UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For The Quarterly Period Ended June 30, 1998

                         Commission File Number: 1-12369

                        SYMONS INTERNATIONAL GROUP, INC.
             (Exact name of registrant as specified in its charter)

INDIANA                                                            35-1707115
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                            Identification No.)


                               4720 Kingsway Drive
                           Indianapolis, Indiana 46205
                    (Address of Principal Executive Offices)

Registrant's telephone number, including area code: (317) 259-6400 (U.S.)

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


As of June 30, 1998, there were 10,387,532  shares of Registrant's  common stock
issued and outstanding exclusive of shares held by Registrant.


<PAGE>



                                 Form 10-Q Index
                       For The Quarter Ended June 30, 1998
                                                                        Page
                                                                       Number

PART 1  FINANCIAL INFORMATION

Item 1  Financial Statements

        Consolidated Financial Statements:
        Consolidated Balance Sheets at June 30, 1998
        (unaudited) and December 31, 1997 . . ..............................3

        Unaudited Consolidated Statements of Earnings for the
        Three and Six Months Ended June 30, 1998 and 1997 ................4-5

           Unaudited Consolidated Statements of Stockholders'
        Equity .............................................................6

        Unaudited Consolidated Statements of Cash Flows for the
        Six Months Ended June 30, 1998 and 1997 ............................7

        Condensed Notes to Unaudited Consolidated Financial
        Statements .........................................................8

Item 2  Management's Discussion and Analysis of Financial
        Condition and Results of Operations ................................9

PART 2  OTHER INFORMATION .................................................19


SIGNATURES ................................................................20



<PAGE>


                         PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
SYMONS INTERNATIONAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (in thousands)
<TABLE>
<CAPTION>

                                                                                  June 30,     December 31,
ASSETS                                                                             1998           1997
                                                                                (unaudited)
<S>                                                                             <C>              <C>
Investments

  Available for sale:

  Fixed maturities, at market                                                   $179,041         $169,385

  Equity securities, at market                                                    39,957           35,542

  Short-term investments, at amortized cost which approximates market             11,220            8,871

Real estate, at cost                                                                 448              450

Mortgage loans, at cost                                                            2,160            2,220

Other                                                                                339               50
                                                                                 -------          -------
         TOTAL INVESTMENTS                                                       233,165          216,518

Investment in and advances to related parties                                      4,387              839

Cash and cash equivalents                                                         22,464           11,276

Receivables, net of allowance for doubtful accounts                              238,532           91,730

Reinsurance recoverable on paid and unpaid losses, net                           106,233           93,832

Prepaid reinsurance premiums                                                     111,526           36,606

Federal income taxes recoverable                                                     982            1,505

Deferred policy acquisition costs                                                 17,618           10,740

Deferred income taxes                                                              2,565            4,722

Property and equipment, net of accumulated depreciation                           17,302           12,051

Intangible assets                                                                 42,742           43,756

Other assets                                                                       5,675            6,300
                                                                                 -------          -------
         TOTAL ASSETS                                                           $803,191         $529,875
                                                                                 =======          =======
LIABILITIES

Losses and loss adjustment expenses                                             $171,557         $136,772

Unearned premiums                                                                226,388          114,635

Reinsurance payables                                                             154,564           35,692

Notes payable                                                                         35            4,182

Distributions payable on preferred securities                                      4,783            4,801

Other                                                                             21,015           20,430
                                                                                 -------          -------
         TOTAL LIABILITIES                                                       578,342          316,512
                                                                                 -------          -------
Minority interest:

  Preferred securities                                                           135,000          135,000
                                                                                 -------          -------
STOCKHOLDERS' EQUITY

Common stock                                                                      38,199           39,019

Additional paid-in capital                                                         5,946            5,925

Unrealized gain on investments                                                     3,912            1,908

Retained earnings                                                                 41,792           31,511
                                                                                 -------          -------
         TOTAL STOCKHOLDERS' EQUITY                                               89,849           78,363
                                                                                 -------          -------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $803,191         $529,875
                                                                                 =======          -------
</TABLE>
See notes to consolidated financial statements

                                      -3-

<PAGE>


SYMONS INTERNATIONAL GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share data)
<TABLE>
<CAPTION>
                                                           Three Months Ended
                                                                June 30,
                                                           1998          1997

<S>                                                      <C>           <C>     
Gross premiums written                                   $173,094      $149,175

Less ceded premiums                                       (68,380)      (65,441)
                                                          -------       -------
Net premiums written                                      104,714        83,734

Change in net unearned premiums                            (5,756)      (10,837)
                                                          -------       -------
Net premiums earned                                        98,958        72,897

Fee income                                                  4,901         5,753

Net investment income                                       3,306         2,838

Net realized gain                                             843           742
                                                          -------        ------
      Total Revenues                                      108,008        82,230
                                                          -------        ------
Loss and loss adjustment expenses                          72,181        58,025

Policy acquisition and general and administrative expenses 23,088        17,514

Interest expense                                               49         1,080

Amortization of intangibles                                   510           164
                                                          -------        ------
      Total Expenses                                       95,828        76,783
                                                          -------        ------
      Earnings before income taxes and minority interest   12,180         5,447

