Chairman's Letter


We've been around for 32 years in Canada and the U.S. I'd like to tell you
about some of the significant milestones we have passed.

December 31, 1976, ended our twelfth year since the inception of the
originating company in our group.  We  concluded  that year by writing
$20 million of gross premiums and had a profit of $600,000, record figures
for our company, which, at the time, had offices in four locations;  
Vancouver,  Toronto, Montreal and Fort Lauderdale.  As exciting as the
year was, it was of  consequence to only a small group of people,  for we 
were a "private"  company at the time,  with a staff of forty.

In 1978 we formed Symons  General  Insurance  Company and followed
that with the acquisition of Pafco Insurance Company in 1983. In less than
three years we took Pafco Financial  Holdings "public" on the Toronto 
Stock Exchange,  with a market valuation  of twenty  times the net  price 
we paid for the  underlying  company, Pafco Insurance  Company Ltd. 
In 1985 we acquired the Ontario General Insurance Company which we 
later sold to take  advantage of certain  financial  aspects in the company.

In 1987 we began focusing on our development in the United States.  
We  purchased  the  "desirable"  business  of a company  in  Indianapolis 
which specialized,  as did Pafco  Insurance  Company  of Canada, in the writing
of non-standard  automobile  insurance.  To underwrite this and other
business,  we licensed  Pafco  General  Insurance  Company of Indiana  and then 
expanded  its operations to other states,  obtaining licensing where it was 
advantageous to do so.

In June of 1990, in a move to strengthen our Untied States  operations,  we
sold The Canadian Pafco Insurance Company and the Canadian book of
insurance business in  Granite  Insurance  Company,  formerly  Symons  
General  Insurance  Company.  Concurrently  we formed  Granite  Reinsurance
Company of  Barbados to provide a finite reinsurance facility.

Granite  Reinsurance  concluded  1995 with a gross premium income of
$47,810,000 and a profit of $4,862,000 for the year.  Originally  established 
with a paid in capital of $125,000  and a  contribution  of $700,000  to 
surplus  from  Granite Insurance Company. Granite Re ended 
<PAGE>

1995 with a net worth of $18,087,000,  which,  apart from the  contributions  to
capital noted above, was self funded from the operations of the company.

In November of 1990,  we acquired IGF  Insurance  Company of Des
Moines,  a crop insurer,  for $6.1  million  and have seen it develop to such 
an extent  that we were recently offered in excess of 6 times our original 
acquisition price. This was  declined  by  the  Board  of  Directors  because
it was  considered to be inadequate as there are better means of capitalizing
its growth potential.

As you will read in this report, IGF increased its profits substantially in 1995
and doubled its gross revenues to $93,087,147  (U.S.).  For the first quarter of
1996 we have seen this pattern of growth continue and, with the recently
enacted 1996 Farm Bill  signed by  President  Clinton on April 5, 1996,  we 
expect  this growth to accelerate.

This asset,  IGF, has become  increasingly  important to our Group, not only for
the  extraordinary  growth of its income,  but for the  increasingly  profitable
nature of that income.

A major business  transaction was initiated on January 31, 1996,  which
may well prove  to be the  most  outstanding  thing we have  done to  date.  We 
formed a partnership  arrangement with Goldman Sachs Capital Partners II, an
affiliate of Goldman Sachs & Co., the highly  regarded U.S.  investment  house, 
creating GGS Management  Holdings,  Inc.  This new company  will become a major
player in the non-standard auto insurance  business in the United States.  The
Company entered into an agreement to acquire the Superior American Insurance 
Company,  Superior Guaranty Insurance Company and another  corporation known 
as Standard Plan, Inc.  We merged our Pafco  General  Insurance  Company to GGS
Management.  (No,  the initials aren't mine, they represent Goran, Goldman 
Sachs.)

Superior writes in excess of $100 million in non-standard auto insurance, which,
along with similar business  underwritten by Pafco General  Insurance Company of
approximately  $49 million,  will make the new entity the 13th largest writer of
non-standard  auto insurance in the U.S. This segment of the insurance business
exceeded $15 billion of premium nationwide in 1995.

The acquisition of Superior,  et. al. was at a very attractive  price of 5% over
GAAP book value, approximately $67 million. As a comparison to this, the sale of
our  Canadian business  in June of 1990 has  approximated 200% over GAAP book
value, albeit over a period of five years.

Oh yes, we now operate in 13 locations throughout Canada, the U.S., Barbados and
Bermuda.  

It has been a  fabulous  year for the  Company  and I can't  wait to 
conclude a report on the activities for 1996.  They could be even more  
outstanding.  As an example of our  anticipated  growth,  we have set as a 
target for 1996 to double gross sales of our  products.  This would require that
we exceed $400 million of business,  a large step  towards  the stated aim of
Goran's  President to reach annual sales of $500 million by the year 2000.

No company can succeed  without a great deal of effort.  We are no exception and
it would be less than  fitting if I didn't  mention  that a lot of hard work 
and long hours go into our results. We have progressed to such a degree that
I would have to fill most of a page if I were to single out those who have 
made

 <PAGE>


sacrifices of their time to the improvement  and development of the company.  In
fact,  I would  probably  have to include  the names of all of our more than 400
employees.

During the year, we extended the Board of Goran to include Jim Torrance Q.C., a
former Director who again agreed to serve with the company,  and John McKeating,
a new  appointee.  This  brought  the  complement  of the Board back to where it
should be, with more outside Directors than "insiders", a desirable position for
a public company. 

We have had extensive meetings  throughout the year, not unusual considering the
many activities of our group.  The Board has given  unstinting  assistance to me
and I wish to thank  them and praise  them for their  considered  and  practical
deliberations and advice.

/s/ G. Gordon Symons
G. Gordon Symons
Chairman of the Board
April 16, 1996


================================================================================

"Safe Harbor"  Statement under the Private  Securities  Litigation Reform
Act of 1995: The  statements  contained in this letter are forward  looking  
statements that involve risks and  uncertainties,  including,  but not limited
to, product demand and market  acceptance  risks,  the effect of  economic
conditions, the impact of competitive products and pricing, product develop-
ment,  the results of financial  efforts,  acquisitions  completed  or  
attempted,  the  effect of the Company's  accounting  policies,  and  other
risks  detailed  in the  Company's Securities and Exchange Commission filings.

================================================================================

<PAGE>

Management's Discussion and Analysis

Financial Condition and
Results of Operations


Results of Operations
--------------------------------------------------------------------------------
Once again,  Goran's gross premium and net income reached record levels
in 1995.  The  Company's  1995  gross  premium  written  increased  to 
$208,216,310  from $173,413,709  in 1994.  More than half of the 
increase  in premium in 1995 over 1994 resulted from growth in the 
crop insurance business,  gross premium written grew $18.9 million in
1995 as compared to 1994,  with premium growth coming from
both the multi peril and the hail  business.  The crop premium volume in
1995 of $93.3 million  recognized a gain in U.S. government  subsidies of $28.2
million compared to $16.3  million of subsidies in 1994 included in a total crop
premium of $74.4  million for 1994.  Gross  written  premiums  for 1994 was 
restated to include the subsidy of $16.3  million on a basis  consistent  with
that of 1995.  All other lines of business  experienced  gross written  premium
increases from 1994 to 1995 as follows:  finite reinsurance  premiums increased
by $8.1 million to $40.7 million,  nonstandard  automobile premiums increased 
by $5.1 million to $67.3  million and surplus  lines  premiums  increased  by 
$2.7  million to $7.0 million.

In 1995, net premiums written (gross written less reinsurance to government FCIC
program and third party  reinsurers)  increased  by 48.3% from $79.9 million in
1994 to $118.5  million in 1995.  This  increase  resulted  from higher premium
volumes on a gross basis as described above,  combined with a reduced
dependence on quota share reinsurance in both the nonstandard automobile lines
(reduced from  approximately  38% in 1994 to 25% in 1995)  and on hail 
reinsurance.  The quota share reinsurance that was placed with third party 
reinsurers in 1994 was taken over internally for 1995.


