustment Expense - the Company's  accounting policy prior
     to 1998 was to discount the  reserves for direct  claims for the time value
     of money. Effective January 1, 1998, the Company adopted its current policy
     (see  Note 1 (i))  which  does not take  into the  account  the  impact  of
     discounting.  The new policy is  consistent  with United  States  generally
     accepted accounting principals ("GAAP").

     The net impact of the changes in  accounting  for income taxes and loss and
     loss adjustment expense has been applied prospectively in the accounts with
     no material  effect for 1998 and prior year.  The impact of the  previously
     applied  policies on the 1997  financial  statements  is  presented  in the
     reconciliation of Canadian and United States GAAP in Note 22.

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



2.   Corporate Reorganization and Acquisitions:

     On August 12, 1997, the Company  purchased the remaining  minority interest
     in Superior  Group  Management  for $61 million in cash.  The excess of the
     acquisition   price  over  the  minority  interest   liability   aggregated
     approximately  $36,045,000  and was assigned to goodwill as the fair market
     value of assets and liabilities approximated their carrying value.

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

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

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

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


<PAGE>


3.   Investments:

Investments are summarized as follows (in thousands):
<TABLE>
<CAPTION>

                                                      Cost or                                   Estimated
                                                    Amortized             Unrealized             Market
December 31, 1999                                       Cost               Gain Loss              Value

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

    TOTAL INVESTMENTS                                 $228,251        $1,001       $(8,512)     $220,740

                                                      Cost or                                   Estimated
                                                     Amortized            Unrealized             Market
December 31, 1998                                       Cost               Gain Loss              Value

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

    TOTAL INVESTMENTS                                 $238,595        $4,717        $(2,446)   $240,866

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

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


<PAGE>

<TABLE>
<CAPTION>


                                                                                     Estimated Market
                                                                   Amortized Cost          Value

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

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

                                                                     1999       1998           1997

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

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

                                                                 1999            1998              1997

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

</TABLE>
  Investments  with a market value of  $23,374,000,  $31,201,000 and $42,367,000
  (amortized  cost of $23,426,000,  $30,958,000 and  $40,690,000) as of December
  31, 1999,  1998 and 1997,  respectively,  were on deposit in the United States
  and Canada.  The deposits are required by various  insurance  departments  and
  others to support licensing  requirements and certain  reinsurance  contracts,
  respectively.

4.   Deferred Policy Acquisition Costs:

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

                                                                 1999            1998           1997

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

5.   Capital Assets:

Capital Assets at December 31 are summarized as follows (in thousands):
<TABLE>
<CAPTION>

                                                                  Accumulated

                                                   1999 Cost     Amortization      1999 Net     1998 Net

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

Accumulated  amortization  at  December  31, 1998 was  $9,719,000.  Amortization
expense related to property and equipment for the years ended December 31, 1999,
1998 and 1997 were $4,887,000 $3,151,000 and $1,754,000 respectively.

6.   Intangible Assets:

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

                                                                  Accumulated

                                                   1999 Cost     Amortization      1999 Net     1998 Net

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

Accumulated  amortization  at  December  31, 1998 was  $3,697,000.  Amortization
expense related to intangible assets for the years ended December 31, 1999, 1998
and 1997 was $2,297,000 $2,379,000 and $1,197,000 respectively.

7.   Unpaid Losses and Loss Adjustment Expenses:

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

                                                                               1999       1998        1997

<S>                                                                        <C>           <C>         <C>
Balance at January 1                                                       $207,432      $152,871    $127,045
Less reinsurance recoverables                                                67,885       108,206      33,113
    NET BALANCE AT JANUARY 1                                                139,547        44,665      93,932
Incurred related to:
Current year                                                                237,817       265,715     200,566
Prior years                                                                  38,816        15,177      10,433
    TOTAL INCURRED                                                          276,633       280,892     210,999
Paid related to:
Current year                                                                167,262       135,473     180,925
Prior years                                                                 117,293        50,537      79,341
    TOTAL PAID                                                              284,555       186,010     260,266
    NET BALANCE AT DECEMBER 31                                              131,625       139,547      44,665
Plus reinsurance recoverables                                                88,293        67,885     108,206
    BALANCE AT DECEMBER 31                                                 $219,918      $207,432    $152,871
</TABLE>

