SECURITIES AND EXCHANGE COMMISSION     
                           Washington, D.C. 20549 
                           ----------------------
     
                                 FORM 10-K 
             ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF 
                   THE SECURITIES EXCHANGE ACT OF 1934 
          For the fiscal year ended        Commission file number 
              December 31, 1995                    1-7801    
                              ----------------
                         ORION CAPITAL CORPORATION 
           (Exact name of registrant as specified in its charter)

                Delaware                            95-6069054 
         (State or other jurisdiction of           (I.R.S. Employer 
           incorporation or organization)           Identification Number)
       
         600 Fifth Avenue, New York, NY               10020-2302 
         (Address of principal executive offices)      (Zip Code)

         Registrant's telephone number, including area code:  212-332-8080

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

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

                                                     Name of each exchange
  Title of each class                                 on which registered
  -------------------                                ---------------------
  Common Stock, $1 par value                         New York Stock Exchange

         Securities registered pursuant to Section 12(g) of the Act:

                9 1/8% Senior Notes due September 1, 2002
                7 1/4% Senior Notes due July 15, 2005
                             (Title of Class)
 
    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
               Yes  x                            No 
                   ---                              ---

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

     The aggregate market value of the voting stock of the registrant held by
non-affiliates was $619,689,366 as of March 14, 1996.

     As of March 14, 1996, 13,890,8064 Shares of Common Stock, $1.00 par value,
of registrant were outstanding exclusive of shares held by registrant and its
subsidiaries.
                      DOCUMENTS INCORPORATED BY REFERENCE

     The information required by Part III is incorporated by reference from
registrant's definitive proxy statement for its Annual Meeting to be held on
June 5, 1996.  Registrant intends to file the proxy material, which involves the
election of directors, not later than 120 days after the close of its fiscal
year.


<PAGE>
                                  PART I
 ITEM 1.  BUSINESS

     Orion Capital Corporation ("Orion") is a property and casualty insurance
holding company.  Orion's insurance subsidiaries and affiliates are authorized
to underwrite and sell most types of property and casualty insurance.  Orion's
insurance businesses are concentrated in niche insurance markets, particularly
workers compensation, professional liability, nonstandard automobile insurance
and underwriting ocean marine, inland marine and property insurance through
underwriting pools.  (Orion and its wholly-owned subsidiaries are referred to
collectively as the "Company.")  The Company provides workers compensation
insurance products through the EBI Companies.  The Company sells its
professional liability insurance through the DPIC Companies and writes other
specialty property and casualty insurance, principally through Connecticut
Specialty Insurance Group ("Connecticut Specialty").  The Company also writes
assumed reinsurance through SecurityRe Companies.  Additionally, the Company
provides underwriting management and related services through Wm. H. McGee &
Co., Inc. ("McGee").

    The Company participates in the nonstandard commercial and personal
automobile insurance business through its slightly less than 50% interest in
Guaranty National Corporation ("Guaranty National").  (Guaranty National and
its wholly-owned subsidiaries are referred to collectively as the "Guaranty
National Companies.")  Guaranty National is an independent publicly-held
company and, except for certain services contractually provided, is not
managed by the Company.  Five of the eleven members of Guaranty National's
board of directors are also members of Orion's board of directors.    

     The Company also owns approximately 20% of the outstanding common stock 
of Intercargo Corporation ("Intercargo"), an insurance holding company whose
subsidiaries specialize in international trade and transportation coverages. 
In February, 1995, the Company and Intercargo reached an agreement which
permits the Company to purchase additional shares from time to time, to bring
its ownership up to 24.9% of Intercargo's outstanding common stock. 
Intercargo operates as an independent company.  One member of Intercargo's
seven-member board of directors is selected by Orion.          

     On June 30, 1995, Orion purchased all the capital stock of McGee from Sun
Alliance Group plc for $22,000,000 in cash.  McGee has been underwriting ocean
marine, inland marine and property insurance on behalf of the insurance
companies it represents for over 108 years.  Orion's subsidiary, Security
Insurance Company of Hartford, has been represented by McGee for over a
century.   McGee provides all related services in connection with this
business, including policy issuance, claim settlement, accounting and
placement of reinsurance.  Operations are conducted in the United States,
through its head office in New York and twenty branch offices throughout the
country.  Activities in Canada, Bermuda and Puerto Rico are managed by McGee's
subsidiaries located in those jurisdictions and they perform substantially
similar services.  



                                     -2-

 <PAGE>
     On July 17, 1995, Orion issued 7 1/4% Senior Notes due July 15, 2005 (the
"7 1/4% Senior Notes") with a face value of $100,000,000 in a public offering
pursuant to a shelf registration filed with the Securities and Exchange
Commission in 1994.  The 7 1/4% Senior Notes issued are non-callable to
maturity and were sold at 99.23% of par to yield 7.36% per annum.  The net
proceeds from the offering were approximately $98,113,000, of which
$46,500,000 was used to repay all of Orion's debt under its bank loan
agreement.  The balance is available for general corporate purposes.  

     The only securities Orion currently has outstanding are its Common Stock,
9 1/8% Senior Notes due September 1, 2002 (the "9 1/8% Senior Notes") and the
7 1/4% Senior Notes.  The reconfiguration and simplification of Orion's debt
and capital structure over the past several years has enabled the Company to
take advantage of generally lower interest rates, decrease the  cost of its
capital and eliminate debt sinking fund payments until maturity of the 9 1/8%
Senior Notes and 7 1/4% Senior Notes.  See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources."

     Orion was incorporated under the laws of the State of Delaware in 1960. 
The Company's principal executive offices are located at 600 Fifth Avenue, New
York, New York 10020, and its telephone number is (212) 332-8080.  The home
office of all the Company's wholly-owned insurance subsidiaries is located at
9 Farm Springs Drive, Farmington, Connecticut 06032.  The head office of McGee
is located at Four World Trade Center, New York, New York 10048.

     The Company's insurance, brokerage and management subsidiaries are
licensed to transact business throughout the United States and in all Canadian
provinces.  They obtain substantially all of their business from approximately
3,000 independent insurance agents and brokers.  The Company has approximately
2,200 employees, substantially all of whom are employed in the Company's
insurance-related operations.
          
     For segment reporting purposes, the operations of the Company are
reported as four segments.  The insurance operations of the Company are
treated as three segments:  Regional Operations,  Reinsurance/Special Programs
and the Company's interest in the Guaranty National Companies.  Guaranty
National's operations were reported on a consolidated basis from 1988 through
November 20, 1991 (when the Company owned 100% of Guaranty National) and have
been reported on the equity accounting basis since then.  The miscellaneous
activities of the parent holding company and various incidental subsidiaries
not involved in insurance-related activities are reported as a fourth segment
under the heading "Other."








                                     -3-


<PAGE>
     Regional Operations provides workers compensation insurance products
through the EBI Companies.  The EBI Companies underwrite and sell workers
compensation insurance through independent agents and brokers and also offer
alternative workers compensation services and products.  Regional Operations'
results include the declining costs associated with the run-off of the
Company's commercial multiple peril insurance business, which was discontinued
in 1988.  Reinsurance/Special Programs includes the DPIC Companies, which
market professional liability insurance;  Connecticut Specialty, which
underwrites and sells specialty insurance programs through independent agents
and general agents; SecurityRe Companies, which write reinsurance; McGee, an
underwriting management company that specializes in ocean marine, inland
marine and property insurance; and a 20% interest in Intercargo, which
specializes in international trade and transportation coverages.  The Guaranty
National Companies write nonstandard commercial and personal automobile
insurance, general liability insurance, surplus lines commercial property and
casualty insurance and collateral protection insurance.  The business of
Orion's other subsidiaries, all of which are insubstantial, as well as the
miscellaneous income and expenses (primarily interest, general and
administrative expenses and other consolidating elimination entries) of Orion
itself, are reported as a fourth segment.
                                
     Net earnings for 1995, 1994 and 1993 amounted to $67,622,000, $55,245,000
and $68,813,000 or $4.77, $3.85 and $4.69 per share, respectively, based on
weighted average common shares outstanding of 14,187,000 in 1995, 14,348,000
in 1994 and 14,598,000 in 1993.  Earnings in 1993 include a benefit of
$11,825,000, or $.81 per share, from the cumulative effect of changes in
accounting principles.  See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

     The following tables present condensed financial information showing 
revenues, pre-tax earnings (loss) and other financial data and ratios of the
Company's four segments for each of the three years in the period ended
December 31, 1995.  Identifiable assets, by segment, are included in Note N 
to the Consolidated Financial Statements, "Industry Segment Information."


















                                     -4-
<PAGE>
<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                             -------------------------------
                                               1995       1994       1993
                                               ----       ----       ----      
                                                      (000s omitted)
<S>                                          <C>        <C>        <C>
REVENUES:
  Regional Operations -
    Premiums earned .......................  $322,098   $278,040   $266,373 
    Net investment income .................    35,750     29,287     33,760
    Realized investment gains .............     4,636      1,246      4,153
    Other income ..........................       188        239          -
                                             --------   --------   --------
      Total Regional Operations ...........   362,672    308,812    304,286
                                             --------   --------   --------

  Reinsurance/Special Programs -
    Premiums earned .......................   426,905    413,183    351,031
    Net investment income .................    59,584     53,209     55,500
    Realized investment gains .............     7,781      2,191      6,706
    Other income ..........................    13,564        575        915
                                             --------   --------   --------
      Total Reinsurance/Special Programs ..   507,834    469,158    414,152
                                             --------   --------   --------
  Other ...................................     3,774      2,977      1,717
                                             --------   --------   --------
                                             $874,280   $780,947   $720,155    
                                             ========   ========   ========

EARNINGS (LOSS):
  Regional Operations .....................  $ 57,830   $ 42,514   $ 34,025    
  Reinsurance/Special Programs ............    43,241     34,117     44,032    
 Guaranty National Companies .............     4,466     11,244      9,509
                                             --------   --------   --------
    Total property and casualty operations.   105,537     87,875     87,566
  Other ...................................   (17,502)   (16,329)   (15,061)
                                             --------   --------   --------
                                               88,035     71,546     72,505 
  Federal income taxes ....................   (20,413)   (16,301)   (15,517) 
  Cumulative effect of adoption of new 
    accounting principles .................         -          -     11,825    
                                             --------   --------   --------
    Net earnings ..........................  $ 67,622   $ 55,245   $ 68,813    
                                             ========   ========   ========
 










                                     -5-
<PAGE>
<CAPTION>
     The following table sets forth, on a consolidated basis, certain
insurance ratios for the Company:
                                                  Year Ended December 31,
                                             --------------------------------
                                               1995        1994        1993
                                               ----        ----        ----
  <S>                                         <C>         <C>         <C>
  Loss and loss adjustment expenses to        
    premiums earned .......................    68.4%       72.1%       74.4% 
  Policy acquisition and other insurance
    expenses to premiums earned ...........    29.0        27.0        26.8  
                                              -----       -----       -----
    Total before policyholders' dividends..    97.4        99.1       101.2  
  Policyholders' dividends to premiums
    earned ................................     2.9         2.1         2.0  
                                              -----       -----       ----- 
    Total after policyholders' dividends ..   100.3%      101.2%      103.2% 
                                              =====       =====       =====
</TABLE>
     The Company's insurance subsidiaries include eight active wholly-owned
insurance companies, as well as a wholly-owned reinsurance underwriting
management company, an insurance management company, service companies and
insurance brokerage firms.  One or more of Orion's insurance subsidiaries is
licensed and transacts business in each of the 50 states of the United States,
the District of Columbia and all provinces of Canada.  In 1995, approximately
13.9% of the direct premiums written by the insurance subsidiaries was
generated in Pennsylvania, 8.0% in Wisconsin and, in the aggregate, an
additional 19.1% was generated in the states of Texas, California and
Illinois.  The primary line of business in Pennsylvania, Wisconsin, Texas and
Illinois was workers compensation.  California's primary line was architects
and engineers professional liability insurance.  The following table shows the
geographical distribution of direct insurance premiums written by the Company
in 1995, 1994 and 1993:
<TABLE>
<CAPTION>
              Geographical Distribution of Direct Premiums Written

                                     Year Ended December 31,
                      ---------------------------------------------------
State                    1995    Pct.      1994    Pct.      1993    Pct.   
-----                    ----    ----      ----    ----      ----    ----
                            (000s omitted - except for percentages)
<S>                   <C>       <C>     <C>       <C>     <C>       <C>
Pennsylvania .......  $110,993   13.9%  $ 79,031   11.5%  $ 74,066   11.4% 
Wisconsin ..........    64,090    8.0     60,108    8.7     56,209    8.7
Texas ..............    62,426    7.8     53,439    7.7     45,050    7.0 
California .........    45,308    5.7     60,313    8.7     60,675    9.4 
Illinois ...........    44,494    5.6     34,285    5.0     28,690    4.4
All others (1) .....   471,973   59.0    404,317   58.4    382,736   59.1
                      --------  -----   --------  -----   --------  -----
                      $799,284  100.0%  $691,493  100.0%  $647,426  100.0%
                      ========  =====   ========  =====   ========  =====
<FN>
(1)   In 1995, no other single state or country accounts for more than 5%
      of total direct premiums written.
</TABLE>

                                     -6-

<PAGE>
     For 1995, 47.0% of the Company's net premiums written was derived from
workers compensation insurance written primarily in thirteen selected states
(including all states listed in the preceding table except California); 27.8%
related to liability insurance other than automobile, primarily professional
liability insurance; 13.0% came from automobile insurance (not including
premiums written by Guaranty National Companies); and 6.5% was from marine
insurance coverages.  No other line of business contributed in excess of 5%
to 1995 net premiums written.  The following table shows premiums written for
the Company, net of reinsurance, by major statutory lines of business:
<TABLE>
<CAPTION>
                            Net Premiums Written

                                        Year Ended December 31,
                        ------------------------------------------------------
                          1995     Pct.      1994     Pct.      1993     Pct.
                          ----     ----      ----     ----      ----     ----
                                (000s omitted - except for percentages)
<S>                     <C>       <C>      <C>       <C>      <C>       <C>
Workers compensation .. $355,691   47.0%   $305,157   42.9%   $311,150   49.0%
Liability other than
  automobile ..........  210,679   27.8     199,214   28.0     145,493   22.9 
Commercial automobile .   64,874    8.6      73,596   10.3      61,798    9.7
Marine ................   49,152    6.5      30,323    4.3      10,500    1.6
Private passenger 
  automobile ..........   33,161    4.4      62,590    8.8      72,286   11.4
Commercial multiple
  peril ...............    5,654     .7       8,701    1.2       9,028    1.4 
All others ............   38,225    5.0      32,474    4.5      25,331    4.0
                        --------  -----    --------  -----    --------  -----
                        $757,436  100.0%   $712,055  100.0%   $635,586  100.0% 
                        ========  =====    ========  =====    ========  =====
</TABLE> 





















                                       -7-
<PAGE>
                          REGIONAL OPERATIONS

     The Regional Operations segment is comprised primarily of the EBI
Companies, which provide traditional workers compensation insurance as well
as alternative workers compensation services and products.  During 1995,
Nations' Care, Inc., the Company's subsidiary which provided alternative
workers compensation products, was reintegrated with the EBI Companies'
operations.  Through the addition of alternative products and pricing
approaches to workers compensation operations, the EBI Companies expect to
extend  the length of their client relationships and further expand their
presence in the workers compensation market.  

     From 1990 through 1995, the EBI Companies' net premiums written have
accounted for almost all of the premium volume of the Regional Operations
segment.  The EBI Companies devote substantially all of their resources to
underwriting and selling workers compensation insurance through independent
agents and brokers.  The EBI Companies have a competitive edge stemming from
their service oriented approach.  They rank among the 25 largest writers of
workers compensation insurance in the United States based on net premiums
written.   

     Regional Operations staffs its offices with underwriters, field
production representatives, claims and loss control representatives, medical
and rehabilitation experts and other technical and administrative personnel. 
The EBI Companies' specialized approach is founded upon a team concept under
which loss control and claims management personnel have significant direct
involvement in account selection and in underwriting each policy. Upon
acceptance of each new account, an EBI Companies team begins to work with the
insured and its employees to identify the factors that influence their
insurance costs.  The EBI Companies approach to underwriting is not merely to
evaluate the risk but to attempt to reduce the likelihood of loss through loss
control services.  During the policy term, an EBI team continues to provide
services designed to reduce the frequency and severity of injuries.  In late
1994, the EBI Companies introduced the concept of "Zero Accident Culture"
(service mark), which focuses insureds on creating an accident free work
environment.  With a desire to influence and impact the work place environment
in order to reduce losses, the EBI Companies concentrate their efforts on
single-location insureds, such as small to medium-sized manufacturers, and
selected service businesses, such as nursing homes and hospitals.  These
businesses are generally small enough not to have their own risk management
staffs but are large enough to benefit from the EBI Companies' cost-reduction
services.
          
     Alternative workers compensation products and services are designed to
capitalize on the Company's expertise acquired from its service oriented and
team approach to traditional workers compensation.  The EBI Companies apply
those skills to writing workers compensation for large accounts, accounts with
large deductibles and other insurance products.  They also offer consulting
and administrative services to self-insured workers compensation programs and
emphasize cost effective loss control and claims management consulting
services.  
           
                                      -8-

<PAGE>
     A workers compensation policy obligates an insurance company to pay all
compensation and other benefits for injured workers as may be required by
applicable state workers compensation laws.  Such benefits include, among
other things, payments for medical and hospital expenses and disability and
vocational rehabilitation expenses.  The insurance policies currently written
by the EBI Companies provide workers compensation coverage with limits of
liability set by the provisions of state workers compensation laws.  The
benefits provided by these laws vary with the nature and severity of the
injury or disease, as well as with the wage level, occupation and age of
the  employee.  Employers liability coverage is also provided to employers
who may be subject to claims for damages (not workers compensation
benefits) because of an injury to a worker.     

     The amount of workers compensation premiums earned is directly
dependent upon wage levels as well as the number of employees on the
payroll of each policyholder and the job classifications of those
employees.  Accordingly, premiums may be affected by the level of
unemployment in general, and particularly by the level of unemployment
experienced in those industries and geographic areas which represent a
substantial portion of the Company's workers compensation insurance
business.  Premium rates are revised annually in most states in which the
EBI Companies do business. Rates vary with different job classifications
and among different employers.  The EBI Companies use the rates and rating
plans filed in the states where they do business.  See "Industry
Characteristics - Rates."

     The EBI Companies has recorded solid underwriting results for the past
few years which has led them to continue a plan of geographic expansion. 
Always selective about the states in which they operate, EBI Companies'
expansion strategy is to anticipate reform initiatives in various states
and establish a foothold in such new markets before reform benefits are
realized.  The EBI Companies are thus able to gain a reputation for service
and effective control before such markets attract the more traditional
workers compensation companies.

     Approximately 760 independent agents and brokers produced
substantially all of the direct business written in 1995 by the EBI
Companies.  All of such agents and brokers receive commissions on the sale
of insurance.  No single independent agent or broker contributed more than
5% of this segment's net written premiums.  The agents and brokers provide
a broad range of insurance services to the public within their local areas,
operate as independent contractors and generally represent other insurers
as well.                       
                 
                        REINSURANCE/SPECIAL PROGRAMS

     The Company's Reinsurance/Special Programs segment is comprised of
five components: DPIC Companies, Connecticut Specialty, SecurityRe
Companies, McGee and the Company's 20% equity interest in Intercargo
Corporation.  All of such components concentrate in highly specialized
lines of business in the property and casualty insurance field.  

                                     -9-
<PAGE>
     DPIC
     ----

     DPIC Companies write professional liability insurance for architects,
engineers, accountants and lawyers.  They are the second largest
underwriter of architect and engineer liability insurance in North America. 


     DPIC Companies' operations are organized to be directly aligned with
their various client groups.  The architects and engineers underwriting
unit is divided into three divisions:  Architects, Engineers and Special
(large accounts) Risks.  Each division is staffed with underwriters and
other professionals who focus on a specific discipline thus enabling them
to develop programs to address the unique issues facing their clients.      
                                    
     DPIC Companies also market the Accountants Professional Liability
System (A/pls+) (registered mark), a program of professional liability
insurance analogous to their architects and engineers products, for
selected medium-sized certified public accounting firms.  In 1994, DPIC
Companies introduced the Lawyers Professional Liability System, a similar
program for preferred law firms.

     Professional liability insurance covers liability arising out of
alleged negligent performance of professional services.  Underwriting and
claims management require a high level of knowledge and expertise.  In an
attempt to limit risk exposure, DPIC Companies'  specialized underwriters
evaluate a great number of factors, including the experience of an
applicant firm's professional personnel, the loss history of the firm, the
employees covered, the type of work performed and the firm's utilization of
suggested loss prevention measures.  DPIC Companies use a premium credit
incentive program to encourage insureds to participate in their liability
education programs and to use other loss prevention practices, such as 
"limitation of liability" clauses in contracts with their clients.

     In most jurisdictions the coverage offered by DPIC Companies is on a
"claims-made reported" policy form, a form which generally insures only
those claims reported by the insured during the policy term.  DPIC
Companies generally use a policy form under which defense costs, primarily
legal fees, are limited by their inclusion within the insured's stated
policy limits.  This policy form has had a favorable impact in controlling
legal costs.  DPIC Companies' specialized claims staff, located in eight
offices in the United States and Canada, stresses early intervention in
disputes to avoid litigation whenever possible.  DPIC Companies have 
pioneered the use of alternative dispute resolution ("ADR") methods to
promptly resolve disputes.  DPIC Companies' "Mediation Works" program has
been particularly successful offering incentives to insureds who agree to
mediate disputes.  Currently, approximately one third of all open claims
are in mediation or some other form of ADR.  Management believes that the
use of such methods has had a beneficial impact on DPIC Companies'
operating results.


                                     -10-

<PAGE>     
     DPIC Companies market their products through 53 specialized agencies,
each highly knowledgeable about risk management for the professions served
and about DPIC Companies' loss prevention programs.  Management believes
that this "value added" approach is the reason why DPIC Companies have
experienced a high customer retention rate (averaging over 90% for the
ninth consecutive year) and why they are less vulnerable to price
competition.  The agents participate in continuing education programs
sponsored by DPIC Companies and are active in their clients' professional
societies.  
    
     Connecticut Specialty.  
     ----------------------

     Connecticut Specialty currently administers the operation of
approximately two dozen specialty programs written through general agents.
The specialized coverages include workers compensation and brownwater
marine insurance, as well as various liability coverages for the trucking
industry.  Connecticut Specialty finds opportunity in commercial niches,
utilizing general agents not only as an efficient and ready-made means of
distribution but drawing upon their established expertise and contacts. 
Connecticut Specialty also develops its own expertise in order to
supplement the contributions of its general agents.  Connecticut Specialty
has developed a methodology for judging opportunities that stresses the
knowledge and quality of the general agent and the unique aspects of the
type of coverage or class of business being underwritten in order to
provide a competitive advantage.    

     Connecticut Specialty defines a "program" as the writing of risks in a
class of business not widely pursued, utilizing forms, coverage, pricing
methodologies and risk management techniques tailored to the needs of the
customer.  While the average program premium size is $7,500,000, a few
programs are larger, such as long-haul and intermediate truck
liability,workers compensation for underground  coal mines, brownwater
marine, and multi-line coverage for volunteer firefighters.

     Connecticut Specialty has formed strategic alliances with what it
believes are knowledgeable and well respected general agents in the
specialty insurance field.  Each of its general agents has superior
knowledge of its markets and has earned customer loyalty by providing
quality services and support.

     Connecticut Specialty utilizes a profit-sharing approach in writing
its special programs whereby minimal profits are earned by the general
agent until the program is profitable.  Connecticut Specialty closely
monitors its programs throughout their existence to ensure that profit
potential is maximized.  
       
     The specialty nature of Connecticut Specialty's business provides some
insulation against the competitive pressures of the overall insurance
market.  Enhanced automation designed for each general agent promotes
efficiency and effectiveness for both the agent and Connecticut Specialty. 
This exclusive relationship with the general agent creates a competitive
advantage in the insurance marketplace and also directly impacts the cost
of entry by competitors.  Connecticut Specialty's ability to exit and enter
markets rather quickly is an added competitive advantage.

                                     -11-


<PAGE>
     SecurityRe Companies.  
     ---------------------

     The Reinsurance/Special Programs segment also participates in
facultative and treaty reinsurance throughout the United States through
SecurityRe Companies.  SecurityRe Companies underwrite a diverse book of
primarily casualty business, using reinsurance intermediaries, with
exposures largely concentrated in the domestic market. SecurityRe
Companies' premiums in recent years have been principally concentrated in
the treaty segment reinsuring small to medium-sized regional and specialty
companies in various lines of business (primarily automobile and commercial
coverages).  Facultative coverage is provided on an excess of loss basis
for casualty and property exposures.  Careful underwriting by SecurityRe
ensures that only select risks are bound so that exposure to loss is
minimized.  The largest net amount insured by SecurityRe is $1,000,000. 
Adherence to strict underwriting guidelines and value-added services to
clients make SecurityRe very competitive in the marketplace.

     McGee.  
     ------

     On June 30, 1995, the Company acquired McGee, a leading ocean marine,
inland marine and property insurance underwriter.  McGee has been in
business since 1887.  Security Insurance Company of Hartford ("Security"),
a subsidiary of the Company, has been represented by McGee since 1894. 
McGee provides all related services in connection with this business,
including policy issuance, claim settlement, accounting and placement of
reinsurance.  Operations are conducted in the United States, through its
head office in New York and twenty branch offices throughout the country. 
Activities in Canada, Bermuda and Puerto Rico are managed by McGee's
subsidiaries located in those jurisdictions and they perform substantially
similar services.

      Each insurer represented by McGee participates in either the United
States or Canadian Inter-Office Reinsurance Agreement (the "McGee Pools"). 
It is through these underwriting pooling agreements that premiums and risk
are allocated among the various insurers.  The insurers participating in
the McGee Pools and the percentage allocated to each insurer is reviewed
and revised annually.  The current Pool participants have an average tenure
of 47 years.  Security is a participant in both the United States and
Canadian Pools.  For the year ending December 31, 1995, McGee underwrote
approximately $102,800,000 in net premiums on behalf of the insurers
participating in the McGee Pools.  The Company's participation in the
United States pool was 6%, 7% and 14.5% in 1993, 1994 and 1995,
respectively.  Participation in the Canadian pool was 10% in 1993 and 1994
and 15% in 1995.  Pursuant to the terms of the McGee Purchase Agreement,
the Company has agreed to increase its rate of participation for 1996 to
37% in the United States and approximately 49% in Canada.  In 1997, the
Company's participation in both McGee Pools will increase by an additional
10.5% and, at the Company's option, may increase by a further 6%.



