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, 1997

                         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, 1997, there were 10,450,000  shares of Registrant's  common stock
issued and outstanding exclusive of shares held by Registrant.


<PAGE>
                                 Form 10-Q Index
                                  June 30, 1997

                                                                        Page
                                                                       Number

PART 1  FINANCIAL INFORMATION

Item 1  Financial Statements..................................

        Consolidated Financial Statements:
        Consolidated Balance Sheets at June 30, 1997 and
        December 31, 1996.....................................

        Consolidated Statements of Earnings for the Three
        and Six Months Ended June 30, 1997 and 1996...........

        Consolidated Statements of Cash Flows
        for the Six Months Ended June 30, 1997 and 1996.......

        Consolidated Statements of Changes in Stockholders'
        Equity................................................

        Notes to Consolidated Financial Statements............

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


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


SIGNATURES....................................................


<PAGE>
SYMONS INTERNATIONAL GROUP, INC.
PART 1     FINANCIAL INFORMATION

Item 1     Financial Statements

In the opinion of management, the financial information reflects all adjustments
(consisting only of normal recurring adjustments) which are necessary for a fair
presentation of the financial position, results of operations and cash flows for
the interim  periods.  The  results for the three and six months  ended June 30,
1997 and 1996 are not  necessarily  indicative of the results to be expected for
the entire year.

These quarterly interim financial statements are unaudited.

                                      -3-

<PAGE>
SYMONS INTERNATIONAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)

                                                 June 30,             June 30, 
                                                     1997                1996

ASSETS

Investments
  Available for Sale:
  Fixed Maturities, at market                    $143,905             $127,681
  Equity Securities, at market                     32,031               27,920
  Short-term investments, at amortized cost        11,742                9,565
  which approximates market
Real Estate, at cost                                  457                  466
Mortgage Loans                                      2,290                2,430
Other                                                  75                   75
                                                 --------              -------
Total invested assets                             190,500              168,137

Cash and cash equivalents                          18,329               13,095
Receivables, net                                  176,045               65,194
Reinsurance recoverable on paid and unpaid
losses, net                                        70,694               48,294
Prepaid reinsurance premiums                       73,927               14,983
Deferred policy acquisition costs                  13,121               12,800
Deferred income taxes                               2,899                3,329
Property and equipment                              9,555                8,137
Federal income taxes recoverable                      ---                  319
Investments in and advances to related parties      2,418                1,152
Other                                              10,153                9,239
                                                   ------                -----
   Total Assets                                  $567,641             $344,679
                                                 ========              =======
LIABILITIES
Losses and loss adjustment expenses              $137,924             $101,719
Unearned premiums                                 160,741               87,285
Reinsurance payable                               100,475                6,508
Federal income tax payable                          1,594                  ---
Term debt                                          44,872               48,000
Other                                              23,411               18,657
                                                   ------               ------
   Total Liabilities                              469,017              262,169
                                                  -------              -------
Minority Interest in Consolidated Subsidiary       26,724               21,610
                                                   ------               ------
STOCKHOLDERS' EQUITY
Common stock                                       39,019               38,969
Additional paid-in capital                          5,905                5,905
Unrealized gain on investments, net of              2,184                  820
deferred taxes of $2,398 and $625
Retained earnings                                  24,792               15,206
                                                   ------               ------
   Total Stockholders' Equity                      71,900               60,900
                                                   ------               ------
   Total Liabilities and Stockholders' Equity    $567,641             $344,679
                                                 ========              =======

See Notes to Consolidated Financial Statements

                                      -4-

<PAGE>
SYMONS INTERNATIONAL GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands)

                                               For the Three Months Ending:
                                            June 30,                June 30,
                                                1997                    1996



Gross premiums written                      $149,175                $105,528
Less ceded premiums                          (65,441)                (47,216)
                                            --------                --------
Net premiums written                          83,734                  58,312
Change in unearned premiums                  (10,837)                (13,031)
                                            --------                --------
Net premiums earned                           72,897                  45,281
Net investment income                          2,838                     975
Other income                                   5,753                   3,085
Net realized capital gain                        742                     264
                                                 ---                     ---
   Total Revenues                             82,230                  49,605
                                              ------                  ------

Loss and loss adjustment expenses             58,025                  36,312
Policy acquisition and general and            17,514                   8,614
administrative expenses
Interest expense                               1,244                   1,012
                                               -----                   -----
   Total Expenses                             76,783                  45,938
                                              ------                  ------

Income before income taxes and minority        5,447                   3,667
interest
Provision for income taxes                     1,897                   1,037
Minority interest                                127                      88
                                                 ---                      --
   Net Earnings                               $3,677                  $2,718
                                              ======                   =====

Primary Earnings Per Share                     $0.35                   $0.39
                                               =====                    ====
Fully Diluted Earning Per Share                $0.35                   $0.39
                                               =====                   =====
   Weighted Average Shares Outstanding
Primary                                       10,593                   7,000
                                              ======                   =====
Fully Diluted                                 10,631                   7,000
                                              ======                   =====

See notes to consolidated financial statements

                                      -5-

<PAGE>
SYMONS INTERNATIONAL GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands)


                                                      For the Six Months Ending:
                                                      June 30,         June 30,
                                                          1997             1996