<PAGE>

In 1995,  the Group's  net  premiums  earned  grew to $104.4  million  from
$75.0 million  in 1994.  The  earning of premium  follows  the term of the 
respective policies,  net premiums earned trails net premiums  written.  For
example, in a growing book of business, net premiums earned will also grow but
will lag behind the written premium.

In 1995,  investment  income grew to $4.8 million from $4.6 million in
1994,  an increase of approximately 5%. The increase of the Company's investment
portfolio in 1995 was partially  offset by reduced investment yields in 1995 as
interest rates trended lower.  Investment income in 1993 of $5.6 million reduced
to an investment  income  of $4.6  million  in 1994 due to  lower  yields, and 
lower investment assets in 1994 in Granite Reinsurance due to settlement of
claims.

Other income includes  billing fees and bad debt  provisions,  decreased to
$3.2 million in 1995 from $4.4 million in 1994, which later amount included a
payment of $2  million  of a  written  down  note  from  the  Company's parent,
Symons International Group Ltd. Without this unusual income in 1994, other
income would have increased from $2.4 million in 1994 to $3.2 million in 1995.
Approximately half of the increase resulted from increased billing fee revenue
from a combination of increased  nonstandard  automobile volume along with an
increased billing fee rate  implemented in the last half of 1995. In addition 
other income increased  in 1995 due to increased  commissions  from  business
written in the Company's surplus lines operations.

Net claims  incurred  increased to $74.4  million in 1995 from $58.2 million in
1994, which increase is more than offset by the increase in net premiums
earned.  The loss  ratio  decreased  from 77.5% in 1994 to 71.2% in 1995  
primarily as a result of improved loss ratios from the finite reinsurance


<PAGE>

division  which  were  71.3% in 1994 and  59.1%  in 1995,  as well as 
increased profitability in the Company's crop hail business in 1995 compared
with 1994.

Net commissions expense is composed of three components: (i) commission expense
paid to the Company's agents; (ii) commission income from reinsurers, 
including a 31% commission  earned by the Company's crop  operations with
respect to multi peril crop insurance; and (iii) underwriting gain or loss on
the Company's multi peril crop  insurance  business  reported by the Company
as an adjustment to the Company's commission income on this business.

In 1995 the Company recorded a net commission  recovery of $1.2 million
compared to a net  commission  expense of $2.0 million in 1994.  Commissions
paid to the Company's agents in 1995 of $34.4 million remained relatively 
constant with that paid in 1994 of $35.0 million.

Ceded commission income in 1995 of $35.6 million increased from $33.0
million in 1994.  Included in these amounts is an  underwriting gain adjustment 
from the multi peril crop line of business of $13.2 million in 1995 and $4.5
million in 1994.  The effect of the increased multi peril underwriting gain 
included in commission income is partly offset by reduced ceding commissions on
nonstandard automobile quota share reinsurance in 1995 versus 1994.

Operating expenses of $23.7 million in 1995 compared with $15.1 million
in 1994, with such expenses increasing proportionately with net premiums earned
in the respective years with an expense ratio on this basis of 20.2% in 1994 and
22.6% in 1995.  Included in 1995's  operating  expenses  is an  accrual for bad
debt expenses of $1.9 million with respect to the nonstandard automobile book
of 

<PAGE>

business,  of which $960,000 relates to an adjustment of 1993 and 1994
balances.  During 1995, the Company  identified such uncollected  amounts and
implemented a full collection department to curtail such write-offs in the 
future. Without the write-off in 1995 of bad debt expense relating to prior 
years, the expense ratio for 1995 would have been 21.7%.

Interest  expense  in 1995 was $2.4  million  compared  to$2.5  million in
1994.  Interest savings in 1995 and 1994 resulting from principal repayments to
the Company's debenture holders and the retirement of the Company's term
loan by SIG in June 1995.

In 1995, income tax expense of $3.4 million relates to a tax provision on
income emanating from the U.S.  operations.  By comparison,  a tax provision in
1994 of $939,000  was  accounted  for by an  amortization  of deferred  income 
taxes of $300,000 with the balance of the provision emanating from a tax 
provision on the income from U.S. operations.

Financial Condition

The Company's assets have grown to $154,112,461 in 1995, up from
$130,372,717 in 1994 and $112,852,129 in 1993. The largest component of 
assets is investments in bonds and stocks.  A breakdown of these  
investments is highlighted in the Notes to Consolidated Financial Statements.

The  Company's  second  largest  asset  category  is accounts  receivable. 
This primarily  represents  monies held on behalf of our  insurance  and 
reinsurance subsidiaries by major third party reinsurance 
<PAGE>

or insurance companies to support outstanding claims and unearned
premiums.  The majority  of these  funds earn  interest  and are held 
in trust for  Granite Re.  Receivables  from  insurance  companies  
were  $47,559,037 in 1995, up  from $34,391,569  in 1994 due to  
increased  volume and the  corresponding  increased reinsurance 
claims reserves,  and 1994 was up from $24,922,897 in 1993, also due
to increased  insurance claims reserves that follows increased  business. 
Total  receivables  represented  42% of total  assets  in 1995  and 43% 
in  1994.   Also included in the above  receivables is premium recorded
but not yet received from the  insured.  This is  business  that has been 
taken on but the premium has not been paid to us at the date of this 
statement. 

Deferred  acquisition  costs is the amount  paid to agents and  premium tax
that would be refunded to us should all our policies in force be canceled on
December 31. The offset is the unearned premium.  In 1995 increased to 
$10.4 million from $6.3 million in 1994.  This  increase in deferred  costs
reflects  increases in unearned premiums to $36.7 million in 1995 from 
$22.8 million in 1994. 

The total  liabilities  of the Company were  $136,880,727  in 1995,  compared to
$123,264,530 in 1994. Outstanding claims increased in 1995 to $62.8 
million from $58.2  million  in 1994,  reflecting  an  increase  in volume in 
1995 over 1994, partially offset by a lower loss ratio from 77.5% in 1994
to 71.2% in 1995.  Management  believes  the  capital  and  surplus  of the  
Company  is  currently sufficient to support its current level of premiums 
written.  However, from time to  time  the  Company  may  consider  raising   
additional  capital  to pursue acquisition opportunities or to finance 
internal growth.
<PAGE>



Shareholders'  equity has continued to grow,  reaching  $17,231,734  at
year-end 1995, compared to $7,108,187 at the end of 1994. While  
shareholders'  equity is now  $17,231,734,  it does not reflect the equity 
upon which Goran conducts its various  insurance  operations.   The  
underlying  insurance  subsidiaries had statutory  surplus at December  
31, 1995 of:  Pafco,  $11,967,800  (U.S.);  IGF, $9,219,463  (U.S.);  
Granite Re,  $18,086,777;  and  Granite,  $3,792,638.  This amounts 
to a total $50.8 million. It is on these equity bases that the Company's
insurance business is written as a ratio to capital and surplus of $50.8
million is 2.33 to 1.00, which is well below the industry threshold of 
3.00 to 1.00.

Goran's long term debt  decreased to  $15,132,250  in 1995 from 
$18,530,800  in 1993.  The repayment of debt resulted from scheduled
principle  payments to the Company's debenture holders in the amount 
of $1,995,750 at December 31, 1995 and the  scheduled  retirement of 
SIG's term loan with a fixed payment of $1,000,000 during 1995.  During
1995,  debenture holders exercised warrants at $3 per common share,  
yielded a total of  $393,750.  The  number of  outstanding warrants 
at December 31, 1995 was 337,625. These warrants do not trade.

During 1995,  IGF continued to profit by borrowing  funds under a
revolving line of credit to finance  premium  receivables  from the farmers.
By utilizing this lower cost of credit,  revolving  line of credit,  IGF stops 
the running of 15% interest  payable  to  FCIC  while  continuing  to  earn
15% interest on the receivables from the farmer. 