Provision for income taxes                                  4,416         1,897
                                                          -------        ------
      Net earnings before minority interest                 7,764         3,550

Minority interest:

  Distributions on preferred securities, net of tax         2,096           --

  Equity in earnings of subsidiary                            --           (127)
                                                          -------        ------
      Net Earnings                                       $  5,668       $ 3,677
                                                          =======        ======


Net earnings per share - basic                              $0.55         $0.35
                                                             ====          ====
Net earnings per share - fully diluted                      $0.53         $0.35
                                                             ====          ====
Weighted average shares outstanding:

  Basic                                                    10,392        10,450
                                                           ======        ======
  Fully diluted                                            10,704        10,631
                                                           ======        ======

</TABLE>

See notes to consolidated financial statements


                                      -4-

<PAGE>


SYMONS INTERNATIONAL GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share data)
<TABLE>
<CAPTION>

                                                            Six Months Ended
                                                                June 30,
                                                           1998         1997

<S>                                                      <C>           <C>     
Gross premiums written                                   $351,490      $279,065

Less ceded premiums                                      (147,215)     (128,541)
                                                          -------       -------

Net premiums written                                      204,275       150,524

Change in net unearned premiums                           (36,833)      (14,512)
                                                           ------        ------

Net premiums earned                                       167,442       136,012

Fee income                                                 11,390        10,791

Net investment income                                       6,264         5,276

Net realized gain                                           2,811         1,684
                                                          -------       -------
      Total Revenues                                      187,907       153,763
                                                          -------       -------
Loss and loss adjustment expenses                         125,386       103,293

Policy acquisition and general and administrative expenses  8,012        30,397

Interest expense                                              232         2,451

Amortization of intangibles                                 1,021           293
                                                          -------       -------
      Total Expenses                                      164,651       136,434
                                                          -------       -------
      Earnings before income taxes and minority interest   23,256        17,329

Provision for income taxes                                  8,438         6,183
                                                          -------       -------
      Net earnings before minority interest                14,818        11,146

Minority interest:

  Distributions on preferred securities, net of tax         4,226           --

  Equity in earnings of subsidiary                            --          1,560
                                                          -------       -------
      Net Earnings                                       $ 10,592      $  9,586
                                                          =======       =======

Net earnings per share - basic                              $1.02         $0.92
                                                             ====          ====
Net earnings per share - fully diluted                      $0.99         $0.90
                                                             ====          ====
Weighted average shares outstanding:

  Basic                                                    10,419        10,450
                                                           ======        ======
  Fully diluted                                            10,715        10,636
                                                           ======        ======

</TABLE>
See notes to consolidated financial statements


                                      -5-

<PAGE>


SYMONS INTERNATIONAL GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands, except number of shares)
<TABLE>
<CAPTION>

                                                          Shares      Total
                                                          Common   Stockholders'  Retained
                                                          Stock       Equity      Earnings

<S>                                                     <C>           <C>         <C>    
BALANCE AT DECEMBER 31, 1996                            10,450,000    $60,900     $15,206

Comprehensive income:
   Net earnings                                                         9,586       9,586
   Change in unrealized gains (losses) on securities                    1,364         --
                                                                       ------
Comprehensive income                                                   10,950         --
Adjustment of offering costs                                               50         --
                                                                       ------       -----

BALANCE AT JUNE 30, 1997                                10,450,000    $71,900     $24,792
                                                        ==========     ======      ======

BALANCE AT DECEMBER 31, 1997                            10,451,667    $78,363     $31,511

Comprehensive income:
   Net earnings                                                        10,592      10,592
   Change in unrealized gains (losses) on securities                    2,004
                                                                       ------
Comprehensive income                                                   12,596

Exercise of stock options                                    1,665         20         --

Cost of shares acquired                                    (65,800)    (1,130)       (311)
                                                        ----------      -----       -----

BALANCE AT JUNE 30, 1998                                10,387,532    $89,849     $41,792
                                                        ==========     ======      ======

</TABLE>
See notes to consolidated financial statements


                                      -6-

<PAGE>



SYMONS INTERNATIONAL GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
                                                                                    Six Months Ended
                                                                                         June 30,
                                                                                   1998           1997

<S>                                                                              <C>               <C>
Cash Flows from Operating Activities:

  Net earnings for the period                                                     $10,592        $9,586

  Adjustments to reconcile net earnings to net cash provided from operations:

     Equity in earnings of subsidiary                                                  --         1,560

     Depreciation and amortization                                                  2,453         1,169

     Deferred income tax expense                                                    1,087        (1,068)

     Net realized gain                                                             (2,811)       (1,684)

Net changes in operating assets and liabilities:

  Receivables                                                                    (146,802)     (110,851)

  Reinsurance recoverable on paid and unpaid losses, net                          (12,401)      (22,400)

  Prepaid reinsurance premiums                                                    (74,919)       58,944)

  Deferred policy acquisition costs                                                (6,878)         (321)

  Other assets                                                                        624        (1,198)

  Losses and loss adjustment expenses                                              34,785        36,205

  Unearned premiums                                                               111,753        73,456

  Reinsurance payables                                                            118,872        93,967