Reserve  estimates  are  regularly  adjusted in  subsequent  reporting  periods,
consistent  with  sound  insurance  reserving   practices,   as  new  facts  and
circumstances  emerge which  indicate a  modification  of the prior  estimate is
necessary.  The adjustment,  referred to as "reserve development," is inevitable
given  the  complexities  of  the  reserving  process  and  is  recorded  in the
statements  of  earnings  in the  period  the need for the  adjustments  becomes
apparent.  The  foregoing   reconciliation   indicates  that  deficient  reserve
developments  of  $30,461,000  $12,996,000  and  $10,967,000 in the December 31,
1999, 1998, and 1997 loss and loss adjustment  expense  reserves,  respectively,
emerged in the following year. The 1997 and 1998 deficient  reserve  development
occurred   primarily  due  to  volatility  in  the  historical  trends  for  the
nonstandard  automobile  business as a result of significant  growth during 1996
and 1997. The deficient reserve  development  during 1999 resulted from a higher
than expected  frequency and severity on nonstandard  automobile claims and from
higher than expected losses on 1998 AgPI policies (see Note 16).

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

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

8.   Notes Payable:

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

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

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

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

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

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

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

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

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

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

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


<PAGE>


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

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

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

10.      Capital Stock

The Company's authorized share capital consists of:

(a)      First Preferred shares

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

(b)      Common Shares

An unlimited  number of common shares of which  5,876,398 are  outstanding as at
December 31, 1999 (1998 - 5,876,398).  During the year, pursuant to the exercise
of warrants and options,  the Company issued nil (1998 - 215,992)  common shares
for  aggregate  consideration  in the  amount nil (1998 -  $1,533,000)  of which
$1,177,000  of the  consideration  was in the form of a loan.  During 1998,  the
Company purchased 69,800 of its common shares for an aggregate  consideration of
$748,000.

11.            Income Taxes:

The  Company  and  its  subsidiaries  have  net  operating  loss  carryovers  of
$66,152,000.  Of that amount, $43,325,000 is attributable to SIG, $15,983,000 is
attributable  to  Goran  and  its  non  U.S.  subsidiaries,  and  $6,844,000  is
attributable  to SIGF a U.S.  subsidiary  which  does  not  qualify  for  filing
consolidated  tax returns with SIG.  These losses are usable only against future
income in these respective operating units.

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

  Expiring  in years  ending  not later  than                  Goran &
  December 31:                                                 Canadian                        Total
                                                    SIG        Subsidiaries        SIGF

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

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

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

                                                                              1999          1998        1997
<S>                                                                         <C>           <C>        <C>
Computed income taxes (benefit) at statutory rate                           $(22,872)     (2,953)    $13,266
Alternative minimum taxes                                                      1,203          55        ----
Dividends received deduction                                                     (92)       (130)        (78)
Goodwill and acquisition costs                                                   793         621         179
Other                                                                         (1,649)     (1,243)       (346)
Tax Exempt (Income) Loss                                                          88         689        (134)
Application of Operating Loss Carry Forward                                      (82)       ----      (1,291)
                                                                             (22,611)     (2,961)     11,596
Valuation allowance change                                                    23,859         923        ----
Income Tax Expense (Benefit)                                                  $1,248     $(2,038)    $11,596

</TABLE>
The net future  tax asset at  December  31,  1999 and 1998 is  comprised  of the
following (in thousands):
<TABLE>
<CAPTION>
                                                                                      1999       1998
Future tax assets:
<S>                                                                                 <C>         <C>
    Unpaid losses and loss adjustment expenses                                      $4,271      $3,548
    Unearned premiums and prepaid insurance                                          5,568       5,972
    Allowance for doubtful accounts                                                  1,022       1,118
    Net operating loss carryforwards                                                23,779       8,129
    Other                                                                            2,940       1,468
        FUTURE TAX ASSET                                                           $37,580     $20,235
Future tax liabilities:
Deferred policy acquisition costs                                                  $(4,872)    $(5,716)
Other                                                                                 (799)       (604)
        FUTURE TAX LIABILITY                                                       $(5,671)    $(6,320)
                                                                                    31,909      13,915
        VALUATION ALLOWANCE                                                       $(31,909)     (8,090)
        NET FUTURE TAX ASSET                                                         $----      $5,825

</TABLE>


<PAGE>


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

12.   Leases:

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

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

Year Ending December 31:
<S>                                                                   <C>
2000                                                                  $4,316
2001                                                                   2,529
2002                                                                   2,270
2003                                                                   1,411
2004 and Thereafter                                                   $2,586
</TABLE>

Rental  expense  charged  to  operations  in 1999,  1998 and  1997  amounted  to
$3,607,000 $2,939,000 and $1,176,000 respectively,  including amounts paid under
short-term cancelable leases.