<PAGE>
Overview

U.S. Operations

Symons  International  Group, Inc. ("SIG") is a wholly owned subsidiary of
Goran Capital,  Inc. SIG is a holding company located in Indianapolis, Indiana.
Its subsidiaries  write various  lines of insurance.  SIG owns 100% and
operates the following companies:

Pafco  General  Insurance  Company  ("Pafco"),  Indianapolis,  IN 
(nonstandard automobile)

IGF Insurance Company ("IGF"),  Des Moines, IA and has 5 branch
offices throughout the U.S.A (crop insurance)

Symons International Group, Inc. (Florida) ("SIGF"), Ft Lauderdale, 
FL  (surplus lines insurance)

The  results of each of these  subsidiaries  are  discussed  below,  following
a general discussion on the consolidated results of the U.S.  operations.  For
the benefit of the reader, it is felt that the entity  discussions should 
center on the specific  product lines written by each  organization.  Pafco 
would refer to the nonstandard  automobile insurance business of Goran which is 
written predominantly by Pafco; however, the licenses of IGF are used in certain
states where we write non standard  automobile  but Pafco does not have a
license.  The crop insurance  business is written by IGF, however, the licenses
of Pafco are used in certain  jurisdictions to facilitate  business where IGF is
not licensed itself.  The remaining aspects of the U.S.  operations is surplus
lines property and casualty business written through SIG Florida.
<PAGE>





Consolidated Results of SIG

Gross premium volume for the U.S.  operations  increased  18.4% to 
$122,088,007 (U.S.) in 1995  versus  $103,133,564  (U.S.).  All three  
product  lines showed increases in 1995 with a  significant  increase  
coming from the crop insurance business.

Net written  premiums for 1995 were  $53,447,000  (U.S.) compared to
$35,139,000 (U.S.) in 1994.  This was an  increase  of 52.1%  resulting  
primarily  from the Company's  decision to reduce its  dependence on quota
share  reinsurance. This allowed the Company to retain more of the gross 
premiums  being  written by its nonstandard automobile segment as well as
its crop insurance business.  

IGF's crop  insurance  business  enjoyed  significant  growth and  profitability
during  1995.  The Crop  Insurance  Reform Act signed  into law in October  1994
enabled the crop insurance  industry to increase its premium  writings,  and IGF
materially  grew its premium volume as well. With increased  premium  production
and normal crop growing  season,  the multi peril crop  business  produced  good
underwriting  profits. The crop hail business also produced profits along with a
growth in premium  writings from $9 million in 1994 to $16 million in 1995.  IGF
focused on  increasing  its crop hail  premium  writings  in order to spread its
risk. The Company utilizes stop loss reinsurance  minimize the effect of adverse
weather conditions on the Company's results.

The  recently  enacted  "Freedom  to Farm"  bill will  allow  IGF to
experience increased growth for 1996, 
<PAGE>

as the  government  withdraws  from the  delivery  basis  catastrophe 
insurance coverage and the insurance industry takes this over.

Nonstandard  automobile  insurance  operations  experienced  a slight 
growth in premium volume during 1995, reversing a two year period of
decline.   During 1995 the operations  focused on simplifying its processes
and on improving service to customers.  Although premium production
grew,  competition  remained strong. The competitive  market kept the
company from  meaningless  growth and rate increase resulting in a higher
than expected loss ratio for the year. In addition, severe winter storm 
activity  at the end of the year  added to the  loss  ratio.  The
expense  ratio of non standard  automobile  was much higher than
budgeted as the company  geared up for the  growth and  improved 
business  for 1996.  The first quarter of 1996 is benefiting  by these 
expenses in 1995 as premiums is growing and less ratios reducing.

SIG Florida  continued  the growth it enjoyed in both 1993 and 1994 by
recording gross  premiums  written  on  behalf  of Pafco of  $6,792,490 
(U.S.) in 1995 as compared to  $5,159,795  (U.S.) in 1994.  The  Florida 
operation continues  to prosper  from the  growth  in the  surplus  lines 
market  opportunities  in the southeast  United  States,  and the addition of
sound  management  and marketing staff, SIG Florida also generates 
commission  income on products sold for third party companies.

Pafco General Insurance Company ("Pafco")
[PAFCO LOGO]

Pafco underwrites  nonstandard  automobile  business through its
headquarters in Indianapolis,  Indiana. A portion of the business is placed
through IGF in order to utilize  licenses it has in Missouri,  Arkansas and 
Illinois.  Pafco's gross written premiums in 1995, excluding crop insurance
fronted for 
<PAGE>



IGF, were $44,577,000 (U.S.) as compared to $39,795,000 (U.S.) in 1994.
In spite of a moderate  growth in gross  premiums,  net premiums  grew 
significantly  to $34,018,000 (U.S.) in 1995 as compared to $24,713,000
(U.S.) in 1994.  The growth in net premiums was  principally a result of a
further  reduction in quota share reinsurance on the nonstandard
automobile business. The net operating results of $(250,000) for 1995 
compared to  $(350,000)  for 1994 are inclusive of dividend income from
IGF  Insurance  Company in 1995 of  $2,000,000  (U.S.) and  $350,000
(U.S.) in 1994.  1995 saw the  Company  focus its  attention  on 
improving  its service to its agents and the ease by which both agents and
our  customers  are able to do  business  with Pafco.  This has borne fruit in
the first quarter of 1996 with material increase in volume and improved
combined loss ratio. 

Pafco's statutory capital and surplus in 1995 increased to $11,967,800
(U.S.) up from  $7,848,000  (U.S.) in 1994.  The strong  performance of
the crop insurance business on IGF increased the value of Pafco's
investment in IGF significantly.

IGF Insurance Company ("IGF")

[IGF LOGO]

IGF writes  principally  MPCI and crop hail insurance and provides 
licenses for Pafco's  automobile  insurance  in  three  states.  Although 
premiums for this coverage  are included in IGF,  the net profit or loss is 
transferred  to Pafco through  reinsurance  programs.  Gross premiums
written in 1995 were $78,216,551 (U.S.) as  compared  to  $64,239,124 
(U.S.)  in 1994.  IGF's 1995  performance increased  significantly  as a
result  of gains in its crop  insurance  business which  reflect  favorable 
growing  conditions.  The Crop  Insurance  Reform Act enacted in October
1994 provided  opportunity for the crop insurance industry to increase its
premium volumes. IGF benefited from this Act and also grew 

<PAGE>

at a rate faster than most of its  principal  competitors  due to the 
marketing efforts of its management team.

IGF exceeded industry results on its multi peril and crop hail business,
because of its unique underwriting criteria. IGF continued to benefit from
its change in 1994 to an in-house adjusting force, which resulted in
enhanced effectiveness on adjusting  crop claims.  By hiring full time
employees to perform this function, IGF has benefited by tighter claims
controls and cost savings.  

IGF's statutory  capital and surplus increased in
1995 to $9,219,463 (U.S.) from $4,875,465  (U.S.)  in 1994.  The 
increase  in  surplus  1995  related  to crop insurance increase in business
and underwriting profits. 

In 1995, IGF concluded its repurchase of the balance of its  outstanding 
common shares which were  principally  held by small investors who
purchased stock when IGF was  created in 1972.  At  year-end  1995, 
Goran  owned 100% of the Company versus 98.8% in 1994.  

Symons International Group, Inc. (Florida) ("SIGF")

Through its specialized surplus lines underwriting unit, Goran writes third
party property and casualty insurance coverage in Pafco and other insurance
companies under contract with SIG Florida. The volume of business continues to
increase and operating results have further improved as a result of decreased
competition in the southeast United States in this market segment and addition
of quality underwriters. Further automation in 1995 has enhanced the processing
capabilities in the office in order to accommodate its growth in premium
writing.