  Distributions payable on preferred securities                                       (18)           --

  Federal income taxes                                                                523         1,913

  Other liabilities                                                                   585         5,120
                                                                                   ------        ------
NET CASH PROVIDED FROM OPERATIONS                                                  37,445        26,510
                                                                                   ------        ------
Cash flow used in investing activities:

  Net (purchases) sales of short-term investments                                  (2,349)       (2,177)

  Purchases of fixed maturities                                                   (94,207)      (36,846)

  Proceeds from sales, calls and maturities of fixed maturities                    85,536        20,964

  Purchase of equity securities                                                   (11,289)      (15,188)

  Proceeds from sales of equity securities                                         11,409        16,531

  Purchase of real estate                                                             223           140

  Purchases of property and equipment                                              (6,545)       (2,294)

  (Purchases) sales of other investments                                             (229)           --
                                                                                   ------         -----
NET CASH USED IN INVESTING ACTIVITIES                                             (17,451)      (18,870)
                                                                                   ------        ------
Cash flow provided from/(used in) financing activities:

  Cost of shares acquired                                                          (1,132)           --

  Payments on notes payable                                                        (4,147)       (3,128)

  Contribution from minority interest owner                                            --         2,304

  Repayments from related parties                                                  (3,548)       (1,582)

  Additional paid-in capital                                                           21            --
                                                                                   ------        ------
NET CASH PROVIDED FROM/(USED IN) FINANCING ACTIVITIES                              (8,806)       (2,406)
                                                                                   ------        ------
Increase in cash and cash equivalents                                              11,188         5,234

Cash and cash equivalents, beginning of period                                     11,276        13,095
                                                                                   ------        ------
Cash and cash equivalents, end of period                                          $22,464       $18,329
                                                                                   ======        ======

</TABLE>

See notes to consolidated financial statements

                                      -7-

<PAGE>



                        SYMONS INTERNATIONAL GROUP, INC.
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                For The Three and Six Months Ended June 30, 1998

NOTES TO THE CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1)      The accompanying  unaudited  condensed  financial  statements have been
         prepared in accordance  with the  instructions  to Form 10-Q and do not
         include all of the  information  and  footnotes  required by  generally
         accepted accounting  principles for complete financial  statements.  In
         the  opinion  of  management,  all  adjustments  (consisting  of normal
         recurring  accruals)  considered  necessary for fair  presentation have
         been  included.  Operating  results  for the  interim  periods  are not
         necessarily indicative of the results that may be expected for the year
         ended December 31, 1998. Interim financial statements should be read in
         conjunction with the Company's annual audited financial statements.

(2)      In June  1997,  the  FASB  issued  Statement  of  Financial  Accounting
         Standards No. 131,  Disclosures  about  Segments of an  Enterprise  and
         Related  Information (SFAS 131), which is effective for years beginning
         after  December 15, 1997.  SFAS 131  established  standards for the way
         that public business  enterprises  report  information  about operating
         segments  in  annual  financial  statements  and  requires  that  those
         enterprises  report selected  information  about operating  segments in
         interim financial  reports.  It also established  standards for related
         disclosures  about products and services,  geographic  areas, and major
         customers.  SFAS 131 is effective for financial  statements  for fiscal
         years beginning after December 15, 1997. The Company will adopt the new
         requirements  effective December 31, 1998. Management has not completed
         its review of SFAS 131,  but does not  anticipate  that the adoption of
         this statement will have a significant effect on the Company's reported
         segments.

         On March 4, 1998, the AICPA  Accounting  Standards  Executive Committee
         issued Statement of Position No. 98-1 (SOP 98-1),  Accounting for the
         Cost of Computer Software Developed or Obtained for Internal Use. SOP
         98-1 was issued to address diversity in practice regarding whether and
         under what conditions the costs of internal-use software should be
         capitalized. SOP 98-1 is effective for financial statements for years
         beginning after December 15, 1998. The Company will adopt the new 
         requirements of the SOP in 1999. Management has not completed its
         review of SOP 98-1, but does not anticipate that the adoption of this
         SOP will have significant effect on net earnings during 1999.

(3)      On March 2, 1998, the Company announced that it had signed an agreement
         with CNA to assume its multi-peril and crop hail operations.  CNA wrote
         approximately  $110  million  of  multi-peril  and crop hail  insurance
         business in 1997. The Company will reinsure 100% of all multi-peril and
         crop hail premiums  written by CNA during 1998 and cede a small portion
         of the Company's  total crop book of business  (approximately  22% MPCI
         and 15% crop hail) back to CNA. Starting in the year 2000,  assuming no
         event of change in control as defined in the agreement, the Company can
         purchase  the  insurance  premiums  reinsured  to  CNA  through  a call
         provision or CNA can require the Company to buy the insurance  premiums
         reinsured to CNA.  Regardless of the method of takeout of CNA, CNA must
         not  compete  in MPCI or crop hail for a period  of time.  There was no
         purchase price. The formula for the buyout in the year 2000 is based on
         a  multiple  of  average  pre-tax   earnings  that  CNA  received  from
         reinsuring

                                      -8-

<PAGE>

         the Company's book of business.

