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, 1999

                         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, 1999, there were 10,385,399 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, 1999
                                                                         Page
                                                                        Number

PART 1  FINANCIAL INFORMATION

Item 1  Financial Statements

        Unaudited Consolidated Financial Statements:
        Unaudited Consolidated Balance Sheets at
        March 31, 1999 and December 31, 1998 . ...........................  3

        Unaudited Consolidated Statements of Earnings
        for the Three Months Ended March 31, 1999 and 1998................  4

        Unaudited Consolidated Statements of Stockholders'
        Equity............................................................  5

        Unaudited Consolidated Statements of Cash Flows
        for the Three Months Ended March 31, 1999 and 1998................  6

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

Item 2  Management's Discussion and Analysis of Financial
        Condition and Results of Operations............................... 10

PART 2  OTHER INFORMATION................................................. 16


SIGNATURES................................................................ 18



<PAGE>

                         PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
SYMONS INTERNATIONAL GROUP, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS (in thousands)
<TABLE>
<CAPTION>
                                                                                   March 31,   December 31,
ASSETS                                                                               1999         1998
<S>                                                                                <C>          <C>
Investments
  Available for sale:
  Fixed maturities, at market                                                      $196,916     $191,002
  Equity securities, at market                                                       12,516       13,264
  Short-term investments, at amortized cost which approximates market                18,025       15,597
Mortgage loans, at cost                                                               2,059        2,100
Other                                                                                 1,180          890
                                                                                    -------      -------
         TOTAL INVESTMENTS                                                          230,696      222,853
Investment in and advances to related parties                                         3,725        3,545
Cash and cash equivalents                                                             4,373       14,800
Receivables, net of allowance for doubtful accounts                                 189,038      120,559
Reinsurance recoverable on paid and unpaid losses, net                               61,555       71,640
Prepaid reinsurance premiums                                                         81,249       31,172
Federal income taxes recoverable                                                     17,590       12,672
Deferred policy acquisition costs                                                    14,907       16,332
Deferred income taxes                                                                 2,197        5,146
Property and equipment, net of accumulated depreciation                              19,207       18,863
Intangible assets                                                                    45,176       45,781
Other assets                                                                          9,981        6,074
                                                                                    -------      -------
         TOTAL ASSETS                                                              $679,694     $569,437
                                                                                    =======      =======
LIABILITIES
Losses and loss adjustment expenses                                                $173,138     $200,972
Unearned premiums                                                                   176,021      110,664
Reinsurance payables                                                                102,652       25,484
Notes payable                                                                         4,520       13,744
Distributions payable on preferred securities                                         1,559        4,809
Other                                                                                24,177       16,769
                                                                                    -------      -------
         TOTAL LIABILITIES                                                          482,067      372,442
                                                                                    -------      -------
Minority interest:
  Preferred securities                                                              135,000      135,000
                                                                                    -------      -------
STOCKHOLDERS' EQUITY
Common stock                                                                         38,136       38,136
Additional paid-in capital                                                            5,851        5,851
Unrealized gain on investments                                                        (119)        1,261
Retained earnings                                                                    18,759       16,747
                                                                                    -------      -------
         TOTAL STOCKHOLDERS' EQUITY                                                  62,627       61,995
                                                                                    -------      -------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $679,694     $569,437
                                                                                    =======      =======
</TABLE>
See notes to consolidated financial statements

                                      -3-

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                  Three Months Ended
                                                                                       March 31,
                                                                                  1999           1998

<S>                                                                             <C>            <C>
Gross premiums written                                                          $152,022       $178,396

Less ceded premiums                                                              (72,055)       (78,835)
                                                                                  ------         ------
Net premiums written                                                              79,967         99,561

Change in net unearned premiums                                                  (10,962)       (31,077)
                                                                                  ------         ------
Net premiums earned                                                               69,005         68,484

Fee income                                                                         4,463          5,120

Net investment income                                                              3,289          2,958