                                     -12-

<PAGE>
     McGee, as an underwriting manager, does not directly solicit business
from insureds but instead relies on a production force consisting of insurance
brokers and agents appointed to represent the portion of the insurers'
business which McGee manages.  McGee is compensated for its services by the
insurers it represents based upon a combination of factors, including a
percentage of the premiums written, the profitability of the business written
and the management services provided.

     Intercargo Corporation.  
     -----------------------

     The Reinsurance/Special Programs segment also includes the Company's 20%
interest in Intercargo.  Intercargo is an insurance holding company whose
subsidiaries specialize in international trade and transportation coverages. 
Its principal product lines are U.S. Customs bonds and marine cargo insurance
sold to importers and exporters through customs brokers and other service
firms engaged in the international movement of goods.  Intercargo operates as
an independent entity and a pro rata share of any profit or loss is reflected
in the Company's consolidated financial statements, based on the Company's
equity interest in Intercargo.  In February 1995, the Company and Intercargo
reached an agreement which permits the Company to purchase additional shares
from time to time, to bring the Company's ownership up to 24.9% of
Intercargo's outstanding common stock.

GUARANTY NATIONAL COMPANIES

     The Company participates in nonstandard commercial and personal
automobile insurance and surplus lines insurance through its interest in
Guaranty National.  Based in Englewood, Colorado, the Guaranty National
Companies underwrite and sell specialty property and casualty coverages which
are not readily available in traditional insurance markets.  Guaranty National
became a publicly held company with its stock listed on the New York Stock
Exchange when the Company sold slightly more than half of the outstanding
common stock of Guaranty National in a public offering in 1991.

     Approximately 84% of the Guaranty National Companies' net written
premiums during 1995 was derived from writing personal and commercial
automobile insurance.  Other types of insurance products sold by Guaranty
National Companies are general liability, commercial multi-peril, umbrella and
property.   Guaranty National Companies have historically focused their
operations on the nonstandard markets.  Nonstandard risks require specialized
underwriting, claims management and other skills and experience.  Guaranty
National Companies' expertise and market position have allowed them to
generate an underwriting profit in eight of the last  nine years.  

     Guaranty National Companies' personal lines unit principally writes
nonstandard automobile insurance, insurance for drivers usually unacceptable
to other insurers for, among other reasons, adverse driving or accident
history, age or vehicle type, and is sold primarily in the Western and
Midwestern regions.  Guaranty National's commercial lines unit writes
commercial automobile insurance, which covers policyholders such as local and 
intermediate trucking, garages, used car dealers, public and private livery,

                                     -13-


<PAGE>
and artisan contractors.  Other commercial lines coverage includes property
(for example, motor-truck cargo), general liability (for example, contractors
and fuel-convenience stores), standard umbrella insurance, standard commercial
packages and other commercial coverages.  Guaranty National also markets
collateral protection insurance, primarily insuring automobiles pledged as
security for loans for which the borrower has not maintained physical damage
coverage as required by the lender.  Such business represents 12% of Guaranty
National Companies' gross written premiums for 1995.

     Premium levels  for nonstandard risks are substantially higher than for
preferred or standard risks.  In personal lines, Guaranty National Companies'
loss exposure is limited by the fact that its insureds typically purchase low
liability limits, often a state's statutory minimum.  The nonstandard
insurance industry is also characterized by the insurer's ability to minimize
its exposure to unprofitable business by effecting timely changes in premium
rates and policy terms in response to changing loss and other experiences.  

    On July 18, 1995 Guaranty National acquired all the capital stock of
Viking Insurance Holdings, Inc. ("Viking") from Talegen Holdings, Inc., a
Xerox Financial Services company, for total consideration of $102,700,000
(subject to certain adjustments).  Viking is the parent company of Viking
Insurance Company of Wisconsin and other affiliated companies which specialize
in providing nonstandard personal automobile insurance.  Headquartered in
Madison, Wisconsin, Viking writes business primarily in California and 17
other western and midwestern states.  

     Guaranty National financed the acquisition of Viking by selling 1,550,000
shares of its common stock in a European offering at a net price per share of
$15.76, converting $20,896,000 of outstanding notes held by the Company into
1,326,128 shares of Guaranty National common stock at a conversion price of
$15.76 per share, and utilizing a portion of a new $110,000,000 credit
facility from a group of lending banks.  The Company's conversion of Guaranty
National notes into 1,326,128 shares of common stock restored the Company to
its previous ownership level of slightly less than 50% of Guaranty National,
after the increase in the number of shares outstanding resulting from Guaranty
National's European offering.
                                    
     Guaranty National and its subsidiaries have entered into a series of
agreements with the Company.  One of these agreements is a shareholder 
agreement pursuant to which the Company has the right to designate three
members of Guaranty National's board, including the Chairman of the Board, for
so long as the Company beneficially owns 30% or more of Guaranty National. 
Under the shareholder agreement, the Company also has a right until 1997 to
require Guaranty National to register under the Securities Act of 1933 all or
part of the shares of common stock it continues to hold.  In addition, the
Company's insurance subsidiaries and the Guaranty National Companies also
entered into certain reinsurance agreements and a trade name agreement.  Orion
and Guaranty National have signed an investment management agreement pursuant
to which most of the Guaranty National Companies' investment portfolio,
including that of Viking, is managed by Orion's investment managers (under the
direction and supervision of Guaranty National).  Orion was paid a fee of
$550,000 per year prior to Guaranty National's acquisition of Viking in July
1995, after which the fee was increased to $650,000 per year.  The investment
management agreement continues for annual periods, unless terminated by either
party upon 90 days prior written notice.

                                      -14-
<PAGE>

                         INSURANCE INDUSTRY CHARACTERISTICS                    
Loss Reserves
-------------

      The Company establishes reserve liabilities for reported losses,
incurred but not reported ("IBNR") losses, and claim settlement and
administration expenses.  Reserves for reported losses and loss adjustment
expenses are estimates of the ultimate costs of claims incurred but not
settled.  IBNR loss reserves are estimates for both unreported claims and
additional development of previously reported claims.  Reserves are primarily
based on the circumstances surrounding each claim, the Company's historical
experience with losses arising from claims not yet reported and the particular
experience associated with the line of business and type of risk involved. 
Consideration is also given to expected changes in costs for property, repairs
to property, medical care, litigation and other legal costs, and vocational
rehabilitation.  The Company regularly monitors the factors affecting its
reserves to better control claim costs, which also provides a base of
information to reevaluate reserve estimates.  The reserve estimates are
regularly reviewed and adjusted to consider all pertinent information as it
becomes available as to the ultimate cost of losses and claims incurred.  Such
reevaluation is a normal, recurring activity that is inherent in the process
of loss reserve estimation. 

     Several methods are used for reviewing reserves, including paid and
incurred loss development, and incurred claim counts and average claim costs. 
These methods can be subject to variability in reserve estimation for a number
of reasons, including improved claims department operating procedures and
accelerated claims settlement due to the use of alternate dispute resolution
and expedited resolution of civil suits in litigation.  Additionally, other
factors that are analyzed and are considered in the determination of loss
reserves include (i) claim emergence and settlement patterns and changes in
these patterns from year to year,(ii) trends in the frequency and severity of
paid and incurred losses, (iii) changes in policy limits and changes in
reinsurance coverages, (iv) changes in the mix and classes of business, and
(v) changes in claims handling procedures as determined by discussions with
claims and operating staff and through claim audits.

     Management revises its reserve estimates as appropriate and believes that
the loss and loss adjustment expense reserves of the Company's insurance
subsidiaries make reasonable and sufficient provision for the ultimate cost of
all losses and claims incurred.  However, no assurances can be given that
reserve development will not occur in the future.

Accident Year Loss and Loss Adjustment Expense Analysis
-------------------------------------------------------

     Accident year is a period of exposure that is used to accumulate loss and
loss adjustment experience by the year in which an incident giving rise to a
claim occurs.  Accident year information is used for loss reserving and in
establishing premium rates.  Accident year loss experience is updated in
subsequent calendar years until all losses and loss adjustment expenses
related to that given accident year have been settled.  Accident year loss
ratio relates losses associated with incidents giving rise to claims occurring
within a given calendar year to premiums earned during the same calendar year. 
Presented below are loss reserve development tables for the five years ended
December 31, 1995 prepared in accident year format.  

                                      -15-
<PAGE>
<TABLE>
<CAPTION>
     For each accident year, the following table presents premiums earned, and
the provision for loss and loss adjustment expenses as a percentage of
premiums earned (the "loss ratios") as established in the initial accident
year and cumulative as of December 31, 1995:                                   

                                           Loss and Loss Adjustment  
Accident            Premiums                  Expense Development              
                                      -------------------------------
  Year               Earned              Initial              Cumulative
--------            --------             -------              ----------
                 (000s omitted)
<S>                 <C>                   <C>                   <C>
1991                $701,386              67.7%                 64.3%
1992                 560,205              71.0                  69.3
1993                 617,404              70.4                  71.8
1994                 691,223              69.6                  70.3
1995                 749,003              66.8                     -
<CAPTION>
     The table set forth below indicates premiums earned, the loss ratio, the
ratio of policy acquisition costs and other insurance expenses to premiums
earned (the "expense ratio"), the ratio of policyholders' dividends to
premiums earned (the "policyholders' dividend ratio") and the total of the
ratios (the "combined ratio") at December 31, 1995:

Accident   Premiums      Loss        Expense     Policyholders'    Combined
  Year      Earned       Ratio        Ratio      Dividend Ratio     Ratio
--------   --------      -----       -------     --------------    --------
        (000s omitted)
<S>        <C>            <C>          <C>              <C>         <C>
1991       $701,386       64.3%        30.2%            2.4%         96.9%
1992        560,205       69.3         27.3             2.4          99.0
1993        617,404       71.8         26.8             2.0         100.6
1994        691,223       70.3         27.0             2.1          99.4
1995        749,003       66.8         29.0             2.9          98.7
<CAPTION>
Calendar Year Loss Reserve Analysis
-----------------------------------

     An analysis of the Company's calendar year loss and loss adjustment
expense reserves net of reinsurance is presented below:

                                              Year Ended December 31,
                                       ------------------------------------
                                         1995          1994          1993
                                       --------      --------      --------
                                                  (000s omitted)
<S>                                    <C>           <C>           <C>
Beginning of year ..................   $891,542      $830,805      $746,298
                                       --------      --------      --------
Provision:
  Current year .....................    500,514       480,826       434,840
  Prior years ......................     11,719        17,297        24,292
                                       --------      --------      --------
                                        512,233       498,123       459,132
                                       --------      --------      -------- 
Payments:
  Current year .....................    146,540       134,120       125,042
  Prior years ......................    263,257       303,266       249,583
                                       --------      --------      --------
                                        409,797       437,386       374,625    
                                       --------      --------      --------
End of year ........................   $993,978      $891,542      $830,805    
                                       ========      ========      ========

                                      -16-


<PAGE>
<CAPTION>
     Cumulative reserve development, net of reinsurance, for the Company's wholly-owned insurance subsidiaries (excluding 
Guaranty National Companies for all years) as of December 31, 1995 for the calendar years 1985 through 1995 is shown in the 
table that follows:

Year Ended December 31,  1985     1986      1987      1988      1989      1990     1991     1992     1993     1994     1995
-----------------------  ----     ----      ----      ----      ----      ----     ----     ----     ----     ----     ----
                                                               (000s omitted)
<S>                   <C>       <C>       <C>       <C>       <C>       <C>      <C>      <C>      <C>      <C>      <C>
Net liability for 
  unpaid loss and 
  loss adjustment 
  expenses..........  $294,427  $359,623  $401,677  $520,304  $602,519  $595,455 $668,467 $746,298 $830,805 $891,542 $993,978

Paid (cumulative) 
  as of:        
  One year later ....  226,776   211,102   178,100   236,657   281,224   261,464  240,318  249,583  303,266  263,257        -
  Two years later....  364,206   320,000   318,883   403,147   438,250   408,624  378,524  429,501  445,369        -        -
  Three years later..  436,665   409,019   414,616   488,397   526,235   493,218  484,335  514,172        -        -        -
  Four years later ..  493,399   468,971   457,182   544,449   581,880   567,068  540,325        -        -        -        -
  Five years later ..  534,321   494,838   490,973   582,527   633,413   605,039        -        -        -        -        -
  Six years later ...  550,743   518,397   515,478   624,415   660,648         -        -        -        -        -        -
  Seven years later..  571,652   537,567   551,055   643,447         -         -        -        -        -        -        -
  Eight years later..  588,050   566,205   563,977         -         -         -        -        -        -        -        -
  Nine years later ..  611,700   576,116         -         -         -         -        -        -        -        -        -
  Ten years later ...  619,077         -         -         -         -         -        -        -        -        -        -
Net liability 
  reestimated as of:
  One year later ....  416,208   434,056   469,137   573,632   647,585   657,100  694,948  770,590  848,102  903,261        -
  Two years later ...  478,093   486,631   504,814   624,337   695,154   685,692  714,953  782,348  854,998        -        -
  Three years later..  527,200   517,476   548,883   658,024   722,626   705,516  732,047  785,995        -        -        -
  Four years later ..  574,073   557,124   568,114   687,818   741,789   741,096  744,251        -        -        -        -
  Five years later ..  605,513   577,977   597,103   705,475   770,359   756,522        -        -        -        -        -
  Six years later ...  623,291   604,056   610,086   733,836   788,288         -        -        -        -        -        -
  Seven years later..  645,114   611,108   637,322   747,525         -         -        -        -        -        -        -
  Eight years later..  652,011   633,723   651,402         -         -         -        -        -        -        -        -
  Nine years later ..  673,417   650,303         -         -         -         -        -        -        -        -        -
  Ten years later ...  684,712         -         -         -         -         -        -        -        -        -        -

Net deficiency ...... (390,285) (290,680) (249,725) (227,221) (185,770) (161,067) (75,784) (39,697) (24,193) (11,719)       -


                                                                   -17-




<PAGE>
<CAPTION>
     Cumulative reserve development for the Company's wholly-owned insurance
subsidiaries (excluding Guaranty National Companies for all years) as of
December 31, 1995 for the calendar years 1992 through 1995 is shown in the
table that follows:

                                1992        1993        1994        1995
                                ----        ----        ----        ----
<S>                          <C>         <C>         <C>         <C>
Gross liability .....        $1,081,396  $1,140,403  $1,181,329  $1,274,982
Reinsurance 
  recoverable .......           335,098     309,598     289,787     281,004
                             ----------  ----------  ----------  ---------- 
Net liability .......        $  746,298  $  830,805  $  891,542  $  993,978
                             ==========  ==========  ==========  ==========
Gross re-estimated                                                             
  liability .........        $1,091,963  $1,133,514  $1,184,498           - 
Re-estimated 
  recoverable .......           305,968     278,516     281,237           -
                             ----------  ----------  ----------
Net re-estimated 
  liability .........        $  785,995  $  854,998  $  903,261           -
                             ==========  ==========  ==========
Gross (deficiency)
  redundancy ........        $  (10,567) $    6,889  $   (3,169)          -
                             ==========  ==========  ==========
</TABLE>
      The preceding loss reserve development tables indicate the aggregate 
year-end liability for loss and loss adjustment expenses net of reinsurance,
the cumulative amounts paid attributable to those reserves through December
31, 1995, the re-estimate of the aggregate liability as of December 31 of each
subsequent year and the cumulative development of prior years' reserves. 
Information is also provided on a gross basis for 1992 through 1995. 
Consistent with industry practice, certain claims for long-term disability
workers compensation benefits are carried at discounted values.  At December
31, 1995 and 1994, long-term disability workers compensation loss reserves are
carried at $56,603,000 and $51,886,000, respectively, in the consolidated
financial statements at net present value using a statutory interest rate of
3.5%.  

     The Company's IBNR loss and loss adjustment expense reserves and other
bulk reserves for losses and loss adjustment expenses for which claim files
have not been established, net of reinsurance, were $508,872,000, $438,194,000
and $336,446,000 as of December 31, 1995, 1994 and 1993, respectively.  

     The following table presents the differences between loss and loss
adjustment expense reserves reported in the consolidated financial statements
in accordance with generally accepted accounting principles ("GAAP"), and
those reported in the combined annual statement filed with state insurance
departments in accordance with statutory accounting practices ("SAP"): 





                                      -18-
<PAGE>
<TABLE>
<CAPTION>
                                                     December 31,     
                                                ----------------------
                                                    1995        1994
                                                    ----        ----
                                                    (000s omitted)
<S>                                             <C>         <C>
Liability on SAP basis ......................   $1,002,864  $  909,723  
  Estimated salvage and subrogation
    recoveries recorded on a cash basis for
    SAP and on an accrual basis for GAAP ....      (10,381)    (14,151) 
  GAAP Reinsurance payable included in SAP
    reserves ................................       (7,774)    (13,817)
  Foreign subsidiary reserves ...............        9,269       9,787
                                                ----------  ----------
Liability on GAAP basis, net of reinsurance..      993,978     891,542 
Reinsurance on GAAP reserves ................      281,004     289,787
                                                ----------  ----------
Liability on GAAP basis .....................   $1,274,982  $1,181,329
                                                ==========  ==========
</TABLE>
     During 1995, the Company strengthened loss reserves and experienced
development for prior years' business based upon the Company's ongoing
actuarial analysis utilizing the most current information available.  The 1995
provision for prior accident year losses by major line of business is as
follows:

                                            (000s omitted)  
Pools and associations ....................     $  9,398
Reinsurance ...............................        6,504 
Commercial multiple peril .................        6,271 
Workers compensation ......................      (11,784)
Other......................................        1,330
                                                --------
                                                $ 11,719
                                                ========

     Adverse development relating to the Company's voluntary participation in
various pools and associations business is generally recorded as the
information is reported to the Company.  The development from reinsurance
relates to the Company's assumed reinsurance business in which loss and loss
adjustment expense experience is indicative of the ceding companies'
experience.  Starting in 1983, the Company expanded its commercial multiple
peril business and then significantly reduced that line of business in 1988
due to greater than expected losses.  The development from the commercial
multiple peril line of business primarily relates to cancelled California
contractors package business, which has recently been experiencing greater
claims activity, and from Connecticut Specialty, as reported losses in certain
programs developed more than anticipated.  The favorable development from the
workers compensation line of business is the result of continued improvement
from the application of risk management and loss control procedures. The other
category includes the Company's professional liability program for architects
and engineers and losses from a discontinued auto liability program.  

                                     -19-
<PAGE>
     Loss reserve estimates are based on forecasts of the ultimate settlement
of claims and are subject to uncertainty with respect to future events.  Loss
reserve amounts are based on management's informed estimates and judgments,
using data currently available.  Reserve amounts and the underlying actuarial
factors and assumptions are regularly analyzed and adjusted to reflect new
information.  The Company has experienced substantial development of losses
from prior accident years, particularly accident years 1984 and 1985 which
were the worst years in recent history for the Company and for the
property/casualty insurance industry in general.  The Company's adverse
development primarily resulted from terminated lines of business, pools and
other programs, higher than anticipated inflationary pressures, unforeseen
judicial decisions (including interpretations of policy coverages beyond what
was originally anticipated) and other external factors exposing the Company to
risks not known when the insurance policies were priced and issued.  

     To reduce loss development, the Company realigned certain management
responsibilities in its Regional Operations segment several years ago.  Key
management positions were added in that segment to further strengthen loss
control and prevention, and to focus more attention towards back-to-work
programs for injured workers.  These factors tend to reduce loss costs and
adverse development.  For the design professionals liability line of business,
the Company has increasingly used alternative dispute resolution techniques
including the extensive use of mediation procedures to settle claims.  These
procedures often result in reduced litigation and other claim related
expenses.  The commercial multiple peril business that is being run off has a
specifically designated group of claims personnel assigned who have been
aggressively settling claims, resulting in an acceleration of payment patterns
in more recent years.

     The majority of the adverse development for the other lines of business
relates to strengthening reserves based on historical loss development
patterns.  The significantly decreased level of adverse development during
more recent years is consistent with the strengthening of loss reserves and
the strong performance of the Company's ongoing lines of business.

     Current operations are more focused on underwriting risks where the
Company has specialized knowledge and can provide enhanced service to reduce
loss costs.  This concentration, and the specialized knowledge and growing
experience in its selected lines of business arising from such concentration,
have enabled the Company to implement improvements in its claims
administration and underwriting procedures which have enhanced the Company's
ability to analyze data and project reserve trends.










                                   -20-

<PAGE>
Investments
-----------
     The Company derives a significant part of its income from its
investments.  Investments of the Company's insurance subsidiaries are made in  
compliance with applicable insurance laws and regulations of the respective
states in which such companies are domiciled and other jurisdictions in which
they conduct business.  Neither Orion nor any of its non-insurance
subsidiaries is constrained by investment restrictions set forth in state
insurance laws.

     The Company maintains a diversified portfolio representing a broad
spectrum of industries and types of securities. The Company has no significant
investments in real estate, although it does own the DPIC Companies' home
office building in Monterey, California and has invested in several real
estate limited partnerships valued at $9,131,000 at December 31, 1995. 
Investments are managed to achieve a superior total return after taxes, while
maintaining a proper balance of safety, liquidity, maturity and marketability. 
Investments are made based on long-term economic value rather than short-term
market conditions.  Approximately 39% of the Company's fixed maturity
portfolio is invested in tax advantaged securities at December 31, 1995. 
Except for investments in securities of the United States Government and its
agencies, the Company did not have any other investments in any one issuer
that exceeded $25,000,000 at December 31, 1995.

       The Company has the ability to hold its fixed maturity investments to
term since its operating cash flow and its short-term investment portfolio
provide the Company with substantial liquidity.  Fixed maturity investments
that the Company has the positive intent to hold to maturity are recorded at
amortized cost.  Fixed maturity investments which may be sold in response to,
among other things, changes in interest rates, prepayment risk, income tax
strategies, or liquidity needs are classified as available-for-sale and are
carried at market value, with unrealized gains and losses reflected in
stockholders' equity.  Equity securities are stated at market value.  Both the
fixed maturities and the equity investments consist primarily of readily
marketable securities. 

     The following table shows the composition of the investment portfolio of
the Company as of December 31, 1995 and 1994, and the quality ratings for the
Company's fixed maturity investments. The investments shown below are listed
at their cost, market value and financial statement (book) values.












                                     -21-

<PAGE>
<TABLE>
<CAPTION>
December 31, 1995          Cost            Market Value         Book Value    
-----------------   ------------------  ------------------  ------------------
                             (000s omitted - except for percentages)
<S>                 <C>         <C>     <C>         <C>     <C>         <C>
Fixed Maturities:
  AAA ............. $  403,434   26.5%  $  421,737   26.1%  $  415,460   25.9% 
  AA ..............    232,810   15.3      248,478   15.4      244,607   15.3
  A ...............    148,950    9.8      155,697    9.7      154,801    9.7
  BBB .............     90,132    5.9       94,231    5.8       94,182    5.9
  BB ..............     55,602    3.7       55,432    3.4       55,352    3.4
  B and Below .....     47,024    3.1       46,945    2.9       47,005    2.9
  Not Rated .......     35,225    2.3       36,631    2.3       36,631    2.3
                    ----------  -----   ----------  -----   ----------  -----
    Sub-total .....  1,013,177   66.6    1,059,151   65.6    1,048,038   65.4
Equity Securities..    257,378   16.9      304,885   18.9      304,885   19.0
Other Long Term
  Investments .....     62,925    4.2       62,925    3.9       62,925    3.9
Short Term
  Investments .....    187,013   12.3      187,013   11.6      187,013   11.7
                    ----------  -----   ----------  -----   ----------  -----
                    $1,520,493  100.0%  $1,613,974  100.0%  $1,602,861  100.0%
                    ==========  =====   ==========  =====   ==========  ===== 

December 31, 1994
-----------------
Fixed Maturities:
  AAA ............. $  413,949   30.9%  $  390,075   29.8%  $  394,291   29.9% 
  AA ..............    172,362   12.8      170,235   13.0      170,221   12.9
  A ...............    112,923    8.4      107,677    8.2      110,051    8.3
  BBB .............    104,180    7.8      100,128    7.6      101,579    7.7
  BB ..............     51,875    3.9       45,805    3.5       46,302    3.5
  B and Below .....     38,507    2.9       34,909    2.7       34,909    2.7
  Not Rated .......     39,501    2.9       40,510    3.1       40,488    3.1
                    ----------  -----   ----------  -----   ----------  -----
    Sub-total .....    933,297   69.6      889,339   67.9      897,841   68.1
Equity Securities..    250,929   18.7      264,434   20.2      264,434   20.0
Other Long Term
  Investments .....     52,564    3.9       52,564    4.0       52,564    4.0
Short Term
  Investments .....    104,201    7.8      104,201    7.9      104,201    7.9
                    ----------  -----   ----------  -----   ----------  -----
                    $1,340,991  100.0%  $1,310,538  100.0%  $1,319,040  100.0%
                    ==========  =====   ==========  =====   ==========  =====

 <CAPTION>
                               Year Ended December 31,
                               -----------------------
                                  1995         1994
                                  ----         ----
<S>                               <C>          <C>
Yield on average  
  investments:     
  Pre-tax .........               7.1%         6.5%
                                  ===          ===
  After-tax .......               5.5%         5.0% 
                                  ===          ===


                                     -22-
</TABLE>

<PAGE>
    Included in other long-term investments on December 31, 1995 were
investments in limited partnerships carried at $60,946,000.  The assets of
these partnerships are managed by outside entities.  Individual
partnerships may invest in a variety of investment vehicles, including but
not limited to U.S. and foreign bonds and equities, both public and
private, and real estate.  Such partnerships are carried at the Company's
interest in the underlying net assets of the limited partnerships.  The
Company's portion of the partnerships' earnings or losses are recorded in
net investment income in the Company's statement of earnings.  Net
investment income on these partnerships was $9,065,000, $555,000 and
$9,203,000 for 1995, 1994 and 1993, respectively.

          The Company strives to enhance the average return of its
portfolio by investing a small percentage of it in a diversified group of
non-investment grade fixed maturity securities, or securities that are not
rated.  The risk of loss due to default is generally considered greater for
non-investment grade securities than for investment grade securities
because the former, among other things, are typically unsecured, often
subordinated to other debts of the issuer and are often issued by highly
leveraged companies.  In the non-investment grade segment of the investment
portfolio, the Company maintains a high degree of diversity, with an
average investment per issuer of approximately $1,545,000 at December 31,
1995.  Only four such investments, aggregating $24,246,000, were in excess
of $5,000,000 as of December 31, 1995.
 
