UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

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

                  For The Quarterly Period Ended June 30, 1997

                        Commission File Number: 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.)

                              181 University Avenue
                               Box 11, Suite 1101
                            Toronto, Ontario M5H 3M7

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

Registrant's telephone number, including area code: (416) 594-1155 (Canada)
                                                    (317) 259-6400 (U.S.)

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


As of June 30, 1997,  there were 5,570,277  shares of Registrant's  common stock
issued and outstanding exclusive of shares held by Registrant.




<PAGE>



                                 Form 10-Q Index
                                  June 30, 1997
                                                                  Page
                                                                 Number

PART 1  FINANCIAL INFORMATION

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

        Consolidated Financial Statements:
        Consolidated Balance Sheets at June 30, 1997 and
        December 31, 1996........................................   4

        Consolidated Statements of Earnings for the Three
        and Six Months Ended June 30, 1997 and 1996..............   5

        Consolidated Statements of Changes in Cash Resources
        for the Six Months Ended June 30, 1997 and 1996..........   7

        Consolidated Statements of Shareholders' Equity..........   8

        Notes to Consolidated Financial Statements...............   9

Item 2  Management's Discussion and Analysis of Financial
        Condition and Results of Operations......................  13

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

SIGNATURES.......................................................  22


<PAGE>



GORAN CAPITAL INC.
PART 1     FINANCIAL INFORMATION

Item 1     Financial Statements

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

These quarterly interim financial statements are unaudited and are stated in
U.S. dollars.

                                      -3-

<PAGE>
GORAN CAPITAL INC.
CONSOLIDATED BALANCE SHEETS
(Canadian GAAP, stated in U.S. Dollars)


                                             June 30,              December 31,
                                                 1997                      1996


ASSETS
Cash and Investments .................. $ 229,616,714             $ 206,670,797
Accounts Receivable
  Premiums Receivable .................   177,407,073                63,873,697
  Due From Insurance Companies ........    20,617,795                33,905,128
  Due From Associated Companies .......       107,718                   140,423
  Accrued and Other Receivables .......     4,533,731                 3,329,893
                                        -------------             -------------
                                          202,666,317               101,249,141
Reinsurance recoverable on outstanding
claims ................................    71,642,210                33,112,946
Prepaid reinsurance premiums ..........    74,139,403                14,983,097
Capital Assets ........................     6,258,199                 4,801,086
Other Assets ..........................     3,493,023                 5,335,477
Deferred Policy Acquisition Costs .....    14,223,788                13,859,492
Goodwill ..............................     1,455,077                 1,329,736
                                        -------------             -------------
Total Assets .......................... $ 603,494,731             $ 381,341,772
                                        =============             =============

LIABILITIES
Accounts Payable
  Due to Insurance Companies .......... $ 104,033,136             $   5,754,831
  Accrued and Other Payables ..........    24,107,297                21,050,919
                                        -------------             -------------
                                          128,140,433                26,805,751
Outstanding Claims ....................   163,102,998               127,044,804
Unearned Premiums .....................   164,972,765                91,206,974
Bank Loans ............................    44,872,000                48,000,000
Minority Interest in Subsidiary .......    47,683,878                41,026,354
                                        -------------             -------------
Total Liabilities .....................   548,772,074               334,083,883
                                        =============             =============
SHAREHOLDERS' EQUITY
Capital Stock .........................    17,469,388                17,416,431
Contributed Surplus ...................     2,774,606                 2,774,606
Retained Earnings .....................    34,743,748                27,401,236
Cumulative Translation Adjustment .....      (265,084)                 (334,384)
                                        -------------             -------------
Total Shareholders' Equity ............ $  54,722,658             $  47,257,890
                                        -------------             -------------
Total Liabilities and Shareholders' ... $ 603,494,731             $ 381,341,772
Equity                                  =============             =============

See Notes to Consolidated Financial Statements


                                      -4-

<PAGE>

GORAN CAPITAL INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Canadian GAAP, stated in U.S. Dollars)