Net realized gain (loss)                                                          (1,382)         1,968
                                                                                  ------         ------
      Total Revenues                                                              75,375         78,530
                                                                                  ------         ------
Loss and loss adjustment expenses                                                 51,819         53,205

Policy acquisition and general and administrative expenses                        16,560         13,555

Interest expense                                                                      74            183

Amortization of intangibles                                                          605            511
                                                                                  ------         ------
      Total Expenses                                                              69,058         67,454
                                                                                  ------         ------
      Earnings before income taxes and minority interest                           6,317         11,076

Provision for income taxes                                                         2,250          4,022
                                                                                  ------         ------
      Net earnings before minority interest                                        4,067          7,054

Minority interest:

  Distributions on preferred securities, net of tax                                2,055          2,130
                                                                                  ------         ------
      Net Earnings                                                               $ 2,012        $ 4,924
                                                                                  ======         ======
Net earnings per share - basic                                                     $0.19          $0.47
                                                                                    ====           ====
Net earnings per share - fully diluted                                             $0.19          $0.46
                                                                                    ====           ====
Weighted average shares outstanding:
  Basic                                                                           10,385         10,445
                                                                                  ======         ======
  Fully diluted                                                                   10,548         10,726
                                                                                  ======         ======
</TABLE>
See notes to consolidated financial statements

                                      -4-

<PAGE>

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

<TABLE>
<CAPTION>

                                                                      Shares           Total
                                                                      Common       Stockholders'     Retained
                                                                       Stock          Equity         Earnings

<S>                                                                <C>               <C>             <C>
BALANCE AT DECEMBER 31, 1997                                       10,451,667        $78,363         $31,511

Comprehensive income:
   Net earnings                                                                        4,924           4,924
   Change in unrealized gains (losses) on securities                                   2,222             --
                                                                                      ------          ------
Comprehensive income                                                                   7,146           4,924

Exercise of stock options                                               1,665             20             --

Cost of shares acquired                                               (57,800)          (882)           (160)
                                                                   ----------         ------          ------
BALANCE AT MARCH 31, 1998                                          10,395,532        $84,647         $36,275
                                                                   ==========         ======          ======


BALANCE AT DECEMBER 31, 1998                                       10,385,399        $61,995         $16,747

Comprehensive income:
   Net earnings                                                                        2,012           2,012
   Change in unrealized gains (losses) on securities                                  (1,380)            --
                                                                                      ------          ------
Comprehensive income                                                                     632           2,012
                                                                   ----------         ------          ------
BALANCE AT MARCH 31, 1999                                          10,385,399        $62,627         $18,759
                                                                   ==========         ======          ======

</TABLE>
See notes to consolidated financial statements


                                      -5-

<PAGE>

SYMONS INTERNATIONAL GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
                                                                                     Three Months Ended
                                                                                           March 31,
                                                                                      1999          1998