Gross premiums written                                $279,065         $146,950
Less ceded premiums                                   (128,541)         (69,908)
                                                     ---------         --------
Net premiums written                                   150,524           77,042
Change in unearned premiums                            (14,512)         (17,976)
                                                      --------         --------
Net premiums earned                                    136,012           59,066
Net investment income                                    5,276            1,533
Other income                                            10,791            4,062
Net realized capital gain                                1,684              228
                                                         -----              ---
   Total Revenues                                      153,763           64,889
                                                       -------           ------

Loss and loss adjustment expenses                      103,293           45,275
Policy acquisition and general and                      30,397           12,283
administrative expenses
Interest expense                                         2,744            1,261
                                                         -----            -----
   Total Expenses                                      136,434           58,819
                                                       -------           ------

Income before income taxes and minority                 17,329            6,070
interest

Provision for income taxes                              (6,183)          (1,854)
Minority interest                                       (1,560)              88
                                                       -------               --
   Net Earnings                                          9,586           $4,304
                                                         =====            =====
Primary Earnings Per Share                              $ 0.90           $ 0.61
                                                        ======           ======
Fully Diluted Earning Per Share                         $ 0.90           $ 0.61
                                                        ======           ======
   Weighted Average Shares Outstanding
Primary                                                 10,617            7,000
                                                        ======            =====
Fully Diluted                                           10,636            7,000
                                                        ======            =====

See notes to consolidated financial statements


                                      -6-

<PAGE>
SYMONS INTERNATIONAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

                                                  For the Six Months Ending
                                                  June 30,             June 30,
                                                     1997                 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings For The Period                        $9,586               $4,304
Adjustments to reconcile Net Earnings to Net
Cash provided from Operations:
  Minority Interest                                 1,560                 (88)
  Depreciation and Amortization                     1,169                  221
  Deferred income tax expense                      (1,068)                 664
  Net realized capital gain                        (1,684)                (228)
Net changes in operating assets and 
liabilities:
  Receivables                                    (110,851)             (48,085)
  Reinsurance recoverable on paid and unpaid      (22,400)             (29,475)
  losses, net
  Prepaid reinsurance premiums                    (58,944)              (3,824)
  Deferred policy acquisition costs                  (321)              (2,888)
  Other assets                                     (1,198)              (3,264)
  Losses and loss adjustment expenses               36,205             (10,216)
  Unearned premiums                                 73,456               52,077
  Reinsurance payables                              93,967               46,349
  Federal income taxes recoverable/(payable)         1,913                 (490)
  Other liabilities                                  5,120                2,925
                                                    ------                -----
Net Cash Provided From Operations                   26,510                7,982
                                                    ------                -----

Cash Flow Used In Investing Activities:
  Cash paid for Superior, net of cash                 ---               (66,389)
  required
  Net (Purchases)/Sales of short-term              (2,177)               11,342
  investments
  Purchases of fixed maturities                   (36,846)              (24,976)
  Proceeds from sales, calls and maturities        20,964                17,896
  of fixed maturities
  Purchase of equity securities                   (15,188)              (86,177)
  Proceeds from sales of equity securities         16,531                65,944
  Proceeds from repayment of mortgage loans           140                   360
  Purchases of property and equipment              (2,294)                 (579)
                                                   -------                 -----
Net Cash Used In Investing Activities             (18,870)              (82,579)
                                                  --------              --------
Cash Flow Provided From/(Used In) Financing
Activities:
  Net proceeds from line of credit and notes          ---                 1,939
  payable
  Proceeds/(payment) related to long-term debt     (3,128)               48,000
  Contribution from minority interest owner         2,304                21,200
  Loans to related parties                         (1,582)                1,147
                                                   -------                -----
Net Cash Provided From/(Used In) Financing
Activities                                         (2,406)               72,286
                                                   -------               ------
Increase/(Decrease) In Cash And Cash Equivalents    5,234                (2,311)
Cash and Cash Equivalents, Beginning of Period     13,095                 2,311
                                                   ------                 -----
Cash and Cash Equivalents, End of Period         $ 18,329               $   ---
                                                 ========               =======

See Notes to Consolidated Financial Statements

                                      -7-

<PAGE>
SYMONS INTERNATIONAL GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)


                       Common   Additional  Unrealized   Retained  Total
                       Stock    Paid-In     Gain (Loss)  Earnings  Stockholders'
                                Capital     on                     Equity
                                            Investments
Balance at             $1,000   $ 3,130       $(45)       $5,450   $ 9,535
December 31, 1995
Sale of subsidiary        ---     3,389         ---          ---     3,389
stock
Change in                 ---       ---         529          ---       529
unrealized loss on
investments, net
of deferred taxes
Net Earnings              ---       ---         ---        4,304     4,304
                          ---       ---         ---        -----     -----
Balance at June         1,000     6,519        (484)       9,754    17,757
30, 1996
Sale of subsidiary        ---      (614)        ---          ---      (614)
stock
Change in                 ---       ---         336          ---       336
unrealized loss on
investments, net
of deferred taxes
Issuance of common     37,969       ---         ---          ---    37,969
stock
Dividend to parent        ---       ---         ---       (3,500)   (3,500)
Net Earnings              ---       ---         ---        8,952     8,952
                          ---       ---         ---        -----     -----
Balance at             38,969     5,905         820       15,206    60,900
December 31, 1996
Adjustment of
offering costs             50       ---         ---          ---        50
Change in                 ---       ---       1,364          ---     1,364
unrealized gain on
investments, net
of deferred taxes
Net Earnings              ---       ---         ---        9,586     9,586
                          ---       ---         ---        -----     -----
Balance at June      $ 39,019   $ 5,905    $  2,184      $24,792    $71,900
30, 1997             ========   =======    ========      =======    =======