         On July 8, 1998, the Company acquired North American Crop  Underwriters
         (NACU) a Henning, Minnesota based managing general agency which focuses
         exclusively on crop  insurance.  The  acquisition  price was $4 million
         with $3 million paid at closing and $1 million due July 1, 2000 without
         interest.  This acquisition captures 100% of the MPCI underwriting gain
         and  fees on  approximately  $27  million  of  premiums.  Prior to this
         transaction,  NACU received all fees and 50% of the  underwriting  gain
         with the balance going to the Company through the CNA transaction.

         Basic and  diluted net income per share are  computed  by dividing  net
         income as  reported  by the  average  number of shares  outstanding  as
         follows:
<TABLE>
<CAPTION>

                                                    Three Months Ended              Six Months Ended
                                                          June 30,                      June 30,
                                                    1998           1997            1998         1997

         <S>                                     <C>            <C>             <C>            <C>
         Basic:
           Weighted-average common shares
              outstanding                        10,392,000     10,450,000      10,419,000     10,450,000
                                                 ==========     ==========      ==========     ==========

         Diluted:
           Weighted-average common shares
              outstanding                        10,392,000     10,450,000      10,419,000     10,450,000
           Dilutive effect of stock options         312,000        181,000         296,000        186,000
                                                 ----------     ----------      ----------     ----------

         Average common shares outstanding
           assuming dilution                    10,704,000      10,631,000      10,715,000     10,636,000
                                                ==========      ==========      ==========     ==========


</TABLE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
       RESULTS OF OPERATIONS OF THE COMPANY

The Company  underwrites and markets  nonstandard  private passenger  automobile
insurance and crop insurance.

Nonstandard Automobile Insurance Operations

The  Company,  through its wholly owned  subsidiaries,  Pafco and  Superior,  is
engaged in the writing of insurance  coverage on automobile  physical damage and
liability  policies  for  "nonstandard  risks".  Nonstandard  insureds are those
individuals who are unable to obtain insurance  coverage through standard market
carriers  due  to  factors  such  as  poor  premium  payment  history,   driving
experience,  record  of  prior  accidents  or  driving  violations,   particular
occupation or type of vehicle.  The Company  offers several  different  policies
which are  directed  towards  different  classes of risk within the  nonstandard
market.  Premium rates for nonstandard risks are higher than for standard risks.
Since it can be viewed as a residual market, the size of the nonstandard private
passenger automobile insurance market changes with the insurance environment and
grows when the standard coverage becomes more restrictive.  Nonstandard policies
have relatively short policy periods and low limits of liability. Due to the low
limits of coverage,  the period of time that elapses  between the occurrence and
settlement of losses under nonstandard policies is shorter than many other types
of  insurance.   Also,  since  the  nonstandard  automobile  insurance  business
typically   experiences  lower  rates  of  retention  than  standard  automobile
insurance,   the  number  of  new  policyholders   underwritten  by  nonstandard
automobile insurance carriers each year is substantially greater than the number
of new policyholders underwritten by standard carriers.


                                      -9-

<PAGE>



Crop Insurance Operations

The two  principal  components  of the  Company's  crop  insurance  business are
Multi-Peril Crop Insurance ("MPCI") and private named peril, primarily crop hail
insurance.  Crop  insurance  is  purchased by farmers to reduce the risk of crop
loss from adverse weather and other uncontrollable  events. Farms are subject to
drought,  floods and other  natural  disasters  that can cause  widespread  crop
losses and, in severe cases,  force farmers out of business.  Historically,  one
out of every twelve acres planted by farmers has not been  harvested  because of
adverse weather or other natural disasters.  Because many farmers rely on credit
to finance  their  purchases of such  agricultural  inputs as seed,  fertilizer,
machinery  and fuel,  the loss of a crop to a natural  disaster can reduce their
ability to repay  these loans and to find  sources of funding for the  following
year's operating expenses.

The Company,  like other  private  insurers  participating  in the MPCI program,
generates revenues from the MPCI program in two ways. First, it markets,  issues
and administers policies, for which it receives administrative fees; and second,
it  participates in a  profit-sharing  arrangement in which it receives from the
government a portion of the aggregate profit, or pays a portion of the aggregate
loss,  in respect of the  business it writes.  The Company  writes MPCI and crop
hail insurance through approximately 1,017 independent agencies in 42 states.

MPCI is a  government-sponsored  program with accounting treatment which differs
in certain  respects from the more traditional  property and casualty  insurance
lines.  For  income  statement  purposes  under  generally  accepted  accounting
principles,  gross  premiums  written  consist of the  aggregate  amount of MPCI
premiums  paid by farmers for buy-up  coverage  (MPCI  coverage in excess of CAT
Coverage),  and any related federal premium  subsidies,  but do not include MPCI
premium on CAT  Coverage  (the minimum  available  level of MPCI  Coverage).  By
contrast,  net premiums  written do not include any MPCI  premiums or subsidies,
all of which are deemed to be ceded to the FCIC as a  reinsurer.  The  Company's
profit or loss from its MPCI business is  determined  after the crop season ends
on the basis of a complex  profit  sharing  formula  established  by law and the
FCIC. For generally accepted  accounting  principles income statement  purposes,
any such profit or loss  sharing  earned or payable by the Company is treated as
an adjustment to commission  expense and is included in policy  acquisition  and
general and administrative expenses.

