<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549-1004

                                    FORM 10-Q

Mark One
[X]               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001

[ ]               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES AND EXCHANGE ACT OF 1934

                   For the transition period from        to
                                                 --------  --------


                         Commission File Number: 0-29042

                        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) 259-6300

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 August 1, 2001, there were 10,385,399 shares of Registrant's no par value
common stock issued and outstanding.


                                       1
<PAGE>

                                 FORM 10-Q INDEX
                       FOR THE QUARTER ENDED JUNE 30, 2001

<TABLE>
<CAPTION>


                                                                                                      Page
                                                                                                     Number

PART I     FINANCIAL INFORMATION

Item 1     Financial Statements

           Consolidated Balance Sheets at June 30, 2001
<S>                                                                                                      <C>
           (unaudited) and December 31, 2000.......................................................       3

           Unaudited Consolidated Statements of Earnings
           for the Three Months Ended
           June 30, 2001 and 2000..................................................................       4

           Unaudited Consolidated Statements of Earnings
           for the Six Months ended
           June 30, 2001 and 2000..................................................................       5

           Unaudited Consolidated Statements of Cash Flows for the
           Six Months Ended June 30, 2001 and 2000 ................................................       6

           Condensed Notes to Unaudited Consolidated Financial
           Statements..............................................................................       7

Item 2     Management's Discussion and Analysis of Financial
           Condition and Results of Operations.....................................................       14

Item 3     Quantitative and Qualitative Disclosures about Market Risk..............................       20

PART II    OTHER INFORMATION.......................................................................       20

SIGNATURES.........................................................................................       23

</TABLE>



                                       2
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                       June 30,
                                                                                        2001           December 31,
                                                                                    (Unaudited)             2000
                                                                                   ---------------     ---------------

ASSETS
  Investments:
    Available for sale:
<S>                                                                                     <C>                 <C>
      Fixed maturities, at market                                                       $87,485             $99,506
      Equity securities, at market                                                       16,066              16,561
      Short-term investments, at amortized cost, which approximates market               15,863              14,872
      Mortgage loans, at cost                                                                 -               1,870
      Other invested assets                                                               1,438               1,331
                                                                                       --------          ----------
  Total Investments                                                                     120,852             134,140
  Investments in and advances to related parties                                             27                 680
  Cash and cash equivalents                                                               1,050               1,363
  Receivables,  net  of  allowance  of  $2,218  and  $1,940  in  2001  and  2000,
      respectively                                                                       64,554              50,364
  Reinsurance recoverable on paid and unpaid losses                                      43,304              48,315
  Prepaid reinsurance premiums                                                           36,203              24,773
  Deferred policy acquisition costs                                                       6,195               6,454
  Property and equipment, net of accumulated depreciation                                11,029              12,392
  Intangible assets                                                                       4,462               4,547
  Other assets                                                                            2,239               3,545
  Net assets of discontinued operations                                                       -               1,384
                                                                                       --------            --------
Total Assets                                                                           $289,915            $287,957
                                                                                       ========            ========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities:
  Loss and loss adjustment expense reserves                                             $92,490            $108,117
  Unearned premiums                                                                      73,506              62,386
  Reinsurance payables                                                                   67,086              62,059
  Distributions payable on preferred securities                                          25,837              18,397
  Deferred income                                                                         4,375                   -
  Other liabilities                                                                      21,131              14,443
                                                                                       --------            --------
Total Liabilities                                                                       284,425             265,402
Minority interest:                                                                     --------            --------
  Company-obligated  mandatory  redeemable  preferred  stock of trust  subsidiary
    holding solely parent debentures                                                    135,000             135,000
                                                                                        -------             -------
Stockholders' Equity (Deficit):
  Common stock, no par value,  100,000,000 shares  authorized,  10,385,000 shares
    issued and outstanding in both 2001 and 2000                                         38,136              38,136
  Additional paid-in capital                                                              5,851               5,851
  Unrealized loss on investments available for sale                                      (2,405)             (3,938)
  Retained (deficit)                                                                   (171,092)           (152,494)
                                                                                       ---------           ---------
Total Stockholders' (Deficit)                                                          (129,510)           (112,445)
                                                                                       ---------           ---------
Total Liabilities and Stockholders' (Deficit)                                          $289,915            $287,957
                                                                                       ========            ========

</TABLE>


SEE CONDENSED 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

                                                                                  ------------------------------
                                                                                      2001              2000
                                                                                  -------------     ------------

<S>                                                                                  <C>               <C>
Gross premiums written                                                               $46,868           $30,032

Less ceded premiums                                                                  (22,248)          (10,686)
                                                                                     --------          --------
    Net premiums written                                                             $24,620           $19,346
                                                                                     =======           =======
    Net premiums earned                                                              $23,031           $37,376

Fee income                                                                             3,540             3,631

Net investment income                                                                  1,574             2,496

Net realized capital loss                                                               (287)           (1,681)
                                                                                     --------         ---------
    Total revenues                                                                    27,858            41,822
                                                                                    --------          --------
Expenses:

    Losses and loss adjustment expenses                                               20,280            29,184

    Policy acquisition and general and administrative expenses                        10,713            19,155

    Amortization of intangibles                                                           42               490
                                                                                  ----------          --------
    Total expenses                                                                    31,035            48,829
                                                                                      ------            ------
Loss from continuing operations before income taxes and minority interest             (3,177)           (7,007)
                                                                                      -------           -------
    Total income taxes                                                                      -               -
                                                                                  -----------       ---------
Loss from continuing operations before minority interest                              (3,177)           (7,007)
                                                                                     --------          -------
Minority interest:

    Distributions on preferred securities, net of tax of $0 in both 2001 and            3,832             3,357
    2000                                                                              -------           -------

Loss from continuing operations                                                       (7,009)          (10,364)

Discontinued operations:

     Income (loss) from operations of discontinued segment, less applicable
     income taxes of $0 in both 2001 and 2000                                         (2,156)            3,146
                                                                                    ---------          -------
Net loss                                                                             $(9,165)          $(7,218)
                                                                                     ========          ========
Weighted average shares outstanding - basic and fully diluted                         10,385            10,385
                                                                                      ======            ======
Net loss from continuing operations per share - basic and fully diluted               $(0.67)           $(1.00)
                                                                                      =======           =======
Net income (loss)of discontinued operations per share - basic and fully diluted       $(0.21)            $0.30
                                                                                      =======            =====
Net loss per share - basic and fully diluted                                          $(0.88)           $(0.70)
                                                                                      =======           =======

</TABLE>


SEE CONDENSED 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
                                                                                   ------------------------------
                                                                                      2001               2000

<S>                                                                                   <C>              <C>
Gross premiums written                                                                $95,090          $89,891

Less ceded premiums                                                                   (53,641)         (40,076)
                                                                                      --------         --------
    Net premiums written                                                              $41,449          $49,815
                                                                                      =======          =======
    Net premiums earned                                                               $41,759          $80,418

Fee income                                                                              6,466            7,565

Net investment income                                                                   3,172            5,410

Net realized capital loss                                                              (1,056)          (1,317)
                                                                                       -------          -------
    Total revenues                                                                     50,341           92,076
                                                                                       ------           ------
Expenses:

    Losses and loss adjustment expenses                                                38,025           66,403

    Policy acquisition and general and administrative expenses                         21,231           37,337

    Amortization of intangibles                                                            85              980
                                                                                    ---------       ----------
    Total expenses                                                                     59,341          104,720
                                                                                       ------          -------
Loss from continuing operations before income taxes and minority interest              (9,000)         (12,644)
                                                                                       -------         --------
    Total income taxes                                                                       -             487
                                                                                   -----------       ---------
Loss from continuing operations before minority interest                               (9,000)         (13,131)

Minority interest:

     Distributions on preferred securities, net of tax of $0 in both 2001 and
     2000                                                                               7,441            6,621
                                                                                        -----            -----
Loss from continuing operations                                                       (16,441)         (19,752)

Discontinued operations:

     Income (loss) from operations of discontinued segment, less applicable
     income taxes of $0 in both 2001 and 2000                                          (2,156)           7,156
                                                                                       -------           -----


Net loss                                                                             $(18,597)        $(12,596)
                                                                                     =========        =========
Weighted average shares outstanding - basic and fully diluted                          10,385           10,385
                                                                                       ======           ======
Net loss from continuing operations per share - basic and fully diluted                $(1.58)          $(1.90)
                                                                                       =======          =======
Net income (loss) of discontinued operations per share - basic and fully diluted       $(0.21)           $0.69
                                                                                       =======           =====
Net loss per share - basic and fully diluted                                           $(1.79)          $(1.21)
                                                                                       =======          =======