     The Company monitors the financial stability of issuers of securities
that it owns.  When conditions are deemed appropriate, the Company ceases
to accrete discount, or accrue interest and dividends.  In cases where the
value of investments are deemed to be other than temporarily impaired, the
Company recognizes losses.  During 1995 provisions for such losses were
$285,000 for equity securities and $4,050,000 for fixed maturity
investments. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Net Investment Income and Realized
Investment Gains."

Reinsurance
-----------
        
     In the ordinary course of business, the Company's insurance
subsidiaries enter into reinsurance contracts with other insurers which
serve to provide greater diversification of business and to limit the
Company's maximum loss from catastrophes, large risks or unusually
hazardous risks.  Ceding reinsurance reduces an insurer's operating
leverage ratio.

     A large portion of the Company's reinsurance protection is provided by
reinsurance contracts or treaties under which all risks meeting prescribed
criteria are automatically covered.  In other instances, reinsurance is
obtained by negotiation for individual risks, or facultative reinsurance. 
The Company's insurance subsidiaries have certain excess-of-loss and
catastrophe treaties with unaffiliated insurers or reinsurers which provide
protection against a specified part or all of certain types of losses over
stipulated dollar amounts arising from one or more occurrences. The amount
of each risk retained by an insurer is subject to maximum limits which vary

                                     -23-

<PAGE>
by line of business and type of coverage.  Retention limits are
periodically revised as the capacity of the Company's insurance
subsidiaries to retain risk varies and as reinsurance prices change. 
Reinsurance contracts do not relieve the Company of its obligation to the
policyholders.  The collectibility of reinsurance is subject to the
solvency of the reinsurers.  The Company is very selective as to its
reinsurers, placing reinsurance with only those reinsurers considered to be
in sound financial condition and having satisfactory underwriting ability. 
Many of the Company's reinsurance agreements are subject to annual renewal
as to coverage, limits and price.  The financial strength of its reinsurers
is continually monitored by the Company.  The Company's insurance
subsidiaries, to their knowledge, have no material exposure to potential
unrecognized losses due to reinsurers that are in known financial
difficulties.

     The Company's insurance subsidiaries have reinsurance protection for
workers compensation losses in excess of $1,500,000 up to $100,000,000. 
The DPIC Companies have reinsurance for 85% of losses from architect and
engineer liability in excess of $1,000,000 up to $5,000,000.  Certain
commercial auto and general liability policies are reinsured for a portion
of losses in excess of $500,000 up to $1,000,000.  The Company's
reinsurance subsidiary maintains various reinsurance arrangements for its
facultative and treaty exposures, including catastrophe protection above
the $1,000,000 level.  In addition to the foregoing, the Company's
insurance subsidiaries also maintain other reinsurance arrangements in
support of their specific business needs.  In 1995 and 1994, the Company's
insurance subsidiaries net premiums written to year-end statutory surplus
were at levels of 1.5:1 and 1.6:1, respectively.

Government Regulation 
---------------------
 
     The Company's insurance subsidiaries, in common with those of other
insurance companies, are subject to comprehensive regulation by insurance
authorities.  In particular, the Company is subject to regulation by the
Insurance Department of Connecticut, the state of incorporation of all of
the Company's insurance subsidiaries.  All insurance companies must file
annual statements and other reports with state regulatory agencies and are
subject to regular and special examinations by those agencies.  A regular
periodic examination of the Company's insurance subsidiaries, covering
their operations and statutory financial statements through December 31,
1991, was satisfactorily completed in 1993 by the Insurance Departments of
California and Connecticut.  A regular periodic examination covering the
Company's operations through December 31, 1994 by the Insurance Department
of Connecticut is currently in process.

     Each of the Company's insurance subsidiaries is also subject to
regulation by other jurisdictions in which it sells  insurance, including
certain Canadian provinces.  States regulate the insurance business through
supervisory agencies which have broad administrative powers, including
powers relating to, among other things, the standards of solvency which
must be met and maintained; the licensing of insurers and their agents;
restrictions on the amount of risk which may be insured under a single
policy; the approval of premium rates; the form and content of the
insurance policy and sales literature; the form and content of financial
statements; reserve requirements; the imposition of monetary penalties for
rules violation; and the nature of and limitations on permitted
investments. In general, such regulations are for the protection of
policyholders rather than stockholders.
  
                                     -24-

<PAGE>
     In some instances, particularly in connection with workers
compensation insurance, various states routinely require deposits of assets
for the protection of policyholders and their employee claimants located in
those states.  As of December 31, 1995 and 1994, securities representing
approximately 15% and 18%, respectively, of the book value of the Company's
investment portfolio were on deposit with various state treasurers or
custodians.  Such deposits consist of securities of the types which comply
with standards established by each state.

     The Company is also subject to state laws regulating insurance holding
company systems.  Most states have enacted legislation and adopted
administrative regulations affecting insurance holding companies and the
acquisition of control of insurance companies, as well as transactions
between insurance companies and their affiliates.  The nature and extent of
such legislation and regulations currently in effect vary from state to
state.  Most states, including Connecticut, currently require
administrative approval of the acquisition of 10% or more of the
outstanding shares of an insurance company incorporated in the state or the
acquisition of 10% or more of an insurance holding company whose insurance
subsidiary is incorporated in the state.  The acquisition of 10% of such
shares is deemed to be the acquisition of "control" for the purpose of most
holding company statutes and requires the filing of detailed information
concerning the acquiring parties and the plan of acquisition and
administrative approval prior to such acquisition.  Material transactions
between insurance companies and affiliated members of the holding company
system are generally required to be "fair and reasonable" and in some cases
are subject to administrative approval. 

     Other states, in addition to an insurance company's state of domicile,
may regulate affiliated transactions and the acquisition of control of
licensed insurers.  The State of California, for example, presently treats
certain insurance subsidiaries of the Company which are not domiciled in
California as though they were domestic insurers for insurance holding
company purposes.  Such subsidiaries are required to comply with the
holding company provisions of the California Insurance Code, certain of
which provisions may be more restrictive than the comparable laws of the
State of Connecticut.

     All state jurisdictions in which the Company is authorized to transact
business require participation in guaranty funds.  Insurers authorized to
transact business in those jurisdictions can be assessed by a state
guaranty fund a percentage (usually from 1% to 2%) of direct premiums
written in that jurisdiction each year to pay claims on behalf of insolvent
insurers.  The likelihood and amount of any future assessment cannot be
estimated until after an insolvency has occurred.  For the years ended
December 31, 1995 and 1994 the Company's insurance subsidiaries were
assessed approximately $222,000 and $1,051,000, respectively (net of
estimated future recoveries) as a result of known insolvencies.  Insurance
companies are required by certain states in which they do business to
participate in automobile insurance plans and workers compensation plans. 
These plans provide insurance on risks which are not written in the
voluntary market. Participation in these plans has usually been
unprofitable for the Company.

     A number of state legislatures and the United States Congress have for
years been considering, or have now enacted, some type of legislative
proposals which alter the rules for tort claims and increase the states'
authority to regulate insurance companies.  These initiatives have expanded 
                                  -25-

<PAGE>
in some instances, the states' regulation over rates (See "Rates" below)
and also have increased data reporting requirements.  In recent years the
state insurance regulatory framework has come under federal scrutiny, and
certain state legislatures have considered or enacted laws that alter, and
in many cases increase, state authority to regulate insurance companies and
insurance holding company systems.  

     The National Association of Insurance Commissioners ("NAIC") and state
regulators are re-examining existing laws and regulations relating to the
solvency of insurers.  The NAIC has adopted risk based capital ("RBC")
requirements for property and casualty insurers.  RBC refers to the
determination of the amount of statutory capital required for an insurer
based on the risks assumed by the insurer (including, for example,
investment risks, credit risks relating to reinsurance recoverables and
underwriting risks) rather than just the amount of net premiums written by
the insurer.  A formula that applies prescribed factors to the various risk
elements in an insurer's business is used to determine the minimum
statutory capital requirement for the insurer.  The capital of each of the
Company's insurance subsidiaries at December 31, 1995 exceeds the RBC
requirements.    

     Although the federal government generally does not directly regulate
the business of insurance, federal initiatives often have an impact on the
business in a variety of ways.  There are various current and proposed
federal measures which may significantly affect the Company's insurance
business, including, among other proposals, the revocation of the antitrust
exemption provided by the McCarran-Ferguson Act, Superfund reform and
reforms to the litigation system.  The various proposed reforms to limit
punitive damages and assess costs to the losing side in a lawsuit, if any
are enacted, might have a positive impact on the Company and the insurance
industry in general.  Suggested changes to the nation's health care system,
however, if enacted, might negatively affect the Company's workers
compensation and automobile liability businesses.  The economic and
competitive effects of any proposals upon the Company would depend upon the
final form such legislation might take.  The Company is unable to predict
what regulatory proposals may be adopted in the future or the effect any
such proposals might have on the Company's business if adopted.

Limitations on Payments from Insurance Subsidiaries
---------------------------------------------------
          
     The principal sources of cash available to Orion are dividends,
reimbursement of various administrative charges, and tax payments from its
subsidiaries.  The payment of dividends to Orion by its insurance
subsidiaries is subject to state regulation.  No state restricts dividend
payments by Orion to its stockholders.

     The ability of the Company's insurance subsidiaries to declare
dividends is governed primarily by the insurance laws of Connecticut, the
state of incorporation of all of the Company's insurance subsidiaries. 
Generally, such laws currently provide that, unless prior approval is
obtained, dividends of a property and casualty insurance company in any
consecutive 12-month period shall not exceed the greater of its net income
for the preceding calendar year or 10% of its policyholders' surplus as of
the preceding December 31, determined on a statutory accounting basis. 
Dividends and distributions by the Company's insurance subsidiaries are
also subject to a requirement that statutory policyholders' surplus be 

                                     -26-

<PAGE>
reasonable in relation to outstanding liabilities and adequate to meet the
companies' financial needs following the declaration of any dividends or
distributions.  State insurance regulators, however, have broad
discretionary authority with respect to approving the payment of dividends
by insurance companies.  Under current Connecticut regulations, the maximum
dividends permitted at December 31, 1995 for the ensuing twelve months,
without prior approval, aggregated $83,173,000.  Orion received $30,546,000
in dividends from its wholly-owned insurance subsidiaries in 1995.  Since
it is difficult to predict future levels of statutory policyholders'
surplus or earnings, the amount of dividends that could be paid in the
future without prior approval cannot be determined at this time.

Rates
-----

     The Company's insurance subsidiaries are generally subject to
regulation as to rates.  Most states have insurance laws requiring that
rate schedules and other information be filed with or made available to the
state's regulatory authority, either directly or through a rating
organization with which the insurer is affiliated.  The regulatory
authority may, in most states, disapprove a rate filing if it finds that
the rates are inadequate, excessive or unfairly discriminatory.  Rates,
which are not necessarily uniform for all insurers, vary by class of
business, hazard assumed and size of risk.  Subject to regulatory
requirements, the Company's management determines the prices charged for
its policies based on a variety of factors including recent historical
claims experience, inflation, competition, tax law and anticipated changes
in the legal environment, both judicial and legislative.  Methods for
arriving at rates vary by type of business, exposure asumed and size of
risk.  Underwriting profitability is affected by the accuracy of these
assumptions, by the willingness of insurance regulators to approve changes
in those rates which they control and by such other matters as underwriting
selectivity and expense control.  The Company's management believes that
its rate outlook for its principal lines of business will remain stable
during 1996.

     Some states have adopted open rating systems for workers compensation
which permit insurers to set premium rates independently without the prior
approval of the insurance commissioners.  A number of other states permit
insurers to deviate from standard rates for workers compensation insurance
after receiving prior approval.  In insuring professional liability risks
the DPIC Companies are generally not limited to the standard rates of a
rating organization but set their own rates because of the unique nature of
the risks being underwritten.  Ocean marine insurance rates are exempt from
regulation.

     On January 31, 1995, the Department of Insurance of the State of
California (the "California Department") advised the Company that it had a
liability of approximately $4,000,000, plus interest under regulations
issued with respect to an amendment to the California Insurance Code known
as Proposition 103.  On November 2, 1995, the terms of a Stipulation  and
Consent Order between the California Department and the Company were
adopted by the Commissioner of the California Department.  Pursuant to that
order, the Company has no premium rollback liability under Proposition 103. 
Further, the California Department acknowledged that premium rates charged
by the Company in California since the passage of Proposition 103 have been
in compliance with the requirements of the California Insurance Code.   

                                     -27-

<PAGE>
Competition
-----------

     The insurance industry is highly competitive.  Over 3,000 property and
casualty insurance companies write business in the United States, but most
of the business is written by about 900 companies.  No single company or
group has more than 10% of the market.  The Company's insurance
subsidiaries are in competition with numerous stock and mutual property and
casualty insurance companies, as well as state run workers compensation
insurance funds, many of which are substantially larger and have
significantly greater resources than the Company.  Competition may take the
form of lower premiums, specialized products, more complete and complex
product lines, greater pricing flexibility, superior service, different
marketing methods or higher policyholder dividend rates.  Superior service
and marketing methods are of particular importance in workers compensation. 
Compet ition might also come from service organizations which administer
self-insured programs.

     The Company's insurance subsidiaries sell their insurance principally
through independent agents, brokers and general agents, who typically also
represent one or more competing insurance companies.  They are paid
commissions based on premiums collected from insureds.  Commission rates
vary according to the type and amount of insurance sold.  Some competitors
in certain lines obtain their business at a lower direct cost through the
use of salaried personnel rather than independent agents and brokers.  

Rating
------

     A.M. Best Company rates the Company's primary insurance subsidiaries
"A (Excellent)."  In general, A.M. Best Company's ratings are based on an
analysis of the financial condition and operation of an insurance company
as it relates to the industry.  These ratings are not primarily designed
for investors and do not constitute recommendations to buy, sell or hold
any security.  A.M. Best Company has upgraded the ratings of the Company
three times in the last six years.  
                  
                       MISCELLANEOUS OPERATIONS

     The Company's fourth business segment consists primarily of the
miscellaneous income and expense (principally interest and general and
administrative expenses) of Orion itself.  For financial reporting
purposes, the Company applies federal income taxes and benefits, as if
fully utilizable, to its segments.  Any consolidating elimination entries
are accounted for in this fourth segment. 

ITEM 2. PROPERTIES             

     The Company's executive office is located at 600 Fifth Avenue, New
York, New York.  The home office of the insurance operations of the Company
is located in Farmington, Connecticut.  The Company's New York executive
office facilities consist of approximately 12,000 square feet and are
leased at an average annual rental, over ten years, of $465,000.  The       
                                     -28-

<PAGE>
Farmington office consists of approximately 140,000 square feet and is
leased at an annual rental of $4,310,000.  The DPIC Companies owns its
office building, which consists of approximately 42,000 square feet, in
Monterey, California.

     All of the other insurance operations of the Company are conducted
from leased premises in or adjacent to major urban centers throughout the
United States, Puerto Rico, Canada and in Bermuda.  These operations, in
the aggregate, occupy approximately 480,000 square feet, at an annual
rental of approximately $8,843,000.      

     The Company believes that its current facilities are suitable and
adequate for their present use and anticipated requirements.

ITEM 3. LEGAL PROCEEDINGS
                    
     The Company is routinely engaged in litigation incidental to its
businesses. In the judgment of the Company's management, there are no
significant legal proceedings pending against the Company which, net of
reserves established therefor, are likely to result in judgments for
amounts that are material to the financial condition, liquidity or results
of operations of Orion and its consolidated subsidiaries, taken as a whole. 


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          
         None.

INFORMATION CONCERNING EXECUTIVE OFFICERS OF THE COMPANY          

     The following is a summary of certain information regarding the
current executive officers of Orion.  All officers of Orion and its
subsidiaries serve at the pleasure of their respective Boards of Directors.

     Alan R. Gruber, Chairman of the Board and Chief Executive Officer of
Orion since March 1976; Chairman of Orion Capital Companies, Inc. ("OC
Companies"), which provides management services to the Orion Capital
Companies, since October 1982; age 68.  

     As previously disclosed, Mr. Gruber plans to retire on December 31,
1996 as Chairman and Chief Executive Officer.  After that date, Mr. Gruber
will remain a member of Orion's Board of Directors and Chairman of the
Executive Committee and, on a part-time basis, will continue employment
with the Company as a Senior Executive Consultant.

     W. Marston Becker, Vice Chairman of the Board since March 8, 1996;
Senior Vice President of Orion and President and Chief Executive Officer of
the DPIC Companies and Senior Vice President of the OC Companies since July
1994; President and Chief Executive Officer of McDonough Caperton Insurance
Group, an insurance brokerage firm, from March 1987 to July 1994; age 43.  


                                     -29-

<PAGE>
     The Orion Board of Directors has announced its present intention of
electing Mr. Becker Chairman of the Board and Chief Executive Officer of
Orion effective January 1, 1997, following Mr. Gruber's planned retirement
from full-time employment on December 31, 1996.
                            
     Larry D. Hollen, President and Chief Operating Officer of Orion since
March 1, 1994; a director of Orion since March 20, 1992;  President of the
OC Companies since February 1994; Executive Vice President and Assistant
Chief Operating Officer of Orion from December 1, 1992 to February 28,
1994; Senior Vice President of Orion from March 1990 to December 1992; 
President of the EBI Companies from January 1990 to May 31, 1993; age 50.

     Raymond W. Jacobsen, Senior Vice President of Orion since July 1994;
Vice President of Orion from March 1990 to July 1994; President and Chief
Executive Officer of the EBI Companies since June 1, 1993; Acting President
and Chief Executive Officer of Connecticut Specialty since October 17,
1995; Executive Vice President of the EBI Companies from December 1989 to
May 31, 1993; Senior Vice President of the OC Companies since March 1990;
age 43.
   
      Daniel L. Barry, Vice President and Controller of Orion since October
1987; Vice Chairman of SecurityRe Inc. since 1989; Senior Vice President of
OC Companies since January 1989; Controller of OC Companies since October
1986; age 45. 

      Michael P. Maloney, Vice President, General Counsel and Secretary of
Orion since August 1979; Senior Vice President of OC Companies since March
1987; age 51.

     William G. McGovern, Vice President and Chief Actuary of Orion since
March 1990; Senior Vice President and Chief Actuary of OC Companies since
October 1989; age 43.

     Vincent T. Papa, Vice President and Treasurer of Orion since June
1985; Chairman of McGee since September 30, 1995; Senior Vice President of
OC Companies since March 1987 and Treasurer since December 1990; age 49.   

     Raymond J. Schuyler, Vice President-Investments of Orion  since June
1984; Senior Vice President of OC Companies since March 1986; age 60.













                                     -30-

<PAGE>

                                   PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS
       
          (a) Principal Market.  The principal market on which Orion's
Common Stock is traded is the New York Stock Exchange.
         
          (b)  Stock Price and Dividend Information.  The table below
presents the high and low market prices and dividend information for
Orion's Common Stock for 1995 and 1994.


                                                       Cash
                                    Stock Prices       Dividends
                                    High     Low       Declared 
                                    ----     ---       ---------

1995:             
                                                              
Quarter Ended December 31........ $45.125  $39.875      $.23     
Quarter Ended September 30.......  45.25    38.375       .23
Quarter Ended June 30............  40.25    34.50        .20
Quarter Ended March 31...........  37.875   34.25        .20
                                                        ----
    Total........................                       $.86
                                                        ====
                                                                   
1994:

Quarter Ended December 31........ $35.25   $28.125      $.20
Quarter Ended September 30.......  34.625   29.75        .20
Quarter Ended June 30............  34.75    29.875       .18 
Quarter Ended March 31...........  34.00    30.00        .18
                                                        ----
    Total........................                       $.76 
                                                        ====

                                                     
     Cash dividends have been paid on Orion's Common stock in every quarter
since the fourth quarter of 1978, when dividends were first commenced.  The
quarterly dividend was further increased in February 1996 to $.25 per
share.
          
     (c)  Approximate Number of Holders of Common Stock.  The number of
holders of record of Orion's Common Stock as of March 14, 1996 was 1,856.






                                     -31-



<PAGE>
<TABLE>
ITEM 6.  SELECTED FINANCIAL DATA

     The following table summarizes information with respect to the operations and financial
condition of Orion and its subsidiaries.  Common stock and per common share data have been
restated to give effect to the 5-for-4 stock splits paid on both November 15, 1993 and
December 7, 1992.  All of Orion's $1.90 Preferred Stock, $2.125 Preferred Stock and Adjustable
Rate Preferred Stock were converted into common stock or redeemed during 1992 and 1993.  In
November 1991, Orion sold 6,250,000 shares of Guaranty National Corporation in an initial
public offering, reducing its level of ownership from 100% to slightly less than 50%. 
Guaranty National's financial statements have been consolidated with those of the Company
through November 20, 1991.  For the periods subsequent to November 20, 1991, the portion of
Guaranty National's results attributable to the Company's ownership is included on an equity
accounting basis.  Information presented as of December 31, 1991 through 1995 excludes the
accounts of Guaranty National.  The consolidated financial statements and related notes
thereto are furnished under Item 8 of this report. 
<CAPTION>
                                        1995        1994        1993        1992        1991   
                                         ----        ----        ----        ----        ----
                                              (000s omitted-except for per share data)
<S>                                <C>         <C>         <C>         <C>         <C>        
For the year ended December 31:
  Total revenues ................. $  874,280  $  780,947  $  720,155  $  647,718  $  837,294
  Gain on sale of common stock
    of Guaranty National .........          -           -           -           -      33,931  
 After-tax investment gains   
    (losses) .....................      7,708       2,427       5,888       3,113      (1,804) 
 Earnings before cumulative 
    effect of change in accounting 
    principles and extraordinary
    loss .........................     67,622      55,245      56,988      45,792      44,668 
  Net earnings ...................     67,622      55,245      68,813      42,872      44,668 
  Earnings per common share before
    cumulative effect of change in 
    accounting principles and
    extraordinary loss ...........       4.77        3.85        3.88        3.62        3.75 
  Net earnings per common 
    share ........................       4.77        3.85        4.69        3.35        3.75 
  Dividends declared -
    Adjustable rate preferred
      share ......................          -           -        1.10        4.16        4.37 
    $1.90 preferred share ........          -           -           -        1.43        1.90 
    $2.125 preferred share .......          -           -         .12       2.125       2.125 
    Common share .................        .86         .76         .68         .60         .59 
    Weighted average number of 
    common shares and equivalents 
    outstanding ..................     14,187      14,348      14,598      10,914       9,964 

As of December 31:
  Total cash and investments ..... $1,606,445  $1,325,241  $1,328,969  $1,169,379  $1,087,454
  Total assets ...................  2,473,588   2,112,761   2,117,454   1,937,408   1,827,069 
  Total policy liabilities .......  1,596,033   1,450,835   1,412,285   1,326,872   1,228,951 
  Notes payable and debentures ...    209,148     152,382     160,372     129,863     142,311 
  Adjustable rate preferred stock           -           -           -      18,705      19,125 
  Stockholders' equity ...........    490,903     365,088     394,195     311,287     249,829 
  Common shares outstanding ......     13,953      14,041      14,372      13,100       9,905 
  Book value per common share .... $    35.18  $    26.00  $    27.43  $    21.48  $    19.00 

                                                -32-
</TABLE>


<PAGE>
ITEM 7:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

GENERAL

     Orion Capital Corporation ("Orion") and its wholly-owned subsidiaries
(collectively the "Company") operate principally in the property and casualty
insurance business.  The Company reports its insurance operations in three
segments - Regional Operations, Reinsurance/Special Programs and Guaranty
National Companies.  Regional Operations provides workers compensation
insurance products through EBI Companies.  Reinsurance/Special Programs
includes (i) DPIC Companies ("DPIC"), which markets professional liability
insurance, (ii) Connecticut Specialty, which writes specialty insurance
programs, (iii) SecurityRe Companies ("SecurityRe"), a reinsurer, (iv) Wm. H.
McGee & Co., Inc. ("McGee"), an underwriting management company that
specializes in ocean marine, inland marine and property insurance and (v) a
20.0% interest in Intercargo Corporation ("Intercargo") which underwrites
insurance coverages for international trade.  The third segment consists of
the Company's 49.1% interest in Guaranty National Corporation, which
specializes in nonstandard commercial and personal automobile insurance.  The
miscellaneous income and expenses (primarily interest, general and
administrative expenses and other consolidating elimination entries) of the
parent company are reported as a fourth segment.

     On June 30, 1995, Orion purchased all of the capital stock of McGee for
$22,000,000 in cash.  McGee specializes in underwriting ocean marine, inland
marine and property insurance through an underwriting pool in the United
States and one in Canada.  The business is written by McGee on behalf of the
insurance companies that comprise the pools.   Orion's subsidiary, Security
Insurance Company of Hartford, which has been a pool member for over 100
years, is a member of both the United States and Canadian pools.  The
Company's participation in the United States pool was 6%, 7% and 14.5% in
1993, 1994 and 1995, respectively.  Participation in the Canadian pool was 10%
in 1993 and 1994 and 15% in 1995.  The Company has agreed to increase its rate
of participation for 1996 to 37% in the United States and approximately 49% in
Canada, and by an additional 10.5% to 16.5%, at the Company's option, for 1997
in both of the McGee pools.  

     The Company's insurance operations have experienced favorable trends for
the past several years, as indicated by its combined ratio which has improved
from 109.4% in 1991 to 105.4% in 1992, 103.2% in 1993, 101.2% in 1994 and
100.3% in 1995.  Operating earnings (earnings after taxes, excluding the
effects of the adoption of new accounting principles and after-tax realized
investment gains) were $59,914,000, $52,818,000 and $51,100,000, or $4.22,
$3.68 and $3.47 per share, in 1995, 1994 and 1993, respectively, based on
weighted average shares outstanding of 14,187,000 in 1995, 14,348,000 in 1994
and 14,598,000 in 1993.  Preferred stock dividends of $409,000 in 1993 were
deducted from earnings to compute earnings per common share.