13.   Reinsurance:

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

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


<PAGE>


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

<TABLE>
<CAPTION>
                         1999                               Gross          Ceded          Net

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

                         1998

Premiums Written                                          546,771       (184,665)     362,106
Premiums Earned                                           554,722       (212,545)     342,177
Incurred losses and loss adjustment expenses              521,476       (240,584)     280,892
Commission expenses (income)                               94,818        (80,272)      14,546

                         1997

Premiums Written                                          448,982       (167,086)     281,896
Premiums Earned                                           422,200       (145,660)     276,540
Incurred losses and loss adjustment expenses              312,079       (101,080)     210,999
Commission expenses (income)                               65,529        (77,279)     (11,750)
</TABLE>

Amounts   recoverable  from  reinsurers  relating  to  unpaid  losses  and  loss
adjustment expenses were $88,293,000 and $67,885,000 as of December 31, 1999 and
1998,  respectively.  These  amounts  are  reported as assets and are not netted
against the liability for loss and loss adjustment  expenses in the accompanying
Consolidated Balance Sheets.

14.      Related Party Transactions

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

Included in  investments  and advances to related  parties are $300,000  (1998 -
$1,377,000)  due from certain  shareholders  and  directors  which relate to the
purchase  of  common  shares  of the  company.  Approximately  $550,000  (1998 -
$1,157,000)  of these  amounts due bear  interest  and are subject to  repayment
terms.

SIG  paid  $3,112,000   $2,832,000  and  $1,034,000  in  1999,  1998  and  1997,
respectively,  for consulting  and other services  relative to the conversion to
the company's new  non-standard  automobile  operating  system.  The Company has
capitalized  these costs as part of its new  non-standard  automobile  operating
system.  Approximately  90% of  these  payments  are for  services  provided  by
consultants   and  vendors   unrelated  to  the  Company.   Stargate   Solutions
("Stargate") manages the work of each unrelated  consultants and vendors and, as
compensation  for such work,  has  retained  approximately  10% of the  payments
referred  to above in return for  management  services  provided.  During  1999,
Stargate  was owned  beneficially  by certain  directors  of the  Company  and a
relative of those directors. Also included in consulting fees to related parties
is $520,000  and $270,000 in 1999 and 1998  respectively,  for payments to Onex,
Inc., an officer of which is on SIG's Board of Directors, for employment related
matters.

15.      Regulatory Matters:

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

IGF received written approval through December 31, 1999 from the IDOI to reflect
its  business  transacted  with  the  FCIC  as  a  100%  cession  with  any  net
underwriting  results recognized in ceding commissions for statutory  accounting
purposes,  which differs from prescribed statutory accounting  practices.  As of
December 31, 1999, that permitted transaction had no effect on statutory surplus
or net income.  The  underwriting  profit results of the FCIC  business,  net of
reinsurance of $18,206,000  $18,405,000  and  $31,595,000 are netted with policy
acquisition and general and administrative expenses for the years ended December
31,  1999,  1998  and  1997,  respectively,  in  the  accompanying  Consolidated
Statements of Earnings.

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

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


<PAGE>



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

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

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

o    Provide a summary of affiliate transactions to the IDOI.

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

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

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

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

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

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

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

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

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

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

16.      Commitments and Contingencies:

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

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

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

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

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

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

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

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

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

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

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

17.      Supplemental Cash Flow Information:

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

                                                                               1999       1998         1997

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

18.      Disclosures About Fair Values of Financial Instruments:

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

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

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

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

d)       Preferred Securities:  The December 31, 1999 estimated market value of
         the Preferred Securities was $40,500,000 based on quoted market prices.

19.         Segment Information:

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


<PAGE>



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

<TABLE>
<CAPTION>
                                            Nonstandard                   Segment      Corporate    Consolidated
                                                Auto          Crop         Totals       & Other        Totals
(in thousands)
Year Ended December 31, 1999

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

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

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

Segment assets                                   $229,640   $145,622     $375,262      $144,660       $519,922

Year Ended December 31, 1998

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

Loss and loss adjustment expenses                 217,916     52,550      270,466        10,426        280,892
Operating Expenses                                 73,346     21,906       95,252         8,674        103,926
Amortization of intangibles                            --        339          339         2,040          2,379
Interest expense                                       --        163          163            --            163
Total expenses                                    291,262     74,958      366,220        21,140        387,360