</TABLE>


SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       5
<PAGE>

SYMONS INTERNATIONAL GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

<TABLE>
<CAPTION>

                                                                                                    Six Months
                                                                                                  Ended June 30
                                                                                      ---------------------------------------
                                                                                           2001                  2000
                                                                                      ----------------     ------------------


Cash flows from operating activities:
<S>                                                                                        <C>                  <C>
    Net loss for the period                                                                $(18,597)            $(12,596)
    Adjustments to reconcile net earnings to net cash provided by (used in)
    operations:
        Depreciation and amortization                                                         2,274                3,322
        Net realized capital loss                                                             1,056                1,317
    Net changes in operating assets and liabilities:
      Receivables                                                                           (14,190)              12,913
      Reinsurance recoverable on paid and unpaid losses                                       5,011              (13,193)
      Prepaid reinsurance premiums                                                          (11,430)             (16,150)
      Deferred policy acquisition costs                                                         259                5,473
      Other assets and liabilities                                                            7,994               (8,922)
      Loss and loss adjustment expense reserves                                             (15,627)             (23,327)
      Unearned premiums                                                                      11,120              (14,455)
      Reinsurance payables                                                                    5,027               26,566
      Distribution payable on preferred securities                                            7,440                6,622
      Deferred income                                                                         4,375                    -
      Net assets from discontinued operations                                                 2,302               10,117
                                                                                            -------              -------
Net cash used in operations                                                                 (12,986)             (22,313)
                                                                                            --------             --------


Cash flows from investing activities, net of assets acquired:
    Net (purchase) sale of short-term investments                                              (990)               6,517
    Proceeds from sales, calls and maturities of fixed maturities                            22,409               35,907
    Purchase of fixed maturities                                                             (7,961)              (2,409)
    Proceeds from sale of equity securities                                                   9,508                6,296
    Purchase of equity securities                                                           (10,277)             (12,170)
    Proceeds from repayment of mortgage loans                                                 1,870                   60
    Purchase of property and equipment                                                       (1,577)                (751)
    Net investing activities from discontinued operations                                      (263)                (459)
    Other                                                                                       (44)                (148)
                                                                                           ---------             --------

Net cash provided by investing activities                                                    12,675               32,843
                                                                                             ------               ------


Cash flows from financing activities, net of assets acquired:
    Net financing activities from discontinued operations                                      (655)             (13,173)
    Repayment of related party loans                                                            653                  504
                                                                                            -------            ---------
Net cash used in financing activities                                                            (2)             (12,669)
                                                                                          ----------             --------


Decrease in cash and cash equivalents                                                          (313)              (2,139)
Cash and cash equivalents, beginning of period                                                1,363                2,139
                                                                                              -----            ---------
Cash and cash equivalents, end of period                                                     $1,050           $        -
                                                                                             ======         ============

</TABLE>


SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       6
<PAGE>

                        SYMONS INTERNATIONAL GROUP, INC.
            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                    For the Three Months Ended June 30, 2001


1.   BASIS OF PRESENTATION
     The financial statements included in this report are the consolidated
     financial statements of Symons International Group, Inc. and its
     subsidiaries (the "Company"). The consolidated financial statements have
     been prepared pursuant to the rules and regulations of the Securities and
     Exchange Commission ("SEC"). In management's opinion, these financial
     statements include all adjustments (consisting only of normal, recurring
     adjustments) necessary for a fair presentation of the results of operations
     for the interim periods presented. Pursuant to SEC rules and regulations,
     certain information and footnote disclosures normally included in financial
     statements prepared in accordance with generally accepted accounting
     principles have been condensed or omitted from these statements, unless
     significant changes have taken place since the end of the most recent
     fiscal year. For this reason, the accompanying consolidated financial
     statements and notes thereto should be read in conjunction with the
     financial statements and notes for the year ended December 31, 2000
     included in the Company's 2000 Annual Report on Form 10-K. Results for any
     interim period are not necessarily indicative of results to be expected for
     the year.

2.   PREFERRED SECURITIES
     The preferred securities represent company-obligated mandatorily redeemable
     preferred securities of a trust subsidiary holding solely parent debentures
     which have a term of 30 years with semi-annual interest payments commencing
     February 15, 1998 (the "Preferred Securities"). The holder may redeem the
     Preferred Securities in whole or in part after 10 years. Under the terms of
     the indenture, the Company is permitted to defer the semi-annual interest
     payments for up to five years. The Company began deferring the semi-annual
     interest payments in February 2000.

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

     o    The Company may not incur additional indebtedness or guarantee
          additional indebtedness.
     o    The Company may not make certain restricted payments including making
          loans or advances to affiliates, repurchasing common stock and the
          payment of dividends in excess of a stated limitation.
     o    The Company may not increase its level of non-investment grade
          securities defined as equities, mortgage loans, real estate, real
          estate loans and non-investment grade fixed income securities.

     These restrictions currently apply as the Company's consolidated coverage
     ratio was (1.05) as of June 30, 2001, and will continue to apply until the
     Company's consolidated coverage ratio exceeds the amount set forth in the
     indenture. The Company is in compliance with these additional restrictions.

3.   REGULATORY AFFAIRS
     Two of the Company's insurance company subsidiaries, Pafco General
     Insurance Company ("Pafco") and IGF Insurance Company ("IGF") are domiciled
     in Indiana and prepare their statutory financial statements in accordance
     with accounting practices prescribed or permitted by the Indiana Department
     of Insurance ("IDOI"). Statutory requirements place limitations on the
     amount of funds that can be remitted to the Company from Pafco and IGF.
     While neither Pafco nor IGF have surplus from which to pay dividends, the
     Indiana statute allows 10% of surplus in regard to policyholders or 100% of
     net income, whichever is greater, to be paid as dividends only from earned
     surplus; however, the consent orders would presently restrict such payments
     in any event. Another insurance company subsidiary, Superior Insurance
     Company ("Superior"), and related entities are domiciled in Florida and
     prepare their statutory financial statements in accordance with accounting
     practices prescribed or permitted by the Florida Department of Insurance
     ("FDOI"). Florida statute contains limitations with regard to payment of
     dividends. Superior may pay dividends of up to 10% of surplus or 100% of
     net income; whichever is greater, from earned surplus. Prescribed statutory
     accounting practices include a variety of publications of the National
     Association of

                                       7
<PAGE>
     Insurance Commissioners ("NAIC"), as well as state laws, regulations, and
     general administrative rules. Permitted statutory accounting practices
     encompass all accounting practices not so prescribed.

     As previously reported, on June 29, 2001, IDOI and IGF entered into a
     Consent Order (the "Consent Order") relating to the continuing operations
     of IGF. The entry of the Consent Order was as a result of losses
     experienced by IGF in its crop insurance operations and followed the sale
     of substantially all of the crop insurance assets of IGF to Acceptance
     Insurance Companies Inc. ("Acceptance").

     Among other matters, the Consent Order prohibits IGF from taking any of the
     following actions, without prior written consent of the IDOI: (i) sell or
     encumber any of its assets, property, or business in force; (ii) disburse
     funds, except to pay direct unaffiliated policyholder claims and normal
     operating expenses in the ordinary course of business (which does not
     include payment to affiliates except for the reimbursement of costs for
     running IGF by SIG, and does not include payments in excess of $10,000);
     (iii) lend its funds; (iv) make investments except in specified types of
     investments; (v) incur debts or obligations, except in the ordinary course
     of business to unaffiliated parties; (vi) merge or consolidate with another
     company; (vii) enter into new, or amend existing, reinsurance agreements;
     (viii) complete, enter into or amend any transaction or arrangement with an
     affiliate; or (ix) disburse funds or assets to any affiliate. The Consent
     Order requires IGF to provide the IDOI with monthly written updates and
     immediate notices of any material change regarding the status of litigation
     with Mutual Service Casualty Insurance Company and with Continental
     Casualty Company, statutory reserves, number of non-standard automobile
     insurance policies in-force by state, and reports of all non-claims related
     disbursements. IGF is required to cease writing new business and, in
     Pennsylvania, cease renewing existing business after July 30, 2001. During
     the first half of 2001, the non-standard automobile insurance policies
     written in Pennsylvania by IGF accounted for approximately 10% of the total
     gross written premiums of the Company. The Company expects to obtain
     authority from the Pennsylvania Department of Insurance to write business
     in Pennsylvania through another of its insurance company subsidiaries.
     IGF's failure to comply with the Consent Order could cause the IDOI to
     begin proceedings to have a rehabilitator or liquidator appointed for IGF
     to extend the provisions of the Consent Order. In the event Pennsylvania
     does not permit another of the Company's insurance subsidiaries to write
     policies in that state, the Company's written premiums for 2001 could be
     less than anticipated.

