<PAGE>

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

                                    FORM 10-Q

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

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

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


                        Commission File Number: 000-24366

                               GORAN CAPITAL INC.
             (Exact name of registrant as specified in its charter)



CANADA                                                       NOT APPLICABLE
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                               Identification No.)

                                   2 Eva Road
                                    Suite 200
                            Toronto, Ontario M9C 2A8

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

   Registrant's telephone number, including area code: (416) 622-0660 (Canada)
                                                       (317) 259-6300 (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 November 1, 2001, there were 5,561,398 shares of Registrant's common stock
issued and outstanding, exclusive of shares held by Registrant.

                                       1
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                        Page
                                                                                                       Number
<S>                                                                                                    <C>
PART I     FINANCIAL INFORMATION

Item 1     Financial Statements

           Consolidated Balance Sheets at September 30, 2001
           (unaudited) and December 31, 2000.......................................................       3

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

           Unaudited Consolidated Statements of Operations
           for the Nine Months ended
           September 30, 2001 and 2000.............................................................       5

           Unaudited Consolidated Statement of Stockholder's
           Equity (Deficit) for the Nine Months ended
           September 30, 2001 and 2000.............................................................       6

           Unaudited Consolidated Statements of Cash Flows for the
           Nine Months Ended September 30, 2001 and 2000 ..........................................       7

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

Item 2     Management's Discussion and Analysis of Financial
           Condition and Results of Operations.....................................................       16

Item 3     Quantitative and Qualitative Disclosures about Market Risk..............................       21

PART II    OTHER INFORMATION.......................................................................       21

Item 1     Legal Proceedings.......................................................................       21

Item 2     Changes in Securities and Use of Proceeds...............................................       23

Item 3     Defaults Upon Senior Securities ........................................................       23

Item 4     Submission of Matters to a Vote of Security Holders ....................................       23

Item 5     Other Information ......................................................................       23

Item 6     Exhibits and Reports on Form 8-K........................................................       24

SIGNATURES      ...................................................................................       25

GORAN CAPITAL INC., Analysis of Loss Per Share ....................................................       26
</TABLE>

                                       2
<PAGE>

PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
GORAN CAPITAL INC.
CONSOLIDATED BALANCE SHEETS
(CANADIAN GAAP, stated in thousands of U.S. dollars)

<TABLE>
<CAPTION>
                                                                                  September 30,
                                                                                      2001               December 31,
                                                                                   (Unaudited)               2000
                                                                                 -----------------     ---------------
<S>                                                                                 <C>                  <C>
ASSETS
  Investments:
    Available for sale:
      Fixed maturities, at market                                                     $61,504              $107,827
      Equity securities, at market                                                     19,373                20,268
      Short-term investments, at amortized cost, which approximates market             12,599                17,594
      Mortgage loans, at cost                                                               -                 1,870
      Other invested assets                                                             1,493                 1,331
                                                                                        -----                 -----
  Total Investments                                                                    94,969               148,890

  Investments in and advances to related parties                                        2,950                 4,254
  Cash and cash equivalents                                                            39,682                 3,230
  Receivables,  net of  allowance  of  $2,218  and  $1,940  in 2001  and  2000,
    respectively                                                                       49,884                54,370
  Reinsurance recoverable on paid and unpaid losses                                    23,518                44,843
  Prepaid reinsurance premiums                                                         28,787                24,774
  Deferred policy acquisition costs                                                     3,536                 6,454
  Property and equipment, net of accumulated depreciation                              10,549                12,400
  Intangible assets                                                                     5,023                 4,983
  Other assets                                                                          1,544                 3,784
  Assets of discontinued operations                                                   309,925               132,050
                                                                                      -------               -------
Total Assets                                                                         $570,367              $440,032
                                                                                     ========              ========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities:
  Loss and loss adjustment expense reserves                                           $90,776              $113,149
  Unearned premiums                                                                    60,502                62,386
  Reinsurance payables                                                                 44,259                63,632
  Distributions payable on preferred securities                                        19,949                15,263
  Deferred income                                                                       8,000                     -
  Other liabilities                                                                    20,748                14,904
  Liabilities of discontinued operations                                              309,925               131,366
                                                                                      -------               -------
Total Liabilities                                                                     554,159               400,700
Minority interest:
  Company-obligated  mandatorily redeemable preferred stock of trust subsidiary
    holding solely parent debentures                                                   94,540               112,000
Stockholders' Equity (Deficit):
  Common stock,  no par value,  100,000,000  shares  authorized,  5,561,398 and
    5,776,398 shares issued and outstanding during 2001 and 2000, respectively         19,023                19,132
  Additional paid-in capital                                                           43,092                23,748
  Unrealized loss on investments available for sale                                      (506)                 (291)
  Retained (deficit)                                                                 (139,941)             (115,257)
                                                                                     ---------             ---------
Total Stockholders' (Deficit)                                                         (78,332)              (72,668)
                                                                                      --------              --------
Total Liabilities and Stockholders' (Deficit)                                        $570,367              $440,032
                                                                                     ========              ========
</TABLE>

SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       3
<PAGE>

GORAN CAPITAL INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(CANADIAN GAAP, stated in thousands of U.S. dollars, except per share data)

<TABLE>
<CAPTION>

                                                                                        Three Months Ended
                                                                                           September 30
                                                                                  --------------------------------
                                                                                      2001              2000
                                                                                  -------------     --------------

<S>                                                                              <C>               <C>
Gross premiums written                                                               $27,348           $45,852
Less ceded premiums                                                                  (12,664)          (13,672)
                                                                                     --------          --------
    Net premiums written                                                             $14,684           $32,180
                                                                                     =======           =======

Net premiums earned                                                                  $22,943           $34,176
Fee income                                                                             4,220             3,386
Net investment income                                                                  1,715             2,594
Net realized capital loss                                                                793            (2,632)
                                                                                      ------            -------
    Total revenues                                                                    29,671            37,524
                                                                                      ------            ------
Expenses:
    Losses and loss adjustment expenses                                               19,859            29,035
    Policy acquisition and general and administrative expenses                        15,696            18,694
    Amortization of intangibles                                                          674               453
                                                                                      ------            ------
    Total expenses                                                                    36,229            48,182
                                                                                      ------            ------
Loss from continuing operations before income taxes and minority interest             (6,558)          (10,658)
                                                                                      -------          --------
    Total income taxes                                                                     -                  -
                                                                                      -------          --------
Loss from continuing operations before minority interest                              (6,558)          (10,658)
                                                                                      -------          --------
Minority interest:

     Distributions on preferred securities, net of tax of $0 in both 2001 and 2000     2,483             2,866
                                                                                      ------           -------
Loss from continuing operations                                                       (9,041)          (13,524)
                                                                                      -------          --------
Discontinued operations:
     Income (loss) from operations of discontinued segment, less applicable                -           (12,387)
                                                                                      ------           --------
     income taxes of $0 in both 2001 and 2000