<PAGE>


Non-U.S. Operations

Goran's  business  outside the United States is conducted  through the
following wholly-owned subsidiaries: 

Granite  Insurance  Company  (Toronto,  Canada)  ("Granite")  (sold
its  business in 1990 in runoff)

Granite  Reinsurance  Company Limited (Barbados and Bermuda) 
("Granite Re") (Finite reinsurance)

Granite Insurance Company ("Granite")

[Granite Insurance LOGO]

Granite is a Canadian  federally  licensed  insurance company which is
presently servicing its investment portfolio and its very few outstanding
claims.   Granite stopped  writing  business  on  December  31, 1989 and
sold its book of Canadian business  in June  1990.  The  outstanding  claims 
continue  to be  settled  in accordance with actuarial estimates and
management's expectations.   During 1995, Granite's  invested assets
reduced to $7,456,155 from  $10,195,091 in 1994. This was the result of
settlements  of claims and the runoff of  outstanding  claims.
Total  outstanding  claims  decreased to $2,950,000  in 1995 from 
$4,411,000 in 1994.  It is expected  that the run off of  outstanding  claims
will continue at least until 1998.  Granite's  net earnings  were  $270,156 in
1995,  compared to $826,423 in 1994  reflecting  the  reduction of invested 
assets,  which in turn reduces earnings from investment yields.

[PAGE CONTAINS PHOTOGRAPHS OF AUTOMOBILES IN THE
MIDDLE MARGIN]
<PAGE>

Investment income in 1995 was $683,637 compared to $986,683 in 1994.

Granite Reinsurance Company Limited ("Granite Re")

[Granite Reinsurance LOGO]

Granite Re is managed by Jardine Pinehurst  Management  Company Ltd.
of Bermuda.  Granite Re underwrites  finite risk reinsurance and stop loss
reinsurance.  This reinsurance  involves  a defined  maximum  risk at the
time of  entering  into a contract.  The  Company  participates  in various 
programs  of  reinsurance  in Bermuda,  the United  States and Canada. 
Reinsurance  normally  requires that a substantial  premium  be paid upon
the  purchase  of cover.  Such  premiums  are invested  in high  grade  
bonds,  some of  which  are  pledged  to  support  the liabilities  assumed 
under the  reinsurance  program.  The  amount  pledged  is reflected in the
Notes To Consolidated  Financial Statements.  One of Granite Re
Canadian  Treaties has expired and will not be renewed.  The runoff will
provide continuous  revenue  for  years  to come but  gross  written 
premiums  of about $30,000,000  will cease and will be replaced with new
programs over the next few years.  Gross premiums written during the 12
months ended November 30, 1995 were $34,802,851  (U.S.)  compared to 
$23,844,330  (U.S.) during the 11 months ended November  30, 1994. 
Net income rose to  $3,975,350  (U.S.) in 1995 compared to $1,887,687
(U.S.) in 1994. This increased  profitability resulted primarily from
a reduced loss ratio on the Company's finite book from 71.6% in 1994 to
59.1% in 1995, combined with increased premium volumes in 1995.

Granite Re began  operation  on July 1, 1990,  with a capital  base of 
$125,000 (U.S.) And $700,000 (U.S.) In 1992. The impact of profitable 
underwriting since the  inception of the Company is  reflected  in the
growth of its shareholders' equity to $13,248,445 (U.S.) in 1995 from
$9,343,095 (U.S.) in 

[PAGE CONTAINS PHOTOGRAPHS OF FARM SCENERY IN THE
MIDDLE MARGIN]

<PAGE>


1994.  Granite Re will  continue to focus  selling  reinsurance that limits its
liability to a defined  amount.  In addition,  Granite Re intends to broaden
its base to include captive reinsurance, which will generate fees for the
Company on a risk free basis.  Such programs are risk free because they 
generally  require that users furnish full  collateral  funds,  which the
reinsurer then reinvests.  Granite Re  thereby  expects  funds  available for 
reinvestment  to increase, generating greater investment returns.

The programs currently underwritten by Granite Re generate a loss
portfolio that is matched with cash.  Such  portfolios  take about eight
years to runoff,  thus generating  investment  returns and  underwriting 
gains  during the life of the runoff.  Meanwhile, new business written in
1995 and beyond will be added to the portfolio of outstanding losses and
invested assets,  perpetuating the growth of Granite Re through fees,
investment income and underwriting profits.



<PAGE>


                               GORAN CAPITAL INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1994




<PAGE>



                               GORAN CAPITAL INC.

                       CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1995 AND 1994



                                TABLE OF CONTENTS





Auditors' Report                                                   1

Consolidated Balance Sheets                                        2

Consolidated Statements of Operations                              3

Consolidated Statements of Deficit                                 4

Consolidated Statements of Changes in Cash Resources               4

Notes to Consolidated Financial Statements                    5 - 18



<PAGE>



                                AUDITORS' REPORT


To the Shareholders of
Goran Capital Inc.


We have  audited the  consolidated  balance  sheets of Goran  Capital Inc.
as at December  31,  1995 and  1994 and the  consolidated  statements  of 
operations, deficit and changes in cash resources for the years then ended. 
These financial statements   are  the   responsibility   of  the   company's  
management.   Our responsibility  is to express an opinion on these
financial  statements based on our audits.

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

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at December 31,
1995 and 1994 and the  results of its  operations  and the  changes in its 
financial position  for the  years  then  ended  in  accordance  with 
generally  accepted accounting principles.




/s/ Schwartz Levitsky Feldman
Toronto, Ontario
March 18, 1996                                            Chartered Accountants
Except as to notes 2(h) and 20,
  which are March 11, 1997


<PAGE>


- ------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------
AS AT DECEMBER 31
(In thousands of U.S. dollars)


Assets                                              1995         1994
                                                  --------     --------
Cash and investments (note 4)                     $ 54,366     $ 46,328
                                                  --------     --------
Accounts receivable
  Premiums receivable                               11,233       13,948
  Due from insurance companies                      34,837       24,516
  Accrued and other receivables                      1,231        1,485
                                                  --------     --------
                                                    47,301       39,949

Reinsurance recoverable on outstanding claims       41,667       15,315
Prepaid reinsurance premiums                         6,263        6,987
Capital assets (note 5)                              2,088          861
Other assets (notes 6 and 12)                        1,417        1,063
Deferred policy acquisition costs                    7,641        4,460
Deferred income taxes                                   73          214
Goodwill                                                --           62
                                                  --------     --------
             Total Assets                         $160,816     $115,239


Liabilities

Accounts payable
  Due to insurance companies                      $  1,986     $  8,441
  Due to associated companies                          188          135
  Accrued and other payables                         8,310        3,858
                                                  --------     --------
                                                    10,484       12,434

Outstanding claims (notes 2(e) and 3)               87,655       56,801
Unearned premiums (note 3)                          33,159       23,270
Bank loans (note 7)                                  5,811        5,441
Debentures (note 8)                                 11,085       12,210
Minority interest in subsidiary                         --           16
                                                  --------     --------
             Total Liabilities                     148,194      110,172

Shareholders' Equity (note 10)                      12,622        5,067
                                                  --------     --------
             Total Liabilities and 
             Shareholders' Equity                 $160,816     $115,239
             




/s/                     /s/ 
Director                Director

Approved on behalf of the board
                                        2


<PAGE>

- ------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31
(In thousands of U.S. dollars, except per share data)



                                                          1995          1994
                                                       ---------     ---------
Revenue
Gross premiums written                                 $ 151,717     $ 126,978

Net premiums earned                                    $  76,102     $  54,944

Net investment and other income (note 4 and 13(a))         5,872         6,624
                                                       ---------     ---------

                                                          81,974        61,568
                                                       ---------     ---------
Expenses

Net claims incurred                                       54,193        42,595

Commissions and operating expenses (note 16(b))           16,352       
12,516

Interest expense                                           1,761         1,843
                                                       ---------     ---------

                                                          72,306        56,954
                                                       ---------     ---------

Income before undernoted items                             9,668         4,614

Provision for income taxes (note 11)                       2,497           688

Minority interest                                             --           (14)
                                                       ---------     ---------
Net income                                             $   7,171     $   3,940
                                                       =========     =========

Earnings per share - basic                             $    1.43     $    0.81
                                                       =========     =========
Earnings per share - fully diluted                     $    1.26     $    0.71
                                                       =========     =========




