UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

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

                  For The Quarterly Period Ended March 31, 1997

                         Commission File Number: 1-12369

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

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


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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes X No


As of March 31, 1997, there were 10,450,000 shares of Registrant's  common stock
issued and outstanding exclusive of shares held by Registrant.


<PAGE>



                                 Form 10-Q Index
                      For The Quarter Ended March 31, 1997
                                                                  Page
                                                                 Number

PART 1  FINANCIAL INFORMATION

Item 1  Financial Statements.....................................      3

        Consolidated Financial Statements:
        Consolidated Balance Sheets at March 31, 1997 and
           December 31, 1996.....................................      4

        Consolidated Statements of Earnings for the Three
        Months Ending March 31, 1997 and 1996....................      6

        Consolidated Statements of Cash Flows
        for the Three Months Ending March 31, 1997 and 1996......      7

           Consolidated Statements of Stockholders' Equity.......      9

        Notes to Consolidated Financial Statements...............     10

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

PART 2  OTHER INFORMATION........................................     22


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


<PAGE>



SYMONS INTERNATIONAL GROUP, INC.
PART 1     FINANCIAL INFORMATION

Item 1     Financial Statements

In the opinion of management, the financial information reflects all adjustments
(consisting only of normal recurring adjustments) which are necessary for a fair
presentation of the financial position, results of operations and cash flows for
the interim  periods.  The results for the three months ended March 31, 1997 and
1996 are not necessarily indicative of the results to be expected for the entire
year.

These quarterly interim financial statements are unaudited.

                                      -3-

<PAGE>



SYMONS INTERNATIONAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS


                                                   March 31,     December 31,
                                                        1997             1996
ASSETS
Investments
  Available for Sale:
  Fixed Maturities, at market                        146,518          127,681
  Equity Securities, at market                        23,918           27,920
  Short-term investments, at amortized cost            6,193            9,565
  which approximates market
Real Estate, at cost                                     461              466
Mortgage Loans                                         2,360            2,430
Other                                                     75               75
Cash and cash equivalents                             19,799           13,095
Receivables                                          114,910           65,194
Reinsurance recoverable on paid and unpaid            25,448           48,294
losses, net
Prepared reinsurance premiums                         50,642           14,983
Deferred policy acquisition costs                     12,324           12,800
Deferred income taxes                                  4,133            3,329
Property and equipment                                 8,782            8,137
Federal income taxes recoverable                           0              319
Investments in and advances to related parties         1,267            1,152
Other                                                 10,290            9,239
Total Assets                                         427,120          344,679


                                      -4-

<PAGE>




                                                   March 31,     December 31,
                                                        1997             1996
LIABILITIES
Losses and loss adjustment expenses                   86,287          101,719
Unearned premiums                                    126,619           87,285
Reinsurance payable                                   49,481            6,508
Federal income tax payable                             3,651                0
Term debt                                             48,000           48,000
Other                                                 22,470           18,657
Total Liabilities                                    336,508          262,169
Minority Interest in Consolidated Subsidiary          24,746           21,610
STOCKHOLDERS' EQUITY
Common stock                                          38,969           38,969
Additional paid-in capital                             5,905            5,905
Unrealized gain/(loss) on investments                  (123)              820
Retained earnings                                     21,115           15,206
Total Stockholders' Equity                            65,866           60,900
Total Liabilities and Stockholders' Equity           427,120          344,679

See Notes to Consolidated Financial Statements


                                      -5-

<PAGE>



SYMONS INTERNATIONAL GROUP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDING:


                                                  March 31,        March 31,
                                                       1997             1996
Gross premiums written                              129,890           41,422
Less ceded premiums                                (63,101)         (22,692)
Net premiums written                                 66,789           18,730
Change in unearned premiums                         (3,674)          (4,945)
Net premiums earned                                  63,115           13,785
Net investment income                                 2,438              558
Other income                                          5,038              977
Net realized capital gain/(loss)                        942             (36)
Total Revenues                                       71,533           15,284
Loss and loss adjustment expenses                    45,268            8,963
Policy acquisition and general and                   13,012            3,669
administrative expenses
Interest expense                                      1,371              249
Total Expenses                                       59,651           12,881
Income before income taxes and minority              11,882            2,403
interest
Provision for income taxes                            4,286              817
Minority interest                                     1,687                0
Net Income                                            5,909            1,586
Primary Earnings Per Share                            $0.56            $0.23
Fully Diluted Earnings per Share                      $0.56            $0.23