     The Illinois, Missouri and Minnesota Departments of Insurance have taken
     action to suspend IGF's and/or Superior's authority to write business in
     those states. IGF is otherwise prohibited from writing any new business
     pursuant to the Consent Order and the amount of business written by IGF and
     Superior in those states is not material. IGF and Superior have also ceased
     writing business in Texas and IGF has ceased writing new business in
     Washington. IGF and Superior will not begin writing business in those
     states without the prior approval of their respective departments of
     insurance. Pafco, IGF and Superior also provide monthly financial
     information to the departments of insurance in certain states in which they
     write business, and Pafco and IGF have agreed to obtain IDOI prior approval
     of any new affiliated party transactions.

     On February 17, 2000, Pafco agreed to an order under which the IDOI may
     monitor more closely the ongoing operations of Pafco. Among other matters,
     Pafco must:

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

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

                                       8
<PAGE>

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

     Pafco's inability or failure to comply with any of the above could result
     in the IDOI requiring further reductions in Pafco's permitted premium
     writings or in the IDOI instituting future proceedings against Pafco.

     Pafco informed the Iowa Department of Insurance ("IADOI") of its decision
     to stop writing new automobile business in Iowa while Pafco reviews and
     revises its program in the state. Pafco has agreed with the IADOI that it
     will not write any new non-standard business, until such time as Pafco has
     reduced its overall non-standard automobile policy counts in the state or
     has: (i) increased surplus; or (ii) achieved a net written premium to
     surplus ratio of less than three to one; and (iii) surplus reasonable to
     its risk. Pafco has continued to service existing policyholders and renew
     policies in Iowa and provide policy count information on a monthly basis in
     conformance with IADOI requirements.

     The financial review of Superior for the year ended December 31, 1999 by
     the FDOI has been completed and the FDOI issued its draft report on July
     19, 2001. Superior intends to dispute certain allegations in the draft
     report with regard to the characterization of payments made by Superior to
     its parent and Superior and has requested a hearing to resolve the disputed
     issues of fact and law. A hearing has not yet been scheduled.

     As previously reported, the FDOI issued a notice of its intent to issue an
     order (the "Notice") which principally addressed certain policy and finance
     fee payments by Superior to Superior Group. A formal administrative hearing
     to review the Notice and a determination that the order contemplated by the
     Notice not be issued was held February 2001. The administrative law judge
     entered a recommended order on June 1, 2001, and the Company would accept
     the recommendations of such order. The FDOI could reject findings in the
     recommended order and issue its order by August 31, 2001 which could
     restrict Superior from paying certain billing and policy fees to Superior
     Group and include a requirement that Superior Group repay to its
     subsidiary, Superior, billing and policy fees from prior years in an amount
     of approximately $35.2 million. A restriction on the ability of Superior to
     pay future billing and policy fees to Superior Group may necessitate that
     the Company take certain actions, which may be subject to regulatory
     approvals, to reallocate operating revenues and expenses between its
     subsidiaries.

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

     The NAIC adopted the Codification of Statutory Accounting Principles
     guidance ("Codification"), which replaces the Accounting Practices and
     Procedures manual as the NAIC's primary guidance on statutory accounting
     effective January 1, 2001. The IDOI and FDOI have adopted Codification.

     The changes in statutory accounting principles resulting from Codification
     which impact the Company's insurance subsidiaries, among other things,
     limit the statutory carrying value of electronic data processing equipment
     and deferred tax assets in determining statutory surplus. The consolidated
     statutory surplus of insurance subsidiaries as of December 31, 2000 is
     $39.4 million. Effective January 1, 2001, the consolidated statutory
     surplus was reduced by $11.4 million to $28.0 million, giving recognition
     to the new accounting principles.

4.   COMMITMENTS AND CONTINGENCIES

     As previously reported, IGF had been a party to a number of pending legal
     proceedings and claims relating to agricultural production interruption
     insurance policies (the "AgPI Program") which were sold by IGF during 1998.
     Sales of this product resulted in large underwriting losses for IGF.

                                       9
<PAGE>
     Approximately $29,047,653 was paid through June 30, 2001 in settlement of
     legal proceedings and claims related to the AgPI Program, with payments
     totaling approximately $259,489 in the first half of 2001. A reserve of
     approximately $10,652,347 remains to pay future claims. All of the policies
     of insurance, which were issued in the AgPI Program, were issued by and
     under the name of Mutual Service Casualty Insurance Company ("MSI"), a
     Minnesota Corporation with its principal place of business located in Arden
     Hills, Minnesota.

     A dispute arose between MSI and IGF with respect to the funding of the
     settlements of claims made on the AgPI Program. MSI and IGF currently are
     arbitrating their dispute over responsibility for over $60 million in
     claims paid by both companies to MSI's insureds. IGF is seeking a recovery
     of the $30 million in claims which it paid, and MSI is seeking a similar
     recovery of the claims which it paid. The arbitration commenced December
     20, 2000. The parties subsequently selected an arbitration panel and had
     their first, organizational meeting with the panel on May 22, 2001. At that
     meeting, MSI moved for an order requiring IGF to post pre-hearing security
     through the issuance of a letter of credit in the amount of $39 million.
     Over IGF's objection, in a two to one vote, the panel on June 9, 2001,
     ordered IGF to post the $39 million in security, which IGF was to have done
     by June 19, 2001.

     On or about June 11, 2001, IGF filed a motion in the United States District
     Court for the District of New Jersey seeking to vacate the arbitration
     panel's order requiring security. On June 19, 2001, MSI filed a motion in
     the same court for a ruling confirming that order. On July 26, 2001, the
     parties presented oral arguments on their cross-motions for vacation and
     confirmation of the order. On August 6, 2001 the court denied IGF's motion
     to vacate the arbitration panel's order. As of this date, IGF has not
     posted the required letter of credit, and it is financially incapable of
     satisfying that requirement.

     On June 25, 2001, MSI filed a complaint for preliminary and permanent
     injunctive relief and damages (the "MSI Complaint") against the Company,
     IGF, IGF Holdings, Inc. ("IGFH"), Granite Reinsurance Company Ltd.
     ("Granite Re"), Goran Capital Inc. ("Goran") and certain affiliates of
     those companies, as well as certain members of the Symons family, and
     Acceptance in the United States District Court for the Southern District of
     Indiana, Indianapolis Division. The MSI Complaint alleges that the
     previously reported June 6, 2001 transfer of IGF's assets to Acceptance and
     the payments by Acceptance to the Company, Goran and Granite Re violated
     Indiana law and are voidable. In addition, the MSI Complaint alleges that
     Acceptance, the Company, Goran, IGFH and the Symons family are liable to
     MSI for the entire $39 million claim which MSI is asserting against IGF in
     arbitration proceedings on theories of successor liability and "piercing
     the corporate veil." The MSI Complaint seeks preliminary and permanent
     injunctive relief against the defendants, an order voiding the various
     transactions between and among the defendants and an order determining that
     the defendants are directly responsible to MSI for MSI's $39 million claim
     against IGF.

     On July 26, 2001, the Company, IGF, IGFH, Goran, Granite Re and their
     affiliates filed answers to the MSI Complaint. In those answers, each of
     the defendants denied the material allegations contained in the MSI
     Complaint and asserted certain affirmative defenses to that complaint. Each
     of those defendants also filed briefs in opposition to MSI's Motion for
     Preliminary Injunctive Relief. A hearing on MSI's Motion for Preliminary
     Injunctive Relief was held Thursday, August 2, 2001. On August 3, 2001, the
     court denied MSI preliminary injunctive relief.

     In the event MSI is successful in obtaining permanent injunctive relief
     against the Company and its affiliates, any such relief would have an
     adverse impact upon the Company and its affiliates and their respective
     assets and operations. Further, in the event MSI is successful in obtaining
     court orders voiding the various transactions between the defendants and
     determining that the defendants are directly responsible to MSI for MSI's
     $39 million claim against IGF, those orders and determinations could also
     have an adverse effect upon the Company and its affiliates and their
     respective assets and operations.