RESULTS OF OPERATIONS

     Earnings (loss) by segment before federal income taxes and cumulative
effect of the adoption of new accounting principles are summarized as follows
for the three years ended December 31, 1995:

                                     -33-

<PAGE>
<TABLE>
<CAPTION>
                                              Year Ended December 31,
                                        -----------------------------------
                                           1995         1994         1993
                                           ----         ----         ----
                                                    (000s omitted)
<S>                                     <C>          <C>          <C>
Regional Operations ................... $ 57,830     $ 42,514     $ 34,025
Reinsurance/Special Programs ..........   43,241       34,117       44,032
Guaranty National Corporation .........    4,466       11,244        9,509
                                        --------     --------     --------
    Total .............................  105,537       87,875       87,566
Other .................................  (17,502)     (16,329)     (15,061)
                                        --------     --------     --------
                                        $ 88,035     $ 71,546     $ 72,505 
                                        ========     ========     ========
</TABLE>
REVENUES

Premiums

     Net premiums written increased 6.4% ($45,381,000) to $757,436,000 in 1995
from $712,055,000 in 1994 and 12.0% ($76,469,000) in 1994 from $635,586,000 in
1993.  The results by segment are as follows:

  -  Regional Operations' net premiums written increased 18.9% ($52,860,000)
     to $332,598,000 in 1995 from $279,738,000 in 1994 and 5.5% ($14,656,000)
     in 1994 from $265,082,000 in 1993.  The premiums written increases were
     in new territories where the Company believes it will benefit from its
     service oriented approach.  The increases were partially offset by the
     impact of legislative reforms in certain states which have led to lower
     premium rates and a reduction in losses and commission expenses,
     resulting in higher profit margins.  The increases in this segment were
     also mitigated by a shift towards high-deductible workers compensation
     products, which also have lower premium rates.

  -  Reinsurance/Special Programs' net premiums written decreased 1.7%
     ($7,479,000) to $424,838,000 in 1995 from $432,317,000 in 1994 and
     increased 16.7% ($61,813,000) in 1994 from $370,504,000 in 1993.  Net
     premiums written by DPIC for professional liability insurance, the
     largest special program, were $184,130,000, $173,205,000 and $123,637,000
     in 1995, 1994 and 1993, respectively.  The increase in 1994 was primarily
     attributable to the discontinuation on January 1, 1994 of a reinsurance
     contract, including a $13,704,000 premium refund received in 1994, in
     order to retain more of DPIC's profitable business.  Excluding this
     refund, DPIC premiums written in 1995 increased 15.4% over premiums
     written in 1994.  The premium increases in 1995 and 1994 reflect both new
     business and a continuation of a high level of policy renewals.  Premium
     volume for Connecticut Specialty decreased 8.3% ($15,165,000) to
     $168,262,000 in 1995 from $183,427,000 in 1994 and 4.6% ($8,819,000) in
     1994 from $192,246,000 in 1993.  The decreases in 1995 and 1994 resulted
     from the cancellation in the second half of 1994 of a personal injury 

                                     -34-

<PAGE>
     protection program in Florida and a physical damage program in Texas,
     where the Company had unfavorable loss experience.  The reduction in
     these programs was partially offset by the introduction of an additional
     marine program, increased participation in McGee's underwriting pools and
     an increase in premiums written in professional liability programs in
     1995 and truck liability programs during 1994.  The percentage of treaty
     and facultative reinsurance assumed to total net premiums written for
     Reinsurance/Special Programs amounted to 17.1%, 17.5% and 14.7% in 1995,
     1994 and 1993, respectively.  

     Premiums earned increased 8.4% ($57,780,000) to $749,003,000 in 1995 from
$691,223,000 in 1994 and 12.0% ($73,819,000) in 1994 from $617,404,000 in
1993.  Premiums earned reflects the recognition in income of the changing
levels of net premium writings.  

Net Investment Income

     Pre-tax net investment income amounted to $99,040,000, $84,915,000 and
$91,803,000 in 1995, 1994 and 1993, respectively.  The pre-tax yields on the
average investment portfolio were 7.1% in 1995, 6.5% in 1994 and 7.4% in 1993,
with after-tax yields of 5.5%, 5.0% and 5.5%, respectively.  The year-to-year
changes in net investment income reflect an increase in equity earnings from
limited partnership investments of $8,510,000 from 1994 to 1995, and a
decrease in limited partnership income of $8,648,000 from 1993 to 1994. 
Earnings from limited partnership investments can vary considerably from year-
to-year, however, the Company's long-term experience with these investments
has been quite favorable.  The increase in net investment income for 1995 is
also attributable to a higher average portfolio yield on a higher investment
base.  Net investment income was increased in both years by income generated
from the deployment of operating cash flow of $148,017,000 in 1995 and
$118,779,000 in 1994.  The carrying value of the Company's investment
portfolio amounted to $1,602,861,000 at December 31, 1995 and $1,319,040,000
at December 31, 1994.  

     Effective December 31, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," which establishes the available-for-sale category
of investment securities and requires such securities to be recorded at market
value, with unrealized gains and losses reported in a separate component of
stockholders' equity.  As a result of the adoption of this standard on
December 31, 1993, the Company reclassified investments with a market value of
$452,102,000 from fixed maturities recorded at amortized cost to fixed
maturities recorded at market, and increased unrealized appreciation on
investments, a component of stockholders' equity, by $20,720,000, net of
deferred income taxes.  In December of 1995, the Company reclassified
additional investments with a market value of $102,581,000 from fixed
maturities recorded at amortized cost to fixed maturities recorded at market,
increasing stockholders' equity by $1,329,000.  This one-time transfer from
the held-to-maturity portfolio was permitted by the implementation guide for
SFAS No. 115.  Fixed maturity investments which the Company has both the
positive intent and the ability to hold to maturity are recorded at amortized
cost.  Investments which may be sold in response to, among other things,
changes in interest rates, prepayment risk, income tax strategies or liquidity

                                   -35-


<PAGE>
needs are classified as available-for-sale and are carried at market value. 
The carrying value of fixed maturity and short-term investments amounted to
$1,235,051,000 and $1,002,042,000 at December 31, 1995 and 1994, respectively,
or approximately 76.9% and 75.6% of the Company's cash and investments.  

     The Company's investment philosophy is to achieve a superior rate of
return after taxes, while maintaining a proper balance of safety, liquidity,
maturity and marketability.  The Company invests primarily in investment grade
securities and strives to enhance the average return of its portfolio through
limited investment in a diversified group of non-investment grade fixed
maturity securities or securities that are not rated.  The risk of loss due to
default is generally considered greater for non-investment grade securities
than for investment grade securities because the former, among other things,
are often subordinated to other indebtedness of the issuer and are often
issued by highly leveraged companies.  At December 31, 1995 and 1994, the
Company's investment in non-investment grade and unrated fixed maturity
securities were carried at $139,075,000 and $119,853,000 with market values of
$139,067,000 and $119,277,000, respectively.  These investments represented a
total of 8.7% and 9.0% of cash and investments and 5.6% and 5.7% of total
assets at December 31, 1995 and 1994, respectively.  

     The Company monitors the financial condition of the issuers of securities
that it owns.  When conditions are deemed appropriate, the Company ceases to
accrete discount, or accrue interest and dividends, and, in cases where the
value of such investments is deemed to be other than temporarily impaired,
recognizes losses.  The Company's non-investment grade investments are highly
diversified, with an average investment per issuer of approximately $1,545,000
at December 31, 1995.  Only four non-investment grade investments aggregating
$24,246,000 were in excess of $5,000,000 at December 31, 1995.

Realized Investment Gains

     Net realized investment gains amounted to $11,885,000 in 1995, $3,437,000
in 1994 and $9,478,000 in 1993.  Sales of equity securities resulted in net
gains of $16,531,000, $3,845,000 and $11,273,000 and sales of fixed maturities
resulted in net gains (losses) of $(311,000), $723,000 and $6,662,000 in 1995,
1994 and 1993, respectively.  Realized investment gains were reduced by
provisions for losses on securities deemed to be other than temporarily
impaired.  These provisions amounted to $285,000 in 1995, $381,000 in 1994 and
$6,310,000 in 1993 for equity securities and $4,050,000, $750,000 and
$2,147,000 in 1995, 1994 and 1993, respectively, for fixed maturity
investments.  Such provisions, based on available information at the time,
were made in consideration of the decline in the financial condition of the
issuers of these securities.

     Realized gains (losses) vary from period to period, depending on market
conditions relative to the Company's investment holdings, the timing of
investment sales generating gains and losses, the occurrence of events which
give rise to other than temporary impairment of investments, and other 

                                     -36-


<PAGE>
factors.  At December 31, 1995 the Company held equity securities with
unrealized appreciation of $47,507,000, as compared to unrealized appreciation
of $13,505,000 for equity securities held at December 31, 1994.  The market
value of the fixed maturities portfolio at December 31, 1995 exceeded
amortized cost by $45,974,000.  This compares with an excess of amortized cost
over market value of $43,958,000 for fixed maturities at December 31, 1994. 
Such amounts can vary significantly depending upon fluctuations in the
financial markets.  The rise in market values during 1995 is primarily
attributable to the decline in interest rates during the year.  The average
maturity of the Company's fixed maturities has not varied significantly in
recent years.  The Company intends to shorten the maturity of a portion of its
fixed maturity portfolio during 1996.

     The performance of the Company's investments, including net investment
income, net realized gains (losses) and unrealized appreciation (depreciation)
is as follows for the three most recent years:

                                                  Year Ended December 31,
                                             --------------------------------
                                               1995        1994        1993    
                                               ----        ----        ----
                                                      (000s omitted)
Net investment income .....................  $ 99,040    $ 84,915    $ 91,803
                                             --------    --------    --------
Net realized gains (losses):
  Fixed maturities ........................    (4,361)        (27)      4,515
  Equity securities .......................    16,246       3,464       4,963
                                             --------    --------    --------  
                                               11,885       3,437       9,478
                                             --------    --------    --------
Net unrealized appreciation (depreciation):
  Fixed maturities ........................    89,932     (92,325)     21,556
  Equity securities .......................    34,002     (18,827)     16,468  
                                             --------    --------    --------
                                              123,934    (111,152)     38,024
                                             --------    --------    --------
                                             $234,859    $(22,800)   $139,305
                                             ========    ========    ========
EXPENSES AND OTHER

Operating Ratios

     The following table sets forth certain ratios of insurance operating
expenses to premiums earned for the Company:
                                                  Year Ended December 31,
                                             --------------------------------
                                               1995        1994        1993
                                               ----        ----        ----
  Loss and loss adjustment expenses .......    68.4%       72.1%       74.4% 
  Policy acquisition and other insurance
    expenses ..............................    29.0        27.0        26.8  
                                              -----       -----       -----
    Total before policyholders' dividends .    97.4        99.1       101.2
  Policyholders' dividends ................     2.9         2.1         2.0
                                              -----       -----       ----- 
    Total after policyholders' dividends ..   100.3%      101.2%      103.2%
                                              =====       =====       =====

                                     -37-

<PAGE>
     The ratio of loss and loss adjustment expenses to premiums earned (the
"loss ratio") was 68.4%, 72.1% and 74.4% in 1995, 1994 and 1993, respectively.
The decreases in the 1995 and 1994 loss ratios were attributable to
improvements in both the Regional Operations and Reinsurance/Special Programs
segments.  

     The loss ratio for Regional Operations was 62.4% in 1995, 67.1% in 1994
and 72.0% in 1993.  These loss ratios reflect the continued success of the
Company's service oriented approach for workers compensation insurance, and
the growth in high-deductible policies where experience has been favorable.

     Reinsurance/Special Programs' loss ratio was 72.9% in 1995, 75.4% in 1994
and 76.1% in 1993.  The improvement in the 1995 loss ratio for this segment is
primarily the result of favorable loss experience for DPIC and the
cancellation of Connecticut Specialty's personal injury protection and
physical damage programs which had unfavorable loss experience in 1994.  The
decrease for 1994 is attributable to increased writings in programs with lower
loss ratios, offset in part by increased losses incurred in the two
Connecticut Specialty cancelled programs.    

     The ratio of deferred acquisition costs and other insurance expenses to
premiums earned (the "expense ratio") was 29.0%, 27.0% and 26.8% in 1995, 1994
and 1993, respectively.  The increase in the expense ratio in 1995 is
attributable to a number of factors including EBI Companies opening offices in
new territories, a change in the mix of business toward policies with lower
premiums and losses relative to policyholder servicing expenses and general
inflationary increases in fixed operating expenses.  The 1994 and 1993 expense
ratios reflect low levels of assessments from certain assigned risk pools. 
The ratio of policyholders' dividends to premiums earned (the "dividend
ratio") was 2.9%, 2.1% and 2.0% in 1995, 1994 and 1993, respectively.  The
increase in the dividend ratio for 1995 is reflective of the lower loss ratios
on workers compensation insurance coverages.  The combined ratio was 100.3% in
1995, 101.2% in 1994 and 103.2% in 1993.

     Provisions for losses and loss adjustment expenses include development of
loss and loss adjustment expense reserves relating to prior accident years,
which increased the calendar year combined ratio by 1.6 percentage points in
1995, 2.5 percentage points in 1994 and 3.9 percentage points in 1993.  The
loss ratios were adversely affected by loss development in the pool and
association (including assigned risk pools) and reinsurance businesses where
loss reserves are established by the Company based on information provided
from sources outside the Company, and where loss patterns were significantly
different than in the past.  Other contributing factors were higher than
anticipated reported losses for commercial multiple peril business and reserve
strengthening for certain other lines of business, including discontinued
programs.  In 1995 and 1994 adverse development was reduced by the continued
improvement in workers compensation insurance from the application of risk
management and loss control procedures.

     The Company's environmental claims principally relate to asbestos and
hazardous waste, arising from certain liability business written prior to the
mid 1980's, which business was never a major element of the Company's
operations.  Environmental claims are also received from certain reinsurance
pools and associations where reserves are established based on information
reported to the Company by the managers of those pools and associations.



                                     -38-

<PAGE>
     Establishing reserve liabilities for environmental claims is subject to
significant uncertainties that make reserve estimation difficult.  Legal
decisions have tended to expand insurance coverage beyond the intent of the
policies.  The disposition of such claims often requires lengthy and costly
litigation.  Uncertainties as to required clean-up remedies and difficulties
in identifying the responsible parties add further to the complexity of
reserve estimation for these claims.  In recent years, the Company has
intensified its efforts to settle and close environmental claims.  To help
minimize the cost of losses and claims, the Company maintains a dedicated
environmental claims staff which administers and continually evaluates each
claim and its defense and settlement possibilities.  In 1995, 1994 and 1993,
the Company paid $5,675,000, $7,233,000 and $5,557,000, respectively, for the
costs of defending and settling such claims.  Payments in 1995, 1994 and 1993
related to 213, 292 and 216 claims, respectively, for the Company's direct
business.  Claim counts have been aggregated by year of coverage for each
occurrence for which policyholders are being defended, and often include
numerous claimants.

     As of December 31, 1995 and 1994, the Company has environmental claims-
related loss and loss adjustment expense reserves, net of reinsurance
recoverables, of $34,559,000 and $20,601,000, respectively, which include 474
and 467 claims, respectively, for direct business written by the Company.  In
estimating liabilities for environmental-related claims, the Company considers
all pertinent information as it becomes available.

     Management believes that the Company's reserves for loss and loss
adjustment expenses make reasonable and sufficient provision for the ultimate
cost of all losses on claims incurred.  However, there can be no assurance
that changes in loss trends will not result in additional development of prior
years' reserves in the future.  Variability in claim emergence and settlement
patterns and other trends in loss experience can result in future development
patterns different than expected.  The Company believes that any such
development will continue at the low levels experienced in recent years,
considering actions taken to increase reserving levels, improve underwriting
standards and emphasize loss control and prevention.  The Company's loss
ratios in recent years, including development of prior years' losses, have
compared favorably with loss ratios experienced by the industry.

     The Company limits both current loss expense and future development of
losses by ceding business to reinsurers.  The Company continually monitors the
financial strength of its reinsurers and, to the Company's knowledge, has no
material exposure with regard to potential unrecognized losses due to
reinsurers having known financial difficulties.

Interest Expense

     Interest expense was $15,943,000 in 1995, $13,597,000 in 1994 and
$13,044,000 in 1993.  The increase of 17.3% in 1995 is due to higher average
debt outstanding after the issuance of $100,000,000 of Senior Notes by Orion
on July 17, 1995.  The 4.2% increase in interest expense in 1994 is primarily
attributable to an increase in average interest rates.  

                                     -39-

<PAGE>
Other Expenses

     Other expenses were $24,740,000, $7,862,000 and $6,527,000 in 1995, 1994
and 1993, respectively.  The increases in both other income and other expenses
for 1995 are primarily attributable to the inclusion of McGee's revenue and
expenses after it was acquired by the Company on June 30, 1995.

Equity in Earnings of Affiliates

     Equity in earnings of affiliates includes the Company's portion of
earnings from Guaranty National and Intercargo.  Earnings (loss) of
$1,038,000, $342,000 and ($122,000) were recorded from the Intercargo
investment in 1995, 1994 and 1993, respectively.  The Company's portion of
Guaranty National's net earnings before the cumulative effect of adopting
changes in accounting principles was $4,466,000 in 1995, $11,244,000 in 1994
and $9,509,000 in 1993 based on Guaranty National's earnings of $8,929,000,
$22,551,000 and $19,285,000, respectively.  Gross premiums written for
Guaranty National increased to $451,513,000 in 1995 from $364,991,000 in 1994
and $322,613,000 in 1993.  Guaranty National's combined ratios were 105.3% in
1995, 97.5% in 1994 and 99.6% in 1993.  The increase in gross premiums written
in 1995 included $61,766,000 from the acquisition of Viking Insurance
Holdings, Inc. ("Viking") by Guaranty National in July 1995.  The reduction in
Guaranty National's earnings and the higher loss ratio for 1995 are due to
Guaranty National strengthening its loss reserves in response to adverse claim
trends in the first half of the year.  Specific measures have been initiated
by Guaranty National to improve results, including tightening underwriting
standards and rate increases.

     In June 1995 Guaranty National sold 1,550,000 shares of its common stock
in an offering under Regulation S of the Securities Act of 1933, as amended at
a net offering price of $15.76 per share.  The Company converted $20,896,000
of Guaranty National subordinated notes it held into 1,326,128 shares of
Guaranty National common stock at the net price received by Guaranty National
from the offering.  The sale of stock and conversion of the subordinated notes
increased the stockholders' equity of Guaranty National and facilitated the
procurement of bank financing for Guaranty National's acquisition of Viking.

Earnings Before Federal Income Taxes

     Earnings before income taxes were $88,035,000, $71,546,000 and
$72,505,000 for 1995, 1994 and 1993, respectively.  The 23.0% increase in pre-
tax earnings from 1994 to 1995 reflects an improvement in insurance operations
profitability of $8,041,000 and an increase in realized investment gains of
$8,448,000.  The 1.3% decrease in pre-tax earnings from 1993 to 1994 reflects
an increase in insurance operations profitability of $5,082,000 and a decrease
in realized investment gains of $6,041,000.   

Federal Income Taxes

     Federal income taxes on pre-tax operating results and the related
effective tax rates amounted to $20,413,000 (23.2%), $16,301,000 (22.8%) and
$15,517,000 (21.4%) in 1995, 1994 and 1993, respectively.  The Company files 

                                     -40-


<PAGE>
consolidated federal income tax returns.  Effective January 1, 1993, the
Company adopted SFAS No. 109, "Accounting for Income Taxes."  Upon adoption of
SFAS No. 109, the Company recorded a benefit of $16,881,000 which was
principally attributable to deferred tax benefits that had not been recognized
due to limitations under prior accounting standards.  The Company's effective
tax rates for 1995, 1994 and 1993 are less than the statutory tax rate of 35%
primarily because of income derived from tax-advantaged securities.  The tax
rate for 1993 reflects a tax benefit of $450,000 from the effect of the
increase in the federal tax rate on the Company's deferred tax asset.  

Cumulative effect of adoption of new accounting principles

     Effective January 1, 1993 the Company recorded the cumulative effect of
adopting SFAS No. 109 (discussed above) and SFAS No. 106 "Employers'
Accounting for Postretirement Benefits Other than Pensions."  SFAS No. 106
requires the accrual of the estimated cost of retiree benefit payments during
the years employees provide services.  Upon adoption of SFAS No. 106 the
cumulative effect of the Company's accumulated obligation for providing
medical benefits to retirees was $5,056,000, after a related tax benefit of
$2,604,000.  Included in the cumulative effects of adopting these accounting
principles is the Company's portion of Guaranty National's benefit from
changes in accounting principles in 1993 of $360,000, net of $185,000 of
federal income taxes provided by the Company.  

Earnings Per Common Share

     Primary earnings per common share amounted to $4.77 in 1995, $3.85 in
1994 and $4.69 ($3.88 before the effect of adopting new accounting principles)
in 1993.  Reflected in the calculation of 1993 earnings per common share are
dividends of $409,000 on the Company's Adjustable Rate Preferred Stock
(redeemed in 1993) and $2.125 Preferred Stock (converted into common stock or
redeemed in 1993).  The conversion and redemptions were effected pursuant to
the terms of the preferred stocks.  Fully diluted earnings per share is not
presented as dilution is less than three percent for all periods.

LIQUIDITY AND CAPITAL RESOURCES

     Cash provided by operating activities increased $29,238,000 to
$148,017,000 in 1995 from $118,779,000 in 1994 and decreased $4,375,000 in
1994 from $123,154,000 in 1993.  Cash flow for 1995 included a disbursement of
$7,800,000 under a retrospectively rated program written by DPIC.  In 1994
operating cash flow included a $10,223,000 receipt from DPIC's discontinuation
of a reinsurance contract.  Cash flow for 1993 included a receipt of
$17,096,000 under a retrospectively rated program written by DPIC, and the
benefit of an income tax overpayment of approximately $4,000,000 from 1992. 
Excluding these one-time items, year-to-year operating cash flows increased
$47,261,000 from 1994 to 1995 and $6,498,000 from 1993 to 1994.  The increase
in operating cash flow for 1995 was the result of an increase in premiums
collected, net investment income received and lower paid losses, offset in
part by higher payments for policy acquisition costs and federal income taxes. 
The increase in 1994 is primarily due to an increase in premiums collected
offset by increases in paid losses, policy acquisition costs and federal
income tax payments.  

                                     -41-

<PAGE>
     Cash used in investment activities increased $102,263,000 to $188,448,000
in 1995 from $86,185,000 in 1994 and decreased $38,230,000 in 1994 from
$124,415,000 in 1993.  Cash is used in investment activities primarily for 
purchases of investments.  The purchases are funded by maturities and sales of
investments, as well as by the net cash remaining from positive operating cash
flows after cash provided by or used in financing activities.  In June 1995
Orion paid $22,000,000 in cash plus acquisition costs to acquire McGee (see
discussion above).

     Cash provided by financing activities was $37,778,000 for 1995.  Cash
used in financing activities was $32,582,000 and $5,046,000 in 1994 and 1993,
respectively.  Orion borrowed $12,000,000 under its bank line of credit in
June 1995 to finance part of the McGee acquisition.  In July 1995 Orion issued
$100,000,000 of senior debt (discussed below) and repaid all of its
outstanding bank debt.  Cash provided in 1993 from an increase in bank
borrowings was used to fund the redemption of Orion's Adjustable Rate
Preferred Stock.  Cash used in financing activities includes dividend
payments, scheduled debt repayments and payments related to the Company's
common stock repurchase program.  Orion increased the quarterly dividend rate
on its common stock by 12.5%, 11.1% and 15.0% in the third quarters of 1993,
1994 and 1995, respectively.  An additional increase of 8.7% was authorized by
the Board of Directors in the first quarter of 1996.
                 
     Orion's uses of cash consist of debt service, dividends to stockholders
and overhead expenses.  These cash uses are funded from existing available
cash, financing transactions and receipt of dividends, reimbursement of
overhead expenses and amounts in lieu of federal income taxes from Orion's
insurance subsidiaries.  Orion received $30,546,000, $30,013,000 and
$25,512,000 in dividends, $6,232,000, $5,735,000 and $5,230,000 for overhead
expenses and federal tax payments of $4,500,000, $6,000,000 and $5,600,000
from its insurance subsidiaries in 1995, 1994 and 1993, respectively.  In 1993 
Orion also received an extraordinary dividend of $65,470,000 (principally
securities) from a California-domiciled subsidiary which was simultaneously
contributed as capital to a Connecticut-domiciled subsidiary to effect a
change in pooling percentages among its insurance subsidiaries.  Payments of
dividends by Orion's insurance subsidiaries must comply with insurance
regulatory limitations concerning stockholder dividends and capital adequacy. 
State insurance regulators have broad discretionary authority with respect to
limitations on the payment of dividends by insurance companies.  Limitations
under current regulations are well in excess of Orion's cash requirements.  

     Orion's insurance subsidiaries maintain liquidity in their investment
portfolios substantially in excess of that required to pay claims and
expenses.  The insurance subsidiaries held cash and short-term investments of
$123,457,000 and $96,572,000 at December 31, 1995 and 1994, respectively.
Orion's insurance subsidiaries had consolidated policyholders' surplus of
$521,510,000 at December 31, 1995 and $458,676,000 at December 31, 1994, and
statutory operating leverage ratios of net premiums written to policyholders'
surplus of 1.5:1 and 1.6:1 at December 31, 1995 and 1994, respectively.  

     On July 17, 1995, Orion issued 7 1/4% Senior Notes due 2005 with a face
value of $100,000,000 in a public offering pursuant to a shelf registration
filed with the Securities and Exchange Commission in 1994.  The senior notes
issued are non-callable to maturity, and were sold at 99.23% of par to yield 

                                     -42-
<PAGE>
7.36% per annum.  The net proceeds from the offering were approximately
$98,113,000, of which $46,500,000 was used to repay all of Orion's debt under
its bank loan agreement.  The balance is available for general corporate
purposes.

     In March 1993 Orion entered into a bank loan arrangement that provided
for initial borrowings of up to $60,000,000, consisting of a $50,000,000 term
loan and a $10,000,000 line of credit.  The proceeds from the term loan were
used to redeem Orion's Adjustable Rate Preferred Stock and to repay a bridge
loan facility with two banks which was used to redeem Orion's 12 1/2%
Subordinated Debentures in December 1992.  In November 1994 Orion increased
its bank credit line to $30,000,000.  In June 1995 Orion borrowed $12,000,000
under the credit line to finance part of the McGee acquisition.  All of the
Company's bank debt was repaid in July 1995 from the proceeds of the 7 1/4%
Senior Notes.

     The  terms of Orion's indentures for its $100,000,000 of 7 1/4% Senior
Notes due 2005 and its $110,000,000 of 9 1/8% Senior Notes due 2002 limit the
amount of liens and guarantees by the Company, and the Company's ability to
incur secured indebtedness without equally and ratably securing the senior
notes.  Management does not believe that these limitations unduly restrict the
Company's operations or limit Orion's ability to pay dividends on its stock. 
At December 31, 1995 the Company was in compliance with the terms of its
senior note indentures.  Management believes that the Company continues to
have substantial sources of capital and liquidity from the capital markets and
bank borrowings.