<PAGE>
- ------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF DEFICIT
- ------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31
(In thousands of U.S. dollars)

                                                     1995         1994
                                                   --------      --------
Retained earnings (deficit), beginning of year     $(11,066)     $(15,006)

Net income for the year                               7,171         3,940
                                                   --------      --------

Retained earnings (deficit), end of year           $ (3,895)     $(11,066)


--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN CASH
RESOURCES
--------------------------------------------------------------------------------
(In thousands of U.S. dollars)

                                                            1995        1994
                                                          --------    --------

Cash provided by (used in):

Operating activities
  Net income                                              $  7,171    $  3,940
  Items not involving cash                                  11,010       7,058
  Changes in working capital relating to operations         (8,544)    (12,422)
                                                          --------    --------

                                                             9,637      (1,424)
                                                          --------    --------
Financing activities
  Reduction of debentures                                   (1,462)     (1,047)
  Increase of borrowed funds                                   220         722
  Issue of share capital                                       303          34
                                                          --------    --------

                                                              (939)       (291)
                                                          --------    --------
Investing activities
  Net (purchase) sale of marketable securities              (4,147)      2,118
  Net purchase of capital assets                            (1,681)       (628)
  Foreign currency translation adjustment                      155        (402)
                                                          --------    --------

                                                            (5,673)      1,088
                                                          --------    --------

Increase (decrease) in cash resources during the year        3,025        (627)
Cash resources, beginning of year                            7,588       8,215
                                                          --------    --------

Cash resources, end of year                               $ 10,613    $  7,588



Cash resources are comprised of:
  Cash (bank overdraft)                                   $  4,171    $   (116)
  Short-term investments                                     6,442       7,704
                                                          --------    --------

                                                          $ 10,613    $  7,588


<PAGE>

-------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of U.S. dollars)


--------------------------------------------------------------------------------
1.    Organization
--------------------------------------------------------------------------------

 Goran Capital Inc. ("Goran") is the parent company of the Goran
 group of  companies.

        The  consolidated  financial  statements  include  the  accounts  of all
        subsidiary companies of Goran, which are 100% owned, as follows:

        1.      Symons  International  Group,  Inc.  ("SIG Inc.")  including its
                subsidiary  companies for which SIG Inc.  acts as a manager,  as
                follows:

                a)      Pafco General  Insurance  Company  ("PGIC") - an
                        Indiana based insurance company;

                b)      IGF  Insurance   Company  ("IGF")  -  an  Indiana  based
                        insurance company;

                c)      Pafco Premium Finance Company - an Indiana based
                        premium finance company;

                d)      Hailplus, Corp. - an Iowa based premium finance
                        company; and

                e)      Symons  International  Group,  Inc.  of Ft.  Lauderdale,
                        Florida  ("SIG-FL") - a Florida based  managing  general
                        insurance agency.

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

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

--------------------------------------------------------------------------------
2.    Summary of significant accounting policies
--------------------------------------------------------------------------------

      These consolidated  financial  statements have been prepared in
conformity  with accounting principles generally accepted in Canada
("Canadian GAAP").

a)     Basis of consolidation

The consolidated financial statements include the accounts of Goran  and
its subsidiary companies, all of which are 100% owned.

All significant  intercompany  transactions  and balances have been           
eliminated.

b)     Premiums

Premiums are taken into income evenly over the lives of the related
policies.

c)     Commissions

Commission expenses and related reinsurance commission recoveries
are  recorded at the  effective  date of the  respective  insurance
policy.



<PAGE>

--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of U.S. dollars)


--------------------------------------------------------------------------------
2.    Summary of significant accounting policies  (cont'd)
--------------------------------------------------------------------------------

d)     Deferred policy acquisition costs

Deferred policy acquisition costs comprise of agents' commissions,           
premium  taxes and  certain  general  expenses  which  are  related             
directly to the acquisition of premiums. These costs, to the extent             
that they are  considered  recoverable,  are deferred and amortized             
over the same  period  that the  related  premiums  are taken  into            
income.

e)     Outstanding claims

The  reserve  for  outstanding  claims  has  been  reported  on  by           
independent   actuaries.   The  Company's   policy   regarding  the             
recognition of the time value of money on outstanding  claims is as             
follows:

i)    Direct claims

The reserve  includes the  recognition of the time value of                     
money on direct claims liabilities.  Using an interest rate of  7.5%
(1994 -  7.5%)  net  claims  incurred  have  been decreased by $161 (1994 -
increased by $88) and outstanding claims at  December  31,  1995  reduced 
by $1,327  (1994 - $1,134). 

ii)    Assumed claims

The Company has not recognized the time value of money with                  
respect to assumed  claims  liabilities  over which it does not have direct 
control over the timing of  settlement  of the liabilities. If the Company had
discounted these claims using an  interest  rate of 7.5%  (1994 - 7.5%) net 
claims incurred  would have been increased by $1,147 (1994 reduced
by $1,264)  and  outstanding  claims at  December  31, 1995 would have
been reduced by $2,348 (1994 - $3,401).

f)     Investments

Investments  in bonds,  mortgages  and  debentures  are  carried at
amortized  cost providing for the  amortization  of the discount or             
premium to maturity date.  Investments  in short-term investments,            
real estate,  and equities are carried at cost. Gains and losses on             
disposal of investments  are taken into income when realized. 
When there has been a loss in value of an investment  that is other than       
a temporary  decline,  the  investment is written down to recognize            
the loss.

g)     Capital assets

Capital   assets  are   recorded  at  cost,   net  of   accumulated
amortization.  Amortization  is  provided  at rates  sufficient  to            
amortize the costs over the estimated useful lives of the assets.

h)     Foreign currency translation

Foreign currency  transaction  gains and losses are included in the
statement of operations.



<PAGE>

--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of U.S. dollars)


--------------------------------------------------------------------------------
2.    Summary of significant accounting policies  (cont'd)
--------------------------------------------------------------------------------

 h)     Goran  and each of its  subsidiaries  have  been  determined  to be
self-sustaining  operations  and are  translated  using the current rate
method whereby all assets and  liabilities are translated into U.S.  dollars  at
the year end rate of  exchange  and  revenue  and expense  items are 
translated  at the average rate of exchange for the year.  The  resulting 
unrealized  translation  gain or loss is deferred  and  shown  separately  in 
shareholders'  equity.  These adjustments are not included in operations
until realized through a reduction in the Company's net investment in such
operations.

--------------------------------------------------------------------------------
3.    Reinsurance
--------------------------------------------------------------------------------

a)     The   Company's   insurance   subsidiaries   follow  a  policy of
  underwriting  and  reinsuring  contracts of insurance  which limits 
their  liability to a maximum amount on any one claim of $220 (1994
- - $214)  in  Canada,  and $250  (1994 - $350) in the USA,  with the
result that unearned premiums and outstanding claims are stated
net of reinsurance.  As the primary insurers,  the Company's  insurance
subsidiaries maintain the principal liability to the policyholder.

b)     The effect of reinsurance on the activities of the Group can be 
summarized as follows:

             1995                         Gross          Ceded        Net
             ----                         -----          -----        ---

             Premiums written            $151,717      $(65,357)     $86,360
             Premiums earned              145,366       (69,264)      76,102
             Incurred losses and loss
               adjustment expenses        148,001       (93,808)      54,193
             Commission expense 
               (note 16(b))                25,069       (25,950)        (881)
             Outstanding claims            87,655       (41,667)      45,988
             Unearned premiums             33,159        (6,264)      26,895

             1994                          Gross        Ceded          Net
             ----                          -----        -----          ---

             Premiums written            $126,978      $(68,503)     $58,475
             Premiums earned              120,241       (65,297)      54,944
             Incurred losses and loss
               adjustment expenses         76,321       (33,726)      42,595
             Commission expense
               (note 16(b))                25,617       (24,174)       1,443
             Outstanding claims            56,801       (15,315)      41,486
             Unearned premiums             23,270        (6,987)      16,283

c)     On June 30, 1991 Granite assumed an outstanding claims
portfolio of  $22,630,  with loss dates of May 31, 1990 and prior, and
received a bond and short-term  investment  portfolio with a value of
$22,546.  The  December  31, 1995  balances in the claims  portfolio  and
the investment  portfolio are $3,509 (1994 - $5,535) and $4,761
(1994 - $8,333) respectively.