     As previously reported, the Company and two of its subsidiaries, IGFH and
     IGF, are parties to a "Strategic Alliance Agreement" dated February 28,
     1998 (the "SAA") with Continental Casualty Company ("CNA"), pursuant to
     which IGF acquired certain crop insurance operations of CNA. Through
     reinsurance agreements, CNA was to share in IGF's profits or losses on
     IGF's total crop insurance business. By letter dated January 3, 2001, CNA
     gave notice pursuant to the SAA of its exercise of the "Put Mechanism"
     under the SAA effective February 19, 2001. According to the SAA, upon
     exercise of the Put Mechanism, IGFH is obligated to pay CNA an amount equal
     to 5.85 times "Average Pre-Tax Income", an amount based in part upon
     payments made to CNA under the SAA. The SAA further provided that 30 days
     after exercise of the Put, IGF will execute a promissory note payable six
     months after the

                                       10
<PAGE>

     exercise of the Put in the principal amount equal to the amount owed, as
     specified by the SAA. In a letter dated March 20, 2001, CNA advised the
     Company that it calculated the principal amount due CNA to be in excess of
     $26 million. CNA also asserted a claim for amounts allegedly due under
     reinsurance agreements for the 2000 crop year.

     As previously reported, the Company believes it has claims against CNA and
     defenses to CNA's claim that may ultimately offset or reduce amounts owed
     to CNA. The Company and CNA have engaged in discussions regarding possible
     alternatives for the resolution of their respective claims against each
     other; however, those discussions ultimately proved unsuccessful.

     Following the failure of settlement discussions, on June 4, 2001, IGF, IGFH
     and the Company filed a complaint against CNA (the "IGF Complaint") in the
     United States District Court for the Southern District of Indiana,
     Indianapolis Division. The IGF Complaint asserts claims against CNA for
     fraud and constructive fraud in connection with the SAA and breach of
     contract and seeks relief against CNA for compensatory and punitive
     damages. On June 27, 2001, CNA filed its "Answer, Separate Defenses and
     Counterclaim", in which CNA generally denied the material allegations of
     the IGF Complaint and asserted various defenses to those claims.

     On June 6, 2001, CNA filed a complaint against IGF, IGFH and the Company
     (the "CNA Complaint") asserting claims based on the SAA and related
     agreements for approximately $25 million allegedly owed CNA by virtue of
     its exercise of the Put Mechanism, $3 million for amounts allegedly due
     under reinsurance agreements for the 2000 crop year, $1 million for certain
     "fronting costs," and $1 million pursuant to a note executed by IGFH to
     CNA's affiliate in connection with the acquisition by IGFH of North
     American Crop Underwriters, Inc. in 1998. CNA also asserts claims to the
     effect that the June 6, 2001 sale of IGF assets to Acceptance resulted in
     payments of funds to Goran, the Company and Granite Re, which funds
     allegedly should have been paid to IGF instead. On June 6, 2001, CNA asked
     the district court to enter a temporary restraining order preventing IGF,
     IGFH and the Company from disposing of the proceeds received by them in
     connection with the sale of IGF assets to Acceptance. In an emergency
     hearing, the court denied CNA the relief it requested, without prejudice to
     reconsideration of those issues at a future time. CNA has since amended the
     CNA Complaint to add Goran and Granite Re as defendants. CNA's counterclaim
     in response to the IGF Complaint asserts essentially the same claims
     against the same parties as the amended CNA Complaint.

     An initial pretrial conference is scheduled for the CNA cases in September
     2001. Although the Company continues to believe that it has claims against
     CNA and defenses to CNA's claims which may offset or reduce amounts owing
     by the Company or its affiliates to CNA, there can be no assurance that the
     ultimate resolution of the claims asserted by CNA against the Company and
     its affiliates will not have a material adverse effect upon the Company and
     its affiliates financial condition or results of operations.

     During 2000, the discontinued crop operations sold a product that insured
     potato producers against lost revenue caused by depressed commodity prices
     for potatoes. The commodity price of potatoes at December 31, 2000 was
     lower than the expected price; therefore, the Company established a
     $4,500,000 gross loss reserve for its unpaid loss obligations on this
     product. Although the Company believes the loss reserve is reasonable, the
     commodity price for potatoes could fluctuate, and the ultimate liability
     may vary from this estimate. There can be no assurance that the ultimate
     losses will not exceed the reserves established to date. The Company
     intends to reevaluate the reserves and make any necessary adjustments in
     the third quarter of 2001.

     As previously reported, a complaint for a class action alleging violations
     of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 was
     filed against the Company and certain of its officers and directors in the
     United States District Court for the Southern District of Indiana. The
     Company intends to vigorously defend the claims brought against it. No
     material developments have occurred since last reported.

     On June 29, 2001, the California Department of Insurance ("CDOI") filed a
     Notice of Non-Compliance against Superior, which alleges that broker fees
     were charged by independent brokers in violation of California law. The
     Notice of Non-Compliance seeks repayment to policyholders of amounts
     collected by the brokers and the possible imposition of fines against
     Superior. Superior has filed a response to the notice and intends to
     vigorously defend the action. The Company did not receive any of the fees
     at issue and has not accrued any amount in its consolidated financial
     statements for this claim.

                                       11
<PAGE>

     As previously reported, actions have been brought in Florida against
     Superior Guaranty Insurance Company (a subsidiary of Superior) purporting
     to be brought on behalf of a class of persons allegedly charged service
     charges or finance charges in violation of Florida law. No material
     developments have occurred since last reported.

     As previously reported, an action has been brought in Florida alleging that
     Superior improperly reduced medical benefits payable and improperly
     calculated interest in violation of Florida law. The case was brought on
     behalf of a purported class consisting of (i) healthcare providers that
     rendered treatment to Superior insureds and claimants of Superior insureds
     and (ii) such insureds and claimants. The Company believes the claim is
     without merit and intends to vigorously defend the charges brought against
     it. No material developments have occurred since last reported.

     As previously reported, an action has been brought in Florida against
     Superior on behalf of a purported class consisting of healthcare providers
     that rendered treatment to Superior insureds and obtained a valid
     assignment of benefits from Superior. The plaintiff alleges that Superior
     reduced or denied claims for medical expenses payable to the plaintiff
     without first obtaining a written report in violation of Florida law. The
     plaintiff also alleges that Superior inappropriately reduced the amount of
     benefits payable to the plaintiff in breach of Superior's contractual
     obligations to the plaintiff. Superior believes the allegations of
     wrongdoing in violation of law are without merit and intends to vigorously
     defend the claims brought against it. No material developments have
     occurred since last reported.

     The Company is a joint and several guarantor in a $7,250,000 debt
     collateralized by operating assets held in an entity in which the Company
     is a 50% owner. The estimated fair market value of the assets approximates
     the debt.

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

5.   LOSS DEVELOPMENT ON PRIOR ACCIDENT YEARS
     During the second quarter of 2001, the Company experienced favorable
     development on its year-end 2000 loss and LAE reserves in the amount of
     $0.8 million. This was the result of favorable settlement of outstanding
     claims and reduced the loss and loss adjustment expense ratio for the
     quarter by 3.5 percentage points.

6.   RECLASSIFICATIONS
     Certain prior period amounts have been reclassified to conform to the
     current year presentation.

7.   EARNINGS PER SHARE
     Basic and diluted net earnings (loss) per share are computed by dividing
     net earnings (loss) as reported by the average number of shares outstanding
     as follows:

<TABLE>
<CAPTION>

                                                                              Three Months Ended
                                                                                    June 30
                                                                          ----------------------------
         (in thousands)                                                      2001            2000
                                                                          ------------    ------------

         Basic:
<S>                                                                            <C>             <C>
           Weighted-average common shares outstanding                          10,385          10,385
                                                                               ======          ======

         Diluted:
           Weighted-average common shares outstanding                          10,385          10,385
                                                                               ======          ======
</TABLE>


     The Company has 1,074,000 stock options outstanding as of June 30, 2001.
     Common stock equivalents are anti-dilutive; therefore, fully diluted
     earnings per share are the same as basic earnings per share.

                                       12
<PAGE>

8.   DISCONTINUED OPERATIONS
     In December 2000, the Company initiated the divestiture of its crop
     insurance segment. This business was predominantly written through IGF. The
     transaction was completed in June 2001 and transferred ownership of
     substantially all of the crop insurance assets of the Company and IGF,
     effective with the 2001 crop cycle to Acceptance. Upon completion of the
     sale, the net assets of the discontinued operations were reduced to zero.
     IGF and its affiliates received approximately $27.4 million at closing, and
     Acceptance assumed all of the crop insurance in-force policies for the 2001
     crop year. For agreeing not to compete in the crop insurance industry for a
     period of three years from the date of sale, the Company received $4.5
     million at closing that is being amortized to income on a straight-line
     basis over three years. An additional $9.0 million in reinsurance premium
     is payable to Granite Re under a multi-year reinsurance treaty whereby
     Granite Re has agreed to reinsure a portion of the crop insurance business
     of Acceptance and provide an indemnity on behalf of IGF. The results of the
     crop insurance segment have been reflected as "Discontinued Operations" in
     the accompanying unaudited consolidated financial statements in accordance
     with Accounting Principles, Board Opinion No. 30 "Reporting the Results of
     Operations --- Reporting the Effects of Disposal of a Segment of a
     Business, and Extraordinary, Unusual and Infrequently Occurring Events and
     Transactions."