See Notes to Consolidated Financial Statements

                                      -6-

<PAGE>



SYMONS INTERNATIONAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDING:


                                                      March 31,   March 31,
                                                           1997        1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income/(Loss) For The Period                          5,909       1,586
Adjustments to reconcile Net Income to Net
Cash provided from Operations:
  Minority Interest                                       1,687           0
  Depreciation and Amortization                             487         143
  Deferred income tax expense                               226          63
  Net realized capital loss/(gain)                        (942)          36
Net changes in operating assets and liabilities:
  Receivables                                          (49,716)     (7,390)
  Reinsurance recoverable on paid and unpaid             22,846     (5,435)
  losses, net
  Prepaid reinsurance premiums                         (35,659)    (18,444)
  Deferred policy acquisition costs                         476       (706)
  Other assets                                          (1,175)       1,037
  Losses and loss adjustment expenses                  (15,432)     (9,412)
  Unearned premiums                                      39,334      23,387
  Reinsurance payables                                   42,973      16,675
  Federal income taxes recoverable/(payable)              3,970         331
  Other liabilities                                       4,179    (11,085)
Net Cash Provided From Operations                        19,163         786


                                      -7-

<PAGE>



  Deferred income tax expense                               226          63
  Net realized capital loss/(gain)                        (942)          36
Net changes in operating assets and liabilities:
  Receivables                                          (49,716)     (7,390)
  Reinsurance recoverable on paid and unpaid             22,846     (5,435)
  losses, net
  Prepaid reinsurance premiums                         (35,659)    (18,444)
  Deferred policy acquisition costs                         476       (706)
  Other assets                                          (1,175)       1,037
  Losses and loss adjustment expenses                  (15,432)     (9,412)
  Unearned premiums                                      39,334      23,387
  Reinsurance payables                                   42,973      16,675
  Federal income taxes recoverable/(payable)              3,970         331
  Other liabilities                                       4,179    (11,085)

                                                      March 31,   March 31,
                                                           1997        1996
Cash Flow Used In Investing Activities:
  Net (Purchases)/Sales of short-term                     3,372       4,348
  investments
  Purchases of fixed maturities                        (22,892)     (5,069)
  Proceeds from sales, calls and maturities               1,232       6,457
  of fixed maturities
  Purchase of equity securities                         (3,998)     (9,768)
  Proceeds from sales of equity securities                8,937       2,370
  Proceeds from repayment of mortgage loans                  70         230
  Purchases of property and equipment                   (1,003)       (522)
Net Cash Provided Used In Investing                    (14,282)     (1,954)
Activities
Cash Flow Provided From/(Used In) Financing
Activities:
  Net proceeds from line of credit and notes                  0     (5,561)
  payable
  Contribution from minority interest owner               2,304           0
  Repayments from related parties                         (481)       4,418
Net Cash Provided From/(Used In) Financing                1,823     (1,143)
Activities
Increase/(Decrease) In Cash And Cash                      6,704     (2,311)
Equivalents
Cash and Cash Equivalents, Beginning of                  13,095       2,311
Period
Cash and Cash Equivalents, End of Period                 19,799           0

See Notes to Consolidated Financial Statements

                                      -8-

<PAGE>



SYMONS INTERNATIONAL GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


                    Common     Additional    Unrealized   Retained     Total
                    Stock      Paid-In       Gain (Loss)  Earnings     Stock-
                               Capital       on           (Deficit)    holders'
                                             Investments               Equity

Balance at          1,000      3,130           (45)         5,450       9,535
December 31,
1995

Change in             ---        ---           (83)           ---         (83)
unrealized loss
on investments,
net of deferred
taxes