This  portfolio has been deposited with a Canadian trust company
to support the  liabilities  assumed.  The invested  funds are used to  
settle claims liabilities as they become due.




<PAGE>
--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of U.S. dollars)


--------------------------------------------------------------------------------
4.    Cash and investments
--------------------------------------------------------------------------------

                                   1995                       1994
                         -------------------------   -------------------------
                          Book Value  Market Value   Book Value   Market Value
Cash (overdraft)           $  4,171     $  4,171     $   (116)     $   (116)
Short-term investments        6,442        6,442        7,704         7,704
Equities                      6,421        6,069        7,634         6,867
Bonds and debentures         27,949       28,080       21,557        20,971
Mortgages                     3,583        3,583        3,713         3,683
Real estate                   3,922        3,922        3,912         3,912
Other loan receivable         1,878        1,878        1,924         1,924
                           --------     --------     --------      --------
                           $ 54,366     $ 54,145     $ 46,328      $ 44,945
                           ========     ========     ========      ========


a)      At December  31, 1995,  cash and  investments  of  approximately 
$20,510  (1994 -  $20,031)  are on  deposit  or held in trust by cedents, 
and to a limited  amount  regulatory  authorities,  to secure certain of the
outstanding claims of the Company.

b)      The  Company  realized a net gain of $198 (1994 - $358) from
the sale of investments  during the year, and recorded an unrealized  
loss of $58 (1994 - $161) on equities, and $Nil (1994 - $190) on
bonds. The carrying value of equities and bonds held at December
31,  1995  includes  a  provision  of $357  (1994  -  $950)  for
investments  considered to have a decline in value that is other than
temporary.  Where market value is not readily determinable, book value is
used as an approximation.

c)      The hotel  property  in Las Vegas that was  acquired in 1992
was sold in 1994 for $4,533.  PGIC took back an 8% first mortgage of
$3,000 from the purchaser, and realized a gain of $147.

d)      As part of the sale of a subsidiary in 1990, the Company and its       
subsidiaries  invested  in  junior  subordinated   participating debentures
of the  purchaser   maturing  on  January  1,  1996 equivalent  to  $2,007,
bearing  interest  at a rate of 10% per annum,  and preferred  shares of a
subsidiary of the  purchaser.  The  debentures  and shares were  redeemed
by the issuer during 1995.

--------------------------------------------------------------------------------
5.     Capital assets
--------------------------------------------------------------------------------

                                       1995                   1994
                           ----------------------------     --------
                                    Accumulated
                             Cost   Amortization   Net        Net

Furniture, fixtures and
    equipment               $3,686     $1,613     $2,073     $  836

Automobiles                    133        118         15         25
                            ------     ------     ------     ------
Total                       $3,819     $1,731     $2,088     $  861
                            ======     ======     ======     ======


       See also note 12.



<PAGE>

--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands U.S. dollars)


--------------------------------------------------------------------------------
6.     Other assets
--------------------------------------------------------------------------------

Included in other  assets are  deferred  charges  relating  to  financing
activities and the acquisition of subsidiaries  amounting to $155 (1994 -
$257).

--------------------------------------------------------------------------------
7.     Bank Loans
--------------------------------------------------------------------------------

a)     IGF  maintained  a secured  revolving  line of  credit,  bearing interest
at prime rate,  in the amount of $6,000 at December 31, 1995, and is due
for renewal May 15, 1996.

At December  31, 1995,  IGF had  outstanding  borrowings  in the amount
of $5,811 (1994 - $4,191).

b)      In December 1994, SIG Inc. obtained an unsecured line of credit,
bearing interest at prime rate plus 1% in the amount of $250.  At December
31, 1995, SIG Inc. had outstanding borrowings in the amount of $ NIL
(1994 - $250). 

c)      As at December 31, 1995, the Company was in compliance with all
covenants under its bank loans. 

--------------------------------------------------------------------------------
8.     Debentures
--------------------------------------------------------------------------------

       At December 31, 1995, the Company had secured and unsecured 
notes in the amount of $11,085 (1994 - $12,210) outstanding.

The notes all bear an  interest  rate of 8% and  mature on  December 
30, 1998.  The Company  has also agreed to secure  these notes with a
general security  agreement  providing a fixed and  floating  charge over all
the  assets of the Company and by a guarantee from Goran,  whereby the
Company  pledged  the  issued  and  outstanding  common  shares  of
PGIC,  GIC and Granite.

As at  December  31,  1995,  the  Company  was  in  compliance  with, 
or subsequently  received waivers with respect to, all covenants  pertaining
to the debentures.

The notes are due for principal repayment as follows:

                     December 30, 1996                     $ 1,848
                     December 30, 1997                       2,233
                     December 30, 1998                       7,004
                                                           -------
                                                           $11,085
                                                           =======



The Company  paid the  principal  payment of $1,462 due on  December
30, 1995.




<PAGE>

--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of U.S. dollars, except share data)


--------------------------------------------------------------------------------
9.     Capital Stock
--------------------------------------------------------------------------------

       The Company's authorized share capital consists of:

       First Preferred Shares

       An  unlimited  number  of  first  preferred  shares,  of  which  none are
       outstanding at December 31, 1995 (1994 - NIL).

       Common Shares

       An unlimited number of common shares,  of which 5,060,229 are
       outstanding  as at December 31, 1995 (1994 - 4,933,779).

During the year,  pursuant to the exercise of warrants  and options, 
the Company  issued  141,450  (1994 - 49,375)  common  shares  for 
aggregate consideration in the amount of $305 (1994 - $34).

The Company has reserved for issue 774,035 (1994 - 915,485) common
shares consisting of:

        a)      337,625  (1994 - 468,875)  shares  issuable  on the  exercise of
                warrants for the  purchase of common  shares at $2.19 per share,
                issued to debentureholders, and;

        b)      436,410  (1994  -  446,610)  shares  pursuant  to  the  employee
                incentive share option plan as follows:

              Number of               Exercise
                Shares                  Price         Expiry Date

                92,500                $0.37           July 31, 1996
               224,166                $1.16           September 15, 1997
                 3,000                $1.48           December 7, 1997
                63,099                $1.82           March 8, 1998
                53,645                $3.85           July 14, 1999
              --------
               436,410

--------------------------------------------------------------------------------
10.    Shareholders' equity
--------------------------------------------------------------------------------

       Shareholders' equity is comprised of the following components:

                                        1995          1994
                                      --------      --------

Capital stock                         $ 16,875      $ 16,126
Deficit                                 (3,895)      (11,066)
Cumulative translation adjustment         (358)            7
                                      --------      --------

Shareholders' equity                  $ 12,622      $  5,067




<PAGE>

--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of dollars)


--------------------------------------------------------------------------------
11.    Income taxes
--------------------------------------------------------------------------------

       The provision for (recovery of) income taxes is analyzed as follows:

                                                  1995         1994
                                                -------      -------

Consolidated net income before income taxes     $ 9,668      $ 4,628
                                                -------      -------

Income taxes at Canadian statutory rates          4,287        2,052
Effect on taxes resulting from:
  Tax exempt income                              (1,571)      (1,070)
  U.S. statutory rate differential                 (750)        (155)
  Application of losses carried forward
    and reserves                                   (399)        (359)
  Operating loss for which no current
    income tax benefit is recognized                785           --
  Deferred income taxes                             145          220
                                                -------      -------
                                                $ 2,497      $   688


       At December 31, 1995,  the Company's  Canadian  subsidiary  had
reserves, unclaimed  for  income  tax  purposes,  of  $2,161  (1994 - 
$2,495).  In  addition,  the Company and its consolidated  subsidiaries 
have operating loss carry  forwards  of  approximately  $13,768 for tax 
purposes  which expire  primarily  after 1996.  The Company  also has net
capital  losses carried  forward of  approximately  $8,057 which can be
applied to reduce income taxes on any future  taxable  capital  gains.  The 
potential  tax benefit of these  reserves and loss carry forwards have not
been recorded in these financial statements.