Net loss                                                                             $(9,041)         $(25,911)
                                                                                     ========         =========
Weighted average shares outstanding - basic and fully diluted                          5,772             5,776
                                                                                       =====             =====
Net loss from continuing operations per share - basic and fully diluted               $(1.57)           $(2.34)
                                                                                      =======           =======
Net loss of discontinued operations per share - basic and fully diluted               $    -            $(2.15)
                                                                                      =======           =======
Net loss per share - basic and fully diluted                                          $(1.57)           $(4.49)
                                                                                      =======           =======
</TABLE>

SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       4
<PAGE>

GORAN CAPITAL INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(CANADIAN GAAP, stated in thousands of U.S. dollars, except for per share data)

<TABLE>
<CAPTION>

                                                                                          Nine Months Ended
                                                                                            September 30
                                                                                   --------------------------------
                                                                                      2001               2000
                                                                                   ------------     ---------------
<S>                                                                               <C>              <C>
Gross premiums written                                                               $125,636         $135,743
Less ceded premiums                                                                   (66,305)         (51,541)
                                                                                      --------         --------
    Net premiums written                                                              $59,331          $84,202
                                                                                      =======          =======

Net premiums earned                                                                   $68,198         $117,126
Fee income                                                                             10,876           10,997
Net investment income                                                                   5,236            8,406
Net realized capital loss                                                                (283)          (3,949)
                                                                                       -------          -------
    Total revenues                                                                     84,027          132,580
                                                                                       ------          -------
Expenses:
    Losses and loss adjustment expenses                                                59,494           93,194
    Policy acquisition and general and administrative expenses                         38,634           57,771
    Amortization of intangibles                                                           733            1,433
                                                                                          ---            -----
    Total expenses                                                                     98,861          152,398
                                                                                       ------          -------
Loss from continuing operations before income taxes and minority interest             (14,834)         (19,818)
                                                                                      --------         --------
    Total income taxes                                                                      -              487
                                                                                      --------         -------
Loss from continuing operations before minority interest                              (14,834)         (20,305)
                                                                                      --------         --------
Minority interest:

     Distributions on preferred securities, net of tax of $0 in both 2001 and 2000      7,694            9,113
                                                                                        -----            -----
Loss from continuing operations                                                       (22,528)         (29,418)
                                                                                      --------         --------
Discontinued operations:
     Income (loss) from operations of discontinued segment, less applicable
     income taxes of $0 in both 2001 and 2000                                          (2,156)          (5,231)
                                                                                       -------          -------

Net loss                                                                             $(24,684)        $(34,649)
                                                                                     =========        =========
Weighted average shares outstanding - basic and fully diluted                           5,775            5,838
                                                                                        =====            =====
Net loss from continuing operations per share - basic and fully diluted                $(3.90)          $(5.04)
                                                                                       =======          =======
Net loss of discontinued operations per share - basic and fully diluted                $(0.37)          $(0.90)
                                                                                       =======          =======
Net loss per share - basic and fully diluted                                           $(4.28)          $(5.94)
                                                                                       =======          =======
</TABLE>

SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       5
<PAGE>


GORAN CAPITAL INC.
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(CANADIAN GAAP, stated in thousands of U.S. dollars)

<TABLE>
<CAPTION>

                                                                        Cumulative     Retained          Total
                                            Common      Contributed    Translation     Earnings      Stockholders'
                                             Stock        Surplus       Adjustment    (Deficit)    Equity (Deficit)
                                             -----        -------       ----------    ---------    ----------------

<S>                                         <C>              <C>              <C>     <C>                <C>
Balance at December 31, 1999                  $19,317          $2,775           $13     $(34,992)          $(12,887)

Repurchase of common shares                     (185)               -             -             -              (185)

Purchase of Preferred Securities                    -          21,763             -             -             21,763

Change in cumulative translation
adjustment                                          -               -         (332)             -              (332)

Net loss                                            -               -             -      (34,649)           (34,649)
                                              -------         -------       -------     ---------          ---------

Balance at September 30, 2000                 $19,132         $24,538       $ (319)     $(69,640)          $(26,290)
                                              =======         =======       =======     =========          =========


Balance at December 31, 2000                  $19,132         $23,748       $ (291)    $(115,257)          $(72,668)

Purchase of Common Shares                       (109)               -             -             -              (109)
Purchase of Preferred Securities                    -          19,344             -             -             19,344

Change in cumulative translation
adjustment                                          -               -         (215)             -              (215)

Net loss                                            -               -             -      (24,684)           (24,684)
                                              -------         -------       -------     ---------          ---------

Balance at September 30, 2001                 $19,023         $43,092       $ (506)   $ (139,941)         $ (78,332)
                                              =======         =======       =======   ===========         ==========
</TABLE>

SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       6

<PAGE>

GORAN CAPITAL INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(CANADIAN GAAP, stated in thousands of U.S. dollars)

<TABLE>
<CAPTION>

                                                                                                   Nine Months
                                                                                                Ended September 30
                                                                                      ---------------------------------------
                                                                                           2001                  2000
                                                                                      ----------------     ------------------
<S>                                                                                    <C>                  <C>
Cash flows from operating activities:
    Net loss for the period                                                                $(24,684)            $(34,649)
    Adjustments to reconcile net loss to net cash used in operations:
        Depreciation and amortization                                                         2,595                5,401
        Net realized capital loss                                                               281                3,942
     Net changes in operating assets and liabilities:
      Receivables                                                                             4,486                7,265
      Reinsurance recoverable on paid and unpaid losses                                      21,325              (21,845)
      Prepaid reinsurance premiums                                                           (4,013)             (19,109)
      Deferred policy acquisition costs                                                       2,918                6,291
      Other assets and liabilities                                                            7,869              (11,119)
      Loss and loss adjustment expense reserves                                             (22,373)             (29,737)
      Unearned premiums                                                                      (1,884)             (14,028)
      Reinsurance payables                                                                  (19,373)              42,224
      Distribution payable on preferred securities                                            4,686               10,075
      Deferred income                                                                         8,000                    -
      Net assets from discontinued operations                                                 1,577               20,307
                                                                                              -----               ------
Net cash used in operations                                                                 (18,590)             (34,982)
                                                                                            --------             --------

Cash flows from investing activities, net of assets acquired:
    Net (purchase) sale of short-term investments                                             4,995               14,887
    Proceeds from sales, calls and maturities of fixed maturities                            60,658               52,514
    Purchase of fixed maturities                                                            (12,443)              (3,562)
    Proceeds from sale of equity securities                                                  17,336               19,923
    Purchase of equity securities                                                           (14,486)             (22,914)
    Proceeds from repayment of mortgage loans                                                 1,870                   90
    Purchase of property and equipment                                                       (1,216)                (950)
    Net investing activities from discontinued operations                                    (1,322)                (307)
    Other                                                                                      (104)                (119)
                                                                                               -----                -----
Net cash provided by investing activities                                                    55,288               59,562
                                                                                             ------               ------