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


Gross Premiums Written                   $149,834,571               $109,859,879
                                         ============               ============
Net Premiums Earned                       $77,126,355                $51,072,513
Net Investment and Other Income            10,108,734                  5,599,771
                                           ----------                  ---------
   Total Revenues                          87,235,089                 56,672,285
                                           ----------                 ----------
Net Claims Incurred                        60,858,371                 39,951,261
General and Administrative Expenses        19,435,633                 10,763,139
Interest Expense                            1,080,411                  1,401,585
                                            ---------                  ---------
   Total Expenses                          81,374,415                 52,115,985
                                           ----------                 ----------
Income Before Undernoted Items              5,860,674                  4,556,300
Provision for Income Taxes                  2,114,072                    978,351
Minority Interest                           1,010,984                    398,376
                                            ---------                    -------
   Net Earnings                            $2,735,618                 $3,179,573
                                           ==========                  =========

   Earnings Per Share - Basic                  $ 0.49                     $ 0.61
                                               ======                     ======
   Earning Per Share - Fully Diluted           $ 0.44                     $ 0.56
                                               ======                     ======

See Notes to Consolidated Financial Statements


                                      -5-

<PAGE>
GORAN CAPITAL INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Canadian GAAP, stated in U.S. Dollars)


                                                    For the Six Months Ending

                                                    June 30,            June 30,
                                                        1997                1996

Gross Premiums Written                          $280,138,810        $151,281,496
                                                ============        ============
Net Premiums Earned                             $142,765,330         $75,590,824
Net Investment and Other Income                   19,382,580           7,063,020
                                                  ----------           ---------
   Total Revenues                                162,147,910          82,653,844
                                                 -----------          ----------
Net Claims Incurred                              107,544,390          56,548,363
General and Administrative Expenses               33,864,132          16,755,942
Interest Expense                                   2,451,411           1,738,644
                                                   ---------           ---------
   Total Expenses                                143,859,933          75,042,949
                                                 -----------          ----------
Income Before Undernoted Items                    18,287,977           7,610,895
Provision for Income Taxes                         6,222,481           1,829,421
Minority Interest                                  4,722,984             398,376
                                                   ---------             -------
   Net Earnings                                   $7,342,512          $5,383,098
                                                  ==========          ==========

   Earnings Per Share - Basic                          $1.32               $1.04
                                                       =====               =====
   Earnings Per Share - Fully Diluted                  $1.26               $0.97
                                                       =====               =====
Weighted Average Shares Outstanding:
   Primary                                         5,552,097           5,172,105
                                                   =========           =========
   Fully Diluted                                   6,096,789           5,674,307
                                                   =========           =========

See Notes to Consolidated Financial Statements

                                      -6-

<PAGE>

GORAN CAPITAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN
CASH RESOURCES FOR THE SIX MONTHS ENDING
(Canadian GAAP, stated in U.S. Dollars)


                                              June 30, 1997       June 30, 1996

CASH PROVIDED BY OPERATING ACTIVITIES
Net Earnings For The Period                       7,342,512           5,383,098
Items Not Affecting Cash Resources:
  Amortization                                    1,352,741             155,152
  Loss (Gain) on Disposal of Investments        (1,783,346)          (2,208,002)
  Minority Interest in Net Income of              4,722,984             398,376
  Consolidated Subsidiary
Net changes in operating assets &
liabilities:
  Decrease (Increase) in Reinsurance           (38,804,985)          17,918,189
  Recoverable on Outstanding Claims
  Decrease (Increase) in Prepaid Reinsurance   (59,281,065)         (36,161,069)
  Premiums
  Decrease (Increase) in Other Assets             1,798,027          (2,038,449)
  Decrease (Increase) in Deferred Policy          (479,700)             353,369
  Acquisition Costs
  Decrease (Increase) in Deferred Income
  Taxes                                                  --              36,520
  Increase (Decrease) in Unearned Premiums       74,525,244          44,036,257
  Increase (Decrease) in Outstanding Losses      37,116,057         (12,615,119)
  Decrease (Increase) in Accounts Receivable  (102,260,248)          (8,875,820)
  Increase (Decrease) in Accounts Payable       101,557,886            (640,589)
                                                -----------            ---------
  Net Cash provided by Operations                25,806,106           5,741,915
                                                 ----------           ---------
INVESTING ACTIVITIES:
  Net Purchase of Marketable Securities        (12,533,845)         (12,895,528)
  Acquisition of Subsidiary                              --         (66,389,000)
  Net Purchase of Capital Assets                (2,658,641)            (536,098)
  Other                                            (13,536)             (51,897)
                                                   --------             --------
  Net Cash Used by Investing Activities        (15,206,022)         (79,872,523)
                                               ------------         ------------
FINANCING ACTIVITIES:
  Increase (Reduction) of Borrowed Funds        (2,728,319)          49,955,554
  Increase (Decrease) in Minority Interest        2,304,000          21,200,670
  Increase (Decrease) in Contributed Surplus         23,103                  --
  Issue of Share Capital                            197,978             400,384
                                                    -------             -------
  Net Cash Provided by Financing Activities       (203,273)          71,556,608
                                                                     ----------
Change in Cash Resources During the Period       10,396,846          (2,574,000)
Cash Resources, Beginning of Period              33,730,582          10,613,027
                                                 ----------          ----------
Cash Resources, End of Period                   $44,127,428          $8,039,027
                                                ===========          ==========
Cash Resources are Comprised of:
  Cash                                          $18,868,870             $77,070
  Short-Term Investments                         25,258,558           7,961,957
                                                 ----------           ---------
  Sub-total                                     $44,127,428          $8,039,027
                                                ===========          ==========