     On December 21, 1992, Orion called for redemption its $2.125 Preferred
Stock on January 21, 1993.  The market price of the shares of common stock
that a holder would receive upon conversion of the preferred stock was
substantially higher than the redemption price of $25.76 per share. 
Consequently, most holders converted into common stock prior to the redemption
date, resulting in the issuance of 3,579 shares of common stock prior to
December 31, 1992 and 1,423,544 shares of common stock in January 1993. 
Holders of 21,605 shares of $2.125 Preferred Stock who did not elect to
convert redeemed their shares for an aggregate of $557,000.

     The Company repurchased 173,181 shares, 442,327 shares and 177,658 shares
of its common stock at an aggregate cost of $7,183,000, $13,745,000 and
$5,473,000 in 1995, 1994 and 1993, respectively.  The Company's remaining
stock purchase authorization from its Board of Directors amounted to
$5,446,000 at December 31, 1995.  Between January 1 and February 21, 1996,
Orion repurchased an additional 16,600 shares of its common stock for
$720,000, reducing the remaining authorization to $4,726,000.

     Orion and its subsidiaries are routinely engaged in litigation incidental
to their businesses.  Management believes that there are no significant legal
proceedings pending against the Company which, net of reserves established
therefor, are likely to result in judgments for amounts that are material to
the financial condition, liquidity or results of operations of Orion and its
consolidated subsidiaries, taken as a whole.  (See also Note J to the
consolidated financial statements).

                                     -43-


<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                             REPORT OF MANAGEMENT


     The management of Orion Capital Corporation is responsible for the
consolidated financial statements and the information included therein.  The
consolidated financial statements are fairly presented and have been prepared
in accordance with generally accepted accounting principles appropriate in the
circumstances, and, where necessary, include amounts based on management's
informed estimates and judgments.  

     The Company has a system of internal controls which it believes provides
reasonable assurance that assets are safeguarded from loss or unauthorized
use, that transactions are recorded in accordance with management's policies
and that the financial records are reliable for preparing financial
statements.  The system of internal controls includes written policies and
procedures which are communicated to all appropriate personnel and updated as
necessary.  

     Compliance with the system of internal controls is continuously
maintained and monitored by management.  The internal audit staff of the
Company evaluates and reports on the adequacy of and adherence to these
controls, policies and procedures.  In addition, as part of its audit of the
consolidated financial statements, Deloitte & Touche LLP, the independent
auditors for the Company, perform an evaluation of the system of internal
controls to the extent they consider necessary to express an opinion on the
consolidated financial statements.  Recommendations concerning the system of
internal controls are provided by both the internal auditors and Deloitte &
Touche LLP, and management takes actions which are believed to be appropriate
responses to these recommendations.

     The Audit Committee of the Board of Directors is comprised of independent
directors, and has general responsibility for oversight of financial controls
and audit activities of the Company and its subsidiaries.  The Audit
Committee, which reports to the Board, annually reviews the qualifications of
the independent auditors and meets periodically with them, the internal
auditors and management to review the plans and results of the audits.  Both
internal and independent auditors have free access to the Audit Committee,
without members of management present, to discuss the adequacy of the system
of internal controls and any other matters which they believe should be
brought to the attention of the Committee.




Alan R. Gruber                                  Daniel L. Barry
Chairman & Chief Executive Officer              Vice President & Controller




                                      -44-

<PAGE>
INDEPENDENT AUDITORS' REPORT
                                                    



The Board of Directors and Stockholders
ORION CAPITAL CORPORATION
New York, New York

     We have audited the accompanying consolidated balance sheets of Orion
Capital Corporation and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of earnings, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995.  Our
audits also included the financial statement schedules listed in the Index at
Item 14(a)2.  These financial statements and financial statement schedules are
the responsibility of the Company's management.  Our responsibility is to
express an opinion on the financial statements and financial statement
schedules based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about 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.  We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Orion Capital Corporation and
subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1995 in conformity with generally accepted accounting
principles.  Also, in our opinion, such financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as
a whole, present fairly in all material respects the information set forth
therein.


DELOITTE & TOUCHE LLP


Hartford, Connecticut
February 21, 1996







                                     -45-
<PAGE>
<TABLE>
<CAPTION>
                   ORION CAPITAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET        
                                 (000s omitted)     

                                     ASSETS 
                                                            December 31,
                                                     -------------------------
                                                         1995           1994
                                                         ----           ----
<S>                                                  <C>            <C>
Investments:
  Fixed maturities at amortized cost (market 
    $276,282 - 1995 and $358,915 - 1994) ..........  $  265,169     $  367,417

  Fixed maturities at market (amortized cost 
    $748,008 - 1995 and $565,880 - 1994) ..........     782,869        530,424 

  Common stocks at market (cost $108,211 - 1995
    and $116,078 - 1994) ..........................     158,895        141,919

  Non-redeemable preferred stocks at market (cost 
    $149,167 - 1995 and $134,851 - 1994) ..........     145,990        122,515 

  Other long-term investments .....................      62,925         52,564 
 
  Short-term investments ..........................     187,013        104,201 
                                                     ----------     ----------
     Total investments ............................   1,602,861      1,319,040 
 
Cash ..............................................       3,584          6,201
 
Accrued investment income .........................      19,290         17,364
 
Investments in and advances to affiliates .........     125,731        108,510 

Accounts and notes receivable (less allowance 
  for doubtful accounts $3,212 - 1995 and  
  $1,954 - 1994) ..................................     137,197        125,132

Reinsurance recoverables and prepaid reinsurance ..     360,052        336,032

Deferred policy acquisition costs .................      77,673         70,137

Property and equipment (less accumulated
  depreciation $23,223 - 1995 and $20,173 - 1994)..      34,009         25,157
      
Excess of cost over fair value of net assets 
  acquired (less accumulated amortization 
  $19,119 - 1995 and $17,586 - 1994) ..............      50,199         29,415
 
Deferred federal income taxes .....................       8,726         42,008

Other assets ......................................      54,266         33,765
                                                     ----------     ---------- 
     Total assets .................................  $2,473,588     $2,112,761
                                                     ==========     ========== 
<FN> 
                 See Notes to Consolidated Financial Statements
                                     -46-

<PAGE>
<CAPTION>
                  ORION CAPITAL CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET
                    (000s omitted - except for share data)

                     LIABILITIES AND STOCKHOLDERS' EQUITY

                                                            December 31,
                                                     -------------------------
                                                         1995          1994
                                                         ----          ----
<S>                                                  <C>           <C>
Liabilities:
  Policy liabilities -                              
    Losses ........................................  $1,007,016    $  952,531
    Loss adjustment expenses ......................     267,966       228,798
    Unearned premiums .............................     302,105       256,855
    Policyholders' dividends ......................      18,946        12,651
                                                     ----------    ----------
      Total policy liabilities ....................   1,596,033     1,450,835
  Federal income taxes payable ....................      18,910        14,829
  Notes payable ...................................     209,148       152,382
  Other liabilities ...............................     158,594       129,627
                                                     ----------    ----------
      Total liabilities ...........................   1,982,685     1,747,673
                                                     ----------    ----------

Commitments and Contingencies (Notes I and J)

Stockholders' equity:
  Preferred stock, authorized 5,000,000 shares - 
    issued and outstanding - none
  Common stock, $1 par value; authorized 
    30,000,000 shares; issued 15,337,650 shares ...      15,338        15,338
  Capital surplus .................................     146,658       147,598
  Net unrealized investment gains (losses), net of 
    federal income taxes (benefit) of $26,691 - 
    1995 and $(14,146) - 1994 .....................      63,255       (11,498)
  Net unrealized foreign exchange translation 
    losses, net of federal income tax benefits of 
    $540 - 1995 and $553 - 1994 ...................      (3,935)       (3,959)
  Retained earnings ...............................     298,452       242,908
  Treasury stock, at cost (1,385,012 shares - 1995
    and 1,296,834 shares - 1994) ..................     (26,534)      (22,451)
  Deferred compensation on restricted stock .......      (2,331)       (2,848)
                                                     ----------    ----------
      Total stockholders' equity ..................     490,903       365,088 
                                                     ----------    ----------

      Total liabilities and stockholders' equity...  $2,473,588    $2,112,761 
                                                     ==========    ==========


<FN>   
                See Notes to Consolidated Financial Statements

                                     -47-
<PAGE>
<PAGE>
<CAPTION>
                      ORION CAPITAL CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENT OF EARNINGS
                      (000s omitted - except for per share data)

                                                             Year Ended December 31,
                                                         ------------------------------
                                                           1995       1994       1993
                                                           ----       ----       ----
<S>                                                      <C>        <C>        <C>
Revenues:
  Premiums earned .....................................  $749,003   $691,223   $617,404
  Net investment income ...............................    99,040     84,915     91,803
  Realized investment gains ...........................    11,885      3,437      9,478
  Other income ........................................    14,352      1,372      1,470
                                                         --------   --------   --------
    Total revenues ....................................   874,280    780,947    720,155
                                                         --------   --------   --------
Expenses:
  Losses incurred .....................................   388,409    386,685    366,716
  Loss adjustment expenses ............................   123,824    111,438     92,416    
  Amortization of deferred policy acquisition costs ...   195,481    165,108    148,440
  Other insurance expenses ............................    21,562     21,461     17,381
  Dividends to policyholders ..........................    21,790     14,836     12,513
  Interest expense ....................................    15,943     13,597     13,044
  Other expenses ......................................    24,740      7,862      6,527
                                                         --------   --------   --------
    Total expenses ....................................   791,749    720,987    657,037
                                                         --------   --------   --------
Earnings before equity in earnings of affiliates, 
  federal income taxes and cumulative effect of 
  adoption of new accounting principles ...............    82,531     59,960     63,118

Equity in earnings of affiliates ......................     5,504     11,586      9,387
                                                         --------   --------   --------
Earnings before federal income taxes and cumulative 
  effect of adoption of new accounting principles .....    88,035     71,546     72,505
Federal income taxes ..................................    20,413     16,301     15,517
                                                         --------   --------   --------
Earnings before cumulative effect of adoption of new
  accounting principles ...............................    67,622     55,245     56,988
Cumulative effect of adoption of new accounting
  principles ..........................................         -          -     11,825
                                                         --------   --------   --------
  Net earnings ........................................  $ 67,622   $ 55,245   $ 68,813
                                                         ========   ========   ========

Earnings per common share:
  Earnings before cumulative effect of adoption of
    new accounting principles .........................  $   4.77   $   3.85   $   3.88
  Cumulative effect of adoption of new accounting
    principles ........................................         -          -        .81
                                                         --------   --------   --------
      Net earnings ....................................  $   4.77   $   3.85   $   4.69
                                                         ========   ========   ========

<FN>
                     See Notes to Consolidated Financial Statements

                                          -48-

<PAGE>
<CAPTION>
                     ORION CAPITAL CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                   (000s omitted)

                                                    Year Ended December 31,
                                                ------------------------------
                                                  1995       1994       1993
                                                  ----       ----       ----
<S>                                             <C>        <C>        <C>
Convertible exchangeable preferred stock:
  Balance, beginning of year ................   $      -   $      -   $ 28,524 
  Conversion of preferred stock .............          -          -    (28,524)
                                                --------   --------   --------
  Balance, end of year ......................   $      -   $      -   $      - 
                                                ========   ========   ========
Common stock:
  Balance, beginning of year ................   $ 15,338   $ 15,338   $ 11,110
  Conversion of preferred stock .............          -          -      1,139
  Exercise of stock options and issuance of
    restricted stock ........................          -          -         24
  Stock issued in 5-for-4 stock split .......          -          -      3,065
                                                --------   --------   --------
  Balance, end of year ......................   $ 15,338   $ 15,338   $ 15,338
                                                ========   ========   ========
Capital surplus:
  Balance, beginning of year ................   $147,598   $148,167   $124,754
  Redemptions and conversions of preferred 
    stock ...................................          -          -     26,072
  Issuance of common stock ..................        152          -          -
  Exercise of stock options and issuance 
    of restricted stock .....................     (1,092)      (569)       406
  Stock issued in 5-for-4 stock split .......          -          -     (3,065)
                                                --------   --------   --------
  Balance, end of year ......................   $146,658   $147,598   $148,167 
                                                ========   ========   ========
Net unrealized investment gains (losses):
  Balance, beginning of year ................   $(11,498)  $ 49,566   $ 18,815
  Cumulative effect of adoption of new 
    accounting principle, net of taxes 
    of $11,157 ..............................          -          -     20,720
  Change in unrealized investment gains 
    (losses), net of taxes ..................     74,753    (61,064)    10,031
                                                --------   --------   -------- 
  Balance, end of year ......................   $ 63,255   $(11,498)  $ 49,566
                                                ========   ========   ========
Net unrealized foreign exchange translation
  losses:
  Balance, beginning of year ................   $ (3,959)  $ (3,665)  $ (2,918)
  Change in unrealized foreign exchange
    translation losses, net of taxes ........         24       (294)      (747)
                                                --------   --------   --------
  Balance, end of year ......................   $ (3,935)  $ (3,959)  $ (3,665)
                                                ========   ========   ========
<PAGE>
Retained earnings:
  Balance, beginning of year ................   $242,908   $198,491   $139,947
  Net earnings ..............................     67,622     55,245     68,813
  Dividends declared ........................    (12,078)   (10,828)   (10,269)
                                                --------   --------   --------
  Balance, end of year ......................   $298,452   $242,908   $198,491 
                                                ========   ========   ========
Treasury stock:
  Balance, beginning of year ................   $(22,451)  $(12,182)  $ (6,694)
  Issuance of common stock ..................        770          -          -
  Exercise of stock options and issuance 
    (cancellation) of restricted stock ......      2,330      3,476        (15)
  Acquisition of treasury stock .............     (7,183)   (13,745)    (5,473)
                                                --------   --------   --------
  Balance, end of year ......................   $(26,534)  $(22,451)  $(12,182)
                                                ========   ========   ========
Deferred compensation on restricted stock:
  Balance, beginning of year ................   $ (2,848)  $ (1,520)  $ (2,251)
  Issuance of restricted stock ..............       (517)    (2,247)      (108)
  Amortization of deferred compensation on
    restricted stock ........................      1,034        919        839 
                                                --------   --------   --------     
  Balance, end of year ......................   $ (2,331)  $ (2,848)  $ (1,520)
                                                ========   ========   ========
<FN>
                  See Notes to Consolidated Financial Statements

                                        -49-


<PAGE>
<CAPTION>
                       ORION CAPITAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED STATEMENT OF CASH FLOWS
                                     (000s omitted)

                                                     Year Ended December 31,
                                               ----------------------------------
                                                  1995        1994        1993
                                                  ----        ----        ----
<S>                                            <C>         <C>         <C>
Cash flows from operating activities:
  Premiums collected ........................  $ 738,083   $ 696,735   $ 626,678
  Net investment income collected ...........     91,964      83,603      81,178
  Losses and loss adjustment expenses paid ..   (409,797)   (437,386)   (374,625)
  Policy acquisition costs paid .............   (204,319)   (185,217)   (162,717)
  Dividends paid to policyholders ...........    (15,495)    (14,708)    (13,150)
  Interest paid .............................    (12,530)    (12,931)    (12,405)
  Federal income tax payments ...............    (18,756)    (10,860)     (7,100)
  Other payments ............................    (21,133)       (457)    (14,705)
                                               ---------   ---------   ---------
    Net cash provided by operating 
      activities ............................    148,017     118,779     123,154 
                                               ---------   ---------   ---------

Cash flows from investing activities:
  Maturities of fixed maturities 
    held-to-maturity ........................     36,804      55,200           - 
  Maturities of fixed maturities
    available-for-sale ......................     12,640      28,839           - 
  Sale of fixed maturity held-to-maturity ...          -       1,155           - 
  Sales of fixed maturities 
    available-for-sale ......................    184,501      88,804           - 
  Maturities and sales of fixed maturities ..          -           -     243,162
  Sales of equity securities.................     78,351      49,881      91,144 
  Investments in fixed maturities 
    held-to-maturity ........................    (41,709)    (53,230)          - 
  Investments in fixed maturities
    available-for-sale ......................   (278,173)   (156,927)          - 
  Investments in fixed maturities ...........          -           -    (311,183)    
  Investments in equity securities ..........    (64,450)    (84,582)   (120,609)
  Acquisition of McGee ......................    (22,355)          -           -
  Effect on cash of consolidating McGee .....        349           -           -
  Investment in Intercargo Corporation ......          -           -     (19,315)
  Net sales (purchases) of short-term 
    investments .............................    (83,617)     (7,505)      8,885 
  Other payments ............................    (10,789)     (7,820)    (16,499)
                                               ---------   ---------   ---------
    Net cash used in investing activities ...   (188,448)    (86,185)   (124,415)
                                               ---------   ---------   ---------
<PAGE>
Cash flows from financing activities:
  Proceeds from issuance of notes payable ...    110,413           -      59,672 
  Proceeds from issuance of common stock ....        246         598         286 
  Repayment of notes payable ................    (54,500)     (8,000)    (29,500)
  Dividends paid to stockholders ............    (11,674)    (10,609)    (10,776)
  Purchases of common stock and purchases 
    and redemption of adjustable rate 
    preferred stock .........................     (6,689)    (14,220)    (23,615)
  Other payments  ...........................        (18)       (351)     (1,113)
                                               ---------   ---------   ---------
    Net cash provided by (used in) financing 
      activities ............................     37,778     (32,582)     (5,046)
                                               ---------   ---------   ---------
Effect of foreign exchange rate changes 
  on cash ...................................         36        (244)        (24)
                                               ---------   ---------   ---------
    Net decrease in cash ....................     (2,617)       (232)     (6,331)
Cash balance, beginning of year .............      6,201       6,433      12,764 
                                               ---------   ---------   ---------
Cash balance, end of year ...................  $   3,584   $   6,201   $   6,433 
                                               =========   =========   =========
<FN>                                                         
                  See Notes to Consolidated Financial Statements

                                       -50-








<PAGE>
<CAPTION>
                   ORION CAPITAL CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF CASH FLOWS - (Continued)
                                 (000s omitted)

                                                    Year Ended December 31,
                                                ------------------------------
                                                  1995       1994       1993
                                                  ----       ----       ----
<S>                                             <C>        <C>        <C>
Reconciliation of net earnings to net cash
  provided by operating activities:
Net earnings .................................  $ 67,622   $ 55,245   $ 68,813
                                                --------   --------   --------
Adjustments:
  Cumulative effect of adoption of new 
    accounting principles ....................         -          -    (11,825)
  Depreciation and amortization ..............     5,900      4,936      3,939 
  Amortization of excess of cost over fair
    value of net assets acquired .............     1,533      1,172      1,173 
  Deferred federal income taxes ..............    (5,165)     9,906       (931)
  Amortization of fixed maturity investments .       815      1,700        128 
  Non-cash investment income .................   (11,272)    (2,840)   (11,586)
  Equity in earnings of affiliates ...........    (5,504)   (11,586)    (9,387)
  Dividends received from affiliates .........     2,597      3,295      3,135 
  Realized investment gains ..................   (11,885)    (3,437)    (9,478)
  Foreign exchange translation adjustment ....       163        257        152 
  Other.......................................       (43)       (38)       (34)

Changes in assets and liabilities (net of
  effects of acquiring McGee):
  Decrease (increase) in accrued investment 
    income ...................................      (952)       259        492 
  Increase in accounts and notes receivable ..   (11,488)   (13,593)    (9,298)
  Decrease (increase) in reinsurance
    recoverables and prepaid reinsurance .....   (24,020)    57,277     21,326 
  Increase in deferred policy acquisition 
    costs ....................................    (7,536)   (12,615)    (1,388)
  Increase in other assets ...................   (18,405)    (7,589)      (431)
  Increase in losses .........................    54,485     14,756     52,695 
  Increase in loss adjustment expenses .......    39,168     26,170      6,312 
  Increase (decrease) in unearned premiums ...    45,250     (2,504)    27,043 
  Increase (decrease) in policyholders' 
    dividends ................................     6,295        128       (637)
  Increase (decrease) in federal income taxes 
    payable ..................................     3,964     (4,465)     9,242 
  Increase (decrease) in other liabilities ...    16,495      2,345    (16,301)
                                                --------   --------   --------
    Total adjustments and changes ............    80,395     63,534     54,341 
                                                --------   --------   --------
  Net cash provided by operating activities ..  $148,017   $118,779   $123,154 
                                                ========   ========   ========


<FN>          

                     
                   See Notes to Consolidated Financial Statements

                                        -51-

/TABLE
<PAGE>
<PAGE>
                  ORION CAPITAL CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 Years Ended December 31, 1995, 1994 and 1993

Note A - Significant Accounting Policies

     Basis of Financial Statement Presentation - Orion Capital Corporation
("Orion") and its wholly-owned subsidiaries (collectively the "Company")
operate principally in the property and casualty insurance business.  The
consolidated financial statements and notes thereto are presented in
accordance with generally accepted accounting principles ("GAAP") for property
and casualty insurance companies and include the accounts of Orion and its
majority-owned subsidiaries.  The Company's investments in unconsolidated
affiliates are accounted for using the equity method (See Note C).  All
material intercompany balances and transactions have been eliminated.

     Adoption of new accounting principles - In 1993 the Company adopted new
accounting standards issued by the Financial Accounting Standards Board which
had a significant impact on the Company's financial statements.  The Company
was required to adopt these standards, which are more fully discussed in the
notes that follow:

SFAS No. 106 -  Employers' Accounting for Postretirement Benefits Other Than   
                  Pensions

SFAS No. 109 -  Accounting for Income Taxes

SFAS No. 115 -  Accounting for Certain Investments in Debt and Equity          
                  Securities

     Regulation - The Company's insurance subsidiaries are subject to
comprehensive regulation by various state insurance departments including
regulations limiting dividend payments to Orion and intercompany transactions. 
Under these regulations, the maximum dividends permitted at December 31, 1995
for the ensuing twelve months, without prior approval, aggregated $83,173,000. 
However, state insurance regulators have broad discretionary authority with
respect to approving the payment of dividends by insurance companies. 
Policyholders' surplus of Orion's wholly-owned insurance subsidiaries
determined in accordance with prescribed statutory accounting practices
amounted to $521,510,000 at December 31, 1995 and $458,676,000 at December 31,
1994.  Statutory net income amounted to $83,842,000, $61,518,000 and
$66,862,000 for 1995, 1994 and 1993, respectively.  

     Cash - For purposes of the consolidated statement of cash flows, the
Company considers only demand deposit accounts to be cash.






                                     -52-

<PAGE>
                  ORION CAPITAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     Investments - Effective December 31, 1993, the Company adopted Statement
of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," which establishes the available-
for-sale category of investment securities and requires such securities to be
recorded at market value, with unrealized gains and losses reported in a
separate component of stockholders' equity.  As a result of the adoption of
this standard on December 31, 1993, the Company reclassified investments with
a market value of $452,102,000 from fixed maturities recorded at amortized
cost to fixed maturities recorded at market, and increased unrealized
appreciation on investments, a component of stockholders' equity, by
$20,720,000, net of deferred income taxes.  Fixed maturity investments include
bonds, preferred stocks with mandatory redemption features, and certificates
of deposit that mature more than one year after the balance sheet date.  Fixed
maturity investments that the Company has both the positive intent and the
ability to hold to maturity are recorded at amortized cost.  Fixed maturity
investments which may be sold in response to, among other things, changes in
interest rates, prepayment risk, income tax strategies or liquidity needs, are
classified as available-for-sale and are carried at market value.  Common
stocks and non-redeemable preferred stocks are stated at market value. 
Fluctuations in the market value of these equity securities are recorded as
unrealized investment gains or losses and credited or charged to stockholders'
equity.  Other long-term investments principally include equity ownership
interests in limited partnerships, which are recorded using the equity method
of accounting.  Short-term investments include certificates of deposit and
commercial paper which mature within one year of the balance sheet date, money
market accounts and United States Treasury Bills.  Estimates of market values
are generally based on quoted market prices or dealer quotes, if available, or
otherwise on an evaluation of the issuers' financial statements.  Realized
investment gains and losses, including provision for other than temporary
impairment of investment securities, are recognized on the specific
identification method.  

     Deferred Policy Acquisition Costs - Costs that vary with, and are
directly related to, the production of new and renewal business are deferred
and amortized as the related premiums are earned.  The test for recoverability
of such deferred costs includes the consideration of net investment income.

     Excess of Cost Over Fair Value of Net Assets Acquired - The excess of the
cost of acquiring subsidiaries over the fair value of their net assets
("goodwill") is amortized on a straight-line basis over periods of 25 to 40
years.  The Company evaluates the recoverability of goodwill from expected
future cash flows, and impairments would be recognized in operating results if
a permanent diminution in value were to occur.

     Revenue Recognition - Premiums are earned on a daily pro rata basis over
the policy period.  A provision is made for anticipated retrospective premium
adjustments and audit premiums.  Direct and assumed premiums are reduced for
reinsurance ceded to other insurers.

                                    -53-
<PAGE>
                  ORION CAPITAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     Policy Liabilities and Reinsurance - Loss and loss adjustment expense
liabilities are established in consideration of individual cases for reported
losses and past experience for incurred but not yet reported losses ("IBNR"). 
Estimated reinsurance receivables are recognized in a manner consistent with
the liabilities relating to the underlying reinsured contracts.  At December
31, 1995 and 1994, long-term disability workers compensation loss reserves are
carried at $56,603,000 and $51,886,000, respectively, in the consolidated
financial statements at net present value using a statutory interest rate of
3.5%.  Policyholders' dividends on participating policies are accrued at
estimated payment rates as the related premiums are earned.  Participating
business represented 24% and 21% of premiums in-force at  December 31, 1995
and 1994, respectively.  As a percent of premiums earned, participating
business amounted to 24% in 1995 and 21% in 1994 and 1993.
                
     Federal Income Taxes -  As of January 1, 1993 the Company prospectively
adopted SFAS No. 109, "Accounting for Income Taxes," replacing the previous
standard for accounting for income taxes, SFAS No. 96.  The objectives of SFAS
No. 109 are to recognize taxes payable or refundable for the current year, and
deferred tax assets or liabilities for the future tax consequences of events
that have been recognized in the Company's financial statements or tax
returns.  The new standard provides for the recognition of deferred tax assets
that were not recognized under SFAS No. 96, and resulted in the recognition of
a cumulative tax benefit of $16,881,000 ($1.16 per share) in the Company's
consolidated statement of earnings for the year ended December 31, 1993.