<S>                                                                                  <C>           <C>
Cash Flows from Operating Activities:
  Net earnings for the period                                                        $2,012        $4,924
  Adjustments to reconcile net earnings to net cash provided
     from operations:
     Depreciation and amortization                                                    1,364         1,117
     Deferred income tax expense (recovery)                                           3,730        (1,173)
     Net realized loss (gain)                                                         1,380        (1,968)
Net changes in operating assets and liabilities:
  Receivables                                                                       (68,479)      (72,542)
  Reinsurance recoverable on paid and unpaid losses, net                             10,085        26,448
  Prepaid reinsurance premiums                                                      (50,077)      (60,275)
  Deferred policy acquisition costs                                                   1,425        (6,527)
  Other assets                                                                       (3,907)         (243)
  Losses and loss adjustment expenses                                               (27,834)      (10,143)
  Unearned premiums                                                                  65,357        91,352
  Reinsurance payables                                                               77,168        60,994
  Distributions payable on preferred securities                                      (3,250)       (3,242)
  Federal income taxes                                                               (4,918)        5,485
  Other liabilities                                                                   7,408           768
                                                                                     ------        ------
NET CASH PROVIDED FROM OPERATIONS                                                    11,464        34,975
                                                                                     ------        ------
Cash flow used in investing activities:
  Purchases sales of short-term investments                                          (2,428)         (227)
  Purchases of fixed maturities                                                     (75,340)      (41,319)
  Proceeds from sales, calls and maturities of fixed maturities                      67,429        34,322
  Purchases of equity securities                                                       (944)       (6,466)
  Proceeds from sales of equity securities                                               22         6,421
  Purchase of real estate                                                                (7)       (2,584)
  Purchases of property and equipment                                                  (976)       (2,869)
  Purchases of other investments                                                       (243)         (320)
                                                                                    -------       -------
NET CASH USED IN INVESTING ACTIVITIES                                               (12,487)      (13,042)
                                                                                     ------        ------
Cash flow provided from/(used in) financing activities:
  Cost of shares acquired                                                                --          (862)
  Payments on notes payable                                                          (9,224)       (1,613)
  Repayments from related parties                                                      (180)       (4,439)
                                                                                     ------        ------
NET CASH USED IN FINANCING ACTIVITIES                                                (9,404)       (6,914)
                                                                                     ------        ------
Increase (decrease) in cash and cash equivalents                                    (10,427)       15,019
Cash and cash equivalents, beginning of period                                       14,800        11,276
                                                                                     ------        ------
Cash and cash equivalents, end of period                                            $ 4,373       $26,295
                                                                                     ======        ======
</TABLE>
See notes to consolidated financial statements

                                      -6-

<PAGE>

                        SYMONS INTERNATIONAL GROUP, INC.
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                    For The Three Months Ended March 31, 1999

NOTES TO THE CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1)      The accompanying unaudited condensed financial statements  have  been
         prepared in accordance  with the  instructions  to Form 10-Q and do not
         include all of the  information  and  footnotes  required by  generally
         accepted accounting  principles for complete financial  statements.  In
         the  opinion  of  management,  all  adjustments  (consisting  of normal
         recurring  accruals)  considered  necessary for fair  presentation have
         been  included.  Operating  results  for the  interim  periods  are not
         necessarily indicative of the results that may be expected for the year
         ended December 31, 1999. Interim financial statements should be read in
         conjunction with the Company's annual audited financial statements.

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

                                                                      Three Months Ended
                                                                           March 31,
                                                                       1999          1998

         <S>                                                        <C>             <C>
         Basic:
           Weighted-average common shares outstanding               10,385,000      10,450,000

         Diluted:
           Weighted-average common shares outstanding               10,385,000      10,450,000
           Dilutive effect of stock options                            163,000         281,000
                                                                    ----------      ----------
         Average common shares outstanding assuming
         dilution                                                   10,548,000      10,726,000
                                                                    ==========      ==========
</TABLE>

(3)      The Company writes nonstandard insurance business through  agents  in
         California where some of the agents charge  administration  fees on top
         of the  premium  to  these  customers.  The  California  Department  of
         Insurance (CDOI) in early 1998 indicated that such broker fees are part
         of premium and has  requested  reimbursement  to the  policyholders  by
         Superior  Insurance  Company.  The CDOI has indicated it may assess the
         Company to repay fees the agents received from the insured. The Company
         did not  receive  any of  these  broker  fees  and has  carried  on the
         insurance  practice that is normal for many of the insurance  companies
         writing automobile  insurance in California.  The total amount, if CDOI
         proceeds and requires all fees  returned  with no recovery from agents,
         is $3 million. As the ultimate outcome of this potential  assessment is
         not deemed  probable,  the  Company  has not  accrued any amount in its
         consolidated financial statements. Although the assessment has not been
         formally  made by the CDOI at this time,  the Company  believes it will
         prevail and will vigorously defend any potential assessment.