     Summarized results of operations and financial position for discontinued
     operations were as follows:

<TABLE>
<CAPTION>

         STATEMENTS OF EARNINGS (LOSSES):
         (in thousands)
                                                                              Three Months Ended
                                                                                   June 30
                                                                     ---------------------------------
                                                                          2001               2000
                                                                     ---------------     -------------

<S>                                                                      <C>                <C>
Gross premiums written                                                   $88,569            $101,108
                                                                         =======            ========
Net premiums written                                                     $(7,906)            $10,379
                                                                         ========            =======

     Net premiums earned                                                 $(2,816)             $6,501
     Net investment and fee income                                         1,251                 154
     Net realized capital gain                                               629                   -
                                                                             ---           ---------
Total revenues                                                              (936)              6,655
                                                                            -----              -----

     Loss and loss adjustment expenses                                       913               7,894
     Policy acquisition and general and administrative expenses            1,901              (4,655)
     Interest and amortization expense                                    (1,594)                269
                                                                          -------                ---
Total expenses                                                             1,220               3,508
                                                                           -----               -----
Income before income taxes                                                (2,156)              3,147

Income tax expense                                                             -                   -
                                                                      ----------           ---------
Net income from discontinued operations                                  $(2,156)             $3,147
                                                                         ========             ======

</TABLE>


                                       13
<PAGE>

         STATEMENTS OF EARNINGS (LOSSES):
         (in thousands)

<TABLE>
<CAPTION>
                                                                             Six Months Ended
                                                                                 June 30
                                                                    ----------------------------------
                                                                          2001               2000
                                                                     ---------------     -------------

<S>                                                                     <C>                 <C>
Gross premiums written                                                  $182,959            $185,468
                                                                        ========            ========
Net premiums written                                                        $(18)            $17,949
                                                                            =====            =======
     Net premiums earned                                                    $(18)             $9,434
     Net investment and fee income                                           935                 121
     Net realized capital gain                                               631                   1
                                                                          ------             -------
Total revenues                                                             1,548                9556
                                                                           -----                ----
     Loss and loss adjustment expenses                                     6,783              10,334
     Policy acquisition and general and administrative expenses           (1,722)             (8,447)
     Interest and amortization expense                                    (1,357)                512
                                                                          -------             ------
Total expenses                                                             3,704               2,399
                                                                           -----               -----
Income before income taxes                                                (2,156)              7,157

Income tax expense                                                             -                   -
                                                                      ----------           ---------
Net income from discontinued operations                                  $(2,156)             $7,157
                                                                         ========             ======

</TABLE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW OF THE COMPANY Symons International Group, Inc. (the "Company") owns
insurance companies that underwrite and market non-standard private passenger
automobile insurance. The Company's principal insurance company subsidiaries are
Pafco General Insurance Company ("Pafco"), Superior Insurance Company
("Superior") and IGF Insurance Company ("IGF"). The Company is a 73% owned
subsidiary of Goran Capital Inc. ("Goran").

As previously announced, the Company completed the sale of its crop insurance
operations in June 2001.

Pafco, Superior, Superior Guaranty Insurance Company ("Superior Guaranty"),
Superior American Insurance Company ("Superior American") and IGF, are engaged
in the writing of insurance coverage for automobile physical damage and
liability policies for non-standard risks. Non-standard risk 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
or violations, particular occupation or type of vehicle. The Company offers
several different policies that are directed towards different classes of risk
within the non-standard market. Premium rates for non-standard risks are higher
than for standard risks. Since it can be viewed as a residual market, the size
of the non-standard private passenger automobile insurance market changes with
the insurance environment and grows when the standard carriers become more
restrictive. Non-standard 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 non-standard
policies is shorter than many other types of insurance. Also, since the
non-standard automobile insurance business typically experiences lower rates of
retention than standard automobile insurance, the number of new policyholders
underwritten by non-standard automobile insurance carriers each year is
substantially greater than the number of new policyholders underwritten by
standard carriers.


                                       14
<PAGE>

FORWARD LOOKING STATEMENTS AND CERTAIN RISKS
All statements, trend analyses, and other information herein contained, relative
to markets for the Company's products and/or trends in the Company's operations
or financial results, as well as other statements including words such as
"anticipate," "could," "feel(s)," "believe," "believes," "plan," "estimate,"
"expect," "should," "intend," "will," and other similar expressions, constitute
forward-looking statements under the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to known and unknown risks;
uncertainties and other factors which may cause actual results to be materially
different from those contemplated by the forward-looking statements. Such
factors include, among other things: (i) general economic conditions, including
prevailing interest rate levels and stock market performance; (ii) factors
affecting the Company's non-standard automobile operations such as rate increase
approval, policy renewals, new business written, and premium volume; and (iii)
the factors described in this section and elsewhere in this report.

SIGNIFICANT LOSSES HAVE BEEN REPORTED AND ARE LIKELY TO CONTINUE
For the three months ended June 30, 2001, losses from continuing operations were
$(7,009,000) compared to losses of $(10,364,000) in the comparable period of
2000. For the six months ended June 30, 2001, losses from continuing operations
were $(16,441,000) compared to losses of $(19,752,000) for the same period of
2000. The Company previously reported losses from continuing operations of
$(71,384,000) for the entire year 2000 compared to losses from continuing
operations of $(65,443,000) for 1999. The 2000 loss includes a one-time charge
for the write-off of goodwill of $33.5 million. The non-standard automobile
operations results prior to this write-off improved over 1999; however, results
continue to be unprofitable. The Company is continuing to seek and implement
rate increases and other underwriting actions to achieve profitability. A number
of systems have been automated and service problems have been eliminated or
significantly reduced. Although the Company has taken a number of actions to
address factors contributing to these past losses, there can be no assurance
that operating losses will not continue.

RECENT AND FURTHER REGULATORY ACTIONS MAY ADVERSELY AFFECT THE COMPANY'S
FUTURE OPERATIONS
The Company's insurance company subsidiaries, their business operations, and
their transactions with affiliates, including the Company, are subject to
extensive regulation and oversight by the Indiana Department of Insurance
("IDOI"), the Florida Department of Insurance ("FDOI"), and the insurance
regulators of other states in which the insurance company subsidiaries write
business. Moreover, the insurance company subsidiaries' losses, adverse trends
and uncertainties discussed in this report have been and continue to be matters
of concern to the domiciliary and other insurance regulators of the Company's
insurance company subsidiaries and have resulted in enhanced scrutiny,
suspensions, orders and other regulatory actions by several regulators. The
primary purpose of insurance regulation is the protection of policyholders
rather than stockholders. Failure to resolve issues with the IDOI and the FDOI,
and with other regulators, in a manner satisfactory to the Company could impair
the Company's ability to execute its business strategies or result in future
regulatory actions or proceedings that could have a material adverse effect on
the Company's operations.

THE COMPANY IS SUBJECT TO A NUMBER OF PENDING LEGAL PROCEEDINGS
The Company is involved in a number of pending legal proceedings. The Company
intends to vigorously defend all of the claims brought against it. Although the
Company believes that it has claims and defenses that may offset or reduce
potential liability and that many of these actions are without merit, there can
be no assurance that such proceedings will not have a material adverse effect on
the Company's operations.

THE TERMS OF THE TRUST PREFERRED SECURITIES MAY RESTRICT THE COMPANY'S ABILITY
TO ACT
The Company has issued, through a wholly owned trust subsidiary, $135 million
aggregate principal amount in Trust Originated Preferred Securities (the
"Preferred Securities"). The Preferred Securities have a term of 30 years with
annual interest payments of 9.5% paid semi-annually. The obligations of the
Preferred Securities are funded from the Company's non-standard automobile
management company. The Company began deferring the semi-annual interest
payments in February 2000 and may continue to defer such payments for up to five
years as permitted by the indenture for the Preferred Securities. Although there
is no present event of default under the indenture that would accelerate the
payment of the Preferred Securities, the indenture contains a number of
covenants that may restrict the Company's ability to act in the future. These
covenants include restrictions on the Company's ability to: incur or guarantee
debt; make payments to affiliates; repurchase its common stock; pay dividends on
common stock; and increase its level of certain investments in other than
investment grade, fixed income securities. There can be no assurance that
compliance with

                                       15
<PAGE>

these restrictions and other provisions of the indenture for the Preferred
Securities will not adversely affect the cash flow of the Company.