     Postretirement Benefits - Effective January 1, 1993 the Company adopted
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," which requires the Company to accrue the estimated cost of retiree
benefits during the years the employees provide services.  The Company
previously expensed the cost of medical benefits provided to retirees as they
were paid.  The cumulative effect of adopting SFAS No. 106 as of January 1,
1993 was a decrease in net earnings of $5,056,000 ($.35 per share), after a
tax benefit of $2,604,000, which has been included in the Company's
consolidated statement of earnings for the year ended December 31, 1993.

     Stock Split - Common stock and per common share data have been restated,
as required, to give effect to the 5-for-4 stock split paid on November 15,
1993 to stockholders of record on October 15, 1993.

     Earnings Per Common Share -  Earnings per common share is computed using
the weighted average common and dilutive common equivalent shares outstanding. 








                                     -54-

<PAGE>
                  ORION CAPITAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note B - Acquisition of Wm. H. McGee & Co., Inc.

     On June 30, 1995, Orion purchased all of the capital stock of Wm. H.
McGee & Co., Inc. ("McGee") for $22,000,000 in cash, and incurred acquisition
expenses of $355,000.  McGee specializes in underwriting ocean marine, inland
marine and property insurance through an underwriting pool in the United
States and one in Canada.  The business is written by McGee on behalf of the
insurance companies that comprise the pools.  The Company's participation in
the United States pool was 6%, 7% and 14.5% in 1993, 1994 and 1995,
respectively.  Participation in the Canadian pool was 10% in 1993 and 1994 and
15% in 1995.  The Company has agreed to increase its rate of participation for
1996 to 37% in the United States and approximately 49% in Canada, and by an
additional 10.5% to 16.5%, at the Company's option, for 1997 in both of the
McGee pools.  The acquisition has been accounted for by the purchase method,
and McGee's operations are included in the Company's results of operations
from July 1, 1995.  The Company recorded $22,317,000 for the excess of cost
over the estimated fair value of the net assets acquired, which is being
amortized over a 30 year period.  The consolidated results of the Company's
operations on a proforma basis, as if the purchase had been made as of the
beginning of the year, would not be materially different than reported herein.

Note C - Investments in Affiliates

     As of December 31, 1995 the Company owned 49.1% of the common stock of
Guaranty National Corporation ("Guaranty National") and 20.0% of Intercargo
Corporation ("Intercargo"), both publicly-held companies.  The Company's
financial statements include the portion of Guaranty National's and
Intercargo's results attributable to the Company's ownership on an equity
accounting basis.  The Company records its share of Intercargo's operating
results in the subsequent quarter, after Intercargo has reported its financial
results.  
<TABLE>
<CAPTION>
                                                             December 31,
                                                         -------------------
                                                           1995       1994     
                                                           ----       ----     
                                                           (000s omitted)
<S>                                                      <C>        <C>
The Company's investments in and advances to 
  affiliates were as follows:
  Book value .........................................   $125,731   $108,510
  Market value .......................................    128,120    138,786

  Guaranty National shares held ......................      7,340      6,004
    - Book value of shares held ......................   $106,059   $ 72,564
    - Market value of shares held ....................    112,855    110,320 

  Intercargo shares held .............................      1,526      1,526 
    - Book value of shares held ......................   $ 19,672   $ 18,750
    - Market value of shares held ....................     15,265     12,593
</TABLE>

                                     -55-

<PAGE>
     In June 1995 Guaranty National sold 1,550,000 shares of its common stock
in an offering under Regulation S of the Securities Act of 1933, as amended,
at a net offering price of $15.76 per share.  The Company converted
$20,896,000 of Guaranty National subordinated notes it held into 1,326,128
shares of Guaranty National common stock at the net price received by Guaranty
National from the offering.  The sale of stock and conversion of the
subordinated notes increased the stockholders' equity of Guaranty National and
facilitated the procurement of financing for Guaranty National's acquisition
of Viking Insurance Holdings, Inc. in July 1995.

     In 1993 the Company acquired 1,526,484 shares, or 20%, of the common
stock of Intercargo.  The aggregate purchase price, including expenses, was
$19,315,000.  The excess of cost over the fair value of the underlying equity
in net assets acquired was $11,158,000, which is being amortized over a 25
year period.

     The Company's share of the undistributed earnings of Guaranty National
after it was deconsolidated following the sale by the Company of a majority
interest in a public offering on November 20, 1991, and Intercargo after
acquiring an equity interest in 1993, were, in the aggregate, $24,867,000 as
of December 31, 1995 and $22,874,000 as of December 31, 1994.  Transactions
with Guaranty National for 1995, 1994 and 1993 reported in the consolidated
statement of earnings include interest income on the Guaranty National
subordinated notes of $1,101,000, $1,640,000 and $1,843,000, investment
management fee income of $595,000, $550,000 and $550,000, respectively,  and
interest expense on a mortgage participation loan of $407,000 in each year.


























                                     -56-
<PAGE>
<TABLE>
<CAPTION>
                  ORION CAPITAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     Summarized financial information for the Company's affiliates is set
forth below:                    
                                                              
                                               Year Ended December 31,  
                                           ------------------------------
                                             1995       1994       1993
                                             ----       ----       ----
                                                    (000s omitted)
<S>                                        <C>        <C>        <C>
Revenues:
  Premiums earned ......................   $474,534   $376,444   $272,636
  Realized investment gains ............      3,291      3,007      5,996
  Investment and other income ..........     38,422     28,090     21,813
                                           --------   --------   --------
                                            516,247    407,541    300,445
                                           --------   --------   --------
Expenses:
  Insurance expenses ...................    490,952    367,501    274,377
  Interest and other ...................      7,452      5,428      3,447
                                           --------   --------   --------
                                            498,404    372,929    277,824
                                           --------   --------   --------
Earnings before federal income taxes
  and cumulative effect of change in
  accounting principles ................     17,843     34,612     22,621
Federal income taxes ...................      1,482      8,734      4,481
                                           --------   --------   --------
  Earnings before cumulative effect of
    change in accounting principles ....   $ 16,361   $ 25,878   $ 18,140
                                           ========   ========   ========
The Company's proportionate share:
  Earnings before cumulative effect of
    change in accounting principles ....   $  5,504   $ 11,586   $  9,387
                                           ========   ========   ========
  Cumulative effect of change in
    accounting principles 
    (SFAS Nos. 106 and 109) ............                         $    545 
                                                                 ========  
<CAPTION>
                                                             December 31,
                                                         --------------------
                                                            1995       1994    
                                                            ----      ----     
                                                            (000s omitted)
<S>                                                      <C>         <C>
Cash and investments .................................   $  714,584  $461,203
Other assets .........................................      306,307   268,872  
                                                         ----------  --------
                                                          1,020,891   730,075
 
Policy liabilities ...................................     (582,884) (426,997)
Notes payable ........................................     (112,735)  (56,383)
Other liabilities ....................................      (63,341)  (62,405) 
                                                         ----------  --------
Stockholders' equity .................................   $  261,931  $184,290 
                                                         ==========  ========

                                     -57-

<PAGE>
<CAPTION>
                    ORION CAPITAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note D - Investments

     The amortized cost and estimated market values of investments in fixed
maturities, equity securities and short-term investments are as follows:

                                              Gross        Gross     Estimated
                                Amortized   Unrealized   Unrealized    Market
December 31, 1995                  Cost       Gains        Losses      Value  
-----------------               ----------  ----------   ----------  --------- 
                                               (000s omitted)
<S>                             <C>          <C>         <C>        <C>
Held-to-maturity securities:
  United States Government
    and government agencies
    and authorities ........... $   90,770   $  3,363    $   (295)  $   93,838
  States, municipalities and
    political subdivisions ....    137,807      6,424           -      144,231
  Foreign governments .........         50          -           -           50
  Corporate securities ........     36,542      1,638         (17)      38,163
                                ----------   --------    --------   ----------
                                $  265,169   $ 11,425    $   (312)  $  276,282
                                ==========   ========    ========   ==========

Available-for-sale securities:
  United States Government
    and government agencies
    and authorities ........... $  206,722   $ 13,054    $ (3,712)  $  216,064
  States, municipalities and
    political subdivisions ....    246,026     18,619        (157)     264,488
  Foreign governments .........      7,900        562           -        8,462
  Corporate securities ........    270,001      9,895      (3,647)     276,249
  Mortgage-backed securities 
    (exclusive of government
     agencies) ................     17,359        282         (35)      17,606
  Equity securities ...........    257,378     61,979     (14,472)     304,885
  Short-term investments.......    187,013          -           -      187,013
                                ----------   --------    --------   ----------
                                $1,192,399   $104,391    $(22,023)  $1,274,767 
                                ==========   ========    ========   ==========
<PAGE>
December 31, 1994
-----------------
Held-to-maturity securities:
  United States Government
    and government agencies
    and authorities ........... $  124,176   $    242    $ (4,084)  $  120,334
  States, municipalities and
    political subdivisions ....    137,736      1,848      (3,062)     136,522
  Foreign governments .........         50          -           -           50
  Corporate securities ........    105,455      1,020      (4,466)     102,009
                                ----------   --------    --------   ----------
                                $  367,417   $  3,110    $(11,612)  $  358,915
                                ==========   ========    ========   ==========

Available-for-sale securities:
  United States Government
    and government agencies
    and authorities ........... $  168,022   $  1,016    $(18,083)  $  150,955
  States, municipalities and
    political subdivisions ....    180,145        955      (5,738)     175,362
  Foreign governments .........      7,678        113        (133)       7,658
  Corporate securities ........    193,909      2,884     (15,553)     181,240
  Mortgage-backed securities 
    (exclusive of government
     agencies) ................     16,126        102      (1,019)      15,209
  Equity securities ...........    250,929     37,345     (23,840)     264,434
  Short-term investments.......    104,201          -           -      104,201
                                ----------   --------    --------   ----------
                                $  921,010   $ 42,415    $(64,366)  $  899,059 
                                ==========   ========    ========   ==========

                                       -58-

<PAGE>
<CAPTION>
                  ORION CAPITAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     Net investment income for the three years ended December 31, 1995 was as
follows:
                                                Year Ended December 31,
                                           ---------------------------------
                                              1995        1994        1993
                                              ----        ----        ----
                                                     (000s omitted)
<S>                                        <C>         <C>         <C>
Net investment income:
  Fixed maturities ......................  $ 69,453    $ 67,305    $ 69,565 
  Equity securities .....................    15,410      14,964      10,495
  Other long-term investments ...........     9,125         685       9,130
  Short-term investments ................     6,311       2,902       3,276
  Accounts and notes receivable .........       113         134         179
  Other .................................       353         411         712    
                                           --------    --------    --------
    Total investment income .............   100,765      86,401      93,357
  Less investment expenses ..............     1,725       1,486       1,554
                                           --------    --------    --------
    Net investment income ...............  $ 99,040    $ 84,915    $ 91,803
                                           ========    ========    ========
<CAPTION>
     Certain information concerning realized and unrealized gains (losses) for
fixed maturities and equity securities is set forth below:

                                                Year Ended December 31,
                                           ---------------------------------
                                              1995        1994        1993
                                              ----        ----        ----
                                                     (000s omitted)
<S>                                        <C>         <C>         <C>
Fixed maturities (only available-for-sale
  securities for 1995 and 1994):
  Gross realized gains ..................  $  7,891    $  4,774    $ 10,817 
  Gross realized losses .................    (8,372)     (4,267)     (4,155)
  Provision for other than temporary
    impairment ..........................    (4,050)      (750)      (2,147)
                                           --------    --------    --------
                                           $ (4,531)   $   (243)   $  4,515
                                           ========    ========    ========
  Change in unrealized gains (losses) 
    recorded in stockholders' equity ....  $ 70,317    $(66,076)   $ 29,131
                                           ========    ========    ========
Equity securities:
  Gross realized gains ..................  $ 17,879    $  5,319    $ 15,163
  Gross realized losses .................    (1,348)     (1,474)     (3,890)
  Provision for other than temporary
    impairment ..........................      (285)       (381)     (6,310)
                                           --------    --------    --------
                                           $ 16,246    $  3,464    $  4,963
                                           ========    ========    ========
  Change in unrealized gains (losses) 
    recorded in stockholders' equity ....  $ 34,002    $(18,827)   $ 16,468
                                           ========    ========    ========
<CAPTION>
     In December 1995 the Company reclassified investments with a market value
of $102,581,000 from fixed maturities recorded at amortized cost to fixed
maturities recorded at market, and recorded unrealized appreciation net of
taxes of $1,329,000. This one-time transfer from the held-to-maturity
portfolio was permitted by the implementation guide for SFAS No. 115.

                                      -59-

<PAGE>
                  ORION CAPITAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)             

In 1994 the Company transferred securities of two issuers with an amortized
cost of $11,469,000 and a market value of $10,122,000 from the held-to-
maturity portfolio to the available-for-sale category due to a deterioration
in the creditworthiness of these issuers.  The Company sold only one security
with an amortized cost of $991,000 from the held-to-maturity portfolio during
1994, resulting in a realized gain of $164,000.

     The amortized cost and estimated market values of fixed maturity and
short-term investments at December 31, 1995, by contractual fiscal maturity,
are shown below.  Expected maturities will differ from contractual maturities
because issuers of securities may have the right to call or prepay obligations
with or without call or prepayment penalties.

                                      Fixed Maturities      Fixed Maturities
                                      Held-to-Maturity     Available-for-Sale
                                    --------------------  --------------------
                                               Estimated             Estimated
                                    Amortized    Market   Amortized    Market
                                       Cost      Value       Cost      Value
                                    ---------  ---------  ---------  ---------
                                                   (000s omitted)
<S>                                  <C>        <C>        <C>       <C>
Due in one year or less ..........   $ 19,220   $ 19,274   $232,198  $231,714
Due after one year through five 
  years ..........................    121,599    125,403     59,323    59,628
Due after five years through ten 
  years ..........................     59,894     62,950    116,893   119,686
Due after ten years ..............     64,456     68,655    368,443   396,435
                                     --------   --------   --------  --------
                                      265,169    276,282    776,857   807,463
Mortgage-backed securities .......          -          -    158,174   162,419
                                     --------   --------   --------  --------
                                     $265,169   $276,282   $935,031  $969,882
                                     ========   ========   ========  ========

</TABLE>

     Other long-term investments had aggregate carrying values of $62,925,000
at December 31, 1995 and $52,564,000 at December 31, 1994 including mortgage
loans on real estate of $1,979,000 and $1,764,000, respectively.  Estimated
market values of mortgage loans and other long-term investments approximate
their carrying values.  The carrying value of the Company's investments in
principal-only securities and interest-only securities totalled approximately
$7,685,000, or 0.5% of total invested assets, at December 31, 1995.  







                                    -60-
<PAGE>
                    ORION CAPITAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     The carrying value of securities on deposit with state regulatory
authorities in accordance with statutory requirements totalled $237,732,000
and $234,265,000 at December 31, 1995 and 1994, respectively.  Excluding
investments in Guaranty National and securities of the United States
Government and its agencies, the Company did not have any investments in
securities of any one issuer that exceeded $25,000,000.  The Company had
$1,441,000 and $1,344,000 of fixed maturity investments for which it was not
accruing income for the years ended December 31, 1995 and 1994, respectively.  

Note E - Reinsurance

     In the normal course of business, the Company's insurance subsidiaries
reinsure certain risks, generally on an excess-of-loss or pro rata basis, with
other companies in order to limit losses.  Reinsurance does not discharge the
primary liability of the original insurer.  As of December 31, 1995 and 1994,
recoverables for reinsurance ceded to the Company's four largest reinsurers,
excluding direct business written for the McGee pool, were an aggregate of
$84,654,000 and $99,476,000, respectively.  At December 31, 1995 and 1994
these reinsurers provided qualified trust accounts for the benefit of the
Company of $39,223,000 and $43,526,000, respectively.  As of December 31,
1995, recoverables for reinsurance ceded to the clearing company for the McGee
pool were $60,745,000, versus $1,777,000 for 1994, and the Company had ceded
balances payable to the clearing company of $22,660,000.  The table below
illustrates the effect of reinsurance on premiums written and premiums earned:
<TABLE>
<CAPTION>
                                                Year Ended December 31,
                                         -------------------------------------
                                             1995         1994         1993
                                             ----         ----         ----
                                         (000s omitted-except for percentages)
<S>                                       <C>          <C>          <C>
Direct premiums written ................  $ 799,284    $ 691,493    $ 647,426
Reinsurance assumed ....................    127,445      120,851      132,702
                                          ---------    ---------    ---------
Gross premiums written .................    926,729      812,344      780,128
Reinsurance ceded ......................   (169,293)    (100,289)    (144,542)
                                          ---------    ---------    ---------
Net premiums written ...................  $ 757,436    $ 712,055    $ 635,586 
                                          =========    =========    =========
Percentage of amount assumed to net ....       16.8%        17.0%        20.9%
                                          =========    =========    =========
Direct premiums earned .................  $ 754,927    $ 685,110    $ 635,374
Reinsurance assumed ....................    126,552      129,737      117,711
                                          ---------    ---------    ---------
Gross premiums earned ..................    881,479      814,847      753,085
Reinsurance ceded ......................   (132,476)    (123,624)    (135,681)
                                          ---------    ---------    ---------
Net premiums earned ....................  $ 749,003    $ 691,223    $ 617,404
                                          =========    =========    =========
Loss and loss adjustment expenses
  incurred recoverable from reinsurers..  $  70,872    $  56,778    $  70,297
                                          =========    =========    =========
</TABLE>
     Reinsurance recoverables and prepaid reinsurance includes prepaid
reinsurance of $68,525,000 at December 31, 1995 and $31,708,000 at December
31, 1994.
                                     -61-

<PAGE>
                    ORION CAPITAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note F - Loss and Loss Adjustment Expense Reserves

     An analysis of the Company's calendar year loss and loss adjustment
expense reserves is summarized as follows:
<TABLE>
<CAPTION>
                                              Year Ended December 31,
                                       -------------------------------------
                                           1995         1994         1993
                                           ----         ----         ----
                                                   (000s omitted)
<S>                                     <C>          <C>          <C>
Net balance, beginning of year .......  $  891,542   $  830,805   $  746,298
                                        ----------   ----------   ----------
Provision:
  Current year .......................     500,514      480,826      434,840
  Prior years ........................      11,719       17,297       24,292
                                        ----------   ----------   ----------
                                           512,233      498,123      459,132
                                        ----------   ----------   ----------

Payments:
  Current year .......................     146,540      134,120      125,042
  Prior years ........................     263,257      303,266      249,583
                                        ----------   ----------   ----------
                                           409,797      437,386      374,625
                                        ----------   ----------   ----------
Net balance, end of year .............     993,978      891,542      830,805
  Add reinsurance recoverables .......     281,004      289,787      309,598
                                        ----------   ----------   ----------
Balance, end of year .................  $1,274,982   $1,181,329   $1,140,403
                                        ==========   ==========   ==========
</TABLE>
     Loss reserve estimates are based on forecasts of the ultimate settlement
of claims and are subject to uncertainty with respect to future events.  Loss
reserve amounts are based on management's informed estimates and judgments,
using data currently available.  Reserve amounts and the underlying actuarial
factors and assumptions are regularly analyzed and adjusted to reflect new
information.  Such reevaluation is a normal, recurring activity that is
inherent in the process of loss reserve estimation and therefore, no
assurances can be given that reserve development will not occur in the future. 
A substantial portion of the loss development experienced by the Company
during the three years ended December 31, 1995 resulted from pools and
associations and other reinsurance, where development is related to the ceding
companies' experience, and from discontinued programs or lines of business. 
Reserve strengthening, higher initial reserving and increased stabilization in
the Company's business have resulted in a decreasing level of loss
development.

     An analysis of the Company's loss and loss adjustment expense
environmental reserves and related claim counts for the three years ended
December 31, 1995 is presented below:

                                     -62-

<PAGE>
                    ORION CAPITAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
                                        Year Ended December 31,
                         -----------------------------------------------------
                              1995               1994               1993
                         ---------------    ---------------    --------------- 
                                  Claim              Claim              Claim
                         Amount   Counts    Amount   Counts    Amount   Counts
                         ------   ------    ------   ------    ------   ------
                                   (000s omitted for dollar amounts)
<S>                      <C>        <C>     <C>        <C>     <C>        <C>
Net balance, beginning 
  of year .............  $20,601    467     $17,189    512     $15,184    335
  Provision ...........   19,633             10,645              7,562
  Payments ............   (5,675)            (7,233)            (5,557)
                         -------            -------            -------
Net balance, end of 
  year ................   34,559    474      20,601    467      17,189    512
  Add reinsurance 
    recoverables ......   10,509             11,391              4,699
                         -------            -------            -------
Balance, end of year ..  $45,068            $31,992            $21,888
                         =======            =======            =======
</TABLE>
     Establishing reserve liabilities for environmental claims is subject to
significant uncertainties that make reserve estimation difficult.  Legal
decisions have tended to expand insurance coverage beyond the intent of the
policies.  The Company does not use discounting in determining its reserves
for environmental claims.  IBNR of $21,739,000 and $13,791,000 is included in
net reserves for environmental claims at December 31, 1995 and 1994,
respectively.

     The Company's environmental claims principally relate to asbestos and
hazardous waste, arising from certain liability business written prior to the
mid 1980's, which business was never a major element of the Company's
operations.  Environmental claims are also received from certain reinsurance
pools and associations where reserves are established based on information
reported to the Company by the managers of those pools and associations.  In
view of the lines of insurance that the Company has traditionally written,
environmental claims have not represented, and are not expected to represent
in the future, a material portion of the Company's total claims.  












                                     -63-
<PAGE>
                    ORION CAPITAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note G - Notes Payable

     On July 17, 1995, Orion issued 7 1/4% Senior Notes due 2005 with a face
value of $100,000,000 (the "7 1/4% Senior Notes") in a public offering.  The
net proceeds from the offering were approximately $98,113,000, of which
$46,500,000 was used to repay Orion's debt under a bank loan agreement and the
balance was used for general corporate purposes.  Orion had $42,500,000 of
notes payable under its bank loan agreement as of December 31, 1994, at
interest rates between 6.71% and 6.90%.  The indentures for the 7 1/4% Senior
Notes and for Orion's 9 1/8% Senior Notes due 2002 limit the amount of liens
and guarantees by the Company, and the Company's ability to incur secured
indebtedness without equally and ratably securing the senior notes.  As of
December 31, 1995, $110,000,000 of Orion's debt is scheduled to be repaid on
September 1, 2002 and the remaining $100,000,000 is due on July 15, 2005.

     Notes payable are recorded at face value less unamortized discount.  The
carrying value and estimated market value of notes payable consist of the
following:
<TABLE>
<CAPTION>
                                                                        Estimated
                                                  Carrying Value       Market Value
                                                ------------------  ------------------
          December 31,                            1995      1994      1995      1994
          ------------                            ----      ----      ----      ----
                                                            (000s omitted)
<S>                                             <C>       <C>       <C>       <C>
$110,000,000 face amount, 9 1/8% Senior Notes,
  due September 1, 2002 ....................... $109,894  $109,882  $125,642  $111,815   
$100,000,000 face amount, 7 1/4% Senior Notes,
  due July 15, 2005 ...........................   99,254         -   104,160         -
Borrowings under loan agreement with banks 
  (various interest rates) ....................        -    42,500         -    42,500
                                                --------  --------  --------  --------
                                                $209,148  $152,382  $229,802  $154,315  
                                                ========  ========  ========  ========
</TABLE>














                                            -64-
<PAGE>
                    ORION CAPITAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note H - Federal Income Taxes

     Orion and its wholly-owned subsidiaries file consolidated federal income
tax returns.  The consolidated federal income tax current provisions for 1995
and 1993 were based on the regular tax method.  The current provision for 1994
was computed by the alternative minimum tax method.  The 1993 tax provision
reflects a tax benefit of $450,000 from the effect of the increase in the
federal tax rate on the Company's deferred tax asset.  The Company adopted
SFAS No. 109 effective January 1, 1993.  The new standard provides for the
recognition of deferred tax assets that were not recognized under the prior
standard, SFAS No. 96.  The cumulative effect of adopting SFAS No. 109 was a
benefit of $16,881,000.  Substantially all federal income taxes incurred by
Orion and its subsidiaries relate to domestic operations.  
<TABLE>
<CAPTION>
     The components of the provision (benefit) for federal income taxes on
income from operations, and allocations of taxes (benefits) to other items for
the three years ended December 31, 1995 are as follows:

                                                 Year Ended December 31,
                                           -----------------------------------
                                              1995        1994        1993
                                              ----        ----        ----
                                                      (000s omitted)
<S>                                         <C>         <C>         <C>
Taxes on income from continuing 
  operations:
  Current ...............................   $ 25,578    $  6,395    $ 16,448
  Deferred ..............................     (5,165)      9,906        (931)
                                            --------    --------    --------
                                              20,413      16,301      15,517
Taxes allocated to other items:
  Cumulative effect of change in 
    accounting for postretirement 
    benefits ............................          -           -      (2,604)
  Stockholders' equity, for unrealized 
    appreciation (depreciation) of 
    securities ..........................     40,837     (32,864)     18,718
  Stockholders' equity, for foreign 
    exchange translation gains (losses) .         13        (159)       (394)
                                            --------    --------    --------
                                            $ 61,263    $(16,722)   $ 31,237
                                            ========    ========    ========








                                     -65-

<PAGE>
<CAPTION>
                   ORION CAPITAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     The tax effects of the temporary differences comprising the Company's net
deferred tax asset as of December 31, 1995 and 1994 are as follows:

                                                         December 31,
                                                    ----------------------
                                                       1995        1994
                                                       ----        ----
                                                        (000s omitted)
<S>                                                  <C>          <C>
Deferred tax assets:
  Loss reserve discounting ......................    $ 55,512     $ 52,940
  Unearned premium reserves .....................      16,609       16,145
  Policyholders' dividends ......................       6,596        4,188
  Realized investment losses ....................       4,319        3,672
  Unrealized investment losses ..................           -        8,975
  Deferred income ...............................       2,482        2,659
  Retiree medical benefits ......................       4,263        3,097
  Other .........................................      11,560        8,426
                                                     --------     --------
                                                      101,341      100,102
                                                     --------     --------

Deferred tax liabilities:                                                      
  Deferred policy acquisition costs .............      27,186       24,548
  Investment in affiliates ......................      20,114       19,091
  Investment income .............................       9,933       10,375
  Unrealized investment gains ...................      31,482            -
  Other .........................................       3,900        4,080
                                                     --------     --------
                                                       92,615       58,094
                                                     --------     --------
                                                     $  8,726     $ 42,008
                                                     ========     ========


















                                     -66-
<PAGE>
<CAPTION>
                    ORION CAPITAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     A reconciliation of expected federal income tax expense on pre-tax
earnings before cumulative effect of adoption of new accounting principles at
regular corporate rates to actual tax expense is as follows:

                                          Year Ended December 31,
                              ------------------------------------------------
                                   1995             1994             1993     
                                   ----             ----             ----
                              Amount   Rate    Amount   Rate    Amount   Rate  
                              ------   ----    ------   ----    ------   ----
                                     (000s omitted-except for percentages)
<S>                           <C>      <C>    <C>       <C>    <C>       <C>
Expected income tax expense.. $30,812  35.0%  $25,041   35.0%  $25,377   35.0%
Change in enacted tax rate ..       -     -         -      -      (905)  (1.3)
Dividends-received deduction.  (5,601) (6.4)   (5,830)  (8.2)   (4,019)  (5.5)
Tax-exempt interest .........  (6,470) (7.3)   (5,362)  (7.5)   (4,929)  (6.8)
Amortization of goodwill ....     536    .6       410     .6       410     .6
Other .......................   1,136   1.3     2,042    2.9      (417)   (.6)
                              -------  ----   -------   ----   -------   ----
Actual income tax expense ... $20,413  23.2%  $16,301   22.8%  $15,517   21.4%
                              =======  ====   =======   ====   =======   ====
</TABLE>
Note I - Commitments

     Minimum lease commitments at December 31, 1995, with the majority having
initial lease periods from one to twenty-five years, are as follows:

                                                        (000s omitted)
       1996 .......................................        $15,661
       1997 .......................................         11,473
       1998 .......................................          9,331
       1999 .......................................          6,937
       2000 .......................................          6,003
       2001 and thereafter ........................         36,441
                                                           -------
         Minimum lease commitments ................        $85,846
                                                           =======

     Rent expense amounted to $14,112,000, $11,519,000 and $11,976,000 net of
sublease rentals of $9,000 in 1994 and $419,000 in 1993.  Substantially all
leases are for office space and equipment.  A number of lease commitments
contain renewal options ranging from one to thirty years.  