Net Earnings          ---        ---           ---          1,586       1,586
Balance at March    1,000      3,130          (128)         7,036      11,038
31, 1996

Sale of               ---      2,775           ---            ---       2,775
subsidiary stock
Change in             ---        ---           948            ---         948
unrealized loss
on investments,
net of deferred
taxes

Issuance of        37,969        ---           ---            ---      37,969
common stock
Dividend to           ---        ---           ---         (3,500)     (3,500)
parent

Net Earnings          ---        ---           ---         11,670      11,670
Balance at         38,969      5,905           820         15,206      60,900
December 31,
1996

Change in             ---        ---          (943)           ---        (943)
unrealized gain
on investments,
net of deferred
taxes

Net Earnings          ---        ---           ---          5,909       5,909

Balance at March   38,969      5,905          (123)        21,115      65,866
31, 1997



See Notes to Consolidated Financial Statements

                                      -9-

<PAGE>



                        SYMONS INTERNATIONAL GROUP, INC.
            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                    For The Three Months Ended March 31, 1997

NOTE 1 - BASIS OF PRESENTATION

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

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

NOTE 2 - ACQUISITION, FORMATION OF SUBSIDIARY AND PUBLIC OFFERING

In January,  1996, Pafco adopted a Plan of Reorganization whereby it transferred
its wholly owned subsidiary,  IGF, to Pafco's parent, SIG. After adoption of the
Plan of Reorganization in January,  1996, Pafco formed a wholly owed subsidiary,
IGF  Holdings,  Inc.  ("IGF  Holdings")  and  formally  submitted  the  Plan  of
Reorganization to the Indiana  Department of Insurance for regulatory  approval.
Once approval was obtained from the Indiana Department of Insurance on April 26,
1996,  Pafco  transferred the outstanding  shares of the capital stock of IGF to
IGF  Holdings.  IGF  Holdings,  in turn,  made a  distribution  to Pafco of $7.5
Million in cash and a subordinated  promissory  note in the principle  amount of
$3.5 Million. Subsequent to that distribution, Pafco then completed the steps in
the Plan by  transferring  the  outstanding  capital  stock of IGF  Holdings  to
Pafco's parent, SIG.

SIG  purchased  Superior  from  Interfinancial,  Inc.  on April  30,  1996 for a
purchase  price of  approximately  $66  Million,  resulting  in  goodwill on the
transaction of approximately $2.2 Million.  Simultaneously with the execution of
the Superior  purchase  agreement,  Goran,  SIG, GGS Management  Holdings,  Inc.
("GGSH")  and GS Capital  Partners II,  L.P.,  a Delaware  limited  partnership,
entered into an agreement (the "GSCP Agreement") to capitalize GGSH and to cause
GGSH to issue its  capital  stock to SIG and to various  funds  affiliated  with
Goldman  Sachs  & Co.  (collectively,  "GS  Funds"),  so as  to  give  SIG a 52%
ownership interest and the GS Funds a 48% ownership  interest in GGSH.  Pursuant
to the GSCP Agreement, (a) SIG contributed to GGSH (i) Pafco common stock with a
book value  determined in accordance  with US GAAP of $16.9 Million as reflected
on an Audited  Post-Closing  Balance  Sheet of Pafco,  (ii) its right to acquire
Superior  pursuant to the Superior  Purchase  Agreement  and (iii) certain fixed
assets,   including   office   furniture  and  equipment,   having  a  value  of
approximately $350,000 and (b) the GS Funds contributed to GGSH $21.2 Million in
cash.

                                      -10-

<PAGE>



The  acquisition of Superior was accounted for under the purchase method and the
results of its operations have been included subsequent to April 30, 1996.

On November 5, 1996, SIG  effectuated  an initial  public  offering of 3,450,000
common stock shares at $12.50 per share.  The proceeds of the offering were used
to  increase  the   capitalization  of  IGF  by  $9,000,000,   repay  $7,500,000
indebtedness  of  SIG,   primarily   certain  amounts  owed  to  Goran  and  its
wholly-owned  subsidiary,  Granite Re, repay a bank debt of  $7,500,000  and pay
Goran a dividend of  $3,500,000.  The remaining  funds were retained for general
corporate purposes, including acquisitions.