Cash flows from financing activities, net of assets acquired:
    Net financing activities from discontinued operations                                       429              (14,539)
    Redemption of share capital                                                                (109)                (185)
    Purchase of subsidiary's preferred securities                                            (1,870)              (2,810)
    Repayment of related party loans                                                          1,304                    -
                                                                                            -------              -------
Net cash used in financing activities                                                          (246)             (17,534)
                                                                                            --------             --------

Increase in cash and cash equivalents                                                        36,452                7,046
Cash and cash equivalents, beginning of period                                                3,230                2,215
                                                                                              -----                -----
Cash and cash equivalents, end of period                                                    $39,682               $9,261
                                                                                            =======               ======
</TABLE>

SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       7
<PAGE>


                               GORAN CAPITAL INC.
            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
             For the Three and Nine Months Ended September 30, 2001


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

2.   PREFERRED SECURITIES
     The preferred securities represent company-obligated mandatorily redeemable
     preferred securities of a trust subsidiary of Symons International Group,
     Inc. ("SIG") holding solely parent debentures which have a term of 30 years
     with semi-annual interest payments commencing February 15, 1998 (the
     "Preferred Securities"). The holder may redeem the Preferred Securities in
     whole or in part after 10 years. SIG, a 73% owned subsidiary of the
     Company, began deferring the semi-annual interest payments in February
     2000. Under terms of the indenture, SIG is permitted to defer the
     semi-annual interest payments for up to five years.

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

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

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

3.   REGULATORY AFFAIRS
     Two of the Company's insurance company subsidiaries, Pafco General
     Insurance Company ("Pafco") and IGF Insurance Company ("IGF") are domiciled
     in Indiana and prepare their statutory financial statements in accordance
     with accounting practices prescribed or permitted by the Indiana Department
     of Insurance ("IDOI"). While neither Pafco nor IGF has surplus from which
     to pay dividends, statutory requirements place limitations on the amount of
     funds that can be remitted to the Company from Pafco and IGF. The Indiana
     statute allows 10% of surplus in regard to policyholders or 100% of net
     income, whichever is greater, to be paid as dividends only from earned
     surplus; however, the Consent Orders with the IDOI, described below,
     prohibit the payment of dividends by Pafco and IGF. Another insurance
     company subsidiary, Superior Insurance Company ("Superior"), and Superior's
     insurance company subsidiaries, Superior American Insurance Company and
     Superior Guaranty Insurance Company, are domiciled in Florida and prepare
     their statutory financial statements in accordance with accounting
     practices prescribed or permitted by the Florida Department of Insurance
     ("FDOI"). Florida statute also contains limitations with regard to payment
     of dividends. Superior may pay dividends of up to 10% of surplus or 100% of
     net income; whichever is greater, from earned surplus. Prescribed statutory
     accounting practices include a variety of publications

                                       8

<PAGE>

     of the National Association of Insurance Commissioners ("NAIC"), as well as
     state laws, regulations, and general administrative rules. Permitted
     statutory accounting practices encompass all accounting practices not so
     prescribed.

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

     The IDOI has continued to monitor the status of IGF. The Consent Order
     prohibits IGF from taking any of the following actions, without prior
     written consent of the IDOI: (i) sell or encumber any of its assets,
     property, or business in force; (ii) disburse funds, except to pay direct
     unaffiliated policyholder claims and normal operating expenses in the
     ordinary course of business (which does not include payment to affiliates
     except for the reimbursement of costs for running IGF by SIG, and does not
     include payments in excess of $10,000); (iii) lend its funds; (iv) make
     investments except in specified types of investments; (v) incur debts or
     obligations, except in the ordinary course of business to unaffiliated
     parties; (vi) merge or consolidate with another company; (vii) enter into
     new, or amend existing, reinsurance agreements; (viii) complete, enter into
     or amend any transaction or arrangement with an affiliate; or (ix) disburse
     funds or assets to any affiliate. The Consent Order requires IGF to provide
     the IDOI with monthly written updates and immediate notices of any material
     change regarding the status of litigation with Mutual Service Casualty
     Insurance Company and with Continental Casualty Company, statutory
     reserves, number of non-standard automobile insurance policies in-force by
     state, and reports of all non-claims related disbursements. Should IGF fail
     to comply with the Consent Order, the IDOI could begin proceedings to have
     a rehabilitator or liquidator appointed for IGF to extend the provisions of
     the Consent Order.

     While IGF is prohibited from writing any new business pursuant to the
     Consent Order, the departments of insurance of Florida, Illinois,
     Minnesota, Missouri, Nebraska and Virginia have also issued orders that
     require IGF to cease writing business in those states without prior
     consent. South Carolina has also requested IGF cease writing business in
     that state. IGF has also agreed with the departments of insurance of Texas
     and Washington to stop writing business in those states.

     As a result of the Consent Order, IGF was prohibited from writing new
     non-standard automobile insurance in Pennsylvania after July 31, 2001.
     Prior to July 31, 2001, the non-standard automobile insurance policies
     written in Pennsylvania by IGF accounted for approximately 10% of the total
     gross written premiums of SIG. During the third quarter, the Pennsylvania
     Department of Insurance determined that it would not permit new business to
     be written in that state by Superior or the Company's other insurance
     company subsidiaries. Therefore, total written premiums for 2001 will be
     less than anticipated.

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

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

     o    Reduce its monthly auto premium writings, or obtain additional
          statutory capital or surplus, such that the ratio of gross written
          premium to surplus and net written premium to surplus does not exceed
          4.0 and 2.4, respectively; and provide the IDOI with regular reports
          demonstrating compliance with these monthly writings limitations.

                                       9
<PAGE>

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

     Pafco's inability or failure to comply with any of the above could result
     in the IDOI requiring further reductions in Pafco's permitted premium
     writings or in the IDOI instituting future proceedings against Pafco.
     Restrictions on premium writings result in lower premium volume. Management
     fees payable to Superior Insurance Group, Inc. ("Superior Group") are based
     on gross written premium; therefore lower premium volume results in reduced
     management fees paid by Pafco.

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

     Superior and Pafco also provide monthly financial information to the
     departments of insurance in certain states in which they write business,
     and Pafco has agreed to obtain IDOI prior approval of any new affiliated
     party transactions.

     The financial review of Superior for the year ended December 31, 1999 by
     the FDOI has been completed and the FDOI issued its draft report on July
     19, 2001. Superior believes it and the FDOI have agreed on language to be
     contained in the final report regarding the characterization of finance and
     service fee payments made by Superior to its parent. Superior anticipates
     the FDOI will issue its final report during the fourth quarter of 2001.

     As previously reported, the FDOI issued a notice of its intent to issue an
     order (the "Notice") which principally addressed certain policy and finance
     fee payments by Superior to Superior Group. A formal administrative hearing
     to review the Notice and a determination that the order contemplated by the
     Notice not be issued was held in February 2001. The administrative law
     judge entered a recommended order on June 1, 2001 that was acceptable to
     Superior. On August 30, 2001 the FDOI issued its final order which Superior
     believes improperly characterized billing and policy fees paid by Superior
     to Superior Group. Superior filed an appeal of the final order to Florida
     District Court. Superior and the FDOI are presently in settlement
     discussions regarding the final order.