Note J - Contingencies

     On January 31, 1995, the Department of Insurance of the State of
California (the "Department") advised the Company that it had a liability of
approximately $4,000,000 plus interest under regulations issued with respect
to an amendment to the California Insurance Code known as Proposition 103.  On
November 2, 1995, the terms of a Stipulation and Consent Order between the
Department and the Company were adopted by the Commissioner of the Department. 
Pursuant to that order, the Company has no premium rollback liability under
Proposition 103.  Further, the Department acknowledged that premium rates
charged by the Company in California since the passage of Proposition 103 have
been in compliance with the requirements of the California Insurance Code.

                                     -67-

<PAGE>
                    ORION CAPITAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     Orion and its subsidiaries are routinely engaged in litigation incidental
to their businesses.  Management believes that there are no significant legal
proceedings pending against the Company which, net of reserves established
therefor, are likely to result in judgments for amounts that are material to
the financial condition, liquidity or results of operations of Orion and its
consolidated subsidiaries, taken as a whole.

Note K - Stockholders' Equity and Earnings Per Common Share

     During 1995, the Company repurchased 173,181 shares of its common stock
at an aggregate cost of $7,183,000.  The Company repurchased 442,327 shares
for $13,745,000 in 1994 and 177,658 shares for $5,473,000 in 1993.  

     Orion declared a 5-for-4 split of its common stock which was paid on
November 15, 1993 to shareholders of record on October 15, 1993.  All common
stock and per common share data presented in the financial statements give
effect to the stock split.  

     On December 21, 1992, Orion called for redemption its $2.125 Convertible
Exchangeable Preferred Stock (the "$2.125 Preferred Stock") on January 21,
1993.  The market price of the shares of common stock that a holder would
receive upon conversion of the preferred stock was substantially higher than
the redemption price of $25.76 per share.  Consequently, most holders
converted into common stock prior to the redemption date, resulting in the
issuance of 3,579 shares of common stock in December 1992 and 1,423,544 shares
of common stock in January 1993.  Holders of 21,605 shares of $2.125 Preferred
Stock, who did not elect to convert, redeemed their shares for an aggregate of
$557,000.

     On April 7, 1993, the Company redeemed all of the outstanding shares of
its Adjustable Rate Preferred Stock for $18,520,000 in cash.  

     Orion declared dividends on its common stock of $12,078,000, $10,828,000
and $9,860,000, or $.86, $.76 and $.68 per share in 1995, 1994 and 1993,
respectively.  Dividends were declared in 1993 in the amount of $407,000, or
$1.10 per share, on Orion's Adjustable Rate Preferred Stock and $2,000, or
$.12 per share, on the $2.125 Preferred Stock.

     The weighted average common shares outstanding for purposes of computing
earnings per share amounted to 14,187,000, 14,348,000 and 14,598,000 shares
for 1995, 1994 and 1993, respectively.  Dividends on preferred stock were
deducted from earnings in 1993 to compute earnings per common share.  

     Orion has a Stockholder Rights Plan (the "Rights Plan") under which each
outstanding share of common stock includes 64% of one preferred stock purchase
right (the "Rights").  The Rights Plan is designed to assure stockholders that
they will receive equitable treatment in the event of a proposed takeover.   


                                     -68-
<PAGE>
                    ORION CAPITAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under the Rights Plan, each holder of a Right is entitled to buy one-hundredth 
of a share of Series A Participating Junior Preferred Stock.  The Rights
become exercisable if an acquiror gains a 20% or greater beneficial ownership
interest in Orion's common stock, on other than fair and favorable terms to
all stockholders.  Each Right not owned by such acquiror will enable the
holder to purchase, at an initial exercise price of $80, common stock having a
value of twice the Right's exercise price.  In addition, under certain
circumstances if Orion is involved in a merger each Right will entitle its
holder to purchase, at the Right's then current exercise price, common shares
of such other company having a value of twice the Right's exercise price.

Note L - Employee Benefit Plans

     The Company maintains a Stock Savings and Retirement Plan (the "Plan"),
qualified under Internal Revenue Code Section 401(k), for eligible employees
of the Company (except for employees of McGee).  Employee and employer matched
contributions to the savings funds are limited to the extent allowable under
the Plan and federal income tax law.  The Plan also provides for defined
contribution savings and retirement benefits that allow the Company to make
annual contributions to the Plan based on a percentage of employees'
compensation.  Employees vest in the Company's contributions over a six-year
period.  The Company has adopted a Surplus Benefit Plan which provides
deferred benefits for those employees who received less than the full employer
contribution to the Company's 401(k) plan as a result of federal tax
limitations on participation in the Plan.

     McGee maintains a Profit Sharing Plan (the "McGee Plan") which is also a
401(k) plan for eligible employees of McGee.  Employee and employer
contributions are limited by the McGee Plan and federal income tax law. 
Employer contributions vest over a seven-year period.  McGee has
noncontributory defined benefit retirement plans covering all eligible
employees, and a nonqualified supplemental retirement plan for certain key
employees.  At December 31, 1995 the accumulated benefit obligation of the
defined benefit plans was approximately $20,205,000, and plan assets for these
plans were approximately $19,233,000.

     The Company maintains a number of incentive plans for key employees. 
Under the Company's 1982 Long-Term Performance Incentive Plan (the "Incentive
Plan"), shares of restricted stock as well as stock options may be granted by
Orion.  Orion granted 27,515, 70,015 and 5,688 shares of restricted stock to
key employees during 1995, 1994 and 1993, respectively.  Restricted stock is
considered issued and outstanding when awarded. There are restrictions as to
its transferability, which restrictions lapse proportionately from the second
to the fifth anniversaries of grant date.  As of December 31, 1995, the
restrictions have not lapsed on 115,556 shares of restricted stock.  All stock
options are granted by Orion at fair market value at date of grant, and are
intended to qualify as incentive stock options.  Stock options become 

                                     -69-

<PAGE>
                    ORION CAPITAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

exercisable from the first through fourth anniversaries of the date of grant,
and expire ten years after the date of grant.  As of December 31, 1995, the
number of shares of stock reserved under the Incentive Plan is 471,545 of
which 177,374 shares are available for future awards and 294,171 shares are
for outstanding stock options, including 175,180 stock options that are
exercisable.  A summary of the option transactions is as follows:
<TABLE>
<CAPTION>
                                       Year Ended December 31,  
                     --------------------------------------------------------------------- 
                                1995                   1994                   1993        
                                ----                   ----                   ----
                                     Price                  Price                  Price
                        Options      Range     Options      Range     Options      Range
                        -------      -----     -------      -----     -------      -----
<S>                     <C>      <C>           <C>      <C>           <C>     <C>
Balance - January 1 ... 348,802  $10.16-33.75  284,337  $10.16-32.40  305,860 $10.16-23.92
Granted ...............       -       -        129,800   32.50-33.75    3,438  32.40       
Cancelled .............  (5,273)  23.92        (19,531)  14.56-23.92        -      - 
Exercised ............. (49,358)  10.16-23.92  (45,804)  10.16-23.92  (24,961) 10.16-14.56
                        -------                -------                -------    
Balance - December 31.. 294,171   10.16-33.75  348,802   10.16-33.75  284,337  10.16-32.40 
                        =======                =======                =======     
</TABLE> 
      
     Orion maintains a non-qualified defined benefit retirement plan for
members of the Board of Directors who are not employees.  Benefits are based
on years of service and director fee levels at retirement.  In 1995, Orion's
stockholders authorized 100,000 shares for a stock option plan for non-
employee directors.  During 1995 Orion granted 54,000 stock options to
directors at fair market value, which become exercisable one year from the
date of grant and expire in ten years.

     The total expense for 1995, 1994 and 1993 for the above savings,
retirement and pension benefit plans for employees and directors amounted to
$6,588,000, $4,659,000 and $3,277,000, respectively.

Note M - Postretirement Medical Benefits

     The Company provides postretirement medical benefits to full-time
employees who have attained age 55 and have 10 years of consecutive service
immediately prior to retirement.  McGee employees that attain age 55 while in
service with McGee are eligible for postretirement medical benefits if they
have 10 years of service, with an increasing level of benefits for additional
years of service up to 35.  The postretirement health care plans are not
funded.  The accumulated postretirement benefit obligation of these plans 
included in other liabilities in the consolidated balance sheet, including
McGee's plan for 1995, is as follows:



                                     -70-

<PAGE>
                    ORION CAPITAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                                                        December 31,
                                                      ----------------
                                                       1995      1994
                                                       ----      ----
                                                       (000s omitted)
       Retirees .................................     $ 3,353   $2,143
       Fully eligible active plan participants ..       1,713      976
       Other active plan participants ...........       3,585    3,234
       Unrecognized net gains ...................       3,528    2,496
                                                      -------   ------  
                                                      $12,179   $8,849
                                                      =======   ======

     Net postretirement benefit cost for the years ended December 31, 1995,
1994 and 1993 was $1,203,000, $1,243,000 and $598,000 consisting of service
cost benefits earned of $695,000, $813,000 and $130,000 and interest on the
accumulated postretirement benefit obligation of $612,000, $539,000 and
$468,000, respectively, and amortization of unrecognized net gains of $104,000
in 1995 and $109,000 in 1994.

     The expected health care cost trend rate used as of December 31, 1995 was
9% for 1996 and 1997, decreasing linearly each year until it reaches 5% for
2005 and future years.  At December 31, 1994 the expected health care cost
trend rates used were 10.25% for 1995 and 9.5% for 1996, ratably reduced to 6%
for 2003 and later years.  A one-percentage-point increase in the assumed
health care cost trend rate for each year would increase the aggregate service
cost and interest cost for 1995, 1994 and 1993 by $245,000, $289,000 and
$145,000, respectively, and increase the accumulated postretirement benefit
obligation as of December 31, 1995 and 1994 by $1,304,000 and $953,000,
respectively.  A one-percentage-point decrease in the health care cost rate
would decrease service and interest costs and the accumulated post retirement
benefit obligation by similar amounts.  The assumed discount rate used in
determining the accumulated postretirement benefit obligation was 7.0% at
December 31, 1995 and 8.5% at December 31, 1994.
















                                     -71-

<PAGE>
                    ORION CAPITAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note N - Industry Segment Information

     The Company's insurance operations are organized and reported as three
business segments: Regional Operations, Reinsurance/Special Programs and
Guaranty National Companies.  Regional Operations provides workers
compensation insurance products through EBI Companies.  Reinsurance/Special
Programs includes DPIC Companies (which markets professional liability
insurance), Connecticut Specialty (which writes specialty insurance programs),
SecurityRe Companies (a reinsurer), McGee (an underwriting management company
that specializes in ocean marine, inland marine and property insurance) and a
20% interest in Intercargo (which underwrites insurance coverages for
international trade).  The third segment consists of the Company's 49.1%
interest in Guaranty National Corporation, which specializes in nonstandard
commercial and personal automobile insurance.  The Company includes its share
of Guaranty National's earnings using the equity method of accounting.  The
miscellaneous income and expenses (primarily interest, general and
administrative expenses and other consolidating elimination entries) of the
parent company are reported as a fourth segment.  Identifiable assets of the
Regional Operations and Reinsurance/Special Programs segments are primarily
allocated based on the cash flows of these segments.

     Financial information for the Company's segments for 1995, 1994 and 1993
is shown below:


























                                     -72-
<PAGE>
<TABLE>
<CAPTION>                                                                                                   
                                                                                  Earnings (Loss)
                                                                                  Before Federal       
                                                                                   Income Taxes   
                                                   Realized                       and Cumulative
                                         Net      Investment                         Effect of       
                            Premiums  Investment    Gains      Other     Total      Accounting    Identifiable
                             Earned     Income     (Losses)    Income   Revenues      Changes        Assets
                            --------  ----------  ----------  --------  --------  --------------  ------------
                                                                (000s omitted)
<S>                        <C>        <C>         <C>         <C>       <C>          <C>           <C>     
1995:
  Regional Operations....  $322,098   $ 35,750    $  4,636    $    188  $362,672     $ 57,830      $  836,089
  Reinsurance/Special                                                 
    Programs ............   426,905     59,584       7,781      13,564   507,834       43,241       1,460,435
  Guaranty National
    Companies ...........         -          -           -           -         -        4,466         106,059
  Other .................         -      3,706        (532)        600     3,774      (17,502)         71,005
                           --------   --------    --------    --------  --------     --------      ----------
    Total ...............  $749,003   $ 99,040    $ 11,885    $ 14,352  $874,280     $ 88,035      $2,473,588
                           ========   ========    ========    ========  ========     ========      ==========

1994:
  Regional Operations ...  $278,040   $ 29,287    $  1,246    $    239  $308,812     $ 42,514      $  748,680
  Reinsurance/Special
    Programs ............   413,183     53,209       2,191         575   469,158       34,117       1,213,026
  Guaranty National
    Companies ...........         -          -           -           -         -       11,244          89,760
  Other .................         -      2,419           -         558     2,977      (16,329)         61,295
                           --------   --------    --------    --------  --------     --------      ----------
    Total ...............  $691,223   $ 84,915    $  3,437    $  1,372  $780,947     $ 71,546      $2,112,761
                           ========   ========    ========    ========  ========     ========      ==========

1993:
  Regional Operations ...  $266,373   $ 33,760    $  4,153    $      -  $304,286     $ 34,025      $  758,596
  Reinsurance/Special
    Programs ............   351,031     55,500       6,706         915   414,152       44,032       1,234,033
  Guaranty National      
    Companies ...........         -          -           -           -         -        9,509          92,590
  Other .................         -      2,543      (1,381)        555     1,717      (15,061)         32,235
                           --------   --------    --------    --------  --------     --------      ----------
    Total ...............  $617,404   $ 91,803    $  9,478    $  1,470  $720,155     $ 72,505      $2,117,454
                           ========   ========    ========    ========  ========     ========      ==========



</TABLE>

<PAGE>
                    ORION CAPITAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note O - Selected Quarterly Financial Data (Unaudited)
<TABLE>
     Quarterly results of operations and earnings per common share for 1995 and 1994
are summarized as follows:
<CAPTION>
                                             First     Second      Third     Fourth
                                            Quarter    Quarter    Quarter    Quarter
                                            -------    -------    -------    -------
                                            (000s omitted-except for per share data)
<S>                                         <C>        <C>        <C>        <C>
1995:
  Premiums earned ......................... $175,058   $186,709   $183,902   $203,334
  Net investment income ...................   23,853     24,435     25,572     25,180
  Realized investment gains ...............    2,560        726      5,885      2,714
  Other income ............................      326        241      6,862      6,923
                                            --------   --------   --------   --------
      Total revenues ...................... $201,797   $212,111   $222,221   $238,151
                                            ========   ========   ========   ========
      Net earnings ........................ $ 17,062   $ 16,049   $ 17,257   $ 17,254
                                            ========   ========   ========   ========
  Net earnings per common share ........... $   1.20   $   1.13   $   1.21   $   1.22
                                            ========   ========   ========   ========

1994:
  Premiums earned ......................... $167,095   $162,443   $180,703   $180,982
  Net investment income ...................   20,768     20,601     22,550     20,996
  Realized investment gains ...............      533        178      1,197      1,529
  Other income ............................      302        415        341        314
                                            --------   --------   --------   --------
      Total revenues ...................... $188,698   $183,637   $204,791   $203,821
                                            ========   ========   ========   ========
      Net earnings ........................ $ 13,240   $ 11,567   $ 15,329   $ 15,109
                                            ========   ========   ========   ========
  Net earnings per common share ........... $    .91   $    .80   $   1.07   $   1.07
                                            ========   ========   ========   ========





<FN>
     The sum of quarterly per common share amounts may not agree with the
corresponding annual amounts due to rounding or antidilution during certain
quarters.








                                       -73-
</TABLE>

<PAGE>

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE
          
          None. 

                             PART III
              
     Pursuant to General Instruction G(3) to this form, the information
required by Part III (Items 10, 11, 12 and 13) hereof is incorporated by
reference from the Company's definitive proxy statement for its Annual Meeting
to be held on June 5, 1996.  The Company intends to file the proxy material,
which involves the election of directors, not later than 120 days after the
close of the Company's fiscal year.

                               PART IV 

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

(a) 1   Financial Statements:
           
        The following financial statements are included in 
        Part II, Item 8. 
                                                                                
                                                                Page
                                                                ----

Report of Management.................................             44

Independent Auditors' Report.........................             45
 
Orion Capital Corporation and Subsidiaries:                       
 
     December 31, 1995 and 1994 

          Consolidated Balance Sheet.................          46-47

     For the years ended December 31, 1995, 1994 and
       1993 

          Consolidated Statement of Earnings.........             48
          Consolidated Statement of Stockholders'                               
            Equity...................................             49            
          Consolidated Statement of Cash Flows.......          50-51

     Notes to the Consolidated Financial Statements..          52-73

(a)  2. Financial Statement Schedules:

     Selected Quarterly Financial Data - for the years ended               
December 31, 1995, and 1994 - Included in Part II, Item 8.       
          
                                     -74-

<PAGE>                     

                                                              Page
                                                              ----              
Schedule         I      Consolidated Summary of             
                        Investments - Other than 
                        Investments in Related 
                        Parties - December 31,                                  
                        1995............................        S-1
 
                II      Condensed Financial 
                        Information of Registrant -        S-2, S-3,
                        December 31, 1995, 1994            S-4, S-5,
                        and 1993........................   S-6                  
                                           
               III      Supplementary Insurance 
                        Information - December 31, 
                        1995, 1994 and 1993.............        S-7

                 V      Valuation and Qualifying 
                        Accounts - December 31, 1995, 
                        1994 and 1993...................        S-8
                  
                VI      Supplemental Information 
                        For Property - Casualty 
                        Insurance Underwriters -
                        December 31, 1995, 1994 and                             
                        1993............................        S-9
                  
     Schedules other than those listed above are omitted for the reason that
they are not required or are not applicable, or the required information is
shown in the Financial Statements or notes thereto. 

   (a)    3. Exhibits:

   Exhibit 3(i)        Restated Certificate of Incorporation of Orion,          
                       as amended on June 3, 1993; filed as Exhibit             
                       3(i) to the Company's Annual Report on Form              
                       10-K for 1993.
                       
   Exhibit 3(ii)       By-Laws of Orion, as amended on May 7, 1993;
                       filed as Exhibit 3(ii) to the Company's Annual           
                       Report on Form 10-K for 1993. 
 
   Exhibit 4(i)        Certificate of Designation, Preferences and              
                       Rights of Series A Junior Participating                  
                       Preferred Stock of Orion, dated March 23,                
                       1989; filed as Exhibit 4(xi) to the Company's            
                       Annual Report on Form 10-K for 1988.

   
                    

                                     -75-

<PAGE>
   Exhibit 4(ii)       Specimen certificate representing shares of              
                       Orion's Common Stock (proof of March 27,                 
                       1989); filed as Exhibit 4(xii) to the                    
                       Company's Annual Report on Form 10-K for 1988.
 
   Exhibit 4(iii)      Indenture, dated as of September 8, 1992, 
                       between Orion and the Connecticut National
                       Bank (now known as Shawmut Bank Connecticut,
                       National Association), as Trustee of Orion's             
                       9 1/8% Senior Notes due September 1, 2002;               
                       filed as Exhibit 4(v) to the Company's Annual
                       Report on Form 10-K for 1992.

   Exhibit 4(iv)       Specimen certificate representing Orion's                
                       9 1/8% Senior Notes; filed as Exhibit 4(vi)
                       to the Company's Annual Report on Form 10-K 
                       for 1992.

   Exhibit 4(v)        Senior Debt Indenture, dated as of July 17, 1995,        
                       between Orion and the State Street Bank and Trust        
                       Company of Connecticut, National Association, as         
                       Trustee of Orion's 7 1/4% Senior Notes due July 15,      
                       2005; filed as Exhibit 4.9 to the Company's Current
                       Report on Form 8-K, filed on 7/14/95.

   Exhibit 4(vi)       First Supplemental Indenture to the Senior Debt
                       Indenture; filed as Exhibit 4.9(a) to the Company's
                       Current Report on Form 8-K, filed on 7/14/95.

   Exhibit 4(vii)      Specimen Certificate representing Orion's 7 1/4%         
                       Senior Notes; filed as Exhibit 4.9(b) to the 
                       Company's Current Report on Form 8-K, filed on
                       7/14/95.

   Exhibit 10(i)*      Orion's Deferred Compensation Plan, as
                       amended; filed as Exhibit 10(i) to the 
                       Company's Annual Report on Form 10-K for 
                       1991.

   Exhibit 10(ii)*     Orion's 1982 Long-Term Performance Incentive             
                       Plan, as amended; filed as Exhibit 10(iii)               
                       to the Company's Annual Report on Form 10-K              
                       for 1992.
 
   Exhibit 10(iii)*    Orion's 1994 Stock Option Plan for Non-
                       Employee Directors; filed as Exhibit 10(iii) to the      
                       Company's Annual Report on Form 10-K for 1994.
 
   Exhibit 10(iv)*     Employment Agreement between Alan R. Gruber
                       and Orion, dated as of March 19, 1993; filed
                       as Exhibit 10(v) to the Company's Annual Report          
                       on Form 10-K for 1992.

*Management contract or compensatory plan or arrangement.

                                     -76-

<PAGE>
   Exhibit 10(v)*      Employment Agreement between Robert B. Sanborn           
                       and Orion, dated as of March 19, 1993; filed             
                       as Exhibit 10(vi) to the Company's Annual Report         
                       on Form 10-K for 1992.

   Exhibit 10(vi)*     Employment Agreement between Larry D. Hollen and         
                       Orion, as amended and restated on December 6, 1995.      
                                                                                
   Exhibit 10(vii)*    Employment Agreement between Raymond W. Jacobsen
                       and Orion, as amended and restated as of December 6,     
                       1995.    

   Exhibit 10(viii)*   Employment Agreement between W. Marston Becker and       
                       Orion, dated as of October 31, 1995.
     
   Exhibit 10(vix)     Lease Agreement between Connecticut UTF, Inc.,           
                       as lessor, and Security Insurance Company of             
                       Hartford ("Security"), as lessee, dated as of            
                       December 19, 1984; filed as Exhibit 10(xxxiii)           
                       to the Company's Annual Report on Form 10-K              
                       for l984.

   Exhibit 10(x)       Second Assignment of Lease and Agreement from            
                       Connecticut UTF, Inc. to Security, dated as of           
                       December 19, 1984; filed as Exhibit 10(xxxiv)            
                       to the Company's Annual Report on Form 10-K              
                       for 1984.
  
   Exhibit 10(xi)      Purchase Money Second Mortgage from                      
                       Connecticut UTF, Inc., as mortgagor, to                  
                       Security, as mortgagee, dated as of                      
                       December 19, 1984; filed as Exhibit 10(xxxvi)            
                       to the Company's Annual Report on Form 10-K              
                       for 1984.

   Exhibit 10(xii)     Purchase Money Note, in the face amount of               
                       $2,800,000, from Connecticut UTF, Inc. to                
                       Security, dated December 19, 1984; filed as              
                       Exhibit 10(xxxvi) to the Company's Annual                
                       Report on Form 10-K for l984.

   Exhibit 10(xiii)    Guarantee from Orion to Connecticut UTF, Inc.,           
                       dated as of December 19, 1984, guaranteeing              
                       the performance of Security under its lease              
                       with Connecticut UTF, Inc.; filed as Exhibit             
                       10(xxxvii) to the Company's Annual Report on             
                       Form 10-K for 1984.

   Exhibit 10(xiv)     Form of Indemnification Agreement, dated as of           
                       June 3, 1987, between Orion and each of its              
                       Directors and Executive Officers; filed as               
                       Exhibit 10(xl) to the Company's Annual Report            
                       on Form 10-K for l987.

*Management contract or compensatory plan or arrangement.
                                     -77-

<PAGE>
   Exhibit 10(xv)         Rights Agreement, dated as of March 15, 1989,         
                          between Orion and Manufacturers Hanover Trust         
                          Company, Rights Agent; filed as Exhibit 1 to          
                          the Company's Form 8-A filed March 28, 1989.

   Exhibit 10(xvi)        Specific Excess Reinsurance Agreement,
                          effective January 1, 1990, by and among
                          several of the Company's wholly-owned
                          insurance subsidiaries and Cologne 
                          Reinsurance Company (Dublin) Ltd.; filed
                          as Exhibit 10(xxiv) to the Company's Annual
                          Report on Form 10-K for 1990.