See Notes to Consolidated Financial Statements

                                      -7-

<PAGE>
<TABLE>
GORAN CAPITAL, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Canadian GAAP, stated in U.S. Dollars)
<CAPTION>


                          Common    Contributed   Cumulative      Retained          Total
                           Stock        Surplus   Translation     Earnings  Stockholders'
                                                  Adjustment     (Deficit)         Equity
<S>                  <C>             <C>          <C>          <C>          <C>
Balance at            16,874,923             --    (357,777)   (3,895,014)   12,622,132
December 31, 1995
Issuance of
common shares            352,315             --           --            --      352,315
Change in
cumulative
translation
adjustment                    --             --       22,800            --       22,800
Net Earnings                  --             --           --     5,383,098    5,383,098
                              --             --           --     ---------    ---------
Balance at June       17,227,238             --    (334,977)     1,488,084   18,380,345
30, 1996
Issuance of
common shares            189,193             --           --            --      189,193
Change in
contributed
surplus                       --      2,774,606           --            --    2,774,606
Change in
cumulative
transaction
adjustment                    --             --          594                        594
Net earnings                  --             --           --    25,913,152   25,913,152
                              --             --           --    ----------   ----------
Balance at            17,416,431      2,774,606    (334,383)    27,401,236   47,257,890
December 31, 1996
Issuance of
common shares             52,957             --           --            --       52,957
Change in
contributed
surplus                       --             --           --            --           --
                              --             --           --                            
Change in
cumulative
translation
adjustment                    --             --       69,299            --       69,299
Net earnings                  --             --           --     7,342,512    7,342,512
                              --             --           --     ---------    ---------
Balance at June      $17,469,388     $2,774,606   $(265,084)   $34,743,748  $54,722,658
30, 1997             ===========     ==========   ==========   ===========  ===========
</TABLE>

See Notes to Consolidated Financial Statements

                                      -8-

<PAGE>



                               GORAN CAPITAL INC.
            CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                For The Three and Six Months Ended June 30, 1997

NOTE 1 - BASIS OF PRESENTATION

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

     These unaudited consolidated financial statements have been prepared by the
Company in accordance with accounting  principles  generally  accepted in Canada
("CDN  GAAP").  These  principles  also  conform in all material  respects  with
accounting principles generally accepted in the United States ("US GAAP") except
as disclosed in Note 5. All material intercompany amounts have been eliminated.

NOTE 2 - REINSURANCE

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

The effects of reinsurance are as follows:

                                      -9-

<PAGE>
NOTE 3
GORAN CAPITAL INC.
Analysis of Effects of Reinsurance
(Canadian GAAP, stated in U.S. Dollars)


                                 For The Three Months Ended
                        June 30,                             June 30,
                            1997                                 1996