     As previously reported, Superior has ceased writing business in Illinois
     and Texas. During the third quarter, Superior agreed with the departments
     of insurance in Illinois and Texas to obtain their prior approval before
     writing any new business in those states. On October 9, 2001, the State
     Corporation Commission of Virginia issued an order to take notice regarding
     an order suspending Superior's license to write business in that state,
     which Superior believes is unwarranted. A hearing for a determination that
     the suspension order not be issued is set for November 29, 2001.

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

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

                                       10
<PAGE>

     The changes in statutory accounting principles resulting from Codification
     which impact the Company's insurance subsidiaries, among other things,
     limit the statutory carrying value of electronic data processing equipment
     and deferred tax assets in determining statutory surplus. The consolidated
     statutory surplus of the Company's insurance subsidiaries as of December
     31, 2000 was $39.4 million. The consolidated statutory surplus was
     approximately $25.2 million at September 30, 2001.

4.   COMMITMENTS AND CONTINGENCIES

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

     Approximately $29.1 million was paid through September 30, 2001 in
     settlement of legal proceedings and claims related to the AgPI Program,
     with payments totaling approximately $359,000 in the first three quarters
     of 2001. A reserve of approximately $5.6 million remains to pay future
     claims. All of the policies of insurance, which were issued in the AgPI
     Program, were issued by and under the name of Mutual Service Casualty
     Insurance Company ("MSI"), a Minnesota corporation with its principal place
     of business located in Arden Hills, Minnesota.

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

     On or about June 11, 2001, IGF filed a motion in the United States District
     Court for the District of New Jersey seeking to vacate the arbitration
     panel's order requiring security. On June 19, 2001, MSI filed a motion in
     the same court for a ruling confirming that order. On July 26, 2001, the
     parties presented oral arguments on their cross-motions for vacation and
     confirmation of the order. On August 6, 2001 the court denied IGF's motion
     to vacate the arbitration panel's order. As of this date, IGF has not
     posted the required letter of credit, and it is financially incapable of
     satisfying that requirement. On November 7, 2001 the arbitration panel
     considered a petition for default judgment against IGF based on IGF's
     failure to post the pre-hearing security. In the event the arbitration
     panel orders a default judgment against IGF, IGF will appeal the order to
     the United States District Court of New Jersey.

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

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

                                       11
<PAGE>

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

     As previously reported, SIG and two of its subsidiaries, IGFH and IGF, are
     parties to a "Strategic Alliance Agreement" dated February 28, 1998 (the
     "SAA") with Continental Casualty Company ("CNA"), pursuant to which IGF
     acquired certain crop insurance operations of CNA. Through reinsurance
     agreements, CNA was to share in IGF's profits or losses on IGF's total crop
     insurance business. By letter dated January 3, 2001, CNA gave notice
     pursuant to the SAA of its exercise of the "Put Mechanism" under the SAA
     effective February 19, 2001. According to the SAA, upon exercise of the Put
     Mechanism, IGFH is obligated to pay CNA an amount equal to 5.85 times
     "Average Pre-Tax Income", an amount based in part upon payments made to CNA
     under the SAA. The SAA further provided that 30 days after exercise of the
     Put, IGF will execute a promissory note payable six months after the
     exercise of the Put in the principal amount equal to the amount owed, as
     specified by the SAA. In a letter dated March 20, 2001, CNA advised SIG
     that it calculated the principal amount due CNA to be in excess of $26
     million. CNA also asserted a claim for amounts allegedly due under
     reinsurance agreements for the 2000 crop year.

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

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

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

     On September 20, 2001, the court ordered a consolidation of the two cases,
     and discovery is proceeding. Although the Company continues to believe that
     it has claims against CNA and defenses to CNA's claims which may offset or
     reduce amounts owing by the Company or its affiliates to CNA, there can be
     no assurance that the ultimate resolution of the claims asserted by CNA
     against the Company and its affiliates will not have a material adverse
     effect upon the Company and its affiliates financial condition or results
     of operations.

     During 2000, the discontinued crop operations sold a product that insured
     potato producers against lost revenue caused by depressed commodity prices
     for potatoes. The commodity price of potatoes at December 31, 2000 was
     lower than the expected price; therefore, IGF established a $4,500,000
     gross loss reserve for its unpaid loss obligations on this product during
     the second quarter of 2001. As of September 30, 2001, IGF had settled
     substantially all of the policyholder claims and no reserve remains.

                                       12
<PAGE>

     As previously reported, a complaint for a class action alleging violations
     of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 was
     filed against the Company and certain of its officers and directors in the
     United States District Court for the Southern District of Indiana. The
     Company intends to vigorously defend the claims brought against it. No
     material developments have occurred since last reported in the June 30,
     2001 Form 10-Q.

     On June 29, 2001, the California Department of Insurance ("CDOI") filed a
     Notice of Non-Compliance against Superior, which alleges that broker fees
     were charged by independent brokers in violation of California law. The
     Company and the CDOI are presently engaged in settlement discussions, and
     the Company expects to settle with the CDOI during the fourth quarter of
     2001. Although the ultimate outcome of the settlement discussions is
     unknown, the Company believes it will settle for an amount less than
     $200,000 and has, therefore, accrued this amount in its consolidated
     financial statements.

     Superior is a defendant in a case filed on May 8, 2001 in the United States
     District Court for the Southern District of Florida entitled The
     Chiropractic Centre, Inc. v. Superior Insurance Company which purports to
     be brought on behalf of a class consisting of healthcare providers
     allegedly paid improperly discounted rates on services to patients based
     upon a preferred provider contract with a third party. The plaintiff
     alleges that Superior breached a third party beneficiary contract,
     committed fraud and engaged in racketeering activity in violation of
     federal and Florida law by obtaining discounted rates offered by a third
     party with whom the plaintiff contracted directly. Superior believes that
     the allegations of wrongdoing as alleged in the complaint are without merit
     and intends to vigorously defend the claims brought against it.

     As previously reported, actions have been brought in Florida against
     Superior Guaranty Insurance Company (a subsidiary of Superior) purporting
     to be brought on behalf of a class of persons allegedly charged service
     charges or finance charges in violation of Florida law. No other material
     developments have occurred since last reported in the June 30, 2001 Form
     10-Q.

     As previously reported, an action has been brought in Florida alleging that
     Superior improperly reduced medical benefits payable and improperly
     calculated interest in violation of Florida law. The case was brought on
     behalf of a purported class consisting of (i) healthcare providers that
     rendered treatment to Superior insureds and claimants of Superior insureds
     and (ii) such insureds and claimants. The Company believes the claim is
     without merit and intends to vigorously defend the charges brought against
     it. No other material developments have occurred since last reported in the
     June 30, 2001 Form 10-Q.