--------------------------------------------------------------------------------
12.    Amortization
--------------------------------------------------------------------------------

       The Company recorded amortization for the year as follows:

                     1995      1994
                     -----     -----

Amortization of:
  Goodwill           $  63     $  47
  Capital assets       483       336
  Investments            3       (39)
  Other assets         144       222
                     -----     -----
                     $ 693     $ 566




<PAGE>
--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of U.S. dollars)


--------------------------------------------------------------------------------
13.    Related party transactions
--------------------------------------------------------------------------------

        a)      In  1989,  the  Company  wrote  off a loan of  $5,135  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 and subsequent to 
year-end,  SIGL entered into  agreements  with Goran  whereby as              
consideration for the release of 766,600 of the escrowed shares, SIGL 
repaid  $1,465 of the loan.  The  balance  due to Goran of  $3,670 
continues to be guaranteed by SIGL and is secured by the  433,400
remaining  escrowed shares.  Pursuant to the agreements, it is the intention 
of SIGL to repay the  balance  of the loan wihin the next 4 years.  The
$1,465 loan repayment was recorded in 1994 as a recovery and included in
other income.

        b)      Included  in other  receivables  are $563 (1994 - $593) due
from certain  shareholders and directors which relate to the purchase
of  common  shares  of the  Company.  Approximately  half of the
amounts due bear interest and are subject to principal repayment
schedules.  The Company also  provided,  indirectly,  an officer with a
second  mortgage  on a  residence  in the  amount of $278 which bears
interest at 7% (1994 - $278).

        c)      Included  in cash and  investments  is a $1,700  loan to a third
party corporation ("TPC"), together with capitalized interest of
$178 (1994 - $201) for a total of $1,878  (1994 -  $1,901).  The
loan is secured by a guarantee and a collateral  mortgage from a
corporation  one third owned by an individual  who is related to
the majority  shareholder  of SIGL. The TPC loaned the $1,700
to SIGL. The interest rate is 7.8% per annum.  The interest accrued
at December 31, 1995, was NIL (1994 - NIL).

                Additional  security for the loan is held in the form of 250,000
common  shares  of  Goran  pledged  by  SIGL.  The  security  is
guaranteed by a $350 guarantee by SIGL.

--------------------------------------------------------------------------------
14.    Contingent liabilities
--------------------------------------------------------------------------------

       a)     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.

       b)     IGF is  responsible  for the  administration  of a run-off book of
              business.  The Federal  Crop  Insurance  Corporation  ("FCIC")
              has requested that IGF take  responsibility  for the claim 
              liabilities  under its  administration  of these policies and IGF
              has requested  reimbursement  of certain  expenses  from the 
              FCIC with respect to this run-off activity.  It is the Company's
              opinion,  and that of its legal  counsel,  that there is no 
              liability on the part of the Company  for claim  liabilities of
              other  companies  under  IGF's administration.





<PAGE>

--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of U.S. dollars)


--------------------------------------------------------------------------------
15.    Segmented information
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                       United         United
                                       States         States         Other
                        Canada         Crop           Other P&C      Foreign       Elimination  Consolidated

1995
<S>                     <C>            <C>            <C>            <C>           <C>          <C>      
Gross premiums
 written                $      --      $  67,828      $  54,260      $  34,837     $(5,208)     $ 151,717
                        =========      =========      =========      =========     =========     =========
Net premiums
 earned                 $     (84)     $  11,608      $  38,034      $  26,544     $  --        $  76,102
                        =========      =========      =========      =========     =========     =========
Segmented operating
 profit                 $   1,900      $     447      $  13,910      $  12,898     $(1,374)     $  27,781

General expenses            3,746         (7,122)        15,934          9,356      (1,304)        20,610
                        ---------      ---------      ---------      ---------     ---------     ---------

Net income (loss)       $  (1,846)     $   7,569      $  (2,024)     $   3,542     $   (70)     $   7,171
                        =========      =========      =========      =========     =========    =========
Identifiable assets     $   6,884      $  59,733      $  47,372      $  55,921     $(9,094)     $ 160,816
                        =========      =========      =========      =========     =========    =========


1994

Gross premiums
 written                $      --      $  54,455      $  48,679      $  23,844     $  --        $ 126,978
                        =========      =========      =========      =========     =========    =========
Net premiums
 earned                 $     (61)     $   4,565      $  27,561      $  22,879     $  --        $  54,944
                        =========      =========      =========      =========     =========    =========
Segmented operating
 profit                 $   3,606      $  (2,286)     $  10,259      $   8,812     $(1,418)     $  18,973

General expenses            3,069         (3,707)        10,775          6,328      (1,418)        15,047

Minority interest              --             --            (14)            --          --            (14)
                        ---------      ---------      ---------      ---------     ---------     ---------

Net income (loss)       $     537      $   1,421      $    (502)     $   2,484     $   --       $   3,940
                        =========      =========      =========      =========     =========    =========
Identifiable assets     $  12,363      $  29,085      $  35,749      $  45,033     $(6,991)     $  115,239
                        =========      =========      =========      =========     =========     =========

</TABLE>



<PAGE>

--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of U.S. dollars)


--------------------------------------------------------------------------------
15.    Segmented information (cont'd)
--------------------------------------------------------------------------------

       The  Canadian  results are  comprised  of the  operations  of Goran as
an entity  which  incurred a loss of $1,472  (1994 - profit of $400) and
the run-off insurance activities of GIC which incurred a loss of $374 (1994
- -  profit of $137).   Segmented   operating  profit  is  composed  of 
premiums  earned, plus  investment and other income net of claims incurred. 

       General  expenses are composed of  commissions  and  operating 
expenses,  interest and income taxes. 

       The United States results are comprised of the consolidated operations
of  SIG Inc.

       Other foreign results are comprised of the operations of Granite.

       See also note 1.

--------------------------------------------------------------------------------
16.    Regulatory matters
--------------------------------------------------------------------------------

       a)     Goran's insurance subsidiaries are subject to certain requirements
              and  restrictions  in  accordance  with the  regulations  of their
              respective  jurisdictions.  Statutory regulations require that the
              subsidiaries  maintain  a minimum  amount of  capital  to  support
              outstanding  insurance  in force  and new  premium  writing.  This
              requirement and other regulations in the respective jurisdictions,
              restricts  the  amount  of  dividends  payable  in any year by the
              subsidiaries to the parent. The statutory surplus of the Company's
              active  insurance  subsidiaries  at December 31, 1995  amounted
              to $34,436 (1994 - $23,616).  Subsequent  to Board of Directors  
              and  regulatory  approval,  IGF declared and paid in December, 
              1995 an extraordinary  dividend to PGIC in the amount of $2,000
              on the  convertible  preferred  stock owned by PGIC.  In 
              December,  1995,  upon Board of  Directors  and regulatory
              approval,  PGIC declared and paid to SIG Inc. a $1,500
              dividend on the common stock owned by SIG Inc.

       b)     PGIC  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").  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  from IDOI to reflect its business
              transacted with the Consolidated  Farm Services Agency 
              ("CFSA") 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, 1995,  that  permitted transaction
              had no effect on statutory surplus or net income.

              The  net  underwriting   results,   included  in  commissions and
              operating expenses, for the years ended December 31, 1995 and
              1994 were a gain of $9,653 and $3,275, respectively.


<PAGE>

--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of U.S. dollars)


16.    Regulatory matters  (cont'd)

       c)     During the year IGF and PGIC entered into a reinsurance 
agreement  in which IGF ceded  $17,696 of multi peril crop business to
PGIC, who  in  turn  ceded  it to  the  CFSA.  As a  matter  of  course,
inter-company  reinsurance  agreements are filed with the IDOI
for  their  approval.  IDOI  approval  has not yet been  received  with
respect to this agreement; however, management believes it will
be received in due course.