Premiums Written
  Gross             $149,834,571                         $109,859,879
  Ceded             (63,704,812)                         (52,095,108)
                    ------------                         ------------
  Net               $ 86,129,759                         $ 57,764,771
                    ============                         ============
Premiums Earned
  Gross             $ 85,025,315                         $ 95,350,334
  Ceded              (7,898,960)                         (44,277,821)
                     -----------                         ------------
  Net               $ 77,126,355                         $ 51,072,513
                    ============                         ============
Claims Incurred
  Gross             $ 97,040,081                         $ 49,368,258
  Ceded             (36,181,709)                          (9,416,997)
                    ------------                          -----------
  Net               $ 60,858,371                         $ 39,951,261
                    ============                         ============


                                  For the Six Months Ended
                        June 30,                             June 30,
                            1997                                 1996

Premiums Written
  Gross             $280,138,810                         $151,281,496
  Ceded             (122,756,815)                         (68,177,443)
                    -------------                        -------------
  Net               $157,381,995                         $ 83,104,053
                    =============                        =============
Premiums Earned
  Gross             $212,362,290                         $143,302,477
  Ceded             ( 69,596,960)                        ( 67,711,653)
                    -------------                        -------------
  Net               $142,765,330                         $ 75,590,824
                    ============                         =============
Claims Incurred
  Gross             $158,797,710                         $ 78,437,241
  Ceded             ( 51,253,320)                         (21,888,877)
                    -------------                        -------------
  Net               $107,544,390                         $ 56,548,363
                    ============                         =============


                        June 30,                         December 31,
                           1997                                  1996
Unearned Premiums
  Gross             $164,972,765                         $ 91,206,974
  Ceded             ( 74,139,403)                        ( 14,983,097)
                    ------------                         ------------
  Net               $ 90,883,362                         $ 76,223,877
                    ============                         ============
Outstanding Claims
  Gross             $163,102,998                         $127,044,804
  Ceded             ( 71,642,210)                        ( 33,112,946)
                    ------------                         ------------
  Net               $ 91,460,788                         $ 93,931,858
                    ============                         ============



                                      -10-

<PAGE>
NOTE 4 - CAPITAL STOCK

For the three and six months ended June 30, 1997,  625 and 164,457 common shares
were issued by the Company pursuant to warrants  previously  issued to debenture
holders and pursuant to an established Company Employee Stock Option Plan.

NOTE 5 - UNITED STATES ACCOUNTING PRINCIPLES

These  unaudited   consolidated  financial  statements  have  been  prepared  in
accordance  with CDN GAAP.  The  difference  between CDN GAAP and US GAAP are as
follows:

                                                  For The Three Months Ended
                                             June 30,                 June 30,
                                                 1997                     1996
Reported Net Earnings                     $ 2,735,618              $ 3,179,573
US/Canada GAAP Differences
  Discounting on Outstanding Claims             (385)                       --
  Deferred Income Taxes                            --                 (657,967)
                                                   --                ---------
Revised Net Earnings                        2,734,233                2,521,606
                                            =========                =========
Earnings Per Share                              $0.46                    $0.46
EPS - Before Extraordinary Items                $0.46                    $0.46
EPS - Fully Diluted                             $0.46                    $0.46
Dividends Per Share                             $0.00                    $0.00
Reported Total Assets                     603,494,731              369,048,502
US/Canada GAAP Differences
  Loans to Purchase Shares                        808                   (2,003)
  Deferred Income Taxes                       737,544                  676,486
  Outstanding Claims ceded                         --                       --
  Unearned Premiums ceded                          --                       --
  Unrealized gain (loss)on investments      2,439,548                 (257,978)
                                            ---------                ---------
Revised Total Assets                      606,672,631              369,465,006
                                          ===========              ===========
Reported Shareholders' Equity              54,722,658               18,376,016
US/Canada GAAP Differences
  Deferred Income Taxes                       737,544                  676,486
  Discounting on Claims                       (2,804)                   (4,720)
  Loans to Purchase Shares                        808                   (2,003)
  Unrealized Gain (Loss) on Investments     2,439,548                 (257,978)
                                            ---------                ---------
Revised Shareholders' Equity               57,897,755               18,787,801
                                           ==========               ==========

                                                  For The Six Months Ended
                                             June 30,                 June 30,
                                                 1997                     1996

Reported Net Earnings                      7,342,512                 5,383,098
US/Canada GAAP Differences
  Discounting on Outstanding Claims           37,893                        --
  Deferred Income Taxes                            0                  (637,226)
                                                   -                 ---------
Revised Net Earnings                       7,380,405                 4,745,872
                                           =========                 =========