NOTE 3 - REINSURANCE

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

The effects of reinsurance are as follows:

                                      -11-

<PAGE>



NOTE 3
SYMONS INTERNATIONAL GROUP, INC.
Analysis of Effects of Reinsurance


                                         March 31,               March 31,
                                              1997                    1996

Premiums Written
  Gross                                    129,890                  41,422
  Ceded                                     63,101                  22,692
  Net                                       66,789                  18,730

Premiums Earned
  Gross                                    124,813                  26,476
  Ceded                                     61,698                  12,691
  Net                                       63,115                  13,785

Losses and LAE Incurred
  Gross                                     60,266                  13,971
  Ceded                                     14,998                   5,008
  Net                                       45,268                   8,963

                                         March 31,            December 31,
                                              1997                    1996

Unearned Premiums
  Gross                                    126,619                  87,285
  Ceded                                     55,048                  14,984
  Net                                       71,571                  72,301

Outstanding Claims
  Gross                                     86,287                 101,719
  Ceded                                     16,307                  29,459
  Net                                       69,980                  72,260

NOTE 4 - CONTINGENT LIABILITY

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

                                      -12-

<PAGE>



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

NOTE 5 - EARNINGS PER SHARE

Primary and fully diluted earnings per share were computed using actual weighted
average shares  outstanding during the first quarter of 1997 of $10,450,000 plus
191,000  assumed  shares from stock option  proceeds  calculated  based upon the
treasury stock method. Weighted average shares outstanding for the first quarter
of 1996 was based on 7,000,000 shares actually outstanding.

NOTE 6 - SUBSEQUENT EVENT

IGF has agreed to purchase  the  business of  Southwest  Crop  Managing  General
Agency ("Southwest"),  a subsidiary of Southwest Crop Insurance Company of Honey
Grove,   Texas.  The  Southwest  book  of  business  has  a  premium  volume  of
approximately $15 Million.

                                      -13-

<PAGE>



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

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

Nonstandard Automobile Insurance Operations

The  Company  owns  52% of GGS  Management  Holdings,  Inc.  ("GGSH")  with  the
remainder  owned by certain funds  affiliated  with  Goldman,  Sachs & Co. GGSH,
through its wholly owned  subsidiaries,  Pafco and  Superior,  is engaged in the
writing of  insurance  coverage  on  automobile  physical  damage and  liability
policies for "nonstandard risks". Nonstandard insureds are those individuals who
are unable to obtain insurance  coverage through standard market carriers due to
factors such as poor premium  payment  history,  driving  experience,  record of
prior accidents or driving violations, particular occupation or type of vehicle.
The  Company  offers  several  different  policies  which are  directed  towards
different  classes of risk  within the  nonstandard  market.  Premium  rates for
nonstandard risks are higher than for standard risks.  Since it can be viewed as
a residual  market,  the size of the nonstandard  private  passenger  automobile
insurance  market  changes  with the  insurance  environment  and grows when the
standard coverage becomes more restrictive. Nonstandard policies have relatively
short  policy  periods  and low  limits of  liability.  Due to the low limits of
coverage,  the period of time that elapses between the occurrence and settlement
of losses  under  nonstandard  policies  is  shorter  than many  other  types of
insurance.  Also, since the nonstandard  automobile insurance business typically
experiences  lower rates of retention than standard  automobile  insurance,  the
number of new  policyholders  underwritten by nonstandard  automobile  insurance
carriers each year is substantially greater than the number of new policyholders
underwritten by standard carriers.