Earnings   (loss)  before  income  taxes,
    minority interest and other  items             $5,273    $(9,793)     $(4,520)      $(2,955)       $(7,475)

Segment assets                                   $376,831   $143,434     $520,265       $50,724       $570,989

Year Ended December 31, 1997

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

Loss   and   loss   adjustment   expenses
(recovery)                                        195,900     16,550      212,450        (1,451)       210,999
Operating Expenses                                 72,463    (14,404)      58,059         5,285         63,344
Amortization of intangibles                            --          2            2         1,195          1,197
Interest expense                                       --        233          233         2,854          3,087
Total expenses                                    268,363      2,381      270,744         7,883        278,627

Earnings   (loss)  before  income  taxes,
    minority interest and other  items            $18,603    $20,862      $39,465       $(1,561)       $37,904
Segment assets                                   $363,864   $119,660     $483,524       $77,324       $560,848

</TABLE>


20.    Stock Option Plans:

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

<TABLE>
<CAPTION>
                                                        1999                       1998                      1997
                                                      Weighted                   Weighted                  Weighted
                                                       Average                    Average                   Average
                                                      Exercise                   Exercise                  Exercise
                                          Shares        Price        Shares        Price       Shares        Price

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

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

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

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

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

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

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

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

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


<PAGE>



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

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

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

(1)  Prior years outstanding share options have been restated to properly reflect outstanding options as at those respective dates.
                                                                         Options                        Options
                                                                       Outstanding                    Exercisable
                                                        Weighted         weighted                       Weighted
                                                        Average          Average                        Average
                                        Number       Remaining Life   Exercise Price     Number      Exercise Price
Range of Exercise Prices             Outstanding       (in years)                      Exercisable

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

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

                                                  1999        1999         1998       1998        1997        1997
                                                   As         Pro-          As        Pro-         As         Pro-
                                                Reported      Forma      Reported     Forma     Reported     Forma
<S>                                             <C>           <C>         <C>       <C>           <C>         <C>
Earnings (loss) from continuing operations      $(62,373)     (65,969)    $(8,999)  $(11,941)     $15,983     $10,047
Basic EPS from continuing operations             $(10.61)     $(11.23)     $(1.54)    $(2.04)       $2.86       $1.80
Fully diluted EPS continuing operations          $(10.61)     $(11.23)     $(1.54)    $(2.04)       $2.70       $1.71
Net earnings (loss)                              (62,373)    $(65,969)   $(11,936)  $(14,678)     $12,438      $6,502
Basic EPS                                        $(10.61)     $(11.23)     $(2.04)    $(2.54)       $2.22       $1.16
Fully diluted EPS                                $(10.61)     $(11.23)     $(2.04)    $(2.54)       $2.12       $1.11
</TABLE>

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

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

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

21.   Quarterly Financial Information (unaudited):

Quarterly financial information is as follows (in thousands):
<TABLE>
<CAPTION>

                                                                  First      Second       Third       Fourth           Total
                           1999

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

                           1998

Gross premiums written                                         $177,196    $170,505     $95,887     $103,183        $546,771
Net premiums written                                             98,361     109,729      72,469       81,547         362,106
Net premiums earned                                              71,885      99,618      94,168       76,506         342,177
Total revenues                                                   82,149     109,085     102,407       86,244         379,885
Net earnings                                                     $3,517      $4,775  $( 10,233)     $(9,995)       $(11,936)
Net earnings (loss) per share - basic                             $0.61       $0.82     $(1.76)      $(5.16)         $(2.04)
Net earnings (loss) per share - fully diluted                     $0.59       $0.78     $(1.76)      $(5.12)         $(2.04)
</TABLE>

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

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

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

In the fourth quarter of 1998, the Company  provided a $3.2 million  reserve for
potential  processing  errors in the crop business assumed from CNA. The Company
also increased its reserves on AgPI exposures by approximately $1.8 million.  As
is customary in the crop insurance industry,  insurance company  participants in
the FCIC program  receive more  precise  financial  results from the FCIC in the
fourth quarter based upon business written on spring-planted crops. On the basis
of FCIC-supplied  financial  results,  IGF recorded,  in the fourth quarter,  an
additional underwriting gain (loss), net of reinsurance, on its FCIC business of
$791,000 $(3,506,000) and $6,979,000 during 1999, 1998 and 1997, respectively.