Earnings Per Share                             $1.24                     $0.85
EPS - Before Extraordinary Items               $1.24                     $0.85
EPS - Fully Diluted                            $1.24                     $0.85
Dividends Per Share                            $0.00                     $0.00

Reported Total Assets                    603,494,731               369,048,502
US/Canada GAAP Differences
  Loans to Purchase Shares                  (587,937)                 (561,683)
  Deferred Income Taxes                    2,898,544                 2,176,047
  Unrealized Gain (Loss) on Investments    2,316,548                  (339,046)
                                           ---------                 ---------
Revised Total Assets                     608,121,886               370,323,820
                                         ===========               ===========

Reported Shareholders' Equity             54,722,658                18,376,016
US/Canada GAAP Differences
  Deferred Income Taxes                    2,898,544                 2,176,047
  Discounting on Claims                   (1,212,801)               (1,323,497)
  Loans to Purchase Shares                  (587,937)                 (561,683)
  Unrealized Gain (Loss) on Investments    2,316,548                  (339,046)
                                           ---------                 ---------
Revised Shareholders' Equity              58,137,012                18,327,837
                                          ==========                ==========


                                      -11-

<PAGE>
NOTE 6 - CONTINGENT LIABILITY

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

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

NOTE 7 - Subsequent Events

On August 12,  1997,  SIG issued $  135,000,000  in Trust  Originated  Preferred
Securities  ("Preferred  Securities").  These Preferred  Securities were offered
through  a  wholly-owned  trust  subsidiary  of SIG and  are  backed  by  Senior
Subordinated  Notes to the  Trust  from SIG.  These  Preferred  Securities  were
offered under Rule 144A of the SEC  ("Offering")  and SIG will ultimately file a
Form S-1  Registration  Statement.  The  proceeds of the  Offering  were used to
repurchase the remaining  minority  interest in GGSH for $61 million,  repay the
balance of the GGS Senior  Credit  Facility of $44.9  million and SIG expects to
contribute the balance,  after  expenses,  of  approximately  $24 million to the
nonstandard  automobile  insurers.  Expenses  of the issue  will  aggregate  4.9
million and will be  amortized  over the term of the  Preferred  Securities  (30
years).  In  the  third  quarter,  the  Company  will  write-off  the  remaining
unamortized  costs of the GGS  Senior  Credit  Facility  of  approximately  $1.4
million pre-tax or approximately $0.11 per share.

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

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

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

                                            June 30, 1997
                                              Unaudited

Revenues                                    $ 163,147,910
Net earnings                                $   6,339,522
Net earnings per common share                      $ 1.14


                                      -12-

<PAGE>



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


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

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

Nonstandard Automobile Insurance Operations

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

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

Crop Insurance Operations

The two principal components of the Company's crop insurance business are Multi-
Peril Crop  Insurance  ("MPCI")  and private  named peril,  primarily  crop hail
insurance.  The majority of the Company's  crop insurance  business  consists of
MPCI.  Crop  insurance  is  purchased by farmers to reduce the risk of crop loss
from  adverse  weather  and other  uncontrollable  events.  Farms are subject to
drought,  floods and other  natural  disasters  that can cause  widespread  crop
losses and, in severe cases,  force farmers out of business.  Historically,  one
out of every twelve acres planted by farmers has not been  harvested  because of
adverse weather or other natural disasters.  Because many farmers rely on credit
to

                                      -13-

<PAGE>



finance  their  purchases  of such  agricultural  inputs  as  seed,  fertilizer,
machinery  and fuel,  the loss of a crop to a natural  disaster can reduce their
ability to repay  these loans and to find  sources of funding for the  following
year's operating expenses.

The Company,  like other  private  insurers  participating  in the MPCI program,
generates revenues from the MPCI program in two ways. First, it markets,  issues
and administers policies, for which it receives administrative fees; and second,
it  participates in a  profit-sharing  arrangement in which it receives from the
government a portion of the aggregate profit, or pays a portion of the aggregate
loss,  in respect of the  business it writes.  The Company  writes MPCI and crop
hail insurance through approximately 1,300 independent agencies in 39 states.