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

Crop Insurance Operations

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

                                      -14-

<PAGE>



Since 1990,  Congress  has  considered  major reform of its crop  insurance  and
disaster  assistance  policies,  resulting in the enactment of the 1994 and 1996
Reform Acts. The 1994 Reform Act required farmers for the first time to purchase
at least CAT Coverage in order to be eligible for other federally sponsored farm
benefits,  including  but not  limited  to low  interest  loans  and crop  price
supports.  The 1994 Reform Act also  authorized for the first time the marketing
and selling of CAT Coverage by the local USDA offices.  However, the 1996 Reform
Act  limits  the role of the  USDA  offices  in the  delivery  of MPCI  coverage
beginning in July,  1996,  which is the  commencement of the 1997 crop year, and
also eliminates the linkage between CAT Coverage and  qualification  for certain
federal farm program benefits. The limitation of the USDA's role in the delivery
system for MPCI  should  provide  the Company  with the  opportunity  to realize
increased revenues from the distribution and servicing of its MPCI product. As a
result of this limitation, the FCIC has transferred to the Company approximately
8,900 insureds for CAT Coverage who previously purchased such coverage from USDA
field offices.  The Company has not experienced any material  negative impact in
1997 from the  delinkage  mandated by the 1996 Reform Act. The Company  believes
that any future potential  negative impact of the delinkage mandated by the 1996
Reform Act will be  mitigated  by,  among other  factors,  the  likelihood  that
farmers  will  continue to purchase  MPCI to provide  basic  protection  against
natural  disasters  since ad hoc  federal  disaster  relief  programs  have been
reduced or eliminated.  In addition,  the Company believes that (i) many lending
institutions  will likely  continue to require  this  coverage as a condition to
crop  lending,  and (ii) many of the farmers  who entered the MPCI  program as a
result of the 1994 Reform Act have come to appreciate  the  reasonable  price of
the  protection  afforded  by CAT  Coverage  and will  remain  with the  program
regardless of delinkage.  There can, however, be no assurance as to the ultimate
effect which the 1996 Reform Act may have on the business or  operations  of the
Company.

The Company,  like other  private  insurers  participating  in the MPCI program,
generates revenues from the MPCI program in two ways. First, it markets,  issues
and administers policies, for which it receives administrative fees; and second,
it  participates in a  profit-sharing  arrangement in which it receives from the
government a portion of the aggregate profit, or pays a portion of the aggregate
loss,  in respect of the  business it writes.  The Company  writes MPCI and crop
hail insurance through approximately 1,200 independent agencies in 31 states.

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

                                      -15-

<PAGE>



The Company also  receives  from the FCIC (i) an expense  reimbursement  payment
equal to a percentage of gross premiums  written for each Buy-Up Coverage policy
it writes ("Buy-Up Expense  Reimbursement  Payment"),  (ii) an LAE reimbursement
payment equal to 13.0% of MPCI Imputed  Premiums for each CAT Coverage policy it
writes  (the "CAT LAE  Reimbursement  Payment"),  and (iii) a small  excess  LAE
reimbursement  payment of two hundredths of one percent (.02%) of MPCI Retention
(as defined  herein) to the extent the Company's MPCI loss ratios on a per state
basis exceed certain levels (the "MPCI Excess LAE Reimbursement  Payment").  For
1997 and 1996, the Buy-Up Expense  Reimbursement Payment has been set at 29% and
31%,  respectively,   of  the  MPCI  Premium.  For  generally  accepted  account
principles income statement purposes,  the Buy-Up Expense  Reimbursement Payment
is treated as a contribution to income and reflected as an offset against policy
acquisition and general and administrative  expenses.  The CAT LAE Reimbursement
Payment and the MPCI Excess LAE Reimbursement  Payment are, for income statement
purposes,  recorded as an offset  against  LAE,  up to the actual  amount of LAE
incurred by the Company in respect of such  policies,  and the  remainder of the
payment, if any, is recorded as Other Income.

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

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

In order to reduce the Company's potential loss exposure under the MPCI program,
in  addition  to  reinsurance  obtained  from the FCIC,  the  Company  purchases
stop-loss  reinsurance  from other private  insurers.  Such private  reinsurance
would not eliminate the Company's  potential  liability in the event a reinsurer
was unable to pay or losses exceeded the limits of the stop-loss  coverage.  For
crop hail  insurance,  the Company has in effect  quota  share  reinsurance  and
various layers of stop-loss  reinsurance.  Based on a review of the  reinsurers'
financial  health and  reputation  in the  insurance  marketplace,  the  Company
believes that the  reinsurers for its crop  insurance  business are  financially
sound and that they  therefore can meet their  obligations  to the Company under
the terms of the reinsurance treaties.