         As part of an  agreement by the Company to assume the  multi-peril  and
         crop operations of CNA during 1998, the Company agreed to reimburse CNA
         for  certain  direct  overhead  costs  incurred by CNA during the first
         quarter of 1998 before the Company  assumed this book of business.  CNA
         has  requested  reimbursement  of $1.5  million in  expenses  which the
         Company  believes  should  only be $1.1  million.  Negotiations  are in

                                      -7-


<PAGE>

         process to settle this dispute.  The Company fully expects the ultimate
         settlement  will  approximate  $1.1 million and has therefore,  accrued
         this amount in its consolidated financial statements at March 31, 1999.

(4)      Year 2000 Compliance

         General

         The Year 2000 Project  ("Project")  addresses the inability of computer
         software and hardware to distinguish between the year 1900 and the year
         2000. In 1996, the Company began a company-wide replacement of hardware
         and software  systems to address this and other issues.  The Company is
         utilizing  systems from Dell,  Hewlett  Packard,  Sun Systems,  Compaq,
         Oracle and ZIM as well as certain software  conversions using Java. The
         new  hardware  is in place and  operational  at all  subsidiaries.  The
         software  systems are in place in our  nonstandard  auto operations and
         are being  implemented  on a  state-by-state  basis.  The Company first
         began  implementing  the new nonstandard auto operating system in those
         states in which the Company  writes annual  policies  (annual  states).
         100% of those annual states are currently in production.  The remaining
         non-annual  states are scheduled to be completed by June 30, 1999.  The
         Y2K issue does not have an effect on the crop operations  until October
         1,  1999.  The  Company  is  converting  non-compliant  crop  operating
         systems,  through programmatic means, into a Y2K compliant environment.
         The crop  operation has completed the  conversion and the testing phase
         of the Project.  A number of the Company's  other IT projects are being
         delayed  or  completely  eliminated  due to the  implementation  of the
         Project.

         Project

         The  Company  has   divided   the   Project   into  three   sections  -
         Infrastructure,   Applications/Business   Systems   and   Third   Party
         Suppliers.  There are common  portions of each of these divisions which
         are:  (1)  identifying  Y2K items;  (2)  assigning a priority for those
         items  identified;  (3) repairing or replacing those items; (4) testing
         the fixes;  and (5) designing a contingency  and business  continuation
         plan for each subsidiary.

         In  February  1998,  all  items had been  identified  and the plans for
         replacement  or repair were  proposed to  management.  These plans were
         approved and the process began.

         The infrastructure  section of the Project was quickly  implemented and
         tested by the  Company's IT staff and has been  completed  since May of
         1998. All desktop, mini and midrange systems as well as phone switches,
         phones  and  building   security  systems  have  been  tested  for  Y2K
         compliance.  Any new systems  required by the Company are being  tested
         and certified  prior to purchase with  completion by June 30, 1999. Two
         mainframes  being  used  by  the  Company  are  not  Y2K  certified  or
         compliant.  These  machines  have been replaced by Sun and HP compliant
         systems and are being kept in production until new applications are put
         in place on the new machines.

         The  applications  systems  section of the  Project  includes:  (1) the
         replacement of nonstandard  auto companies  Policy  Administration  and
         Claims systems; (2) the conversion of crop operations systems in total;
         and (3)  replacement of  non-compliant  business  systems  company-wide
         (this includes wordprocessors,  network operating systems,  spreadsheet

                                      -8-

<PAGE>

         programs, presentation systems, etc.).

         The Company had already made the decision to transition  off all of its
         nonstandard auto legacy systems and this process had been in work since
         1996.  These systems are Y2K compliant and are scheduled for completion
         by the end of June 30, 1999.  The  conversion  of crop systems began in
         August 1998 and is  complete.  Business  systems are being  replaced as
         vendors certify their  compliance.  The Company is at 90% compliance in
         this area.