See Notes to Consolidated Financial Statements

                                      -8-

<PAGE>
                        SYMONS INTERNATIONAL GROUP, INC.
            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                For The Three and Six Months Ended June 30, 1997

NOTE 1 - BASIS OF PRESENTATION

The  foregoing   consolidated  condensed  financial  statements  are  unaudited.
However,  in the opinion of  management,  all  adjustments  necessary for a fair
presentation of the results of the interim period  presented have been included.
All  adjustments are of a normal and recurring  nature.  Results for any interim
period are not  necessarily  indicative  of results to be expected for the year.
The   consolidated   financial   statements   include  the  accounts  of  Symons
International  Group,  Inc.,  ("SIG"  and  the  "Company")and  its  wholly-owned
subsidiary,  IGF Insurance Company ("IGF"), as well as its 52% owned subsidiary,
GGS  Management  Holdings,  Inc.  ("GGSH"),  which  wholly  owns  Pafco  General
Insurance Company ("Pafco") and Superior  Insurance  Company  ("Superior").  The
Company  is a  67%  owned  subsidiary  of  Goran  Capital  Inc.  ("Goran").  The
consolidated  condensed  interim  financial  statements  have been  prepared  in
accordance  with Form 10-Q  specifications  and,  therefore,  do not include all
information and footnotes normally shown in full annual financial statements.

These  unaudited  consolidated  financial  statements  have been prepared by the
Company  in  accordance  with  generally  accepted  accounting  principles.  All
material intercompany amounts have been eliminated.

NOTE 2 - REINSURANCE

In order to reduce risk and  increase  its  underwriting  capacity,  the Company
purchases reinsurance.  Reinsurance does not relieve the Company of its ultimate
liability  to its  insureds  for the risks  ceded to  reinsurers.  As such,  the
Company is  subject to credit  risk with  respect to risks  ceded to  reinsurers
should a reinsurer  fail.  Effective  January 1, 1996  reinsurance was placed as
follows: For the nonstandard automobile segment, the Company purchases excess of
loss and  catastrophic  protections  which  result in minimum  ceded  premium in
proportion  to  gross  written  premiums.  For the  crop  segment,  the  Company
reinsures to the federal government Federal Crop Insurance  Corporation ("FCIC")
program all of its  Multi-Peril  Crop  Insurance  ("MPCI")  business which has a
back-end  underwriting  gain or loss feature.  The Company  reinsures  stop-loss
protection  to  affiliates  and third  party  reinsurers  on its MPCI  business.
Regarding the crop hail line of business,  the Company also carries an excess of
loss (stop-loss)  protection with third party  reinsurers.  Effective January 1,
1997,  the  Company  ceded  20% of its new and  renewal  nonstandard  automobile
business  and 40% of its crop  hail  business  and 50% of its crop  named  peril
business under certain quota share arrangements.  Granite Re, an affiliate, is a
participant  in  the  20%  quota  share  treaty,  receiving  10%  of  the  ceded
nonstandard automobile business.

The effects of reinsurance are as follows:

                                      -9-

<PAGE>
NOTE 3
SYMONS INTERNATIONAL GROUP, INC.
Analysis of Effects of Reinsurance
(in thousands)


                      For the three months ended      For the six months ended
                        June 30,      June 30,          June 30,       June 30,
                            1997          1996              1997           1996
Premiums Written
  Gross                 $149,175      $105,528          $279,065       $146,950
  Ceded                 (65,440)      (47,216)         (128,541)        (69,980)
                        --------      --------         ---------       --------
  Net                    $83,735       $58,312          $150,524        $77,042
                         =======       =======          ========        =======
Premiums Earned
  Gross                  $80,796       $81,252          $205,609        107,728
  Ceded                  (7,899)      (35,971)          (69,597)        (48,662)
                         -------      --------          --------        --------
  Net                    $72,897       $45,281          $136,012        $59,066
                         =======       =======          ========        =======
Losses and LAE
Incurred
  Gross                  $94,080       $63,913          $154,346        $77,884
  Ceded                 (36,055)      (27,601)          (51,053)        (32,609)
                        --------      --------          --------        --------
  Net                    $58,025       $36,312          $103,293         $45,275
                         =======       =======          ========         =======


                         June 30, 1997                December 31, 1996
Unearned Premiums
  Gross                      $160,741                      $87,285
  Ceded                       (73,927)                     (14,983)
                              --------                     --------
  Net                         $86,814                      $72,302
                              ========                     ========
Outstanding Claims
  Gross                      $137,924                     $101,719
  Ceded                       (62,080)                     (29,459)
                              --------                     --------
  Net                         $75,844                      $72,260
                              =======                      =======

NOTE 3 - CONTINGENT LIABILITY

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

                                      -10-

<PAGE>
One of the Company's  subsidiaries,  IGF, is the administrator of a run-off book
of business.  The FCIC has requested that IGF take responsibility for the claims
liabilities  of these  policies  under  its  administration.  IGF has  requested
reimbursement  of certain  expenses  from the FCIC with  respect to this run-off
activity.  IGF instituted  litigation  against the FCIC on March 23, 1995 in the
United  States  District  Court for the  Southern  District of Iowa seeking $4.3
Million as reimbursement  for these expenses.  The FCIC has  counterclaimed  for
approximately $1.2 Million in claims payments for which the FCIC contends IGF is
responsible  for as successor  to the run-off book of business.  While the final
result of this lawsuit cannot be predicted with certainty,  the Company believes
that the final  resolution  of this  lawsuit  will not have a  material  adverse
effect on the financial condition of the Company.