Certain other  conditions of the Company's crop business may effect  comparisons
of the  Company's  results and  operating  ratios  with that of other  insurers,
including: (i) the seasonal nature of the business whereby profits are generally
recognized predominantly in the second half of the year, (ii) the

                                      -16-

<PAGE>



short-term  nature of crop business whereby losses are known within a short time
period,  and (iii) the limited amount of investment  income associated with crop
business. In addition,  cash flows from the crop business differ from cash flows
from certain more traditional lines.

In 1996, the Company instituted a policy of recognizing (i) 35% of its estimated
MPCI gross premiums written for each of the first and second  quarters,  20% for
the third quarter and 10% for the fourth quarter,  (ii) commission  expense at a
rate of 16% of MPCI gross premiums  written  recognized and (iii) Buy-Up Expense
Reimbursement at the applicable rate of MPCI gross premiums  written  recognized
along with  normal  operating  expenses  incurred  in  connection  with  premium
writings.  In the third quarter, if a sufficient volume of policyholder  acreage
reports have been received and processed by the Company, the Company's policy is
to recognize  MPCI gross  premiums  written for the first nine months based on a
re-estimate  which takes into account  actual gross  premiums  processed.  If an
insufficient  volume of policies has been processed,  the Company's policy is to
recognize  in the third  quarter  20% of its full year  estimate  of MPCI  gross
premiums written,  unless other circumstances require a different approach.  The
remaining  amount of gross premiums written is recognized in the fourth quarter,
when  all  amounts  are  reconciled.   The  Company  also  recognizes  the  MPCI
underwriting  gain or loss during each quarter,  reflecting  the Company's  best
estimate of the amount of such gain or loss to be recognized  for the full year,
based on, among other things,  historical results,  plus a provision for adverse
developments.  In the third and  fourth  quarters,  a  reconciliation  amount is
recognized  for the  underwriting  gain or loss based on final  premium and loss
information.

Regulation

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

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

Results of Operations

For the three months ended March 31, 1997, the Company  recorded net earnings of
$5,909,000 or $0.56 per share.  This is  approximately a 273% increase from 1996
comparable amounts of $1,586,000 or $0.23 per share. The improved

                                      -17-

<PAGE>



earnings  were  attributable  to  continued  improvement  in the  results of the
nonstandard  automobile  segment  and  continued  growth  and profit in the crop
segment. The nonstandard automobile segment demonstrated significant improvement
due to  significantly  higher  volume  and an  improved  expense  ratio from the
acquisition  of  Superior.  The crop segment also  demonstrated  strong  premium
growth and enhanced  profitability  due to higher  volume as well as better loss
experience in winter wheat.



                                                  For The Period Ended March 31,
                                                   1997                    1996
Nonstandard-Automobile Insurance
Operations:
  Gross premiums written                         75,066                  17,922
  Net premiums written                           59,588                  20,167
  Net premiums earned                            63,105                  13,626
  Net investment income                           2,338                     396
  Other income, principally billing fees          2,899                     591
  Net realized capital gain (loss)                  942                    (52)
  TOTAL REVENUES                                 69,284                  14,561

  Losses and loss adjustment expenses            45,268                   8,565
  Policy acquisition and general and             17,124                   5,174
  administrative expenses
  Interest and amortization of                    1,484                       0
  intangibles
  TOTAL EXPENSES                                 63,876                  13,739

  Earnings before income taxes                    5,408                     822

GAAP Ratios
(Nonstandard Automobile Only):
  Loss and LAE Ratio                              71.7%                   62.9%
  Expense ratio, net of billing fees              22.5%                   33.6%
  Combined ratio                                  94.2%                   96.5%