REVIEW OF CONSOLIDATED OPERATIONS

NET LOSS
The net loss for the three months ended June 30, 2001 was $(9,165,000) or
$(0.88) per share (basic and diluted). This is an increase of $(1,947,000) or
$(0.19) per share from the net loss for the same period of 2000. The increased
net loss is due primarily to the loss from operations of the discontinued crop
insurance segment of $(2,156,000) realized in the second quarter. This loss also
increased the net loss for the six months ended June 30, 2001 over the same
period in 2000 by $(6,001,000) or $(0.58) per share. Refer to Note 8.
"Discontinued Operations" of the Condensed Notes to Consolidated Financial
Statements for additional information.

The loss from continuing operations before taxes and distributions on preferred
securities was $(3,177,000) for the three months ended June 30, 2001 compared to
a loss of $(7,007,000) for the comparable period in 2000, an improvement of
$3,830,000. For the six months ended June 30, 2001, the loss from continuing
operations before taxes and distributions on preferred securities improved by
$3,644,000 to $(9,000,000).

GROSS PREMIUMS WRITTEN
Gross premiums written increased 56% for the second quarter of 2001 as compared
to the second quarter of 2000, due primarily to rate increases implemented in
2000 and 2001. Gross premiums written in the second quarter of 2000 declined 55%
from the second quarter of 1999 due to the Company exiting certain highly
competitive markets and instituting other underwriting initiatives intended to
increase profitability. These and other subsequent actions have allowed the
Company to increase premiums in the second quarter of 2001 to levels comparable
to the second quarter of 1999. For the first half of 2001, gross premium written
increased 6% over the same period in 2000, due primarily to the aforementioned
rate increases and a 24% reduction in policies in force.

NET PREMIUMS WRITTEN
Net premiums written represent the portion of premiums that are being retained
by the Company after consideration for risk sharing through reinsurance
contracts. As a result of losses in the Company's insurance subsidiaries and to
manage overall risk retention, the Company entered into a reinsurance agreement
to cede a portion of the gross written premiums to a third party. In the second
quarter of 2001, the Company ceded approximately 47% of its gross written
premiums under a quota share reinsurance contract that was effective January 1,
2000. For the first half of 2001, approximately 56% of gross premiums written
were ceded to the reinsurer.

NET PREMIUMS EARNED
Net premiums earned have decreased 38% and 48% for the three and six months
ended June 30, 2001, respectively, as compared to the same periods in 2000.
Premiums are earned ratably over the term of the underlying insurance contracts
and the reduction in net premiums earned is a result of the increase in ceded
premiums.

FEE INCOME
Fee income is derived from installment billings and other services provided to
policyholders. The reductions in fee income for both the three and six months
ended June 30, 2001 as compared to the comparable period in 2000 is attributable
to the reduction in policies in force.

NET INVESTMENT INCOME
Net investment income decreased 37% and 41% for the three and six months ended
June 30, 2001 compared to the same periods in 2000. This decrease is reflective
of the decline in invested assets during a period of declining premiums and the
payout of prior year losses settled in 2001.

                                       16
<PAGE>

NET REALIZED CAPITAL LOSSES
Net realized capital losses were $(287,000) and $(1,056,000) for the second
quarter and first half of 2001, respectively, as compared to net realized
capital losses of $(1,681,000) and $(1,317,000) in the comparable periods of
2000. Capital losses were realized due to the continued liquidation of
investments to fund operations and claim payments under unfavorable market
conditions.

LOSSES AND LOSS ADJUSTMENT EXPENSES
The loss and loss adjustment expense (LAE) ratio for the Company for the three
and six months ended June 30, 2001, was 88.1% and 91.1%, respectively, of net
premiums earned as compared to 94.8% for the first quarter of 2001 and to 82.3%
for the entire year 2000.

During the second quarter of 2001, the Company experienced favorable development
on its year-end 2000 loss and LAE reserves for accidents occurring in 2000 and
prior in the amount of $0.8 million resulting from favorable settlement of
outstanding claims. This development reduced the loss and LAE ratio for the
second quarter by 3.5 percentage points.

The loss and allocated loss adjustment expense ratio for the Company for the
three months ended June 30, 2001 was 71.2% compared to 70.2% for the same period
in 2000. The unallocated loss adjustment expense (ULAE) ratio for the quarter
was 16.8% compared to 7.9% for the second quarter of 2000. ULAE is not ceded
under the Company's quota share reinsurance agreement; therefore, such expense
represents a higher percentage of net earned premiums when compared to the same
period last year. ULAE as a percentage of gross written premiums was 8.3% for
the second quarter in 2001 as compared to 9.8% in 2000.

POLICY ACQUISITION AND GENERAL AND ADMINISTRATIVE EXPENSE
Policy acquisition and general and administrative expenses for the three and six
months ended June 30, 2001 declined to $10,713,000 and $21,231,000,
respectively, from the comparable periods of 2000. A reduction for the second
quarter and first half of 2001 of 44% and 43%, respectively, over the same
periods in 2000. This reflects an increase in ceding commissions associated with
the quota share reinsurance contract and overall operating expense reductions.

As a percentage of gross premiums written, the Company experienced a reduction
in its 2001 expense ratio from 64% in 2000 to 23% and from 42% in 2000 to 22%
for the three and six months ended June 30, 2001, respectively. These decreases
are the result of the Company continuing to reduce operating expenses, the
effect of increased operating expenses allocated to LAE, and an increase in
ceding commissions earned under the quota share reinsurance contract.

PROVISION (BENEFIT) FOR INCOME TAXES
At June 30, 2001 the Company's net tax assets are fully offset by a 100%
valuation allowance that resulted in no tax benefit for either the three or six
months ended June 30, 2001.


REVIEW OF CONSOLIDATED FINANCIAL CONDITION

INVESTMENTS
Total investments at June 30, 2001 and December 31, 2000 were $120.9 million and
$134.1million, respectively. The decline in invested assets results from
continued liquidations to fund claim payments and operating expenses.
Composition of investments is comparable between these periods and the Company's
market risk exposure has not changed materially since December 31, 2000.

REINSURANCE RECEIVABLES AND PAYABLES
The Company negotiated a third-party quota share reinsurance agreement that
became effective January 1, 2000. Under the quota share agreement, the Company
may cede a portion of its non-standard automobile insurance premiums and related
losses based on a variable percentage of up to 75% of Superior's and up to 90%
of Pafco's earned premiums in 2001. The average ceding percentage over the year
2000 was 33%, with 41% being ceded in the fourth quarter of 2000. In aggregate,
the Company's ceding percentage for the first quarter of 2001 was increased to
approximately 55% and remained unchanged in the second quarter. The increase in
the amount of premiums and losses ceded under this contract directly affect
reinsurance balances due and payable on the face of the financial statements.

                                       17
<PAGE>

RECEIVABLES
The receivables have increased by $14,190,000, or 28% from December 31, 2000.
This increase is attributable to an increase in billable premiums due to a shift
in product mix to twelve-month policies from six-month policies.

LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES
Total loss and loss adjustment expense reserves decreased from $108,117,000 as
of December 31, 2000 to $92,490,000 as of June 30, 2001, a reduction of
approximately $15.6 million. This decrease is consistent with the Company's
declining volume of business.

UNEARNED PREMIUMS
At June 30, 2001, unearned premiums were $73,506,000, an increase of $11,120,000
from December 31, 2000, consistent with the increase in receivables discussed
above.

DEFERRED INCOME
In connection with the sale of the crop insurance book of business to Acceptance
on June 6, 2001, the Company received a payment of $4.5 million for agreeing not
to engage in the crop insurance business for three years from the sale date. The
payment is being amortized to income on a straight-line basis over the
three-year period with one month of amortization taken in the second quarter.

OTHER LIABILITIES
Other liabilities increased by $6,688,000 from December 31, 2000 to June 30,
2001. However, payables as of June 30, 2001 of $21,131,000 are more comparable
to payables of $19,700,000 as of June 30, 2000.