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

The consolidated  financial  statements are prepared in accordance with Canadian
GAAP.  Material  differences between Canadian and U.S. GAAP are described below.
There were no material difference in net earnings in 1999 and 1998

(a)      Earnings and retained earnings (in thousands):

                                                                         1997

Net earnings in accordance with Canadian GAAP                         $12,438
Add effect of difference in accounting for:
Future income taxes (see Note 1(p))                                       177
Minority interrest                                                        107
Losses and loss adjustment expenses   (see note 1(p))                    (504)
Net earnings in accordance with U.S. GAAP                             $12,218


Applying  U.S.  GAAP,  future income tax assets would be increased by $1,975,000
and  losses and loss  adjustment  expenses  outstanding  would be  increased  by
$1,765,000 as at December 31, 1997. As a result of these  adjustments,  retained
earnings  would  be  increased  by  $140,000  which is net of  related  minority
interest  of $70,000 as at  December  31,  1997.  The effect of the above  noted
differences on other  individual  balance sheet items and on working  capital is
not significant.

(b)      Earnings per share

Earnings per share,  as  determined  in  accordance  with U.S.  GAAP are set out
below.  Basic  earnings  per share are computed  based on the  weighted  average
number  of  common  shares  outstanding  during  the  year.  Fully  diluted  are
calculated  using the treasury stock method and assume  conversion of securities
when the results are dilutive.

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

                                                                       1997

Basic                                                             5,590,576
Fully Diluted                                                     5,886,211
Earnings per share,  as determined in accordance with U.S. GAAP,
are as follows (no differences for 1999 and 1998)
Basic earnings per share from continuing operations $2.82 Fully diluted earnings
per share from continuing  operations $2.68 Basic earnings per share $2.19 Fully
diluted earnings per share $2.08


<PAGE>



(c)      Receivables from sale of capital stock

The SEC Staff  Accounting  Bulletins  require that accounts or notes  receivable
arising  from  transactions  involving  capital  stock  should be  presented  as
deductions from shareholders' equity and not as assets. Accordingly, in order to
comply with U.S.  GAAP  shareholders'  equity  would be reduced by $300,000  and
$1,377,000 at December 31, 1999 and December 31, 1998,  respectively  to reflect
the loans due from certain  shareholders  which relate to the purchase of common
shares of the Company.

(d)      Unrealized gain (loss) on investments

U.S. GAAP requires that unrealized gains and losses on investment  portfolios be
included as a component in determining  shareholders' equity. In addition,  SFAS
No.  115  permits  prospective  recognition  of  unrealized  gains  (losses)  on
investment  portfolio for  year-ends  commencing  after  December 15, 1993. As a
result,  shareholders' equity would be (decreased) increased by $(4,874,000) and
by $1,176,000  which is net of future tax of $2,637,000 and $679,000 and related
minority  interest  of nil and  $416,000  as at  December  31,  1999  and  1998,
respectively.

(e)      Changes in shareholders  equity(deficit)

A reconciliation  of  shareholders'  equity (deficit) from Canadian GAAP to U.S.
GAAP is as follows (in thousands):
<TABLE>
<CAPTION>

                                                                      1999             1998
<S>                                                                    <C>               <C>
Shareholders equity in accordance with Canadian GAAP                   $(12,887)         $49,725
Add (deduct) effect of difference in account for:
    Receivables from sale of capital stock (see note c)            (300)                 (1,377)

    Unrealized (loss) gain on investments (see note d)                   (4,874)           1,176
Shareholder's equity in accordance with U.S. GAAP                      $(18,061)         $49,524

</TABLE>

23.  Subsequent Events

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

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

24.   Management's Plans

The Company reported net losses of $62.4 million and $11.9 million for the years
1999 and 1998 respectively.  While the stockholders  equity at December 31, 1999
is a deficit of approximately  $12.9 million,  SIG has a thirty year mandatorily
redeemable  preferred  stock  outstanding of $135 million at an interest rate of
9.5%. This Trust  Preferred is not due for redemption  until 2027. The insurance
subsidiaries  have statutory surplus of approximately $57 million upon which the
Company  conducts  its  insurance  operations.   The  management  has  initiated
substantial  changes in  operational  procedures  and  business  in an effort to
return the Company to profitable levels and to improve its financial  condition.
The  nonstandard  auto  insurance  segment  hired a new  President,  a new Chief
Information  Officer,  and pricing and claims management since the year end. The
Company has and is continuing to raise its rates in a market  environment  where
increasing  rates  and  withdrawal  from the  market  by other  companies  shows
positive trends for an improving profitability of the nonstandard auto division.
The crop insurance company has experienced a substantial increase in gross sales
in its major product lines and strong demand for its new innovative products.

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