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

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

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

On June 9, 1997, the Secretary of  Agriculture  announced that the USDA would no
longer provide CAT coverage  through USDA offices in any state for the 1998 crop
year. This is to be implemented by a transferring of CAT policies to the various
members of the crop  insurance  industry.  At this time,  the  Company  has been
preliminarily  informed that it will receive  approximately 17,000 policies that
were formerly written by USDA offices, although there can be no assurance that

                                      -14-

<PAGE>



the Company  will receive this number of  policies.  Based on  historical,  per-
policy averages,  the Company has  preliminarily  estimated that it will receive
approximately  an additional $6 to $7 million in premiums from such  transferred
policies,  however, there can be no assurance that this number will be realized.
This estimate assumes that IGF will retain 100% of such premiums.

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

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

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

Certain other  conditions of the Company's crop business may effect  comparisons
of the  Company's  results and  operating  ratios  with that of other  insurers,
including: (i) the seasonal nature of the business whereby profits are generally
recognized  predominantly  in the second half of the year,  (ii) the  short-term
nature of crop business whereby losses are known within a short time period, and
(iii) the limited amount of investment income associated with crop business.  In
addition,  cash flows from the crop business differ from cash flows from certain
more traditional lines.

     In 1996,  the Company  instituted  a policy of  recognizing  (i) 35% of its
estimated MPCI gross premiums written for each of the first and second quarters,
20% for the  third  quarter  and 10% for the  fourth  quarter,  (ii)  commission
expense at a rate of 16% of MPCI gross  premiums  written  recognized  and (iii)
Buy-Up  Expense  Reimbursement  at the  applicable  rate of MPCI gross  premiums
written  recognized along with normal operating  expenses incurred in connection
with  premium  writings.  In  the  third  quarter,  if a  sufficient  volume  of
policyholder  acreage  reports have been  received and processed by the Company,
the Company's  policy is to recognize MPCI gross premiums  written for the first
nine  months  based on a  re-estimate  which  takes into  account  actual  gross


                                      -15-

<PAGE>



premiums  processed.  If an insufficient  volume of policies has been processed,
the  Company's  policy is to recognize in the third quarter 20% of its full year
estimate of MPCI gross premiums written,  unless other  circumstances  require a
different approach. The remaining amount of gross premiums written is recognized
in the fourth  quarter,  when all  amounts  are  reconciled.  The  Company  also
recognizes the MPCI  underwriting  gain or loss during each quarter,  reflecting
the Company's  best estimate of the amount of such gain or loss to be recognized
for the full year,  based on, among other  things,  historical  results,  plus a
provision  for  adverse  developments.  In the  third  and  fourth  quarters,  a
reconciliation  amount is recognized for the underwriting  gain or loss based on
final premium and loss information.

Regulation


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

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

Results of Operations

For the three and six months  ended June 30,  1997,  the  Company  recorded  net
earnings  of   $2,735,618   and   $7,342,512  or  $0.49  and  $1.32  per  share,
respectively.  This is  approximately a 13.9% decrease and a 36.3% increase from
1996  comparable  amounts of  $3,179,573  and  $5,383,098 or $0.61 and $1.04 per
share,  respectively.  The improved  year-to-date  earnings were attributable to
continued  premium growth of the  nonstandard  automobile  segment and continued
growth and profit in the crop  segment.  The  improvement  for the three  months
ended  relates to the growth and  profitability  of the crop  segment.  The crop
segment  demonstrated  enhanced  profitability  due to higher  volume as well as
normal crop underwriting expectations.  Reinsurance operations at Granite Re and
commercial insurance results from SIG-FL continue to meet expectations.

                                      -16-

<PAGE>




                                             For The Three Months Ended June 30,
                                                     1997                 1996