         The Company relies on third party vendors for investments,  reinsurance
         treaties and banking.  The Company began inquiring about Y2K compliance
         with its third  party  vendors  beginning  in July 1998.  To date,  all
         vendors have replied regarding their compliance efforts. Those that are
         not in compliance  have until the end of second  quarter 1999 to do so,
         or they will be replaced.

         Costs

         The  Company  considers  the cost  associated  with the  Project  to be
         material.  The Company has estimated the total cost to be $5.7 million,
         the  majority  of which has been  capitalized  as  hardware or software
         costs. The Company has also incurred substantial costs for carrying two
         systems  including  personnel  costs  and  outside  service  fees.  The
         component  of these costs  specifically  associated  with Y2K cannot be
         reasonably estimated.  The total amount expended through March 31, 1999
         on  all  infrastructure  and  software  upgrades  is  approximately  $5
         million.  The Company expects to spend another  $800,000 in its efforts
         to  complete  the  Project.  This does not  include  additional  annual
         maintenance costs that will be incurred as we move forward. Funding for
         these costs will continue to be provided by funds from operations.  The
         Company   believes   that  the  new   nonstandard   auto   system  will
         significantly  enhance service  capability and reduce future  operating
         costs.

         Risks

         Failure  to  correct  the Y2K  problem  through  efficient  and  timely
         implementation  of the  Company's  new  operating  system could cause a
         failure or interruption of normal business  operations.  These failures
         could materially affect the Company's  operational  results,  financial
         condition  and  liquidity  through  reduction of premium  volume and an
         increase  in  operating  costs as a  percentage  of  premium  volume or
         deterioration of loss experience. Due to the nature of the Y2K problem,
         the Company is uncertain  whether it will have a material affect or the
         potential  magnitude of any financial impact. The Company believes that
         the possibility of significant business interruptions should be reduced
         by successful implementation of the Project.


                                      -9-

<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, 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.

Crop Insurance Operations

General

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

         The Company,  like other  private  insurers  participating  in the MPCI
program,  generates  revenues  from the MPCI  program  in two  ways.  First,  it
markets,  issues and administers policies, for which it receives  administrative
fees; and second,  it participates in a  profit-sharing  arrangement in which it
receives  from the  government  a portion  of the  aggregate  profit,  or pays a
portion of the aggregate loss, in respect of the business it writes. The Company
writes MPCI and crop hail  insurance  through 2,007  independent  agencies in 43
states.

         In  addition  to  MPCI,  the  Company  offers  stand  alone  crop  hail
insurance, which insures growing crops against damage resulting from hail storms

                                      -10-

<PAGE>

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  60%  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  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.

         The fee income  business  is  primarily  services to farmers for global
positioning  grid mapping of their farm and soil sampling to enhance the growing
conditions of the crops.

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

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

         Geo  AgPLUS(TM)  provides to the farmer  measuring,  gridding  and soil
sampling  services  combined  with  fertility  maps  and  the  software  that is
necessary to run precision farming programs.  Grid soil sampling,  when combined
with  precision  farming  technology,  allows the farmer to apply just the right
amount of fertilization, thus balancing soil nutrients for a maximum crop yield.
Precision farming technology increases the yield to the farmer, reduces the cost
of unnecessary  fertilization and enhances the environment by reducing overflows
of fertilization into the ecosystem.  Geo AgPLUS(TM) is an IGF Insurance Company
trademarked  precision  farming  division  that is now  marketing  its fee based
services to the farmer.