     As previously reported, an action has been brought in Florida against
     Superior on behalf of a purported class consisting of healthcare providers
     that rendered treatment to Superior insureds and obtained a valid
     assignment of benefits from Superior. The plaintiff alleges that Superior
     reduced or denied claims for medical expenses payable to the plaintiff
     without first obtaining a written report in violation of Florida law. The
     plaintiff also alleges that Superior inappropriately reduced the amount of
     benefits payable to the plaintiff in breach of Superior's contractual
     obligations to the plaintiff. Superior believes the allegations of
     wrongdoing in violation of law are without merit and intends to vigorously
     defend the claims brought against it. No material developments have
     occurred since last reported in the June 30, 2001 Form 10-Q.

     SIG is a 50% owner in a limited liability corporation ("LLC") established
     to provide business services to SIG, the Company and an unrelated third
     party. The fair market value of the LLC's operating assets approximated its
     outstanding debt at September 30, 2001.

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

5.   LOSS DEVELOPMENT ON PRIOR ACCIDENT YEARS
     During the third quarter of 2001, the Company experienced unfavorable
     development on its year-end 2000 loss and LAE reserves in the amount of
     $1.0 million. This increased the loss and loss adjustment expense ratio for
     the quarter by 4.0 percentage points.

                                       13
<PAGE>

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

7.   LOSS PER SHARE
     Basic and diluted net loss per share is computed by dividing net loss as
     reported by the average number of shares outstanding as follows:

<TABLE>
<CAPTION>

      (in thousands)                                               Three Months Ended           Nine Months Ended
                                                                      September 30                  September 30
                                                                  2001            2000          2001         2000
                                                                 ------          ------        ------       ------
<S>                                                               <C>             <C>           <C>          <C>
      Basic:
        Weighted-average common shares outstanding                5,772           5,776         5,775        5,838
                                                                  =====           =====         =====        =====

      Diluted:
        Weighted-average common shares outstanding                5,772           5,776         5,775        5,838
                                                                  =====           =====         =====        =====
</TABLE>


     The Company has 732,750 stock options outstanding as of November 8, 2001.
     Common stock equivalents are anti-dilutive; therefore, fully diluted loss
     per share is the same as basic loss per share.

8.   UNITED STATES ACCOUNTING PRINCIPLES
     These unaudited consolidated financial statements have been prepared in
     accordance with Canadian (CDN) GAAP. There are no differences between CDN
     GAAP and US GAAP for both the net loss and the net loss per share. The
     differences between CDN GAAP and US GAAP for stockholders' (deficit) are as
     follows (in thousands):

<TABLE>
<CAPTION>

         (in thousands)                                                   September 30,     December 31,
                                                                               2001             2000
                                                                         ----------------------------------
<S>                                                                           <C>              <C>
         Stockholders (deficit in accordance with
         Canadian GAAP                                                          $(78,332)        $(72,668)

         Add (deduct) effect of difference in accounting for:
              Receivable from sale of capital stock                               (1,258)          (1,258)
              Unrealized gain (loss) on investments                               (4,149)          (3,602)
                                                                                  -------          -------
         Stockholders' (deficit) in accordance with
         US GAAP                                                                $(83,739)        $(77,528)
                                                                                =========        =========
</TABLE>

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

     Summarized results of operations for discontinued operations were as
     follows:

                                       14
<PAGE>

<TABLE>
<CAPTION>

         STATEMENTS OF OPERATIONS:
          (in thousands)                                                     Three Months Ended
                                                                               September 30
                                                                     ---------------------------------
                                                                          2001               2000
                                                                     ---------------     -------------
<S>                                                                  <C>                 <C>
Gross premiums written                                                   $56,236             $34,337
                                                                         =======             =======
Net premiums written                                                        $154              $8,942
                                                                            ====              ======

     Net premiums earned                                                    $154             $14,155
     Net investment and fee income                                           (26)                372
     Net realized capital gain                                                (6)                  -
                                                                              ---             ------
Total revenues                                                               122              14,527
                                                                             ---              ------

     Loss and loss adjustment expenses                                     1,546              20,803
     Policy acquisition and general and administrative expenses           (1,424)              5,812
     Interest and amortization expense                                         -                 299
                                                                          -------             ------
Total expenses                                                               122              26,914
                                                                             ---              ------

Loss before income taxes                                                       -             (12,387)

Income tax expense                                                             -                   -
                                                                        --------             -------

Net loss from discontinued operations                                   $      -            $(12,387)
                                                                        ========            =========

<CAPTION>

         STATEMENTS OF OPERATIONS:
         (in thousands)
                                                                             Nine Months Ended
                                                                               September 30
                                                                     ---------------------------------
                                                                          2001               2000
                                                                     ---------------     -------------
<S>                                                                     <C>                 <C>
Gross premiums written                                                  $239,195            $219,915
                                                                        ========            ========
Net premiums written                                                       $(172)            $26,891
                                                                           ======            =======

     Net premiums earned                                                   $(172)            $23,589
     Net investment and fee income                                           961                 493
     Net realized capital gain                                               636                   1
                                                                             ---            --------
Total revenues                                                             1,425              24,083
                                                                           -----              ------

     Loss and loss adjustment expenses                                     5,238              31,137
     Policy acquisition and general and administrative expenses             (300)             (2,634)
     Interest and amortization expense                                    (1,357)                811
                                                                          -------           --------
Total expenses                                                             3,581              29,314
                                                                           -----              ------

Loss before income taxes                                                  (2,156)             (5,231)

Income tax expense                                                             -                   -
                                                                         --------             ------

Net loss from discontinued operations                                    $(2,156)            $(5,231)
                                                                         ========            ========
</TABLE>

                                       15

<PAGE>

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

OVERVIEW OF THE COMPANY
Goran Capital, Inc. ("the Company") owns approximately 73% of Symons
International Group, Inc. ("SIG"). SIG owns insurance companies that underwrite
and market nonstandard private passenger automobile insurance. SIG's principal
insurance company subsidiaries are Pafco General Insurance Company ("Pafco"),
Superior Insurance Company ("Superior") and IGF Insurance Company ("IGF").
Additionally, the Company owns 100% of Granite Reinsurance Company Ltd.
("Granite Re"), Granite Insurance Company ("Granite") and Symons International
Group, Inc. Florida ("SIGF").

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

Pafco, Superior, Superior Guaranty Insurance Company ("Superior Guaranty"), and
Superior American Insurance Company ("Superior American") are engaged in the
writing of insurance coverage for automobile physical damage and liability
policies for nonstandard risks. Nonstandard risk insureds are those individuals
who are unable to obtain insurance coverage through standard market carriers due
to factors such as poor premium payment history, driving experience or
violations, particular occupation or type of vehicle. The Company offers several
different policies that are directed towards different classes of risk within
the 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 carriers become 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.

Granite Re is a finite risk reinsurance company based in Barbados.

Granite is a Canadian federally licensed insurance company that ceased writing
new insurance policies on January 1, 1990.