The Company also  receives  from the FCIC (i) an expense  reimbursement  payment
equal to a percentage of gross premiums  written for each Buy-Up Coverage policy
it writes ("Buy-Up Expense  Reimbursement  Payment"),  (ii) an LAE reimbursement
payment equal to 13.0% of MPCI Imputed  Premiums for each CAT Coverage policy it
writes  (the "CAT LAE  Reimbursement  Payment"),  and (iii) a small  excess  LAE
reimbursement  payment of two hundredths of one percent (.02%) of MPCI Retention
(as defined  herein) to the extent the Company's MPCI loss ratios on a per state
basis exceed certain levels (the "MPCI Excess LAE Reimbursement  Payment").  For
1998 and 1997, the Buy-Up Expense  Reimbursement Payment has been set at 27% and
29%,  respectively,   of  the  MPCI  Premium.  For  generally  accepted  account
principles income statement purposes,  the Buy-Up Expense  Reimbursement Payment
is treated as a contribution to income and reflected as an offset against policy
acquisition and general and administrative  expenses.  The CAT LAE Reimbursement
Payment and the MPCI Excess LAE Reimbursement  Payment are, for income statement
purposes,  recorded as an offset  against  LAE,  up to the actual  amount of LAE
incurred by the Company in respect of such  policies,  and the  remainder of the
payment, if any, is recorded as Other Income.


                                      -10-

<PAGE>



In June 1998,  the United States  Congress  passed  legislation  which  provided
permanent funding for the crop insurance industry.  However,  beginning with the
1999 crop year, the Buy-Up Expense  Reimbursement  Payment was reduced to 24.5%,
the CAT LAE  Reimbursement  Payment was reduced to 11% and the $50 CAT  coverage
fee will no longer go to the insurance companies.

The Company expects to more than offset these  reductions  through growth in fee
income from non-federally subsidized programs such as AgPI(R) and GEO Ag Plus(R)
initiated  in 1998.  The  Company has also been  working to reduce its  internal
costs  including  agent's  commissions.  While the Company fully believes it can
more than offset these  reductions,  there is no  assurance  the Company will be
successful in its efforts or that further  reductions in federal  reimbursements
will not continue to occur.

In addition to MPCI, the Company offers stand alone crop hail  insurance,  which
insures  growing  crops  against  damage  resulting  from hail  storms and which
involves no federal  participation,  as well as its  proprietary  product  which
combines the application and  underwriting  process for MPCI and hail coverages.
This  product  tends to produce less  volatile  loss ratios than the stand alone
product since the combined product  generally insures a greater number of acres,
thereby  spreading the risk of damage over a larger insured area.  Approximately
half of the  Company's  hail  policies  are  written in  combination  with MPCI.
Although  both crop hail and MPCI provide  coverage  against hail damage,  under
crop hail coverages farmers can receive payments for hail damage which would not
be severe enough to require a payment under an MPCI policy. The Company believes
that  offering  crop hail  insurance  enables it to sell more  policies  than it
otherwise would.

In addition to crop hail  insurance,  the Company  also sells a small  volume of
insurance  against crop damage from other specific named perils.  These products
cover specific crops and are generally written on terms that are specific to the
kind of crop and farming  practice  involved  and the amount of  actuarial  data
available.  The Company plans to seek  potential  growth  opportunities  in this
niche market by  developing  basic  policies on a diverse  number of named crops
grown in a variety of geographic areas and to offer these policies  primarily to
large producers through certain select agents.

AgPI(R) protects  businesses that depend upon a steady flow of a crop (or crops)
to stay  in  business.  This  protection  is  available  to  those  involved  in
agribusiness  who are a step beyond the farm gate,  such as elevator  operators,
custom  harvesters,  cotton gins and businesses that are dependent upon a single
supplier of products, (i.e., popping corn).

These businesses have been able to buy normal business interruption insurance to
protect  against on-site  calamities such as a fire, wind storm or tornado.  But
until now, they have been totally  unprotected by the insurance industry if they
incorporate  a  production  shortfall  in their trade area which  limited  their
ability  to  bring  raw  materials  to  their  operation.   AgPI(R)  allows  the
agricultural  business to protect  against a  disruption  in the flow of the raw
materials it depends on. AgPI(R) was formally introduced at the beginning of the
1998 crop year.

Geo AgPLUS(TM)  provides to the farmer the soil sampling  results  combined with
fertility maps and the software that is necessary to run their precision farming
program.  Grid soil sampling,  when combined with precision farming,  allows the
farmer to apply just the right amount of fertilization,  thus balancing the soil
for a maximum crop yield.  Precision  farming increases the yield to the farmer,
reduces the cost of unnecessary  fertilization  and enhances the  environment by
reducing overflows of fertilization into the

                                      -11-

<PAGE>



ecosystem.  Geo  AgPLUS(TM) is an IGF Insurance  Company  trademarked  precision
farming division that is now marketing its fee based products to the farmer.