Certain Accounting Policies for Crop Insurance Operations

         MPCI is a government-sponsored  program with accounting treatment which
differs in certain  respects  from the more  traditional  property  and casualty
insurance  lines.  For  income  statement   purposes  under  generally  accepted
accounting principles, gross premiums written consist of the aggregate amount of

                                      -11-

<PAGE>

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

         The Company also  receives  from the FCIC (i) an expense  reimbursement
payment equal to a percentage of gross premiums written for each Buy-Up Coverage
policy  it  writes  ("Buy-Up  Expense  Reimbursement  Payment")  and (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").  For 1998 and
1997,  the Buy-Up  Expense  Reimbursement  Payment  has been set at 27% and 29%,
respectively,  of the MPCI Premium. For generally accepted accounting 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 is, 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 June 1998,  the United  States  Congress  passed  legislation  which
provided permanent funding for the crop insurance industry.  However,  beginning
with the 1999 MPCI crop  year,  the Buy-Up  Expense  Reimbursement  Payment  was
reduced to 24.5%, the CAT LAE  Reimbursement  Payment was reduced to 11% and the
$60 CAT coverage fee will no longer go to the insurance companies.

         The Company expects to more than offset these reductions through growth
in  non-federally  subsidized  programs  such  as  AgPI(R)  and  Geo  AgPLUS(TM)
initiated in 1998. The Company has also been working to reduce its costs.  While
the Company fully believes it can more than offset these reductions, there is no
assurance  the  Company  will be  successful  in its  efforts  or  that  further
reductions in federal reimbursements will not continue to occur.

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

                                      -12-


<PAGE>

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 latest available loss information.

 Results of Operations
<TABLE>
<CAPTION>
                                                                                  For the three months
                                                                                       ended March 31,
                                                                                     1999        1998

<S>                                                                                <C>         <C>
NONSTANDARD AUTOMOBILE INSURANCE OPERATIONS:
  Gross premiums written                                                           $61,171     $89,976
                                                                                    ======      ======
  Net premiums written                                                             $73,687     $82,267
                                                                                    ======      ======
  Net premiums earned                                                              $65,396     $68,323
  Fee income                                                                         4,521       4,155
  Net investment income                                                              3,164       2,801
  Net realized gain (loss)                                                          (1,382)      1,968
                                                                                    ------      ------
        TOTAL REVENUES                                                              71,699      77,247
                                                                                    ------      ------
  Losses and loss adjustment expenses                                               51,313      53,146
  Policy acquisition and general and administrative expenses                        19,595      18,123
                                                                                    ------      ------
        TOTAL EXPENSES                                                              70,908      71,269
                                                                                    ------      ------
  Earnings before income taxes                                                     $   791      $5,978
                                                                                    ======       =====
GAAP RATIOS (Nonstandard Automobile Only):
  Loss and LAE Ratio                                                                  78.5%       77.8%
  Expense ratio, net of billing fees                                                  23.0        20.4
                                                                                      ----        ----
  Combined ratio                                                                     101.5%       98.2%
                                                                                     =====        ====
CROP INSURANCE OPERATIONS:
  Gross premiums written(2)                                                        $90,723     $86,175
                                                                                    ======      ======
  Net premiums written                                                             $ 6,281     $17,294
                                                                                    ======      ======
  Net premiums earned                                                               $3,608        $161
  Fee income                                                                           (58)      2,332
  Net investment income                                                                 57          53
                                                                                    ------      ------
        TOTAL REVENUES                                                               3,607       2,546
                                                                                    ------      ------
  Losses and loss adjustment expenses                                                  506          59
  Policy acquisition and general and administrative expenses(1)                     (3,340)     (3,647)
  Amortization of intangibles                                                           95          --
  Interest expense                                                                      74         183
                                                                                        --         ---
        TOTAL EXPENSES                                                              (2,665)     (3,405)
                                                                                     -----       -----
  Earnings before income taxes                                                     $ 6,272      $5,951
                                                                                    ======       =====
</TABLE>
(1)  Negative crop expenses are caused by inclusion of MPCI expense
     reimbursement and underwriting gain.
(2)  Includes premiums assumed from CNA in accordance with the Strategic
     Alliance Agreement.


                                      -13-

<PAGE>

Net Earnings

For the three months ended March 31, 1999, the Company  recorded net earnings of
$2,012,000 or $.19 per share  (basic).  This is  approximately  a 59.1% decrease
from 1998 comparable amounts of $4,924,000 or $0.47 per share (basic).