NOTE 4 - EARNINGS PER SHARE

Primary and fully diluted earnings per share for the three and six months ending
June 30, 1997 were computed using actual  weighted  average  shares  outstanding
during 1997 of  10,450,000  plus 143,000 and 167,000  assumed  shares from stock
option  proceeds  calculated  based upon the  treasury  stock  method.  Weighted
average  shares  outstanding  for 1996 was based on  7,000,000  shares  actually
outstanding.

NOTE 5 - SUBSEQUENT EVENTS

On August  12,  1997,  the  Company  issued $  135,000,000  in Trust  Originated
Preferred Securities ("Preferred  Securities").  These Preferred Securities were
offered through a wholly-owned trust subsidiary of the Company and are backed by
Senior  Subordinated  Notes to the  Trust  from  the  Company.  These  Preferred
Securities were offered under Rule 144A of the SEC  ("Offering") and the Company
will  ultimately  file a Form S-1  Registration  Statement.  The proceeds of the
Offering were used to repurchase the remaining minority interest in GGSH for $61
million,  repay the balance of the GGS Senior  Credit  Facility of $44.9 million
and  the  Company  expects  to  contribute  the  balance,   after  expenses,  of
approximately $24 million to the nonstandard  automobile  insurers.  Expenses of
the issue will  aggregate 4.9 million and will be amortized over the term of the
Preferred Securities (30 years). In the third quarter the Company will write-off
the  remaining   unamortized   costs  of  the  GGS  Senior  Credit  Facility  of
approximately $1.4 million pre-tax or approximately $0.09 per share.

The  excess  of the  acquisition  price  over the  minority  interest  liability
aggregated  approximately  $34,000,000  and was assigned to goodwill as the fair
market value of acquired assets  approximating  their carrying  value.  Goodwill
will be  amortized  over 25  years  to match  management's  expectations  of the
expected benefit period.

The  Preferred  Securities  have a term of 30 years  with  semi-annual  interest
payments due at 9.50%.  The Preferred  Securities may be redeemed in whole or in
part after 10 years.

Assuming  this offering  took place at January 1, 1997,  the proforma  effect of
this  offering on the Company's  consolidated  statement of earnings for the six
months ended is as follows:
                                            June 30, 1997
                                              Unaudited

Revenues                                      $ 153,763
Net earnings                                  $   8,089
Net earnings per common share                 $    0.76

                                      -11-

<PAGE>
The aforementioned  proforma results do not include the effects of the write-off
of  the  debt  issuance  cost  to  be  recorded  in  the  third   quarter.   The
aforementioned  proforma amounts are dilutive because of the additional  reserve
adjustment to the  non-standard  auto  operations in the second  quarter and the
non-inclusion of investment income on the additional proceeds from the offering.
The Company expects based on projected premium volumes and results of operations
for the  non-standard  division  that  this  transaction  will be  accretive  to
earnings in future years.


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

GGS Management Holdings,  Inc. ("GGSH"),  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.

The Company follows the customary  industry  practice of reinsuring a portion of
its risks and paying for that  protection  based upon  premiums  received on all
policies subject to such reinsurance.  As part of its internal  procedures,  the
Company evaluates the financial  condition of each prospective  reinsurer before
it  cedes  business  to that  carrier.  Based  on the  Company's  review  of its
reinsurers'  financial health and reputation in the insurance  marketplace,  the
Company  believes its reinsurers are  financially  sound and that they therefore
can meet their  obligations  to the Company  under the terms of the  reinsurance
treaties.

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.  The majority of the Company's  crop insurance  business  consists of
MPCI.  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

                                      -12-

<PAGE>
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 1,300 independent agencies in 39 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  (GAAP),  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 does 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 GAAP 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
1997 and 1996, the Buy-up Expense  Reimbursement Payment has been set at 29% and
31%, respectively,  of the MPCI Premium. For GAAP 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.

The Company is currently  negotiating  the 1998 Standard  Reinsurance  Agreement
with the FCIC. The current  government  proposal is to reduce the Buy-Up Expense
Reimbursement  Payment  to 27 to 28%.  The  negotiations  are  on-going  and the
ultimate  results  cannot be determined at this time.  There can be no assurance
that the Company will negotiate terms which are favorable to the Company.

On June 9, 1997, the Secretary of  Agriculture  announced that the USDA would no
longer provide CAT Coverage  through USDA offices in any state for the 1998 crop
year. This is to be implemented by a transferring of CAT policies to the various
members of the crop  insurance  industry.  At this time,  the  Company  has been
preliminarily  informed that it will receive  approximately 17,000 policies that
were formerly  written by USDA offices,  although there can be no assurance that
the  Company  will  receive  this  number  of  policies.  Based  on  historical,
per-policy  averages,  the  Company  has  preliminarily  estimated  that it will
receive  approximately  an  additional  $6 to $7 million in  premiums  from such
transferred policies,  however,  there can be no assurance that this number will
be realized.  This estimate assumes that IGF will retain 100% of such premiums.