STOCKHOLDERS' (DEFICIT)
Stockholders' (deficit) has increased by $(17,065,000) from December 31, 2000.
This increase is the result of the net loss of $(18,597,000) for the six months
ended June 30, 2001, offset by a reduction in unrealized loss on investments of
$1,533,000.

LIQUIDITY AND CAPITAL RESOURCES

The primary source of funds available to the management and holding companies
are fees from policyholders, management fees and dividends from its primary
subsidiaries.

The Company collects billing fees charged to policyholders that elect to make
their premium payments in installments. Superior Insurance Group, Inc.
("Superior Group") also receives management fees under its management agreement
with its insurance subsidiaries. Superior Insurance Company ("Superior") may pay
dividends of up to 10% of surplus or 100% of net income, whichever is greater,
from earned surplus as permitted by Florida statute. During 2000 and 2001
Superior has not had net income from which to pay dividends. As a result of
regulatory actions taken by the Indiana Department of Insurance ("IDOI") with
respect to Pafco and IGF, those subsidiaries may not pay dividends without prior
approval by the IDOI. Extraordinary dividends, within the meaning of the Indiana
Insurance Code, cannot be paid by Pafco without the prior approval of the
Indiana Insurance Commissioner. The management fees charged to Pafco, IGF and
Superior are subject to review by the IDOI and FDOI.

The non-standard automobile insurance subsidiaries' primary sources 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, payment of
claims settlement costs, operating expenses (primarily management fees),
commissions to independent agents, premium taxes, 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 maintains investment programs intended to provide adequate funds to pay
claims. During the second quarter of both 2001 and 2000, due to reduced premium
volume, the Company has liquidated investments to pay claims. The Company
historically has tried to maintain duration averages of 3.5 years. However, the
reduction in new funds due to lower premium volume has and will cause the
Company to shorten duration. The Company may incur the cost of selling longer
bonds to pay claims as claim payments tend to lag premium receipts. Due to the
decline in premium volume, the Company has experienced a

                                       18
<PAGE>

reduction in its investment portfolio, but to date has not experienced any
problems meeting its obligations for claims payments.

On August 12, 1997, the Company issued through a wholly owned trust subsidiary
$135 million aggregate principal amount in Trust Originated Preferred Securities
("Preferred Securities"). The Preferred Securities have a term of 30 years with
annual interest payments of $6.5 million, which commenced February 15, 1998. The
Preferred Securities may be redeemed in whole or in part after 10 years.

The Company began deferring the semi annual interest payments in February 2000.
The Company may continue to defer interest payments in accordance with the terms
of the trust indenture for up to five years. The unpaid interest installment
amounts accrue interest at 9.5%. The Company will defer the interest payment due
in August 2001.

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

o    The Company may not incur additional indebtedness or guarantee additional
     indebtedness.
o    The Company may not make certain restricted payments including making loans
     or advances to affiliates, repurchasing common stock and the payment of
     dividends in excess of a stated limitation.
o    The Company may not increase its level of non-investment grade securities
     defined as equities, mortgage loans, real estate, real estate loans and
     non-investment grade fixed income securities.

These restrictions currently apply as the Company's consolidated coverage ratio
was (1.05) at June 30, 2001, and will continue to apply until the Company's
consolidated coverage ratio is in compliance with the terms of the trust
indenture. The Company is in compliance with these additional restrictions.

Net cash used in operating activities in the first half of 2001 aggregated
$(13.0) million compared to cash used of $(22.3) million in the comparable
period of 2000.

The seasonality of the discontinued crop operations and the resultant cash flows
have been historically insufficient to fund crop insurance operations during
certain periods of the crop cycle. As previously reported, during 2000, IGF's
working capital line of credit expired and the Company sought to obtain a
replacement credit facility or other alternative financing. The Company was not
able to secure a third-party credit arrangement; however, intercompany loans
approved by regulators were made to IGF to fund short-term cash flow needs
during the first quarter of 2001. These loans were paid in full as of June 30,
2001. As previously reported, the discontinued crop operations were sold to a
third party in June 2001.

Management believes cash flows from premiums, investment income and billing fees
in the non-standard automobile operations will be sufficient to meet obligations
to policyholders and operating expenses for the foreseeable future. This is due
primarily to the lag time between receipt of premiums and claims payments.
Accordingly, while there can be no assurance as to the sufficiency of the
Company's cash flow in future periods, the Company believes that its cash flow
will be sufficient to meet all of the Company's operating expenses and operating
debt service (not including the Preferred Securities) for the foreseeable
future.

GAAP stockholders' equity reflected a deficit of $(129,510,000) at June 30,
2001, which does not reflect the statutory equity upon which the Company
conducts its various insurance operations. The Company's insurance subsidiaries,
after the effects of Codification (See Note 3 to the consolidated financial
statements), had statutory surplus of approximately $27.6 million at June 30,
2001.

ITEM 3.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Information related to Qualitative and Quantitative Disclosures about Market
Risk was included under Item 1. Business in the December 31, 2000 Form 10-K. No
material changes have occurred in market risk since this information was
disclosed in the December 31, 2000 Form 10-K.

                                       19
<PAGE>

PART II - OTHER INFORMATION
ITEM 1.   LEGAL PROCEEDINGS

As previously reported, IGF, which is a wholly owned subsidiary of the company,
had been a party to a number of pending legal proceedings and claims relating to
agricultural production interruption insurance policies (the "AgPI Program")
which were during 1998. Sales of this product resulted in large underwriting
losses by IGF.

Approximately $29,047,653 was paid through June 30, 2001 in settlement of legal
proceedings and claims related to the AgPI Program, with payments totaling
approximately $259,489 in the first half of 2001. A reserve of approximately
$10,652,347 remains to pay future claims. All of the policies of insurance,
which were issued in the AgPI Program, were issued by and under the name of
Mutual Service Casualty Insurance Company ("MSI"), a Minnesota Corporation with
its principal place of business located in Arden Hills, Minnesota.

A dispute arose between MSI and IGF with respect to the funding of the
settlements of claims made on the AgPI Program. MSI and IGF currently are
arbitrating their dispute over responsibility for over $60 million in claims
paid by both companies to MSI's insureds. IGF is seeking a recovery of the $30
million in claims which it paid, and MSI is seeking a similar recovery of the
claims which it paid. The arbitration commenced on December 20, 2000. The
parties subsequently selected an arbitration panel and had their first,
organizational meeting with the panel on May 22, 2001. At that meeting, MSI
moved for an order requiring IGF to post pre-hearing security through the
issuance of a letter of credit in the amount of $39 million. Over IGF's
objection, in a two to one vote, the panel on June 9, 2001, ordered IGF to post
the $39 million in security, which IGF was to have done by June 19, 2001.

On or about June 11, 2001, IGF filed a motion in the United States District
Court for the District of New Jersey seeking to vacate the arbitration panel's
order requiring security. On June 19, 2001, MSI filed a motion in the same court
for a ruling confirming that order. On July 26, 2001, the parties presented oral
arguments on their cross-motions for vacation and confirmation of the order. On
August 6, 2001 the court denied IGF's motion to vacate the arbitration panel's
order. As of this date, IGF has not posted the required letter of credit, and it
is financially incapable of satisfying that requirement.

On June 25, 2001, MSI filed a complaint for preliminary and permanent injunctive
relief and damage (the "MSI Complaint") against the Company, IGF, IGFH, Granite
Re, Goran and certain affiliates of those companies, as well as certain members
of the Symons family, and Acceptance in the United States District Court for the
Southern District of Indiana, Indianapolis Division. The MSI Complaint alleges
that the previously reported June 6, 2001 transfer of IGF's assets to Acceptance
and the payments by Acceptance to the Company, Goran and Granite Re violated
Indiana law and are avoidable. In addition, the MSI Complaint alleges that
Acceptance, the Company, Goran, IGFH and the Symons Family are liable to MSI for
the entire $39 million claim which MSI is asserting against IGF in arbitration
proceedings on theories of successor liability and "piercing the corporate
veil." The MSI Complaint seeks preliminary and permanent injunctive relief
against the defendants, an order voiding the various transactions between and
among the defendants and an order determining that the defendants are directly
responsible to MSI for MSI's $39 million claim against IGF.

On July 26, 2001, the Company, IGF, IGFH, Goran, Granite Re and their affiliates
filed answers to the MSI Complaint. In those answers, each of the defendants
denied the material allegations contained in the MSI Complaint and asserted
certain affirmative defenses to that complaint. Each of those defendants also
filed briefs in opposition to MSI's Motion for Preliminary Injunctive Relief. A
hearing on MSI's Motion for Preliminary Injunctive Relief was held Thursday,
August 2, 2001. On August 3, 2001, the court denied MSI preliminary injunctive
relief.