Consolidated Gross Premiums Written

Gross premiums written for the nonstandard automobile  segment  decreased 32.0%
for the three  months  ended March 31, 1999  compared to the three  months ended
March 31, 1998.  This represents an 8.8% decrease in premiums from the average
premium volume in the last half of 1998.  The primary reasons for this decline
in volume has been the downsizing by the Company of its nonstandard automobile
business in certain competitive markets, the loss of some business prior to the
hiring of a new new product development team and the slowing of new business
during the conversion by the Company to a new operating computer system.

Gross premiums  written for the crop segment were  comparable to those of a year
ago. Crop premiums for the three months ended March 31 are as follows:

<TABLE>
<CAPTION>
                                              1999             1998
                                              ----             ----

<S>                                         <C>              <C>
CAT imputed                                 $16,312          $16,319
MPCI                                         62,280           60,743
Crop hail and named perils                   28,443           25,431
                                            -------          -------
                                            107,035          102,493
Less: CAT imputed                           (16,312)         (16,319)
                                             ------           ------
                                            $90,723          $86,174
                                             ======           ======
</TABLE>

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

MPCI  premiums are  considered  to be 100% ceded to the federal  government  for
accounting purposes.  Quota share cession rates for other lines of insurance for
the three months ended March 31 are as follows:

<TABLE>
<CAPTION>
                                           1999           1998
                                           ----           ----
<S>                                         <C>            <C>
Nonstandard automobile                       0%            10%
Crop hail                                   62%            25%
Named peril                                 50%            50%
AgPI                                        62%             0%

</TABLE>

Fee income decreased 12.8% for the three months ended March 31, 1999 as compared
to the  corresponding  period of the prior year. Such decrease was primarily due
to the Federal  government  retaining  the CAT fee policy,  partially  offset by
increased penetration of policy issuance fees on the automobile book.

Net investment  income increased 11.2% for the three months ended March 31, 1999
as compared to the corresponding period of the prior year due to the transfer of
invested  assets  to  interest   bearing  fixed  maturities  from  equity  based
investments since the first quarter of 1998. The realized loss was primarily due
to tax loss  related  selling of certain  securities  as well as some selling to
reduce the average duration of the fixed income portfolio.

                                      -14-

<PAGE>

The loss ratio for the nonstandard automobile segment for the three months ended
March 31, 1999 was 78.5%  comparable  to 77.8% for the three  months ended March
31,  1998 . 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 to
$16,560,000  or 24.0% of net premium earned for the three months ended March 31,
1999 compared to $13,555,000 or 19.8% of net premium earned in the corresponding
period of 1998. Nonstandard auto general and administrative expenses rose due to
increased use of temporary help to resolve processing backlogs and lower expense
recoveries from reinsurers due to the elimination of quota share  reinsurance in
1999.

Crop segment expenses include agent commissions, stop loss reinsurance costs and
operating  expenses  which are offset by MPCI  Expense  Reimbursements  and MPCI
Underwriting  Gain. The negative expense results primarily from the inclusion of
the MPCI Underwriting Gain.

Amortization of intangibles  includes goodwill from the acquisition of Superior,
additional  goodwill from the  acquisition of the minority  interest  portion of
GGSH and the acquisition of NACU, debt or preferred  security issuance costs and
organizational costs.

Income tax  expense was 35.6% and 36.3% of pre-tax  income for the three  months
ended March 31, 1999 and 1998.

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

Financial Condition

The  Company's  total  assets  of  $679,694,000  at  March  31,  1999  increased
$110,257,000  from $569,437,000 as of December 31, 1998. The primary reasons for
this increase were increased premium receivable and reinsurance payable balances
in the crop business due to the normal accumulation of these balances during the
year and settlement in the fall of each year, coincidental with fall harvest.