SIGF is a Florida based surplus lines insurance agency whose operations were
discontinued effective January 1, 1999. On November 1, 2001 SIGF entered into an
agreement for the acquisition of the book of business of a Florida based
property, casualty and marine insurance agency, which is subject to the approval
of the 15th Judicial Circuit Court of Palm Beach County, Florida, which has
jurisdiction over the assets of the seller. The transaction, if approved, is
expected to close during the fourth quarter of 2001 or the first quarter of
2002.

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

SIGNIFICANT LOSSES HAVE BEEN REPORTED AND ARE LIKELY TO CONTINUE
For the three months ended September 30, 2001, losses from continuing operations
were $(9,041,000) compared to losses of $(13,524,000) in the comparable period
of 2000. For the nine months ended September 30, 2001, losses from

                                       16
<PAGE>

continuing operations were $(22,528,000) compared to losses of $(29,418,000) for
the same period of 2000. The Company previously reported losses from continuing
operations of $(63,224,000) for the entire year 2000 compared to losses from
continuing operations of $(47,000,000) for 1999. The 2000 loss includes a
one-time charge for the write-off of goodwill of $33.5 million. The Company is
continuing to seek and implement rate increases and other underwriting actions
to achieve profitability. A number of systems have been automated and service
problems have been eliminated or significantly reduced. Although the Company has
taken a number of actions to address factors contributing to these past losses,
there can be no assurance that operating losses will not continue.

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

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

THE TERMS OF THE TRUST PREFERRED SECURITIES MAY RESTRICT THE COMPANY'S ABILITY
TO ACT
SIG has issued, through a wholly owned trust subsidiary, $135 million aggregate
principal amount in Trust Originated Preferred Securities (the "Preferred
Securities"). The Preferred Securities have a term of 30 years with annual
interest payments of 9.5% paid semi-annually. The obligations of the Preferred
Securities are funded from SIG's non-standard automobile management company. SIG
began deferring the semi-annual interest payments in February 2000 and may
continue to defer such payments for up to five years as permitted by the
indenture for the Preferred Securities. Although there is no present event of
default under the indenture that would accelerate the payment of the Preferred
Securities, the indenture contains a number of covenants that restrict SIG's
ability to act in the future. These covenants include restrictions on SIG's
ability to: incur or guarantee debt; make payments to affiliates; repurchase its
common stock; pay dividends on common stock; and increase its level of certain
investments in other than investment grade, fixed income securities. There can
be no assurance that compliance with these restrictions and other provisions of
the indenture for the Preferred Securities will not adversely affect the cash
flow of SIG.


REVIEW OF CONSOLIDATED OPERATIONS

NET LOSS
The net loss for the three months ended September 30, 2001 was $(9,041,000) or
$(1.57) per share (basic and diluted). This is a decrease of $(16,870,000) or
$(2.92) per share from the net loss for the same period of 2000. The decreased
net loss is due primarily to the loss from operations of the discontinued crop
insurance segment of $(12,387,000) realized in the third quarter of 2000 and
operational improvements mentioned above. This loss also decreased the net loss
for the nine months ended September 30, 2001 over the same period in 2000 by
$(9,965,000) or $(1.66) per share. See Note 9. "Discontinued Operations" of the
Condensed Notes to Consolidated Financial Statements in Part I of this report
for additional information.

The loss from continuing operations before taxes and distributions on preferred
securities was $(6,558,000) for the three months ended September 30, 2001
compared to a loss of $(10,658,000) for the comparable period in 2000, an
improvement of $4,100,000. For the nine months ended September 30, 2001, the
loss from continuing operations before

                                       17
<PAGE>

taxes and distributions on Preferred Securities improved by $4,984,000 compared
to 2000.

GROSS PREMIUMS WRITTEN
Gross premiums written decreased 40% for the third quarter of 2001 as compared
to the third quarter of 2000. Gross premiums written in the third quarter of
2000 declined 20% from the third quarter of 1999 due to the Company exiting
certain highly competitive markets and instituting other underwriting
initiatives intended to increase profitability as well as, being limited by
regulatory action from writing in certain states and general surplus levels. For
the first nine months of 2001, gross premium written decreased 7% over the same
period in 2000, due primarily to the aforementioned regulatory and strategic
actions and a 25% reduction in policies in force.

NET PREMIUMS WRITTEN
Net premiums written represent the portion of premiums that are being retained
by the Company after consideration for risk sharing through reinsurance
contracts. As a result of losses in the Company's insurance subsidiaries and to
manage overall risk retention, the Company entered into a reinsurance agreement
to cede a portion of the gross written premiums to a third party. In the third
quarter of 2001, the Company ceded approximately 46% of its gross written
premiums under a quota share reinsurance contract that was effective January 1,
2000. For the first nine months of 2001, approximately 53% of gross premiums
written were ceded to the reinsurer.

NET PREMIUMS EARNED
Net premiums earned have decreased 33% and 42% for the three and nine months
ended September 30, 2001, respectively, as compared to the same periods in 2000.
Premiums are earned ratably over the term of the underlying insurance contracts
and the reduction in net premiums earned is a result of the decrease in written
premiums and policies in force.

FEE INCOME
Fee income is derived from installment billings and other services provided to
policyholders. In the third quarter of 2001, fee income was 25% higher than
2000; while fee income for the nine months of 2001 was 1% lower than 2000. This
results from the addition of new fee types (insufficient funds, reinstatement
and cancellation) offsetting the decrease in overall fees caused by the decrease
in total policy counts mentioned above.

NET INVESTMENT INCOME
Net investment income decreased 34% and 38% for the three and nine months ended
September 30, 2001 compared to the same periods in 2000. This decrease is
reflective of the decline in invested assets during a period of declining
premiums and the liquidation of investments to pay prior year losses settled in
2001.

NET REALIZED CAPITAL GAINS AND (LOSSES)
Net realized capital gains/losses were $(793,000) and $(283,000) for the three
and nine months ended September 30, 2001, respectively, as compared to net
realized capital losses of $(2,632,000) and $(3,949,000) in the comparable
periods of 2000. Capital gains resulted from the liquidation of longer duration
fixed income securities in the third quarter of 2001 in order to rebalance the
portfolio. These transactions resulted in a higher cash balance at September 30,
2001 that was reinvested in the fourth quarter in shorter maturities. Capital
losses were realized due to the continued liquidation of investments to fund
operations and claim payments under unfavorable market conditions.

LOSSES AND LOSS ADJUSTMENT EXPENSES
The loss and loss adjustment expense (LAE) ratio for the Company for the three
and nine months ending September 30, 2001, was 83.5% and 88.4% of net premiums
earned respectively, as compared to 83.1% and 82.7% for the similar period of
2000, and to 82.3% for the entire year of 2000. A portion of LAE, unallocated
loss adjustment expenses (ULAE), is not ceded as part of the quota share
reinsurance contract mentioned above and accounts for the increased percentages.

During the third quarter of 2001, the Company experienced unfavorable
development on its year-end 2000 loss and LAE reserves in the amount of $1.0
million. This increased the loss and LAE ratio for the third quarter by 4.0
percentage points.