In order to reduce the Company's potential loss exposure under the MPCI program,
in  addition  to  reinsurance  obtained  from the FCIC,  the  Company  purchases
stop-loss  reinsurance from other private  reinsurers.  Such private reinsurance
would not eliminate the Company's  potential  liability in the event a reinsurer
was unable to pay or losses exceeded the limits of the stop-loss  coverage.  For
crop hail  insurance,  the Company  has in effect  various  layers of  stop-loss
reinsurance.

Certain other  conditions of the Company's crop business may affect  comparisons
of the  Company's  results and  operating  ratios with those of other  insurers,
including: (i) the seasonal nature of the business whereby profits are generally
recognized  predominantly  in the second half of the year,  (ii) the  short-term
nature of crop business whereby losses are known within a short time period, and
(iii) the limited amount of investment income associated with crop business.  In
addition,  cash flows from the crop business differ from cash flows from certain
more traditional lines.

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



                                      -12-

<PAGE>



Results of Operations

For the three and six months  ended June 30,  1998,  the  Company  recorded  net
earnings of $5,668,000  and  $10,592,000  or $0.55 and $1.02 per share  (basic).
This is  approximately  a 54.1%  and  10.5%  from  1997  comparable  amounts  of
$3,677,000 and $9,586,000 or $0.35 and $0.92 per share (basic).

Increased  earnings  reflect  improved  results from the nonstandard  automobile
division due to  improvements  in both the loss and expense  ratios.  Prior year
results in the second  quarter  also  included a one-time  charge to earnings of
$5,300,000 for loss  reserves.  Crop results for the second quarter of 1998 were
up slightly over 1997 while year-to-date results for this division are virtually
flat  with  the  prior  year.  This is due to  volume  gains  offset  by  higher
commission  expense,  lower  reimbursements  and  integration  costs  of the CNA
transaction.



                                      -13-

<PAGE>


<TABLE>
<CAPTION>

                                                                                     For the three months
                                                                                         ended June 30,
                                                                                     1998            1997
NONSTANDARD AUTOMOBILE INSURANCE OPERATIONS:

<S>                                                                                 <C>             <C>    
  Gross premiums written                                                            $79,530        $90,481
                                                                                     ======         ======
  Net premiums written                                                              $69,154        $74,255
                                                                                     ======         ======
  Net premiums earned                                                               $70,498        $65,139

  Fee income                                                                          4,553          4,305

  Net investment income                                                               3,133          2,756

  Net realized gain                                                                     673            742
                                                                                     ------         ------
        TOTAL REVENUES                                                               78,857         72,942
                                                                                     ------         ------
  Losses and loss adjustment expenses                                                53,502         53,756

  Policy acquisition and general and administrative expenses                         18,681         18,368

  Interest and amortization of intangibles                                               --             --
                                                                                     ------          -----
        TOTAL EXPENSES                                                               72,183         72,124
                                                                                     ------         ------
  Earnings before income taxes                                                      $ 6,674        $   818
                                                                                     ======         ======
GAAP RATIOS (Nonstandard Automobile Only):

  Loss and LAE Ratio                                                                   75.9%          82.5%

  Expense ratio, net of billing fees                                                   20.0           21.6
                                                                                       ----           ----
  Combined ratio                                                                       95.9%         104.1%
                                                                                       ====          =====

CROP INSURANCE OPERATIONS:

  Gross premiums written(2)                                                         $92,020        $56,647
                                                                                     ======         ======
  Net premiums written                                                              $35,560         $9,479
                                                                                     ======          =====
  Net premiums earned                                                               $28,460         $7,758

  Fee income                                                                            350          1,448

  Net investment income                                                                 112             43

  Net realized capital gain                                                             170             --
                                                                                     ------          -----
        TOTAL REVENUES                                                               29,092          9,249
                                                                                     ------          -----

  Losses and loss adjustment expenses                                                18,679          4,269

  Policy acquisition and general and administrative expenses(1)                       3,897         (1,260)

  Interest expense                                                                       50             13
                                                                                     ------          -----
        TOTAL EXPENSES                                                               22,626          3,022
                                                                                     ------          -----
  Earnings before income taxes                                                      $ 6,466         $6,227
                                                                                     ======          =====

</TABLE>
(1) Negative crop expenses are caused by inclusion of MPCI expense reimbursement
and underwriting gain. (2) Includes premiums assumed from CNA in accordance with
the Strategic Alliance Agreement.