                                      -13-

<PAGE>
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.

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  insurers.  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  quota  share  Reinsurance  and
various layers of stop-loss  Reinsurance.  Based on a review of the  reinsurers'
financial  health and  reputation  in the  insurance  marketplace,  the  Company
believes that the  reinsurers for its crop  insurance  business are  financially
sound and that they  therefore can meet their  obligations  to the Company under
the terms of the Reinsurance treaties.

Certain other  conditions of the Company's crop business may effect  comparisons
of the  Company's  results and  operating  ratios  with that 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 a
rate of 16% 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,

                                      -14-

<PAGE>
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.

Regulation

The  Company's  admitted  insurance  businesses  are  subject to  comprehensive,
detailed regulation  throughout the United States, under statutes which delegate
regulatory,   supervisory   and   administrative   powers  to  state   insurance
commissioners.  The primary  purpose of such  regulations and supervision is the
protection of  policyholders  and claimants.  Depending on whether the insurance
company is domiciled in the state and whether it is an admitted or  non-admitted
insurer,  such authority may extend to such things as (i) periodic  reporting of
the insurer's financial condition,  (ii) periodic financial  examination,  (iii)
approval of rates and policy  forms,  (iv) loss  reserve  adequacy,  (v) insurer
insolvency,  (vi) the licensing of insurers and their agents, (vii) restrictions
on the payment of dividends and other distributions,  (viii) approval of changes
in control, and (ix) the type and amount of permitted investments.

The Company's  MPCI program is federally  regulated and supported by the federal
government by means of premium subsidies to farmers,  expense  reimbursement and
federal reinsurance pools for private insurers.  Consequently,  the MPCI program
is subject to oversight by the legislative and executive branches of the federal
government,  including the FCIC. The MPCI program regulations  generally require
compliance  with federal  guidelines  with respect to  underwriting,  rating and
claims  administration.  The Company is required to perform continuous  internal
audit procedures and is subject to audit by several federal government agencies.

Results of Operations

For the three and six months  ended June 30,  1997,  the  Company  recorded  net
earnings of  $3,677,000  and $ 9,586,000  or $0.35 and $0.90 per share.  This is
approximately  a 35.3%  and  123%  increase  from  1996  comparable  amounts  of
$2,718,000  and $4,304,000 or $0.39 and $0.61 per share.  The improved  earnings
for the six months  ended were  attributable  to  continued  premium  growth and
improved  expense  ratios of the  nonstandard  automobile  segment and continued
growth and profit in the crop  segment.  The  improvement  for the three  months
ended  relates to the growth and  profitability  of the crop  segment.  The crop
segment  demonstrated  enhanced  profitability  due to higher  volume as well as
normal crop underwriting expectations.

                                      -15-

<PAGE>
                                                For the three months ended
                                                          June 30,
                                              1997                        1996
Nonstandard-Automobile Insurance
Operations:
  Gross premiums written                   $90,481                     $44,368
                                           =======                      ======
  Net premiums written                     $74,255                     $41,922
                                           =======                      ======
  Net premiums earned                      $65,139                     $39,218
  Net investment income                      2,756                       1,039
  Other income, principally billing          4,305                       1,742
  fees
  Net realized capital gain                    742                         264
                                               ---                         ---
     TOTAL REVENUES                         72,942                      42,263
                                            ------                      ------
  Losses and loss adjustment expenses       53,756                      30,266
  Policy acquisition and general and        18,368                      10,600
  administrative expenses
  Interest and amortization of               1,227                         696
                                             -----                         ---
  intangibles
     TOTAL EXPENSES                         73,351                      41,562
                                            ------                      ------
  Earnings/(loss) before income taxes       $ (409)                       $701
                                            ======                        ====

GAAP Ratios
(Nonstandard Automobile Only):
  Loss and LAE Ratio                         82.5%                       77.2%
  Expense ratio, net of billing fees         21.6%                       22.6%
                                             -----                       -----
  Combined ratio                            104.1%                       99.8%
                                            ======                       =====

Without  the $ 5.3  million  reserve  increase,  the  ratios  would have been as
follows:
  Loss and LAE Ratio                         74.4%                       77.2%
  Expense ratio, net of billing fees         21.6%                       22.6%
                                             -----                       -----
  Combined ratio                             96.0%                       99.8%
                                             =====                       =====

Crop Insurance Operations:
  Gross premiums written                  $56,647                      $59,133
                                          =======                      =======
  Net premiums written                     $9,479                      $14,690
                                           ======                      =======
  Net premiums earned                      $7,758                       $6,063
  Net investment income                        43                          (66)
  Other income                              1,448                          775
  Net realized capital gain (loss)            ---                          ---
                                              ---                          ---
     TOTAL REVENUES                         9,249                        6,772
                                            -----                        -----
  Losses and loss adjustment expenses       4,269                        6,047
                                            =====                        =====
  Policy acquisition and general and       (1,260)                      (2,433)
  administrative expenses
  Interest expense                             13                           25
                                               --                           --
     TOTAL EXPENSES                         3,022                        3,639
                                            -----                        -----
  Earnings before income taxes             $6,227                       $3,133
                                           ======                       ======