Nonstandard-Automobile Insurance Operations:
  Gross premiums written                      $90,481,000          $44,368,000
                                              ===========           ==========
  Net premiums written                        $74,255,000          $41,922,000
                                              ===========           ==========
  Net premiums earned                          65,139,000          $39,218,000
  Net investment income                         2,756,000            1,039,000
  Other income, principally billing fees        4,305,000            1,742,000
  Net realized capital loss                       742,000              264,000
                                                  -------              -------
  TOTAL REVENUES                               72,942,000           42,263,000
                                               ----------           ----------
  Losses and loss adjustment expenses          53,756,000           30,266,000
  Policy acquisition and general and           18,368,000           10,600,000
                                               ----------
  administrative expenses
  Interest and amortization of intangibles      1,227,000              696,000
                                                ---------              -------
  TOTAL EXPENSES                               73,351,000           41,562,000
                                               ----------           ----------
  Earnings (loss) before income taxes          $ (409,000)            $701,000
                                               ==========             ========
GAAP Ratios(Nonstandard Automobile Only):
  Loss and LAE Ratio                                82.5%                77.2%
  Expense ratio, net of billing fees                21.6%                22.6%
                                                    -----                -----
  Combined ratio                                   104.1%                99.8%
                                                   ======                =====

Without the  reserve  increase of $5.3  million,  the ratios  would have been as
follows:

   Loss and LAE Ratio                               74.4%                77.2%
   Expense ratio, net of billing fees               21.6%                22.6%
                                                    -----                -----
   Combined ratio                                   96.0%                99.8%
                                                    =====                =====
Crop Insurance Operations:
  Gross premiums written                     $56,647,000           $59,133,000
                                             ===========           ===========
  Net premiums written                        $9,479,000           $14,690,000
                                              ==========           ===========
  Net premiums earned                         $7,758,000            $6,063,000
  Net investment income                           43,000               (66,000)
  Other income                                 1,448,000               775,000
  Net realized capital gain (loss)                    --                    --
                                                      --                    --
  TOTAL REVENUES                               9,294,000             6,772,000
                                               ---------             ---------
  Losses and loss adjustment expenses          4,269,000             6,047,000
  Policy acquisition and general and          (1,260,000)           (2,433,000)
  administrative expenses
  Interest expense                                13,000                25,000
  TOTAL EXPENSES                               3,022,000             3,639,000
                                               ---------             ---------
  Earnings before income taxes                $6,227,000            $3,133,000
                                              ==========            ==========


                                      -17-

<PAGE>




                                             For The Six Months Ended June 30,
                                              1997                         1996

Nonstandard-Automobile Insurance Operations:
  Gross premiums written                    $165,547,000            $62,290,000
                                            ============            ===========
  Net premiums written                      $133,843,000            $62,089,000
                                            ============            ===========
  Net premiums earned                       $128,244,000            $52,844,000
  Net investment income                        5,094,000              1,435,000
  Other income, principally billing fees       7,204,000              2,333,000
  Net realized capital gain (loss)             1,684,000                212,000
                                               ---------                -------
  TOTAL REVENUES                             142,226,000             56,824,000
                                             -----------             ----------
  Losses and loss adjustment expenses         99,024,000             38,831,000
  Policy acquisition and general and          35,492,000             15,774,000
  administrative expenses
  Interest and amortization of intangibles     2,711,000                696,000
                                               ---------                -------
  TOTAL EXPENSES                             137,227,000             55,301,000
                                             -----------             ----------
  Earnings before income taxes                $4,999,000             $1,523,000
                                              ==========             ==========
GAAP Ratios
(Nonstandard Automobile Only):
  Loss and LAE Ratio                               77.2%                  73.5%
  Expense ratio, net of billing fees               22.1%                  25.4%
                                                   -----                  -----
  Combined ratio                                   99.3%                  98.9%
                                                   =====                  =====

Without the  reserve  increase of $5.3  million,  the ratios  would have been as
follows:

  Loss and LAE Ratio                               73.1%                  73.5%
  Expense ratio, net of billing fees               22.1%                  25.4%
                                                   -----                  -----
  Combined ratio                                   95.2%                  98.9%
                                                   =====                  =====
Crop Insurance Operations:
  Gross premiums written                   $108,356,000             $80,537,000
                                           ============             ===========
  Net premiums written                      $16,680,000             $14,953,000
                                            ===========             ===========
  Net premiums earned                       $ 7,768,000             $ 6,222,000
  Net investment income                          92,000                  96,000
  Other income                                3,587,000               1,148,000
                                              ---------
  Net realized capital gain (loss)                   --                  16,000
                                                     --                  ------
  TOTAL REVENUES                             11,447,000               7,482,000
                                             ----------               ---------
  Losses and loss adjustment expenses         4,269,000               6,444,000
  Policy acquisition and general and         (6,026,000)             (4,266,000)
  administrative expenses
  Interest expense                               24,000                 120,000
                                                 ------                 -------
  TOTAL EXPENSES                            (1,733,000)               2,298,000
                                            -----------               ---------
  Earnings before income taxes              $13,180,000              $5,184,000
                                            ===========              ==========