                                       18
<PAGE>

POLICY ACQUISITION AND GENERAL AND ADMINISTRATIVE EXPENSE
Policy acquisition and general and administrative expenses for the three and
nine months ended September 30, 2001 declined to $15,696,000 and $38,634,000
respectively, from the comparable periods of 2000. A reduction for the third
quarter and first nine months of 2001 of 16% and 33%, respectively, over the
same periods in 2000. This reflects an increase in ceding commissions associated
with the quota share reinsurance contract and operating expense reduction
initiatives.

As a percentage of gross premiums written, the Company experienced an increase
in its 2001 expense ratio of 16% over 2000 for the three months ended September
30, 2001. This increase is the result of a true-up of ceding commissions earned
between the second and third quarters, as year-to-date percentages equal 53%,
which only 46% of written premiums was ceded in the third quarter. For the nine
months ended September 30, 2001, the decrease in the expense ratio of 12% is the
result of reduced operating expenses, the effect of increased operating expenses
allocated to LAE and an increase in ceding commissions earned under the quota
share reinsurance contract.

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


REVIEW OF CONSOLIDATED FINANCIAL CONDITION

CASH AND INVESTMENTS
Total investments at September 30, 2001 and December 31, 2000 were $95.0 million
and $148.9 million, respectively. The decline in invested assets results from
continued liquidations to fund claim payments and operating expenses, as well as
the portfolio rebalancing mentioned above. Composition of investments is
comparable between these periods and the Company's market risk exposure has not
changed materially since December 31, 2000. Refer to Net Realized Capital Gains
and (Losses) above for a discussion of other changes on cash investment
balances.

REINSURANCE RECEIVABLES AND PAYABLES
SIG negotiated a third-party quota share reinsurance agreement that became
effective January 1, 2000. Under the quota share agreement, SIG may cede a
portion of its non-standard automobile insurance premiums and related losses
based on a variable percentage of up to 75% of Superior's and up to 90% of
Pafco's earned premiums in 2001. The average ceding percentage over the year
2000 was 33%, with 41% being ceded in the fourth quarter of 2000. SIG's ceding
percentage for 2001 was approximately 53%. The increase in the amount of
premiums and losses ceded under this contract directly affect reinsurance
balances due and payable on the face of the financial statements.

RECEIVABLES
The receivables have decreased by $4,486,000, or 8% from December 31, 2000. This
decrease is attributable to the collection of premiums from periods in which
written premiums were higher and the general decrease in current year earned
premiums and the general decline in premium volume in 2001.

LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES
Total loss and loss adjustment expense reserves decreased from $113,149,000 as
of December 31, 2000 to $90,776,000 as of September 30, 2001, a reduction of
approximately $22,373,000. This decrease is consistent with the Company's
declining volume of business.

UNEARNED PREMIUMS
At September 30, 2001, unearned premiums were $60,502,000, a decrease of
$1,884,000 from December 31, 2000, consistent with the decrease in receivables
discussed above.

DEFERRED INCOME
In connection with the sale of the crop insurance book of business to Acceptance
on June 6, 2001, the Company and SIG each received a payment of $4.5 million for
agreeing not to engage in the crop insurance business for three years from the
sale date. The payment is being amortized to income on a straight-line basis
over the three-year period with four months of amortization taken through
September 30, 2001.

                                       19
<PAGE>

OTHER LIABILITIES
Other liabilities increased by $5,844,000 from December 31, 2000 to September
30, 2001. This increase is largely caused by increases in prepaid insurance
related to the 2001 Crop Year prepaid by Acceptance Insurance Companies, Inc.
and an accrual for legal expenses.

STOCKHOLDERS' (DEFICIT)
Stockholders' (deficit) has increased by $(5,664,000) from December 31, 2000.
This increase is the result of the net loss of $(24,684,000) for the nine months
ended September 30, 2001, offset by an increase in combined surplus of
$19,344,000 due primarily to the purchase by the Company of SIG's Preferred
Securities.

LIQUIDITY AND CAPITAL RESOURCES

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

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

The non-standard automobile insurance subsidiaries' primary sources of funds are
premiums, investment income and proceeds from the maturity or sale of invested
assets. Such funds are used principally for the payment of claims, payment of
claims settlement costs, operating expenses (primarily management fees),
commissions to independent agents, premium taxes, dividends and the purchase of
investments. There is variability to cash outflows because of uncertainties
regarding settlement dates for liabilities for unpaid losses. Accordingly, the
Company maintains investment programs intended to provide adequate funds to pay
claims. During the third quarter of both 2001 and 2000, due to reduced premium
volume, the Company has liquidated investments to pay claims. The Company
historically has tried to maintain duration averages of 3.5 years. However, the
reduction in new funds due to lower premium volume has and will cause the
Company to shorten duration. The Company may incur the cost of selling longer
bonds to pay claims as claim payments tend to lag premium receipts. Due to the
decline in premium volume, the Company has experienced a reduction in its
investment portfolio, but to date has not experienced any problems meeting its
obligations for claims payments.

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

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

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

o    SIG may not incur additional indebtedness or guarantee additional
     indebtedness.
o    SIG may not make certain restricted payments including making loans or
     advances to affiliates, repurchasing

                                       20
<PAGE>

     common stock and the payment of dividends in excess of a stated limitation.
o    SIG may not increase its level of non-investment grade securities defined
     as equities, mortgage loans, real estate, real estate loans and
     non-investment grade fixed income securities.

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

Net cash used in operating activities in the first nine months of 2001
aggregated $(18,590,000) million compared to cash used of $(34,982,000) million
in the comparable period of 2000.

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

CDN GAAP stockholders' equity reflected a deficit of $(78,332,000) at September
30, 2001, which does not reflect the statutory equity upon which the Company
conducts its various insurance operations. The Company's insurance subsidiaries,
after the effects of Codification (See Note 3 to the consolidated financial
statements), had statutory surplus of approximately $25.2 million at September
30, 2001.

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

PART II -         OTHER INFORMATION
ITEM 1.  LEGAL PROCEEDINGS

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

Approximately $29,147,278 was paid through September 30, 2001 in settlement of
legal proceedings and claims related to the AgPI Program, with payments totaling
approximately $359,114 for the first three quarters of 2001. A reserve of
approximately $5,635,079 remains to pay future claims. All of the policies of
insurance, which were issued in the AgPI Program, were issued by and under the
name of Mutual Service Casualty Insurance Company ("MSI"), a Minnesota
corporation with its principal place of business located in Arden Hills,
Minnesota.

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

On or about June 11, 2001, IGF filed a motion in the United States District
Court for the District of New Jersey seeking to vacate the arbitration panel's
order requiring security. On June 19, 2001, MSI filed a motion in the same court
for a ruling confirming that order. On July 26, 2001, the parties presented oral
arguments on their cross-motions for vacation

                                       21
<PAGE>

and confirmation of the order. On August 6, 2001 the court denied IGF's motion
to vacate the arbitration panel's order. As of this date, IGF has not posted the
required letter of credit, and it is financially incapable of satisfying that
requirement. On November 7, 2001 the arbitration panel considered a petition for
default judgment against IGF based on IGF's failure to post the pre-hearing
security. In the event the arbitration panel orders a default judgment against
IGF, IGF will appeal the order to the United States District Court of New
Jersey.