                                      -14-

<PAGE>


<TABLE>
<CAPTION>



                                                                                              For the six months
                                                                                                ended June 30,

                                                                                            1998             1997

NONSTANDARD AUTOMOBILE INSURANCE OPERATIONS:

<S>                                                                                     <C>             <C>     
  Gross premiums written                                                                $169,506        $165,547
                                                                                         =======         =======

  Net premiums written                                                                  $151,421        $133,843
                                                                                         =======         =======

  Net premiums earned                                                                   $138,821        $128,244

  Fee income                                                                            8,708           7,204

  Net investment income                                                                 5,934           5,094

  Net realized gain                                                                       2,641           1,684
                                                                                        -------         -------
        TOTAL REVENUES                                                                  156,104         142,226
                                                                                        -------         -------
  Losses and loss adjustment expenses                                                   106,648         99,024

  Policy acquisition and general and administrative expenses                            36,804          35,492

  Interest and amortization of intangibles                                                  --              --
                                                                                        -------         ------
        TOTAL EXPENSES                                                                  143,452         134,516
                                                                                        -------         -------
  Earnings before income taxes                                                          $ 12,652        $  7,710
                                                                                         =======         =======
GAAP RATIOS (Nonstandard Automobile Only):

  Loss and LAE Ratio                                                                    76.8%           77.2%

  Expense ratio, net of billing fees                                                    20.2            22.1
                                                                                        ----            ----
  Combined ratio                                                                        97.0%           99.3%
                                                                                        ====            ====

CROP INSURANCE OPERATIONS:

  Gross premiums written(2)                                                             $178,195        $108,356
                                                                                         =======         =======
  Net premiums written                                                                  $ 52,854        $16,680
                                                                                         =======         ======
  Net premiums earned                                                                   $ 28,621        $7,768

  Fee income                                                                            2,682           3,587

  Net investment income                                                                 165             92

  Net realized capital gain                                                                 170            --
                                                                                        -------         -----
        TOTAL REVENUES                                                                   31,638         11,447
                                                                                        -------         ------
  Losses and loss adjustment expenses                                                   18,738          4,269

  Policy acquisition and general and administrative expenses(1)                         250             (6,026)

  Interest expense                                                                          233             24
                                                                                        -------         ------
        TOTAL EXPENSES                                                                   19,221         (1,733)
                                                                                       -------         ------
  Earnings before income taxes                                                          $ 12,417        $13,180
                                                                                         =======         ======


</TABLE>
(1) Negative crop expenses are caused by inclusion of MPCI expense reimbursement
and underwriting gain. (2) Includes premiums assumed from CNA in accordance with
the Strategic Alliance Agreement.

Consolidated  gross premiums written increased 16.0% and 26.0% for the three and
six months  ended June 30, 1998  compared to  comparable  periods in 1997 due to
growth in both the nonstandard auto and crop segments.



                                      -15-

<PAGE>



Gross premiums written for the nonstandard auto segment  decreased 12.1% for the
three  months  ended June 30, 1998 and  increased  2.4% for the six months ended
June 30, 1998 compared to comparable periods in 1997. The decrease in the second
quarter  primarily  reflects certain program changes and rate increases taken in
Florida to improve loss experience.

Gross premiums  written for the crop segment  increased  62.4% and 64.5% for the
three and six months ended June 30, 1998 compared to comparable periods in 1997.
Such  increase  was due to the  transaction  with CNA,  internal  growth and new
products  such as  AgPI.  Premium  increases  were  noted  in all  lines of crop
insurance.  Crop  premiums  for the three and six  months  ended  June 30 are as
follows:

<TABLE>
<CAPTION>
                                                           Three Months                   Six Months
                                                          Ended June 30,                 Ended June 30,
                                                       1998            1997          1998            1997
                                                       ----            ----          ----            ----

<S>                                                  <C>              <C>          <C>            <C>    
CAT imputed                                          $16,319          $13,031      $32,638         $26,063
MPCI                                                  46,654           39,239      107,297          79,016
Crop hail and named perils                            37,873           17,408       63,365          29,340
AgPI                                                   7,493              --         7,533              --
                                                     -------           ------      -------          ------
                                                     108,339           69,678      210,833         134,419
Less: CAT imputed                                    (16,319)         (13,031)     (32,638)        (26,063)
                                                     -------           ------      -------         -------
                                                     $92,020          $56,647     $178,195        $108,356
                                                      ======           ======      =======         =======

</TABLE>
Remaining gross written premiums  represent  commercial  business which is ceded
100% to an affiliate, Granite Reinsurance Company Ltd.

MPCI  premiums are  considered  to be 100% ceded to the federal  government  for
accounting purposes.  Quota share cession rates for other lines of insurance for
the three and six months ended June 30 are as follows:

<TABLE>
<CAPTION>
                                                       1998          1997
                                                       ----          ----

<S>                                                    <C>           <C>
Nonstandard automobile                                  10%           20%
Crop hail                                               25%           40%
Named peril                                             50%           50%

</TABLE>
Fee  income  decreased  14.8%  for the  three  months  ended  June 30,  1998 and
increased  5.6% for the six  months  ended  June  30,  1998 as  compared  to the
corresponding  periods of the prior year.  The decrease in the second quarter of
1998 results from the Company's  practice of  offsetting  CAT fees with crop LAE
costs.  Such  offset was  greater in 1998.  However,  overall  fees  continue to
increase.  Such increase was due to greater installment  billings on nonstandard
automobile policies, which averaged 5.14% and 4.35% of gross written premiums in
1998 and 1997,  respectively,  and  additional  CAT fees on crop business due to
growth in volume.

Net  investment  income  increased  16.5% and 18.7% for the three and six months
ended June 30, 1998 as compared to the corresponding  periods of the prior year.
Such increase was due primarily to greater  invested assets offset somewhat by a
declining yield due to market conditions.