                                      -18-

<PAGE>



                                                  For The Period Ended March 31,
                                                   1997                    1996
Crop Insurance Operations:
  Gross premiums written                         51,709                  21,404
  Net premiums written                            7,201                     263
  Net premiums earned                                10                     159
  Net investment income                              49                     162
  Other income                                    2,139                     373
  Net realized capital gain (loss)                    0                      16
  TOTAL REVENUES                                  2,198                     710

  Losses and loss adjustment expenses                 0                     397
  Policy acquisition and general and            (4,766)                 (1,833)
  administrative expenses
  Interest expense                                   11                      95
  TOTAL EXPENSES                                (4,755)                 (1,341)

  Earnings before income taxes                    6,953                   2,051

Statutory Capital and Surplus:
  Pafco                                          18,674                  13,423
  IGF                                            33,003                  10,488
  Superior                                       58,023                  51,681

Consolidated  gross premiums written  increased 213.6% due to growth in both the
nonstandard auto and crop segments.

Gross premiums written for the nonstandard auto segment increased  318.8%.  Such
increase  was  due  primarily  to  gross  premiums   written  from  Superior  of
$56,925,000  for the three months ended March 31, 1997,  internal  growth due to
improved service,  certain product  improvements and tougher uninsured  motorist
laws in states such as California and Florida.

Gross premiums written for the crop segment increased 141.6%.  Such increase was
due continued industry privatization and aggressive marketing efforts.  Premiums
reported  in the  first  three  months  of each year  generally  do not  include
significant  crop hail  premiums  since most of the  policies are written in the
second quarter. In the first quarter of 1997, the Company recorded approximately
$12,000,000  of crop  hail  gross  premiums  written  as  acreage  reports  were
processed  faster than in prior years.  However,  very little of these  premiums
have been earned.

Remaining gross written premiums represent  commercial  business which was ceded
100% effective January 1, 1996 to an affiliate, Granite Reinsurance Company Ltd.

                                      -19-

<PAGE>



In 1997, the Company ceded  $15,477,000 of  nonstandard  automobile  premiums as
part of a 20% quota share treaty instituted  January 1, 1997. No such treaty was
in effect during 1996. Due to the growth in premiums and the  corresponding  lag
in statutory  earnings,  the Company's  subsidiaries  needed to cede premiums in
excess of a ratio to statutory surplus of 3.15:1 in order to maintain compliance
with debt covenants. The Company was in compliance with all debt covenants as of
March 31, 1997.  It is expected  that such cession will  continue as the Company
explores alternative financing plans.

Increases  in net  premiums  earned for the three months ended March 31, 1997 as
compared  to the  corresponding  period of the prior  year  reflects  the strong
growth in written  premiums offset by the effects of the nonstandard  automobile
quota share.

Net investment income increased  $1,880,000 for the three months ended March 31,
1997 as compared to the  corresponding  period of the prior year.  Such increase
was due  primarily  to  investment  income  from  Superior  of  $1,838,000.  The
remaining increase was due to greater invested assets.

Other income  increased  $4,061,000 for the three months ended March 31, 1997 as
compared to the corresponding period of the prior year. Such increase was due to
billing fee income on nonstandard  automobile business at Superior of $2,111,000
and due to an increase in the in-force policy count.  There was also an increase
in the receipt of CAT Coverage  fees and CAT LAE  reimbursement  payments due to
higher premium volume.

Realized  gains of $942,000 in the first  quarter of 1997 was due primarily to a
change in equity managers and a repositioning of the portfolio.

The loss  ratio  for the  nonstandard  automobile  segment  in 1997 was 71.7% as
compared to 62.9% in 1996. The increase in the loss ratio primarily reflects the
significant  growth in volume since the first  quarter of 1996 and has decreased
from  77.2% in the fourth  quarter of 1996 and 73.7% for all of 1996.  Crop hail
loss ratios in the first quarter do not have significant  impact on consolidated
earnings.