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

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

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

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

Also, as previously reported, SIG, IGFH and IGF believe they have claims against
CNA and defenses to CNA's claim that may ultimately offset or reduce amounts
owed to CNA. The parties have engaged in discussions regarding possible
alternatives for the resolution of their respective claims against each other.
However, those discussions ultimately proved to be unsuccessful.

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

On June 6, 2001, CNA filed a complaint against IGF, IGFH and SIG (the "CNA
complaint") asserting claims based on the SAA and related agreements for
approximately $25 million allegedly owed CNA by virtue of its exercise of the
Put Mechanism, $3 million for amounts allegedly due under reinsurance agreements
for the 2000 crop year, $1 million for

                                       22
<PAGE>

certain "fronting costs," and $1 million pursuant to a note executed by IGFH to
CNA's affiliate in connection with the acquisition by IGFH of North American
Crop Underwriters, Inc. in 1998. CNA also asserted claims to the effect that the
June 6, 2001 sale of IGF assets to Acceptance resulted in payments of funds to
the Company, SIG and Granite Re, which funds allegedly should have been paid to
IGF instead. On June 6, 2001, CNA asked the district court to enter a temporary
restraining order preventing IGF, IGFH and SIG from disposing of the proceeds
received by them in connection with the sale of IGF assets to Acceptance. In an
emergency hearing, the court denied CNA the relief it requested, without
prejudice to reconsideration of those issues at a future time. CNA has since
amended the CNA Complaint to add the Company and Granite Re as defendants. CNA's
counterclaim in response to the IGF Complaint asserts essentially the same
claims against the same parties as the amended CNA Complaint.

On September 20, 2001, the court ordered a consolidation of the two cases.
Discovery in the case is proceeding. Although the Company continues to believe
that it has claims against CNA and defenses to CNA's claims which may offset or
reduce amounts owing by the Company of its affiliates to CNA, there can be no
assurance that the ultimate resolution of the claims asserted by CNA against the
Company and its affiliates will not have a material adverse effect upon the
Company and its affiliates financial condition or results of operations.

As previously reported, the California Department of Insurance ("CDOI") filed a
Notice of Non-Compliance against Superior on June 29, 2001, which alleges that
broker fees were charged by independent brokers in violation of California law.
The Company and the CDOI are presently in settlement discussions, and the
Company expects to settle with the CDOI during the fourth quarter. Although the
ultimate outcome of the settlement discussions is unknown, the Company believes
it will settle for an amount less than $200,000 and therefore has accrued this
amount in its consolidated financial statements.

Superior is a defendant in a case filed on May 8, 2001 in the United States
District Court for the Southern District of Florida entitled The Chiropractic
Centre, Inc. v. Superior Insurance Company which purports to be brought on
behalf of a class consisting of healthcare providers improperly paid discounted
rates on services to patients based upon a preferred provider contract with a
third party. The plaintiff alleges that Superior breached a third party
beneficiary contract, committed fraud and engaged in racketeering activity in
violation of federal and Florida law by obtaining discounted rates offered by an
third party with whom the plaintiff contracted directly. Superior believes that
the allegations of wrongdoing as alleged in the complaint are without merit and
intends to vigorously defend the claims brought against it.

See footnote 4, "Commitment and Contingencies", and footnote 3, "Regulatory
Affairs", to the Company's consolidated financial statements in Part I of this
report, incorporated herein by reference, for additional legal matters.

Except as set forth above, there have been no other material developments in any
of the pending legal proceedings previously reported by the Company in the June
30, 2001 Form 10-Q.

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

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS
         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
         None

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

ITEM 5.  OTHER INFORMATION
         On September 17, 2001 the Company announced a stock repurchase program.
         Under the program, the Company may purchase its outstanding common
         shares on the open market. The Company's

                                       23
<PAGE>

          common shares are traded in the U.S. on the NASDAQ OTC Bulletin Board
          (NOBB) and in Canada on the Toronto Stock Exchange (TSE). The maximum
          purchase amount acquired will not exceed $500,000.

          The purchase of shares listed on the NOBB became effective on
          September 17, 2001 and may continue for up to two years. Depending on
          market conditions and other factors, purchases on the NOBB may be
          commenced or suspended at any time during the two-year period. The
          purchase of shares listed on the TSE program became effective on
          October 4, 2001 and the Company may purchase an aggregate of up to
          272,555 shares pursuant to the normal course issuer bid as approved by
          the TSE. Any shares acquired through the TSE will be cancelled. The
          TSE purchase plan terminates on the earlier of the date on which the
          maximum number of common shares is purchased and October 3, 2002.

          On November 1, 2001 SIGF entered into an agreement for the acquisition
          of the book of business of Florida International Underwriters, Inc., a
          Florida corporation ("FIU"), which is engaged in the business of
          writing property, casualty and marine insurance. The transaction is
          subject to the approval of the 15th Judicial Circuit Court of Palm
          Beach County, Florida, which has jurisdiction over the assets of FIU.
          The transaction, if approved, will become effective during the fourth
          quarter of 2001or the first quarter of 2002.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          Exhibits:  None

          Reports on Form 8-K:

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





                                       24
<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 on November 12, 2001.



                                         By:  /s/ Alan G. Symons
                                              ---------------------------
                                         Alan G. Symons
                                         Chief Executive Officer



                                         By:  /s/ John G. Pendl
                                              ---------------------------
                                         John G. Pendl
                                         Chief Financial Officer



                                       25
<PAGE>

     Goran Capital Inc. - Consolidated
     Analysis of Loss Per Share
     US GAAP - Treasury Method

<TABLE>
<CAPTION>

                                                                             Nine Months               Nine Months
                                                                                Ended                     Ended
                                                                         September 30, 2001         September 20, 2000
                                                                         ------------------         ------------------

<S>                                                                         <C>                       <C>
     Average Price (US $)                                                             N/A                        N/A

     Proceeds from Exercise of Warrants and Options (US $)                            Nil                        Nil

     Shares Repurchased - Treasury Method                                             Nil                        Nil

     Shares Outstanding - Weighted Average                                      5,775,000                  5,838,000

     Add:  Options and Warrants Outstanding (1)                                       Nil                        Nil

     Less:  Treasury Method - Shares Repurchased                                      Nil                        Nil

     Shares Outstanding for US GAAP Purposes                                    5,775,000                  5,838,000

     Net Loss in Accordance with US GAAP                                     $(24,684,000)              $(34,649,000)

     Net Loss Per Share - US GAAP - Basic and Fully Diluted                        $(4.28)                    $(5.94)

</TABLE>


     (1) Only those options with a dilutive effect were included above for the
     nine months ended September 30, 2001 and 2000.




                                       26