    Exhibit 10(xvii)*     Retirement Plan for Directors of Orion,
                          as amended (September, 1994); filed as Exhibit        
                          10(xvi) to the Company's Annual Report on Form 10-K   
                          for 1994.
 
    Exhibit 10(xviii)*    Orion Supplemental Benefits Plan, filed as            
                          Exhibit 10(xxv) to the Company's Annual Report
                          on Form 10-K for 1991.

    Exhibit 10(xix)       Shareholder Agreement, dated as of November 7,        
                          1991 by and among the Company, Guaranty               
                          National Corporation and certain wholly-owned         
                          subsidiaries of the Company; filed as Exhibit
                          10(xxv) to the Company's Annual Report on
                          Form 10-K for 1991.
    
    Exhibit 10(xx)        Amendments to the Shareholder Agreement by and
                          among the Company, Guaranty National Corporation
                          and certain wholly-owned subsidiaries of the
                          Company made as of February 2, 1994 and March 2,      
                          1995; filed as Exhibit 10(xix) to the Company's       
                          Annual Report on Form 10-K for 1994.

    Exhibit 10(xxi)       Underwriting Agreement for Orion's 7 1/4% Notes       
                          due 2005, dated July 12, 1995; filed as Exhibit 1     
                          to the Company's Current Report on Form 8-K, filed    
                          on 7/14/95.

    Exhibit 10(xxii)      Letter Agreement, dated September 13, 1993, by        
                          and between Orion and Intercargo Corporation;         
                          filed as Exhibit 10(xxii) to the Company's   
                          Annual Report on Form 10-K for 1993.

    Exhibit 10(xxiii)     Amendment, dated February 14, 1995, to the Letter
                          Agreement by and between Orion Capital Corporation
                          and Intercargo Corporation; filed as Exhibit          
                          10(xxiii) to the Company's Annual Report on Form      
                          10-K for 1994.

    Exhibit 10(xxiv)      Agreement, dated September 13, 1993, by and
                          between Orion and The Harper Group, Inc.;
                          filed as Exhibit 10(xxiii) to the Company's
                          Annual Report on Form 10-K for 1993.

    Exhibit 10(xxv)       Purchase Agreement by and between Sun Alliance USA    
                          Inc. and Orion, dated as of June 30, 1995.

*Management contract or compensatory plan or arrangement.
                                     -78-

<PAGE>
    Exhibit 11         Statement re:  computation of earnings
                       per common share.

    Exhibit 21         Subsidiaries of Orion.
                              
    Exhibit 23         Consents of Deloitte & Touche LLP

    Exhibit 27         Financial Data Schedule.
    
    Exhibit 28         Information from reports furnished to state
                       insurance regulatory authorities.

     Copies of exhibits may be obtained upon payment of a $.50 per page fee. 
Such requests should be made in writing to: Corporate Secretary, Orion Capital
Corporation, 600 Fifth Avenue, New York, New York 10020.

   (b)  Reports on Form 8-K:
                       
        None.
 
   (c)  Filed exhibits:

        See Exhibit Index 


   (d)  Financial statements of non-consolidated subsidiaries:

          The Audited Consolidated Financial Statements of 
          Guaranty National Corporation and subsidiaries, 
          Consolidated Balance Sheet at December 31, 1995
          and 1994, Consolidated Statement of Earnings, State-
          ment of Changes in Shareholders' Equity and Statement
          of Cash Flows for the years ended December 31, 
          1995, 1994 and 1993, the Related Notes to the                     
          Consolidated Financial Statements and Financial                   
          Statement Schedules included in Guaranty National 
          Corporation's Annual Report on Form 10-K for the 
          1995 fiscal year are incorporated herein by                       
          reference ("Guaranty National 1995 Form 10-K"). 
          In addition, the information set forth under 
          the caption "Reserves" (on pages 13 through 17) 
          of the Guaranty National 1995 Form 10-K is in-
          corporated by reference herein. The Company 
          currently holds a slightly less than 50% interest 
          in Guaranty National's outstanding common stock.  
          Since November 1991, Guaranty National's operations 
          have been reported by the Company on the equity 
          accounting basis.




                                     -79-

<PAGE>

                                   SIGNATURES


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

                            ORION CAPITAL CORPORATION


 
By: /s/ Alan R. Gruber                               March 14, 1996
    ------------------
       Alan R. Gruber      Chairman of the Board    
                           (Principal Executive                             
                            and Financial Officer)


By: /s/ Daniel L. Barry                               March 14, 1996
    -------------------
        Daniel L. Barry     Vice President and       
                            Controller (Principal
                            Accounting Officer)





























                                     -80-

<PAGE>
     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons (including a
majority of the members of the Board of Directors of the Registrant) in the
capacities and on the dates indicated:             

  Signature and Title                                    Date 
-------------------------                           --------------


/s/ Alan R. Gruber                                  March 14, 1996
-------------------------
    Alan R. Gruber 
  Chairman of the Board


/s/ W. Marston Becker                               March 14, 1996
--------------------------
     Vice Chairman


/s/ Bertram J. Cohn                                 March 14, 1996
-------------------------
    Bertram J. Cohn
       Director


/s/ John C. Colman                                  March 14, 1996
-------------------------
    John C. Colman
       Director


/s/ Larry D. Hollen                                 March 14, 1996
-------------------------
    Larry D. Hollen    
       Director


/s/ Robert H. Jeffrey                               March 14, 1996
----------------------
   Robert H. Jeffrey
     Director


/s/ Warren R. Lyons                                 March 14, 1996
-------------------------
    Warren R. Lyons
       Director


/s/ James K. McWilliams                             March 14, 1996
-------------------------
    James K. McWilliams
       Director
   

/s/ R. W. Moore                                     March 14, 1996
-------------------------
     Ronald W. Moore
       Director
                               
                                     -81-


<PAGE>          


  Signature and Title                                    Date 
----------------------                                 --------



----------------------
    Robert B. Sanborn 
     Director


/s/ William J. Shepherd                             March 14, 1996
-----------------------
    William J. Shepherd
     Director


/s/ John R. Thorne                                  March 14, 1996
-----------------------
    John R. Thorne
     Director


--------------------
    Roger B. Ware
     Director


                                        

























                             

                                   -82-
<PAGE>
                                  EXHIBIT INDEX

Exhibit 10(vi)       Employment Agreement between Larry D. Hollen and          
                     Orion, as amended and restated on December 6, 1995.

Exhibit 10(vii)      Employment Agreement between Raymond W. Jacobsen and
                     Orion, as amended and restated as of December 6, 1995.   

Exhibit 10(viii)     Employment Agreement between W. Marston Becker and        
                     Orion, dated as of October 31, 1996.


Exhibit 10(xxvi)     Purchase Agreement by and between Sun Alliance USA        
                     Inc. and Orion, dated as of June 30, 1995. 
  
Exhibit 11           Statement re:  computation of earnings              
                     per common share.

Exhibit 21           Subsidiaries of Orion.       

Exhibit 23           Consents of Deloitte & Touche.

Exhibit 27           Financial Data Schedule.
                                                           
Exhibit 28**         Information from reports furnished to state   
                     insurance regulatory authorities.              




















---------------------------------     
**Exhibit 28, information from reports furnished to state insurance regulatory
authorities, has been filed on paper with the Securities and Exchange
Commission under cover of Form SE.


                                   -83-

<PAGE>
<TABLE>
<CAPTION>
                                                                    SCHEDULE I
                 ORION CAPITAL CORPORATION AND SUBSIDIARIES
               CONSOLIDATED SUMMARY OF INVESTMENTS-OTHER THAN
                       INVESTMENTS IN RELATED PARTIES
                              December 31, 1995
                               (000s omitted)
==============================================================================
              Column A                Column B      Column C        Column D
              --------                --------      --------        --------
                                                                  Amount Shown  
                                                                 on Balance
          Type of Investment            Cost         Value           Sheet
______________________________________________________________________________
<S>                                 <C>             <C>             <C>
Fixed maturities held-to-maturity:
  Bonds -
    United States Government and 
     government agencies and 
     authorities ................   $   90,770      $ 93,838        $   90,770
    States, municipalities and
      political subdivisions ....      137,807       144,231           137,807
    Foreign governments .........           50            50                50
    All other corporate bonds ...       36,542        38,163            36,542
                                    ----------      --------        ----------
                                       265,169       276,282           265,169
                                    ----------      ========        ----------

Fixed maturities available-for-sale:
  Bonds -
    United States Government and 
     government agencies and 
     authorities ................      206,722       216,064           216,064
    States, municipalities and
      political subdivisions ....      246,026       264,488           264,488
    Foreign governments .........        7,900         8,462             8,462
    Public utilities ............        7,086         7,789             7,789
    All other corporate bonds ...      188,351       194,499           194,499
  Redeemable preferred stocks ...       91,923        91,567            91,567
                                    ----------      --------        ----------
                                       748,008       782,869           782,869
                                    ----------      ========        ----------

Equity securities:
  Common stocks -
    Public utilities ............        8,348        10,287            10,287
    Banks, trusts and insurance
      companies .................       36,704        71,292            71,292
    Industrial, miscellaneous and
      all other .................       63,159        77,316            77,316
  Non-redeemable preferred stocks      149,167       145,990           145,990
                                    ----------      --------        ----------
                                       257,378       304,885           304,885
                                    ----------      ========        ----------

Mortgage loans on real estate ...        1,979                           1,979
Other long-term investments .....       60,946                          60,946
Short-term investments ..........      187,013                         187,013
                                    ----------                      ----------
      Total investments .........   $1,520,493                      $1,602,861
                                    ==========                      ==========
                                       S-1

<PAGE>
<CAPTION>
                                                                   SCHEDULE II
                ORION CAPITAL CORPORATION AND SUBSIDIARIES
              CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                        ORION CAPITAL CORPORATION
                              BALANCE SHEET
                              (000s omitted)
  
                                  ASSETS

                                                             December 31,
                                                         --------------------
                                                           1995        1994
                                                           ----        ----
<S>                                                      <C>         <C>
Fixed maturities held at market (cost $666 - 1995 and
  $1,344 - 1994) ......................................  $    666    $  1,344

Short-term investments ................................    55,425      12,838
      
Cash ..................................................         3         180
        
Notes receivable and other assets .....................     4,476       4,078
        
Deferred federal income taxes .........................     8,739      42,008
             
Investment in subsidiaries ............................   651,781     497,024
             
Excess of cost over fair value of net assets acquired..    48,987      28,140
                                                         --------    --------

  Total assets ........................................  $770,077    $585,612
                                                         ========    ========

                     LIABILITIES AND STOCKHOLDERS' EQUITY

Other liabilities .....................................  $ 31,551    $ 27,325

Due to affiliates .....................................    19,682      25,988

Federal income taxes payable ..........................    18,793      14,829
             
Notes payable .........................................   209,148     152,382 
                                                         --------    --------

  Total liabilities ...................................   279,174     220,524 
            
Stockholders' equity ..................................   490,903     365,088 
                                                         --------    --------

  Total liabilities and stockholders' equity ..........  $770,077    $585,612 
                                                         ========    ========
<FN>                                                           
          See Notes to Condensed Financial Information of Registrant

                                      S-2

<PAGE>
<CAPTION>
                                                                  SCHEDULE II

                 ORION CAPITAL CORPORATION AND SUBSIDIARIES
               CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                         ORION CAPITAL CORPORATION
                           STATEMENT OF EARNINGS
                              (000s omitted)
                                                    Year Ended December 31,  
                                                 ----------------------------
                                                   1995      1994      1993
                                                   ----      ----      ----
<S>                                              <C>       <C>       <C>
Revenues:
  Net investment income .......................  $  1,770  $    396  $    458
  Realized investment losses ..................      (800)        -       (13)
  Other income ................................       595       550       550 
                                                 --------  --------  --------
                                                    1,565       946       995 
                                                 --------  --------  --------
Expenses:
  Interest ....................................    15,537    13,190    12,670 
  General and administrative ..................     3,106     3,676     1,629  
  Amortization of excess of cost over fair           
    value of net assets acquired ..............     1,470     1,110     1,111 
                                                 --------  --------  --------  
                                                   20,113    17,976    15,410 
                                                 --------  --------  --------  
                                    
Loss before federal income taxes (benefit), 
  equity in net earnings of subsidiaries and
  cumulative effect of adoption of new
  accounting principles .......................   (18,548)  (17,030)  (14,415)
                                                 --------  --------  --------
Federal income taxes (benefit):
  Current .....................................    24,165     6,395    16,448 
  Deferred ....................................    (3,881)    9,906      (931) 
                                                 --------  --------  --------
                                                   20,284    16,301    15,517
                                                 --------  --------  --------
Loss before equity in net earnings of 
  subsidiaries and cumulative effect of change
  in accounting principles ....................   (38,832)  (33,331)  (29,932)
Equity in net earnings of subsidiaries ........   106,454    88,576    86,920 
                                                 --------  --------  --------
Earnings before cumulative effect of change in
  accounting principles .......................    67,622    55,245    56,988 
Cumulative effect of change in accounting
  principles ..................................         -         -    11,825
                                                 --------  --------  --------
Net earnings ..................................  $ 67,622  $ 55,245  $ 68,813
                                                 ========  ========  ========



<FN>
        See Notes to Condensed Financial Information of Registrant

                                   S-3

<PAGE>
<CAPTION>
                                                                  SCHEDULE II
                  ORION CAPITAL CORPORATION AND SUBSIDIARIES
                CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                          ORION CAPITAL CORPORATION
                           STATEMENT OF CASH FLOWS
                               (000s omitted)

                                                   Year Ended December 31, 
                                               ------------------------------
                                                 1995       1994       1993
                                                 ----       ----       ----
<S>                                            <C>        <C>        <C>
Cash flows from operating activities:
  Dividends received from subsidiaries ......  $ 30,546   $ 30,013   $ 25,512
  Net investment income collected ...........     1,737        212        156
  Federal income taxes received from
    subsidiaries ............................     4,500      6,000      5,600
  Interest paid .............................   (12,123)   (12,524)   (11,998)
  Other expenses paid .......................    (2,276)    (2,454)    (2,249)
  Other receipts ............................     1,268      3,230        634 
                                               --------   --------   --------
   Net cash provided by operating activities.    23,652     24,477     17,655 
                                               --------   --------   --------
Cash flows from investing activities:
  Sales of equity securities ................                    -        426 
  Purchase of fixed maturities ..............         -     (1,344)         - 
  Net purchases of short-term investments ...   (42,587)    (4,313)    (4,793)
  Investments in subsidiaries ...............     4,476        763     (6,983)
  Acquisition of McGee ......................   (22,355)         -          -
  Other payments ............................       (99)      (795)       (17)
                                               --------   --------   --------
    Net cash used in investing activities ...   (60,565)    (5,689)   (11,367)
                                               --------   --------   --------
Cash flows from financing activities:
  Proceeds from issuance of notes payable ...   110,413          -     59,672 
  Proceeds from issuance of common stock ....       246        598        286 
  Repayment of notes payable ................   (54,500)    (8,000)   (29,500)
  Dividends paid to stockholders ............   (12,717)   (11,263)   (11,598)
  Purchases of common stock and purchases 
    and redemption of adjustable rate 
    preferred stock .........................    (6,689)       (38)   (23,615)
  Other payments ............................       (17)      (351)    (1,113)
                                               --------   --------   --------
    Net cash provided by (used in) financing 
      activities ............................    36,736    (19,054)    (5,868)
                                               --------   --------   --------
    Net increase (decrease) in cash .........      (177)      (266)       420 
  Cash balance, beginning of year ...........       180        446         26 
                                               --------   --------   --------
  Cash balance, end of year .................  $      3   $    180   $    446 
                                               ========   ========   ========

<FN>
           See Notes to Condensed Financial Statements of Registrant

                                       S-4

<PAGE>
<CAPTION>
                                                                  SCHEDULE II

                   ORION CAPITAL CORPORATION AND SUBSIDIARIES
                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                           ORION CAPITAL CORPORATION
                     STATEMENT OF CASH FLOWS - (Continued)
                                (000s omitted)

 
                                                   Year Ended December 31,
                                               ------------------------------
                                                 1995       1994      1993
                                                 ----       ----      ----
<S>                                            <C>        <C>        <C>
Reconciliation of net earnings to net cash 
  provided by operating activities:
Net earnings ................................  $ 67,622   $ 55,245   $ 68,813
                                               --------   --------   --------
Adjustments:
  Cumulative effect of change in accounting
    principles ..............................         -          -    (11,825)
  Equity in net earnings of subsidiaries ....  (106,454)   (88,576)   (86,920)
  Consolidating elimination of subsidiaries
    income taxes ............................    30,941     10,576     18,962
  Dividends received from subsidiaries ......    30,546     30,013     25,512
  Depreciation and amortization .............     2,594      2,064      1,966
  Deferred federal income taxes (benefit) ...    (3,881)     9,906       (931)
  Realized investment losses ................       800          -         13 
  Amortization of discount on debt ..........        36         10          9  

Change in assets and liabilities:
  Decrease (increase) in notes receivable and
    other assets ............................        90       (520)       470
  Increase (decrease) in taxes payable and 
    other liabilities .......................     7,799     (1,668)     9,952
  Increase (decrease) in due to affiliates ..    (6,441)     7,427     (8,366)
                                               --------   --------   --------  
    Total adjustments and changes ...........   (43,970)   (30,768)   (51,158)
                                               --------   --------   -------- 
  Net cash provided by operating activities..  $ 23,652   $ 24,477   $ 17,655
                                               ========   ========   ========
<FN> 

Non-cash transaction:
     As a result of a change in pooling by the Registrant's insurance
     subsidiaries, the Registrant received an extraordinary dividend of
     $65,470,000 (principally securities) in 1993 which it simultaneously
     contributed to another insurance subsidiary.


         See Notes to Condensed Financial Information of Registrant

                                       S-5                                    

 </TABLE>
<PAGE>
                                                                  SCHEDULE II

                  ORION CAPITAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                 Years Ended December 31, 1995, 1994 and 1993

Note A - Notes Payable

     Notes payable consist of the following:
<TABLE>                                                
<CAPTION>
                                                                  Estimated
                                           Carrying Value       Market Value
                                          -----------------  -----------------
          December 31,                      1995     1994      1995     1994
          ------------                      ----     ----      ----     ----
                                                     (000s omitted)
<S>                                       <C>      <C>       <C>      <C>
$110,000,000 face amount, 9 1/8% Senior 
  Notes, due September 1, 2002 .......... $109,894 $109,882  $125,642 $111,815
$100,000,000 face amount, 7 1/4% Senior
  Notes, due July 15, 2005 ..............   99,254        -   104,160        -
Borrowings under loan agreement with 
  banks (various interest rates) ........        -   42,500         -   42,500 
                                          -------- --------  -------- -------- 
                                          $209,148 $152,382  $229,802 $154,315
                                          ======== ========  ======== ========
</TABLE>                                               
     As of December 31, 1995, $110,000,000 of the Registrant's debt is
scheduled to be repaid on September 1, 2002 and the remaining $100,000,000 is
due on July 15, 2002.

Note B - Expense Reimbursement and Management Fees

     During 1993 through 1995, the Registrant was reimbursed for payroll,
office rental and other expenses incurred by it to support the operations of
its insurance subsidiaries.  This reimbursement of $6,232,000, $5,735,000 and
$5,230,000 in 1995, 1994 and 1993, respectively, is accounted for as a
reduction of general and administrative expenses.  The Registrant received an
investment management fee from Guaranty National of $595,000 in 1995 and
$550,000 in 1994 and 1993.












                                      S-6
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                                       SCHEDULE III
                                             ORION CAPITAL CORPORATION AND SUBSIDIARIES
                                                 SUPPLEMENTARY INSURANCE INFORMATION
                                                           (000s omitted)
-----------------------------------------------------------------------------------------------------------------------------------
   Column A       Column B   Column C   Column D  Column E Column F  Column G   Column H    Column I    Column J  Column J Column K
   --------       --------   --------   --------  -------- --------  --------   --------    --------    --------  -------- --------
                              Reserve                                                                           
                             For Unpaid          Dividends                                 Amortization   
                  Deferred     Losses             Payable                      Losses and  of Deferred            Policy- 
                   Policy     and Loss              to                  Net       Loss       Policy      Other    holders'
                 Acquisition Adjustment Unearned  Policy-  Premiums Investment Adjustment  Acquisition Insurance  Dividend Premiums
   Segment          Costs     Expenses  Premiums  holders   Earned    Income    Expenses      Costs     Expenses  Expenses Written
                                                                        (a)
___________________________________________________________________________________________________________________________________
<S>                 <C>      <C>         <C>       <C>      <C>       <C>        <C>        <C>         <C>       <C>      <C>
1995:
Regional Operations $29,516  $  460,597  $ 84,360  $16,799  $322,098  $ 35,750   $201,054   $ 73,544    $11,302   $17,231  $332,598 
Reinsurance/
  Special Programs.  48,157     814,385   217,745    2,147   426,905    59,584    311,179    121,937     10,260     4,559   424,838
Other .............       -           -         -        -         -     3,706          -          -          -         -         -
                    -------  ----------  --------  -------  --------  --------   --------   --------    -------   -------  --------
                    $77,673  $1,274,982  $302,105  $18,946  $749,003  $ 99,040   $512,233   $195,481    $21,562   $21,790  $757,436
                    =======  ==========  ========  =======  ========  ========   ========   ========    =======   =======  ========

1994:
Regional Operations $21,313  $  463,360  $ 62,431  $11,179  $278,040  $ 29,287   $186,437   $ 55,986    $ 9,871   $12,404  $279,738
Reinsurance/
  Special Programs.  48,824     717,969   194,424    1,472   413,183    53,209    311,686    109,122     11,590     2,432   432,317
Other .............       -           -         -        -         -     2,419          -          -          -         -         -
                    -------  ----------  --------  -------  --------  --------   --------   --------    -------   -------  --------
                    $70,137  $1,181,329  $256,855  $12,651  $691,223  $ 84,915   $498,123   $165,108    $21,461   $14,836  $712,055
                    =======  ==========  ========  =======  ========  ========   ========   ========    =======   =======  ========

1993:
Regional Operations $19,326  $  474,903  $ 67,310  $10,581  $266,373  $ 33,760   $191,826   $ 59,596    $ 8,144   $ 9,232  $265,082
Reinsurance/
  Special Programs.  38,196     665,500   192,049    1,942   351,031    55,500    267,306     88,844      9,237     3,281   370,504
Other .............       -           -         -        -         -     2,543          -          -          -         -         -
                    -------  ----------  --------  -------  --------  --------   --------   --------    -------   -------  --------
                    $57,522  $1,140,403  $259,359  $12,523  $617,404  $ 91,803   $459,132   $148,440    $17,381   $12,513  $635,586
                    =======  ==========  ========  =======  ========  ========   ========   ========    =======   =======  ========

<FN>

(a)  Net investment income for Regional Operations and Reinsurance/Special Programs is allocated on the basis of cash flow.
                                                                       S-7
/TABLE
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
                                                                    SCHEDULE V

                   ORION CAPITAL CORPORATION AND SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS

                                 (000s omitted)


===============================================================================
    Column A          Column B           Column C          Column D   Column E
    --------          --------           --------          --------   --------  
                                         Additions
                                  ----------------------
                                      (1)        (2)
                     Balance at   Charged to  Charged to             Balance at
                    Beginning of   Costs and    Other     Deductions   End of
  Description          Period      Expenses    Accounts      (a)       Period
_______________________________________________________________________________
<S>                    <C>          <C>         <C>         <C>        <C>       
1995:
Allowance for 
  doubtful accounts-
  Accounts and notes
    receivable         $1,954       $1,689      $    -      $  431     $3,212
                       ======       ======      ======      ======     ======

1994:
Allowance for 
  doubtful accounts-
  Accounts and notes
    receivable         $1,859       $1,030      $    -      $  935     $1,954
                       ======       ======      ======      ======     ======

1993:
Allowance for 
  doubtful accounts-
  Accounts and notes
    receivable         $1,959       $2,337      $    -      $2,437     $1,859
                       ======       ======      ======      ======     ======



<FN>


     (a)  Accounts written off

</TABLE>




                                      S-8
<PAGE>
<TABLE>
<CAPTION>
                                                                                                                        SCHEDULE VI
                                               ORION CAPITAL CORPORATION AND SUBSIDIARIES
                                  SUPPLEMENTAL INFORMATION FOR PROPERTY-CASUALTY INSURANCE UNDERWRITERS
                                                             (000s omitted)

===================================================================================================================================
    Column A       Column B   Column C   Column D  Column E Column F  Column G      Column H          Column I   Column J  Column K
    --------       --------   --------   --------  -------- --------  --------      --------          --------   --------  --------
                               Reserve                                                            
                                 for                                             Losses and Loss                     
                                Unpaid                                         Adjustment Expenses  Amortization   Paid          
                   Deferred     Losses   Discount                              Incurred Related to  of Deferred   Losses 
                    Policy     and Loss  Deducted                       Net        (1)       (2)      Policy     and Loss           
Affiliation with  Acquisition Adjustment in Column Unearned Premiums Investment  Current    Prior   Acquisition Adjustment Premiums
   Registrant        Costs     Expenses     (C)    Premiums  Earned    Income      Year     Year      Costs      Expenses  Written
                                            (a)          
___________________________________________________________________________________________________________________________________
<S>                 <C>       <C>         <C>       <C>      <C>       <C>       <C>       <C>       <C>        <C>       <C>
1995:
 Consolidated
  property and                                              
  casualty entities $ 77,673  $1,274,982  $  4,100  $302,105 $749,003  $ 95,334  $500,514  $ 11,719  $195,481   $409,797  $757,436
                    ========  ==========  ========  ======== ========  ========  ========  ========  ========   ========  ========

1994:
 Consolidated 
  property and 
  casualty entities $ 70,137  $1,181,329  $  4,100  $256,855 $691,223  $ 82,496  $480,826  $ 17,297  $165,108   $437,386  $712,055
                    ========  ==========  ========  ======== ========  ========  ========  ========  ========   ========  ========

1993:
 Consolidated
  property and
  casualty entities $ 57,522  $1,140,403  $  4,100  $259,359 $617,404  $ 89,260  $434,840  $ 24,292  $148,440   $374,625  $635,586
                    ========  ==========  ========  ======== ========  ========  ========  ========  ========   ========  ========

<FN>
(a)  Discount deducted in Column C is computed using a statutory interest rate of 3.5% for certain workers compensation losses.

                                                                     S-9
/TABLE
<PAGE>