                                      -16-

<PAGE>

                                                   For the six months ended
                                                            June 30,
                                                  1997                   1996
Nonstandard-Automobile Insurance
Operations:
  Gross premiums written                      $165,547                $62,290
                                              ========                =======
  Net premiums written                        $133,843                $62,089
                                              ========                =======
  Net premiums earned                         $128,244                $52,844
  Net investment income                          5,094                  1,435
  Other income, principally billing              7,204                  2,333
  fees
  Net realized capital gain                      1,684                    212
                                                 -----                    ---
     TOTAL REVENUES                            142,226                 56,824
                                               -------                 ------
  Losses and loss adjustment expenses           99,024                 38,831
  Policy acquisition and general and            35,492                 15,774
  administrative expenses
  Interest and amortization of                   2,711                    696
                                                 -----                    ---
  intangibles
     TOTAL EXPENSES                            137,227                 55,301
                                               -------                 ------
  Earnings before income taxes                  $4,999                 $1,523
                                                ======                 ======
GAAP Ratios
(Nonstandard Automobile Only):
  Loss and LAE Ratio                             77.2%                  73.5%
  Expense ratio, net of billing fees             22.1%                  25.4%
                                                 -----                  -----
  Combined ratio                                 99.3%                  98.9%
                                                 =====                  -----

Without the  reserve  increase of $5.3  million,  the ratios  would have been as
follows:
   Loss and LAE Ratio                            73.1%                 73.5%
   Expense ratio, net of billing fees            22.1%                 25.4%
                                                 -----                 -----
   Combined ratio                                95.2%                 98.9%
                                                 =====                 =====
Crop Insurance Operations:
  Gross premiums written                      $108,356              $80,537
                                              ========              =======
  Net premiums written                         $16,680              $14,953
                                               =======              =======
  Net premiums earned                           $7,768               $6,222
  Net investment income                             92                   96
  Other income                                   3,587                1,148
  Net realized capital gain                         --                   16
                                                    --                   --
     TOTAL REVENUES                             11,447                7,482
                                                ------                -----
  Losses and loss adjustment expenses            4,269                6,444
  Policy acquisition and general and            (6,026)              (4,266)
  administrative expenses
  Interest expense                                  24                  120
                                                                        ---
     TOTAL EXPENSES                             (1,733)               2,298
                                               -------                -----
  Earnings before income taxes                 $13,180               $5,184
                                               =======               ======
Statutory Capital and Surplus:
  Pafco                                         17,273              $14,872
                                                ======              =======
  IGF                                           36,760              $11,559
                                                ======              =======
  Superior                                      65,018              $48,036
                                                ======              =======

Consolidated  Gross Premiums  Written  increased 41.4% in the second quarter and
89.9% year-to-date due to growth in both the nonstandard auto and crop segments.
Gross Premiums  Written for the nonstandard  auto segment  increased 104% in the
second quarter and 166%  year-to-date.  Such increase was due primarily to Gross
Premiums Written from Superior of $71,921,000 and $128,846,000 for the three and
six months ended June 30, 1997, as compared to $25,202,000 in 1996 subsequent to
its acquisition on April 30, 1996.  While a portion of this increase  relates to
four additional months of premium in 1997 of Superior, additional premium growth
relates to internal growth due to improved service, certain product improvements
and tougher  uninsured  motorist laws in states such as California  and Florida.
Such increase was primarily due to volume rather than rate  increases,  although
the Company  adjusts rates on an ongoing basis.  Gross Premiums  Written for the
crop  segment   decreased   4.2%  in  the  second  quarter  and  increase  34.5%
year-to-date.   The  year-to-date   increase  was  due  to  continued   industry
privatization and aggressive marketing efforts, while the decrease in the second
quarter is a reflection of timing of processing  of acreage  reports.  Remaining
gross  written  premiums  represent  commercial  business  which was ceded  100%
effective January 1, 1996 to an affiliate, Granite Reinsurance Company Ltd.

Net Premiums  Written  increased in the second quarter and year-to-date for 1997
as compared to 1996 due to the growth in Gross Premiums  Written offset by quota
share Reinsurance.

In 1997, the Company ceded $15,876,000 and $31,363,000 of nonstandard automobile
premiums during the second quarter and year-to-date as part of a 20% quota share
treaty instituted  January 1, 1997. No such treaty was in effect during 1996. In
1997, the Company ceded  $6,903,00 and  $11,805,000 of crop hail premiums during
the  second  quarter  and  year-to-date  as part  of a 40%  quota  share  treaty
instituted  January 1, 1997. In 1996, crop hail premiums were ceded at a rate of
10%. The nonstandard  automobile quota share Reinsurance  treaty is not expected
to continue in effect subsequent to the Offering of the Preferred Securities.

Net Premiums  Earned  increased for the three and six months ended June 30, 1997
as  compared to the  corresponding  periods of the prior  year,  reflecting  the
strong growth in Gross Written Premiums offset by the effects of the nonstandard
automobile and crop hail quota share treaties.

Net investment income increased  $1,863,000 and $3,743,000 for the three and six
months ended June 30, 1997 as compared to the corresponding periods of the prior
year.  Such increases were due primarily to investment  income from Superior and
greater invested assets.