Netcash provided by operating  activities  decreased to $11,464,000 in 1999 from
$34,975,000  in 1998 due to  reduced  gross  premium  volume  in the  automobile
business.  Financing activities included normal activities on the Company's line
of credit for crop operations.

                                      -15-

<PAGE>

PART II - OTHER INFORMATION

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

ITEM 2.  CHANGES IN SECURITIES
         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
         None

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

ITEM 5.  OTHER INFORMATION
         Within  this  form  10-Q  the  Company  has  incorporated  the
         financial impact of events which had occurred as of March 31,
         1999,  but  which  came to  management's  attention  and / or
         became quantifiable after the release to the public of the
         first quarter results of operations on May 12, 1999.

         The  Company  writes a portion  of its crop  hail  insurance
         based on continuous  policies which remain in-force unless
         and until cancelled by the policyholder.  The Company also
         writes a lesser amount of crop hail insurance on an
         annual basis.  In the first quarter  earnings  release dated
         May  12,  1999,  the  Company  recorded  approximately  $11.3
         million  of  crop  hail  gross  written  premium  related  to
         processed crop hail policies. However, the Company failed to
         record all of the continuous policies for which liabilities
         had  attached  as of the March 31, 1999  balance  sheet date,
         thus   understating   crop  hail  gross  written  premium  by
         approximately $16.6 million, and net written premium by
         approximately  $4.0  million.  The crop hail  gross  written
         premium  should  have  totalled  $27.9  million  for the first
         quarter,  which is  comparable  with the $24.5 million in crop
         hail gross written premium recorded in the first quarter
         of 1998.

         The  increase  in the crop  hail  premiums  has an effect on
         income through  ceding  commissions  the Company  receives on
         quota share reinsurance  treaties.  It also improves earnings
         through profits on the net retained portion of the crop hail
         business.   The  total  amount  of  pre-tax earnings related to
         the  additional  $16.6 million in gross written premiums  recorded
         for  the first quarter of 1999 was approximately $2.0 million.

         The  Company  reinsures  100%  of a book  of  crop  insurance
         business  written through a third party insurance  company.
         As  described  in the notes to the 1998  audited  financial
         statements, this product, called "AgPI(R)", insures against
         business  interruption risk. At year end 1998 the Company had
         recorded $7.5 million in gross assumed loss reserves.  Based

                                      -16-

<PAGE>

         on further recent analysis,  coupled with recently  released
         national data related to the 1998 crop year, the
         Company has  increased its assumed gross loss reserves from
         $7.5 million to $15.0 million as of March 31, 1999.

         To date,  there has not been a ceding  of paid  losses to the
         Company from the third party  reinsurance  company related to
         the potential  AgPI(R)  liability.  The Company  believes the
         ultimate development on these gross reserves could range
         from $10 million to $20 million,  and, as such,  believes
         that recorded gross loss reserves of  $15  million  is sufficient.
         However,  there  can be no  assurance  that  the Company's
         ultimate liability for AgPI(R) related losses will not be materially
         greater or less than the Company's reserve for this liability.

         The Company  retrocedes  the  majority  of this  business  to
         reinsurers.  The retrocession cover on this book of business
         is 62% quota share reinsurance of which 7.5% is retroceded to Granite
         Reinsurance Company Ltd., an affiliate, and as such the Company has
         ceded  approximately  $4.7  million  of  premium,  and  $9.3
         million of loss reserves,  to retro reinsurers.  The company
         also incurred approximately $1M in pretax fee expense
         related to this treaty in the first quarter.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
         Exhibit 1.0 - AgPI, Crop Hail and MPCI Multi-year Quota Share
         Reinsurance Agreement


                                      -17-

<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: May 28, 1999                   By:/s/ Alan G. Symons
                                      Alan G. Symons
                                      Chief Executive Officer



Dated: May 28, 1999                   By:/s/ Thomas R. Kaehr
                                      Thomas R. Kaehr
                                      Vice President, Treasurer and
                                      Chief Financial Officer







                                      -18-
<PAGE>