The loss  ratio for the  nonstandard  automobile  segment  for the three and six
months ended June 30, 1998 was 75.9% and 76.8% as compared to 82.5% and 77.2% in
1997. The loss ratio for the  nonstandard  automobile  segment for the three and
six months ended June 30, 1997, excluding the $5.3 million reserve adjustment in
the second quarter of 1997 was 74.4% and 73.1%, respectively.

                                      -16-

<PAGE>



The increase in the loss ratio in 1998 from 1997,  excluding  the effects of the
reserve adjustment in 1997, reflects increased severity costs and the effects of
certain pending rate increases.  However,  this loss ratio has improved from the
first  quarter  of 1998  which was  77.8%,  due to the  effects  of recent  rate
increases. The crop hail loss ratio in 1998 was 53.5% compared to 54.2% in 1997.

Policy acquisition and general and  administrative  expenses have increased as a
result of the  increased  volume of  business  produced by the  Company.  Policy
acquisition  and general and  administrative  expenses rose to  $23,088,000  and
$38,012,000  or 23.3%  and  22.7% of net  premium  earned  for the three and six
months ended June 30, 1998 compared to $17,514,000  and $30,317,000 or 24.0% and
22.3% of net premium  earned in the  corresponding  periods of 1997. The expense
ratio,  for the nonstandard  segment  improved to 20.0% and 20.2% for the second
quarter and  year-to-date  in 1998 as  compared to 21.6% and 22.1% in 1997,  due
primarily to reduced  expenses from the Indianapolis  operations  (Pafco General
Insurance Company) resulting from lower commissions on multi-tiered products and
other efficiency implementations as well as higher billing fee rates.

Crop segment expenses include agent commissions, stop loss reinsurance costs and
operating  expenses  which are offset by MPCI  Expense  Reimbursements  and MPCI
Underwriting  Gain. The increase in expenses  results  primarily from a 2% lower
MPCI Expense  Reimbursement  for 1998 versus  1997,  higher  commissions  due to
competition and integration costs of the CNA transaction offset by a higher MPCI
Underwriting  Gain due to volume.  This gain is an  estimate  until later in the
year when crops are harvested and losses are known.  The estimated gain ratio in
1998 was consistent with 1997 at 10%.

Amortization of intangibles  includes goodwill from the acquisition of Superior,
additional  goodwill from the acquisition of the minority  interest  position in
GGSH, debt or preferred  security issuance costs and  organizational  costs. The
increase in 1998  reflects the effects of the Preferred  Securities  Offering in
late 1997.

Interest expense primarily  represents interest incurred since April 30, 1996 on
the GGS Senior Credit  Facility.  The GGS Senior Credit Facility was repaid with
the proceeds from the Preferred Securities Offering.

Income  tax  expense  was 36.3% of  pre-tax  income for the three and six months
ended June 30, 1998 compared to 34.8% and 35.7% in 1997.  The increased  rate is
due to higher goodwill amortization.

Distributions  on Preferred  Securities  are calculated at a rate of 9.5% net of
federal income taxes.



                                      -17-

<PAGE>



Financial Condition

The  Company's   total  assets  of  $803,191,000  at  June  30,  1998  increased
$273,353,000  from $529,838,000 as of December 31, 1997. The primary reasons for
this  increase  was an increase  in cash and  invested  assets due to  continued
growth in  premiums,  normal  receipt of crop funds from the FCIC,  increases in
receivables  from insureds and reinsurers due to continued  growth in volume and
growth in prepaid  reinsurance in crop operations due to the accounting for MPCI
with the FCIC.

Net cash provided by operating  activities  improved to $37,445,000 in 1998 from
$26,510,000  in 1997 due to continued  premium growth and normal receipt of crop
funds from the FCIC.  This  additional  cash flow was used to increase  invested
assets. Financing activities included normal activities on the Company's line of
credit for crop operations. Loans to related parties is primarily a $3.3 million
loan to an  affiliate,  Granite  Re,  for  reinsurance  activities  and  certain
short-term  officer loans.  During 1998, the Company bought back 65,800 treasury
shares as part of an announced buy back program.


                                      -18-

<PAGE>



PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS
          The Company's insurance subsidiaries are parties to litigation arising
in the  ordinary  course of  business.  The Company  believes  that the ultimate
resolution  of these  lawsuits  will not have a material  adverse  effect on its
financial  condition or results of operations.  The Company,  through its claims
reserves,  reserves for both the amount of  estimated  damages  attributable  to
these lawsuits and the estimated costs of litigation.

ITEM 2.   CHANGES IN SECURITIES
          None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES
          None

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

ITEM 5.   OTHER INFORMATION
          None

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
          None


                                      -19-

<PAGE>


                                   SIGNATURES



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



Dated: August 12, 1998              By:______________________
                                       Alan G. Symons
                                       Chief Executive Officer



Dated: August 12, 1998              By:______________________
                                       Gary P. Hutchcraft
                                       Vice President, Treasurer and
                                       Chief Financial Officer



Dated: August 12, 1998              By:______________________
                                       James J. Lund
                                       Vice President and
                                       Chief Accounting Officer




                                      -20-

<PAGE>