Other income  increased  $2,668,000  and $6,729,000 for the three and six months
ended June 30, 1997 as compared to the corresponding  periods of the prior year.
Such increases were due to billing fee income on nonstandard automobile business
at Superior and due to an increase in the in-force policy count.  There was also
an  increase  in the  receipt  of CAT  Coverage  Fees and CAT LAE  Reimbursement
Payments due to higher premium volume.

Realized  gains of  $1,684,000  in 1997 were due primarily to a change in equity
managers and a repositioning of the portfolio.

The Loss and LAE  Ratio for the  nonstandard  automobile  segment  was 82.5% and
77.2% for the three and six months  ended June 30, 1997 as compared to 77.2% and
73.5%  for  the  corresponding   periods  in  1996.  The  Company,  as  part  of
management's  actions to reduce costs and combine  operations of the nonstandard
automobile  division,  combined the claims  management  as well as the reserving
philosophies of Superior Insurance Company with Pafco General Insurance Company,
the two  nonstandard  automobile  insurance  companies in the Group. In order to
align the different reserving philosophies of its two subsidiaries,  the Company
adopted the more conservative methodology for the

                                      -17-

<PAGE>
combined  business which required an increase of reserves of $5.3 million.  This
adjustment increased the second quarter and year-to-date 1997 loss ratio by 8.1%
and  4.1%.  While  the  Company  believes  those  actions  were  necessary,  the
establishment and monitoring of reserve levels are a highly  subjective  process
involving  numerous  estimates and  assumptions.  Therefore,  actual results may
differ  from  current  estimates.  The  Crop  Hail  Loss  Ratio in 1997 is 54.2%
compared to 61.0% in 1996.

Policy acquisition and general and  administrative  expenses have increased as a
result of the increased volume of business produced by the Company combined with
a higher  percentage  of net  premiums  retained  and  offset  by  increases  in
reinsurance commission income. Policy acquisition and general and administrative
expenses rose to $17,514,000  and  $30,397,000 or 24.0% and 22.4% of Net Premium
Earned for the three and six months ended June 30, 1997  compared to  $8,614,000
and  $12,283,000 or 19.0% and 20.8% of Net Premium  Earned in the  corresponding
periods of 1996. Such increase was due to a higher mix of nonstandard automobile
premiums in 1997 as compared to 1996.  The Expense  Ratio,  net of billing fees,
for the nonstandard automobile segment improved to 21.6% and 22.1% for the three
and six  months  ended  June 30,  1997 as  compared  to 22.6%  and 25.4% for the
corresponding   periods  in  1996,   due  to   technological   and   operational
efficiencies, economies of scale and tighter expense controls.

Due to the accounting for the crop insurance segment, operating expenses for the
three and six months ended June 30, 1997 includes a contribution  to earnings of
$1,260,000 and $6,026,000,  as compared to comparable  amounts of $2,433,000 and
$4,266,000  for the  corresponding  periods in 1996.  Such  increase  was due to
greater Buy-up Expense Reimbursement  Payments and MPCI underwriting gain due to
increased premium volumes.

The nonstandard  automobile quota share treaty reduced  premiums earned,  losses
and LAE incurred and policy acquisition and general  administrative  expenses by
$12,442,000,  $8,631,000  and  $3,501,000,  and  $15,812,000,  $10,912,000,  and
$4,505,000, respectively, for the three and six months ending June 30, 1997, for
a net pre-tax  earnings  reduction of $310,000 and $395,000 in the three and six
months ending June 30, 1997.  Reduction in expenses  reflects ceding  commission
income net of a deferred acquisition cost adjustment.

Interest expense increased  $232,000 and $1,483,000 for the three and six months
ended June 30, 1997 as compared to the  corresponding  periods in the prior year
due primarily to interest incurred since April 30, 1996 on the GGS Senior Credit
Facility.  The GGS Senior Credit  Facility will be repaid with the proceeds from
the Offering of the Preferred Securities.

Income tax expense  was 34.8% and 35.7% of pre-tax  income for the three and six
months ended June 30, 1997 as compared to 28.3% and 30.5% in 1996.  The increase
was due to the  Company's  selling of its tax exempt  investments  in the second
half of 1996 as part of its restructuring of the investment portfolios.

Financial Condition and Capital Reserves and Liquidity

The  Company's   total  assets  of  $567,641,000  at  June  30,  1997  increased
$222,962,000 from $ 344,679,000 as of December 31, 1996. The primary reasons for
this increase were an increase of  $27,597,000  in cash and invested  assets and
increases in receivables and reinsurance assets due to growth in premium volume.
The  increase in cash and  invested  assets was due to the increase in cash flow
from operations.  The Company did not significantly change its investment mix or
philosophy in 1997.

The primary  source of funds  available to the Company as a holding  company are
dividends from its primary  subsidiaries,  IGF, IGF Holdings and GGS Management.
Subsequent to the Offering of the Preferred  Securities and the repayment of the
GGS Senior Credit Facility and purchase of the remaining 48% minority  interest,
GGS  Management  will have no dividend  restrictions.  The Company also receives
$150,000 quarterly pursuant to an administration agreement with IGF to cover the
costs of executive management, accounting, investing, marketing, data processing
and reinsurance.