Policy acquisition and general and  administrative  expenses have increased as a
result of the increased volume of business produced by the Company combined with
a higher  percentage  of net  premiums  retained  and  offset  by  increases  in
reinsurance commission income. Policy acquisition and general and administrative
expenses rose to $13,012,000 or 20.6% of net premium earned for the three months
ended March 31, 1997 compared to  $3,669,000  or 26.6% of net premium  earned in
the  corresponding  period  of 1996.  There is a  disproportionate  relationship
between  increased  operating  expenses and increased net retention of business.
The expense ratio,  gross of billing fees, for the nonstandard  segment improved
to  27.1%  in 1997 as  compared  to 38.0%  in  1996,  due to  technological  and
operational efficiencies, economies of scale and tighter expense controls.

Due to the unique accounting for the crop insurance segment,  operating expenses
for the three months ended March 31, 1997 includes a contribution to earnings of
$4,766,000,  as compared to a comparable  amount of  $1,833,000  for 1996.  Such
increase  was due to greater  Buy-up  Expense  Reimbursement  Payments  and MPCI
underwriting gain due to increased  premium volumes.  The MPCI underwriting gain
was also increased by improved loss experience on winter wheat.

                                      -20-

<PAGE>



Interest expense increased  $1,122,000 for the three months ended March 31, 1997
as  compared  to the  corresponding  period in the prior year due  primarily  to
interest  incurred  since April 30, 1996 on the $48 Million of debt  incurred to
purchase Superior.

The Superior  acquisition  debt is  effectively  fixed at 8.85% through  January
1997,  9.08%  through  April 1997,  9.24%  through July 1997,  and 8.80% through
October 1999 through an interest rate swap agreement.

The nonstandard  automobile quota share treaty reduced  premiums earned,  losses
and LAE incurred and policy acquisition and general  administrative  expenses by
$3,370,000, $2,281,000 and $1,004,000,  respectively, for a net pre-tax earnings
reduction  of  $85,000  in the first  quarter  of 1997.  Reduction  in  expenses
reflects ceding commission  income net of deferred  acquisition cost adjustment.
Such impact was relatively immaterial to earnings due to the low ratio of earned
to written premiums. There was no significant impact to pre-tax earnings for the
crop insurance  quota share as no significant  premiums were earned in the first
quarter.

Income tax expense  was 36.1% of pre-tax  income in 1997 as compared to 34.0% in
1996.  The  increase  was due to a deferred  tax  provision  of $128,000 for the
unremitted  earnings of GGSH to SIG.  Such tax is  provided at the tax  effected
dividends  received rate of 7% of GGSH net earnings  less minority  interest and
will  continue  unless SIG obtains  greater  than 80% control of GGSH or GGSH is
distributed in a tax-free reorganization.

Financial Condition

The  Company's  total  assets  of  $427,120,000  at  March  31,  1997  increased
$82,441,000 from  $344,679,000 as of December 31, 1996. Cash and invested assets
increased to 199,234,000 at March 31, 1997 from 181,232,000 at December 31, 1996
due to improved cash flow from operations.

The Company's  shareholders'  equity  increased from $60,900,000 at December 31,
1996 to $65,866,000 at March 31, 1997.  Long term debt to equity was .41 to 1 at
December  31,  1996 and .38 to 1 at March 31,  1997.  Both  ratios  exclude  the
minority interest portion of long-term debt.

Net cash provided by operating  activities  improved to $19,163,000 in 1997 from
$786,000 in 1996 due to improved  earnings and premium  growth.  This additional
cash  flow was used to  increase  invested  assets.  The  contribution  from the
minority interest owner in 1997 was made to increase the  capitalization of GGSH
and the Company who contributed its 52% share.



                                      -21-

<PAGE>



PART II - OTHER INFORMATION

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

ITEM 2.       CHANGES IN SECURITIES
              None

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES
              None

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

ITEM 5.       OTHER INFORMATION
              None

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

                                      -22-

<PAGE>


                               SIGNATURES



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




Dated: March 31, 1997          By:__/s/ Alan G. Symons_________
                               Alan G. Symons
                               Chief Executive Officer





Dated:  March 31, 1997         By:___/s/ Gary P. Hutchcraft_____
                               Gary P. Hutchcraft
                               Vice President, Treasurer and
                               Chief Financial Officer



                                      -23-