--------------------------------------------------------------------------------
17.    Events subsequent to December 31, 1995
--------------------------------------------------------------------------------

       Subsequent to December 31, 1995, the Company entered into an
agreement to purchase  Superior  Insurance  Company  ("Superior") for a
purchase price equal  to 105% of the GAAP net  book  value  of  Superior 
at the time of Closing.  For 1995,  Superior reported premiums in the
amount of $94,800, assets of $160,100 and a net book value of $61,600. 
The  acquisition  is subject to normal  regulatory  approvals.  Management  
believes that such  approvals  will be  forthcoming  and that the  transaction
is expected to close on or about April 30, 1996.

       In addition,  the Company has entered into agreements with Goldman,
Sachs  & Co. to create a joint  venture to acquire  Superior.  The 
Company  has agreed  to  contribute  (i)  its  rights  under  the  Superior  
Purchase Agreement; (ii) 100% of the capital stock of PGIC at a minimum 
book value of $14,000 and (iii) certain operational capital assets. 
Investment funds affiliated with Goldman Sachs ("Goldman  Entities") 
agreed to contribute cash of approximately  $20,000.  With the cash
contributed by the Goldman Entities and the proceeds of a Senior Bank
Facility, the new company, GGS Management,  Inc.,  will  acquire 
Superior.  SIG  Inc.  will  have a 52%  interest in GGS Management,  Inc. 
through its ownership of shares in GGS Management Holdings, Inc.

--------------------------------------------------------------------------------
18.    Reconciliation  of Canadian  GAAP and United States  generally 
accepted accounting principles ("U.S. 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:

       (a)    Earnings and retained earnings
                                                  1995         1994
                                                -------      -------
Net earnings in accordance with
Canadian GAAP                                   $ 7,171      $ 3,940


Add effect of difference in accounting for:

  Deferred income taxes [see note (d)]             (344)       1,180

  Outstanding claims [see note (e)]                (161)          88
                                                -------      -------

Net earnings in accordance with U.S. GAAP         6,666        5,208



<PAGE>

--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of U.S. dollars, except share data)


--------------------------------------------------------------------------------
18.     Reconciliation  of Canadian  GAAP and United States  generally 
accepted accounting principles ("U.S. GAAP") and additional information
(cont'd)
--------------------------------------------------------------------------------

       (a)    Earnings and retained earnings (cont'd)


              Applying U.S. GAAP,  deferred income tax assets would be
increased by $1,466 and $1,742,  outstanding  claims  would be  increased
by $1,327 and $1,134, and cumulative  translation adjustment would
be increased  by $36  and  $84 as at  December  31,  1995  and 
1994, respectively.  As  a  result  of  these  adjustments,  accumulated
deficit  would be  decreased  by $139 and $608 as at December  31,
1995  and  1994,  respectively.  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.  Primary  earnings per share are computed  based on
the weighted  average number of common shares  outstanding  during
the year plus common share equivalents consisting of stock options
and  warrants.  Primary and fully  diluted  earnings per share are calculated 
using the Treasury Stock method and assume conversion of securities when
the result is dilutive.

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

                                                      1995           1994    
                                                  ----------     ----------
                Primary                           $5,567,644     $5,399,463
                                                
                Fully diluted                      5,567,644      5,399,463
                                
              Earnings per share,  as determined in accordance  with U.S. 
GAAP, are as follows:

                                                      1995           1994    
                                                  ----------     ----------
              Primary earnings per share              $1.20         $0.96
              Fully diluted earnings per share         1.20          0.96

       (c)    Supplemental cash flow information

              Cash paid for interest and income taxes is summarized as follows:

                                                      1995           1994    
                                                  ----------     ----------
              Cash paid for interest                 1,548           1,773
              Cash paid for income taxes, 
               net of refunds                        1,953             166


<PAGE>
--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of U.S. dollars)

--------------------------------------------------------------------------------
18.     Reconciliation  of Canadian  GAAP and United States  generally 
accepted accounting principles (U.S. GAAP) and additional information
(cont'd)
--------------------------------------------------------------------------------

       (d)    Income taxes

              The  difference in accounting  for deferred  income taxes reflects
              the  adoption  for  U.S.  GAAP,  effective  January  1,  1993,  of
              Statement of  Financial  Accounting  Standards  No. 109 ("SFAS
              No. 109"),  "Accounting  for Income Taxes." This standard 
              requires an asset and liability  approach  that takes into account
              changes in tax rates when  valuing the deferred tax amounts to be
              reported in the balance sheet.

              Deferred tax assets  recognized under Canadian GAAP, which
              require realization  beyond a  reasonable  doubt in  order to  
              record  the  assets,  amounted to $73 and $214 at  December  31, 
              1995 and 1994, respectively, and pertained to Canadian operations
              only.

              The  adoption of SFAS No. 109 results in  additional  deferred tax
              assets  recognized for deductible  temporary  differences and loss
              carry-forwards in the amount of $2,581 and $2,375 net of 
              valuation allowances of $69 and $260 and deferred tax liabilities
              recognized for taxable temporary differences in the amount of 
              $1,114 and $633 at December 31, 1995 and 1994, respectively.

       (e)    Outstanding claims

              The difference in accounting for  outstanding  claims reflects the
              application for U.S. GAAP of SEC Staff Accounting Bulletin No.
              62, "Discounting  by  Property/Casualty   Insurance  Companies". 
              This standard does not allow discounting of unpaid claim 
              liabilities by  public companies, except in specific circumstances
              that are not applicable to the Company.

       (f)    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 $563  
              and $593 as at December 31, 1995 and 1994, respectively, to
              reflect the loans due from certain  shareholders  which relate to
              the purchase of common shares of the Company.

       (g)    Unrealized loss on investments

              U.S. GAAP require that unrealized losses on investment 
              portfolios  be included as a component in determining 
              shareholders' equity. In addition,   SFAS  No.  115  permits  
              prospective   recognition  of  unrealized gains on investment 
              portfolios for year-ends commencing after December 15, 1993. 
              As a result,  shareholders'  equity would be reduced by $221 and
              $1,383 as at December 31, 1995 and 1994, respectively.  As the 
              Company classifies its debt and equity securities as available for
              sale,  the adoption of SFAS No. 115 in 1994 has no effect on net 
              income.



<PAGE>

--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of U.S. dollars)


--------------------------------------------------------------------------------
18.     Reconciliation  of Canadian  GAAP and United States  generally 
accepted accounting principles (U.S. GAAP) and additional information
(cont'd)
--------------------------------------------------------------------------------

       (h)    Changes in shareholders' equity

              A  reconciliation  of  shareholders'  equity from Canadian GAAP
              to U.S. GAAP is as follows:

                                                           1995         1994
                                                         -------      -------
Shareholders' equity in accordance
  with Canadian GAAP                                      12,622        5,067

Add (deduct) effect of difference in accounting for:

  Deferred income taxes (see note (a))                     1,466        1,742

  Outstanding claims (see note (a))                       (1,327)      (1,134)

  Receivables from sale of capital
    stock (see note (f))                                    (563)        (593)

  Unrealized loss on investments
    (see note(g))                                           (221)      (1,383)
                                                          -------      -------

Shareholders' equity in accordance with
    U.S. GAAP                                             11,977        3,699
                                                          ======        =====


--------------------------------------------------------------------------------
19.    Comparative figures
--------------------------------------------------------------------------------

       Certain  comparative  figures  have been  reclassified  to conform to
       the basis of presentation adopted in 1995.

--------------------------------------------------------------------------------
20.    Reporting currency
--------------------------------------------------------------------------------
       These  financial  statements,  which  are  denominated  in U.S.  dollars,
       reflect  the  conversion  of  the  previously   issued   Canadian  dollar
       denominated  financial  statements,  which were issued  together  with
       an  auditors' report thereon dated March 18, 1996.