                                      -18-

<PAGE>
GGS  Management  collects  billing  fees charged to  policyholders  of Pafco and
Superior  who  elect  to  make  their  premium  payments  in  installments.  GGS
Management  also receives  management  fees under its management  agreement with
Pafco and Superior.  When the Florida  Department  approved the  acquisition  of
Superior by GGS  Holdings,  it  prohibited  Superior  from paying any  dividends
(whether  extraordinary  or not) for  four  years  from the date of  Acquisition
without the prior written approval of the Florida Department,  and extraordinary
dividends,  within the meaning of the Indiana  Insurance Code, cannot be paid by
Pafco without the prior  approval of the Indiana  Commissioner.  The  management
fees charged to Pafco ad Superior by GGS Management are subject to review by the
Indiana and Florida Departments.

The nonstandard  automobile insurance  subsidiaries' primary source of funds are
premiums,  investment  income and proceeds from the maturity or sale of invested
assets.  Such funds are used  principally  for the payment of claims,  operating
expenses (primarily management fees), commissions, dividends and the purchase of
investments.  There is  variability  to cash outflows  because of  uncertainties
regarding settlement dates for liabilities for unpaid losses.  Accordingly,  the
Company has  experienced  an increase in its  investment  portfolio  and has not
experienced  any problems with meeting its  obligations  for claims  payments or
management fees.

The Company is also in the process of preparing a management  agreement  between
IGF and IGF Holdings similar to that for the nonstandard  automobile  operations
in which IGF will pay IGF Holdings certain management fees for services rendered
by IGF Holdings for IGF.  IGF  Holdings has no  limitations  on dividends to the
Company  thus  providing a cash flow stream  other than  dividends  from IGF for
amounts in excess of IGF Holding's  expenses.  As of December 31, 1996,  IGF has
the ability to pay $12, 122,000 in dividends without prior regulatory approval.

Cash flows in the Company's  MPCI  business  differ from cash flows from certain
more  traditional  lines. The Company pays insured losses to farmers as they are
incurred during the growing season,  with the full amount of such payments being
reimbursed to the Company by the federal  government within three business days.
MPCI premiums are not received  from farmers until covered crops are  harvested.
Such  premiums  are required to be paid over in full to the FCIC by the Company,
with interest, if not paid by a specified date in each crop year.

During 1996,  IGF  continued  the practice of borrowing  funds under a revolving
line of  credit to  finance  premium  payables  to the FCIC on  amounts  not yet
received from farmers (the "IGF Revolver").  The maximum  borrowing amount under
the IGF Revolver is $7,000,000. IGF has not borrowed on this line in 1997.

Net  cash  provided  by  operating  activities  in 1997  aggregated  $26,510,000
compared to  $7,982,000 in 1996.  This increase in funds  provided was caused by
additional cash of $4,690,000 from net earnings  adjusted for non-cash  expenses
and realized gains or losses, continued premium growth and the normal receipt of
funds from the FCIC in the first quarter on the crop insurance operations.

Net cash used in investing  activities  decreased  from  $82,579,000  in 1996 to
$18,870,00 in the first quarter of 1997  reflecting the  acquisition of Superior
in 1996  offset in part by the  application  of funds  received  from  operating
activities.  The proceeds from sales of equity securities of $16,531,000 in 1997
reflects a change in investment  managers and a  restructuring  of the portfolio
rather than a liquidation for operating cash needs.

In 1997,  financing activities used cash of $2,406,000 compared to cash provided
of  $72,286,000  in 1996.  The Company paid  principal of $3,128,000 on its Term
Debt as scheduled. The contribution from the GS Funds of $2,304,000 represents a
contribution  to GGS Holdings that was  ultimately  contributed to the insurance
subsidiaries for

                                      -19-

<PAGE>
surplus.  The Company also  contributed cash to maintain its 52% share. The crop
insurance segment had no need to borrow funds on its revolver in 1997 due to the
proceeds it received from the initial public  offering and continued  growth and
profitable operations.

PART II - OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS
              One of the Company's subsidiaries,  IGF Insurance Company ("IGF"),
              is the  administrator  of a run-off book of business.  The Federal
              Crop  Insurance  Corporation  ("FCIC") has requested that IGF take
              responsibility  for the claims liabilities of these policies under
              its  administration.  IGF has requested  reimbursement  of certain
              expenses from the FCIC with respect to this run-off activity.  IGF
              instituted  litigation  against  the FCIC on March 23, 1995 in the
              United  States  District  Court for the Southern  District of Iowa
              seeking $4.3 million (US) as reimbursement for these expenses. The
              FCIC has  counterclaimed  for approximately $1.2 million (U.S.) in
              claims payments for which the FCIC contends IGF is responsible for
              as  successor  to the run-off  book of  business.  While the final
              result of this litigation cannot be predicted with certainty,  the
              Company  believes  that the final  resolution of this lawsuit will
              not have a material  adverse effect on the financial  condition of
              the Company.

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



                                      -20-

<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, 1997           By:__/s/ Alan G. Symons____________________
                                 Alan G. Symons
                                 Chief Executive Officer





Dated: August 12, 1997           By:__/s/ Gary P. Hutchcraft________________
                                 Gary P. Hutchcraft
                                 Vice President, Treasurer and
                                 Chief Financial Officer



                                      -21-

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