In the event MSI is successful in obtaining permanent injunctive relief against
the Company and its affiliates, any such relief would have an adverse impact
upon the Company and its affiliates and their respective assets and operations.
Further, in the event MSI is successful in obtaining court orders voiding the
various transactions between the defendants and determining that the defendants
are directly responsible to MSI for MSI's $39 million claim against IGF, those
orders and determinations also could have an adverse effect upon the Company and
its affiliates and their respective assets and operations.

                                       20
<PAGE>

As previously reported, the Company and two of its subsidiaries, IGFH and IGF,
are parties to a "Strategic Alliance Agreement" dated February 28, 1998 (the
"SAA") with Continental Casualty Company ("CNA"), pursuant to which IGF acquired
certain crop insurance operations of CNA. Through reinsurance agreements, CNA
was to share in IGF's profits or losses on IGF's total crop insurance business.
By letter dated January 3, 2001, CNA gave notice pursuant to the SAA of its
exercise of the "Put Mechanism" under the SAA effective February 19, 2001.
According to the SAA, upon exercise of the Put Mechanism, IGFH is obligated to
pay CNA an amount equal to 5.85 times "Average Pre-Tax Income", an amount based
in part upon payments made to CNA under the SAA. The SAA further provided that
30 days after exercise of the Put, IGF will execute a promissory note payable
six months after the exercise of the Put in the principal amount equal to the
amount owed, as specified by the SAA. In a letter dated March 20, 2001CNA also
asserted a claim for amounts allegedly due under reinsurance agreements for the
2000 crop year.

Also, as previously reported, the Company believes it has claims against CNA and
defenses to CNA's claim that may ultimately offset or reduce amounts owed to
CNA. The Company and CNA engaged in discussions regarding possible alternatives
for the resolution of their respective claims against each other. However, those
discussions ultimately proved to be unsuccessful.

Following the failure of settlement discussions, on June 4, 2001, IGF, IGFH and
the Company filed a complaint against CNA (the "IGF Complaint") in the United
States District Court for the Southern District of Indiana, Indianapolis
Division. The IGF Complaint asserts claims against CNA for fraud and
constructive fraud in connection with the SAA and breach of contract and seeks
relief against CNA for compensatory and punitive damages. On June 27, 2001, CNA
filed its "Answer, Separate Defenses and Counterclaim", in which CNA generally
denied the material allegations of the IGF Complaint and asserted various
defenses to those claims.

On June 6, 2001, CNA filed a complaint against IGF, IGFH and the Company (the
"CNA complaint") asserting claims based on the SAA and related agreements for
approximately $25 million allegedly owed CNA by virtue of its exercise of the
Put Mechanism, $3 million for amounts allegedly due under reinsurance agreements
for the 2000 crop year, $1 million for certain "fronting costs," and $1 million
pursuant to a note executed by IGFH to CNA's affiliate in connection with the
acquisition by IGFH of North American Crop Underwriters, Inc. in 1998. CNA also
asserts claims to the effect that the June 6, 2001 sale of IGF assets to
Acceptance resulted in payments of funds to Goran, the Company and Granite Re,
which funds allegedly should have been paid to IGF instead. On June 6, 2001, CNA
asked the district court to enter a temporary restraining order preventing IGF,
IGFH and the Company from disposing of the proceeds received by them in
connection with the sale of IGF assets to Acceptance. In an emergency hearing,
the court denied CNA the relief it requested, without prejudice to
reconsideration of those issues at a future time. CNA has since amended the CNA
Complaint to add Goran and Granite Re as defendants. CNA's counterclaim in
response to the IGF Complaint asserts essentially the same claims against the
same parties as the amended CNA Complaint.

An initial pretrial conference is scheduled in these cases for September.
Although the Company continues to believe that it has claims against CNA and
defenses to CNA's claims which may offset or reduce amounts owing by the Company
of its affiliates to CNA, there can be no assurance that the ultimate resolution
of the claims asserted by CNA against the Company and its affiliates will not
have a material adverse effect upon the Company and its affiliates financial
condition or results of operations.

As previously reported, the California Department of Insurance ("CDOI") has
advised the Company that it is reviewing a possible assessment which could total
$3,000,000. On June 29, 2001, the CDOI filed a Notice of Non-Compliance against
Superior, which alleges that broker fees were charged by independent brokers in
violation of California law. The Notice of Non-Compliance seeks repayment to
policyholders of amounts collected by the brokers and the possible imposition of
fines against Superior. Superior has filed a response to the notice and intends
to vigorously defend the action. As the ultimate outcome of this potential
assessment is not deemed probable, the Company has not accrued any amount in its
consolidated financial statements. No assessment has been made by the CDOI and
the Company will vigorously defend any potential assessment and believes it will
prevail.

Except as set forth above, there have been no other material developments in any
of the pending legal proceedings previously reported by the Company in the March
31, 2001 Form 10-Q.

                                       21
<PAGE>

The Company's insurance subsidiaries are parties to other 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 estimate costs of litigation.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS
                  None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
                  None

ITEM 4.  SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

The company held its annual meeting of shareholders on May 30, 2001. The
following is a summary of the matters voted on at the meeting:

<TABLE>
<CAPTION>

(a)      The two nominees for director were elected to serve three-year terms ending in 2003, as follows:

                NOMINEE                       FOR              AGAINST         WITHHOLD
         -------------------               ---------         -------------    -----------
         VOTE
         -------

<S>                                        <C>                  <C>            <C>
         Douglas H. Symons                 7,341,819            1,633          3,041,947
         Gene S. Yerant                    7,340,669            1,633          3,043,097

</TABLE>


          The terms of the following directors continued after the meeting: G.
          Gordon Symons, Alan G. Symons, John K. McKeating, Robert C. Whiting,
          and Larry S. Wechter.

     (b)  The appointment of BDO Seidman, LLP as the Company's independent
          auditors was ratified by the following shareholder vote:

          For             7,371,309
          Against:            2,633
          Abstain:        3,022,457

ITEM 5.  OTHER INFORMATION
                  None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

          Exhibits:

  (10)     10.9     Asset Purchase Agreement by and among Acceptance Insurance
                    Companies Inc., American Growers Insurance Company, American
                    Agrisurance, Inc., Goran Capital Inc., Symons International
                    Group, Inc., IGF Holdings, Inc. and IGF Insurance Company
                    dated May 23, 2001.

          10.10     First Amendment to Asset Purchase Agreement by and among
                    Acceptance Insurance Companies, Inc., American Growers
                    Insurance Company, American Agrisurance, Inc., Goran Capital
                    Inc., Symons International Group, Inc., IGF Holdings, Inc.,
                    and IGF Insurance Company dated June 5, 2001.

          10.11     Assignment and Assumption Agreement by IGF Holdings, Inc.
                    and IGF Insurance Company and Acceptance Insurance Companies
                    Inc. dated May 23, 2001.

                                       22
<PAGE>


          10.12     Granite Reinsurance Company Limited / Acceptance Crop Hail
                    Retrocession Agreement by and between Acceptance Insurance
                    Company and Granite Reinsurance Company Limited dated May
                    23, 2001.

          10.13     IGF/Acceptance Retrocession Agreement by and between
                    Acceptance Insurance Company and IGF Insurance Company dated
                    May 23, 2001.


          10.14     MPCI Stop Loss Reinsurance Contract between Granite
                    Reinsurance Company, Ltd. and Acceptance Insurance Companies
                    Inc. effective as of July 1, 2000.


          10.15     Consulting and Non-competition Agreement by and between
                    Symons International Group, Inc. and Acceptance Insurance
                    Companies Inc. dated May 23, 2001.


          Reports on Form 8-K:

          On June 12, 2001 the Company filed a Form 8-K describing the
          completion of the sale of substantially all of the crop insurance
          assets of IGF Insurance Company (a wholly owned subsidiary of the
          Registrant) to Acceptance Insurance Companies Inc.

          On August 2, 2001 the Company filed a Form 8-K describing recent legal
          proceedings and regulatory actions regarding the Registrant and its
          affiliates as discussed above under "Legal Proceedings," "Commitments
          and Contingencies," and "Regulatory Affairs."

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 on August 14, 2001.



                                By: /s/ Douglas H. Symons
                                    ------------------------
                                    Douglas H. Symons
                                    Chief Executive Officer



                                By: /s/ Mark A. Paul
                                    -------------------------
                                    Mark A. Paul
                                    Vice President, Chief Financial Officer,
                                    and Treasurer


                                       23