Statutory Capital and Surplus:
  Pafco                                     $17,273,000             $14,872,000
                                            ===========              ==========
  IGF                                       $36,760,000             $11,559,000
                                            ===========              ==========
  Superior                                  $65,018,000             $48,036,000
                                            ===========              ==========


                                      -18-

<PAGE>



Consolidated  gross premiums  written  increased 36.3% in the second quarter and
85.1%  year-to-date  in comparison to 1996 due to growth in both the nonstandard
auto and crop segments.  Gross premiums written for the nonstandard auto segment
increased  104% in the second quarter and 166%  year-to-date.  Such increase was
due primarily due to gross  premiums  written from Superior of  $71,921,000  and
$128,846,000 for the three and six months ended June 30, 1997, respectively,  as
compared to $25,202,000 in 1996 subsequent to its acquisition on April 30, 1996.
While a portion of this increase relates to four additional months of premium in
1997 of Superior,  additional  premium growth relates to internal  growth due to
improved service,  certain product  improvements and tougher uninsured  motorist
laws in states such as California  and Florida.  The  year-to-date  increase was
primarily due to volume rather than rate increases, although the Company adjusts
rates on an ongoing basis. Gross premiums written for the crop segment decreased
4.2% in the second quarter and increased 34.5%  year-to-date.  The  year-to-date
increase was due to continued  industry  privatization and aggressive  marketing
efforts,  while the decrease in the second  quarter is a reflection of timing of
processing  of acreage  reports.  Remaining  gross  written  premiums  represent
commercial  business  which  was  ceded  100%  effective  January  1, 1996 to an
affiliate, Granite Reinsurance Company Ltd.

Net premiums  written  increased in the second quarter and year-to-date for 1997
as compared to 1996 due to the growth in gross premiums  written offset by quota
share reinsurance.

In 1997, the Company ceded $15,876,000 and $31,353,000 of nonstandard automobile
premiums during the second quarter and year-to-date as part of a 20% quota share
treaty instituted  January 1, 1997. No such treaty was in effect during 1996. In
1997, the Company ceded  $6,903,000 and $11,905,00 of crop hail premiums  during
the  second  quarter  and  year-to-date  as part  of a 40%  quota  share  treaty
instituted  January 1, 1997. In 1996, crop hail premiums were ceded at a rate of
10%. The nonstandard  automobile quota share reinsurance  treaty is not expected
to continue in effect subsequent to the Offering of the Preferred Securities.

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

Net investment income increased  $3,427,917 and $6,470,305 for the three and six
months ended June 30, 1997 as compared to the corresponding periods of the prior
year.  Such increases were due primarily to investment  income from Superior and
greater  invested  assets.  The second  quarter of 1996 included a one-time gain
from the sale of investments of $2,200,000.

Other income  increased  $1,081,046  and $5,849,255 for the three and six months
ended June 30, 1997 as compared to the corresponding  periods of the prior year.
Such increases were due to billing fee income on nonstandard automobile business
at Superior  and an increase in the  in-force  policy  count.  There was also an
increase in the receipt of CAT Coverage fees and CAT LAE reimbursement  payments
due to higher premium volume.

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

                                      -19-

<PAGE>



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

Policy acquisition and general and  administrative  expenses have increased as a
result of the increased volume of business produced by the Company combined with
a higher  percentage  of net  premiums  retained  and  offset  by  increases  in
reinsurance commission income. Policy acquisition and general and administrative
expenses rose to $19,435,633  and  $33,864,132 or 25.2% and 23.7% of net premium
earned for the three and six months ended June 30, 1997 compared to  $10,763,139
and  $16,755,942 or 21.1% and 22.1% of net premium  earned in the  corresponding
periods of 1996. Such increase was due to a higher mix of nonstandard automobile
premiums in 1997 as compared to 1996.  The expense  ratio,  net of billing fees,
for the nonstandard automobile segment improved to 21.6% and 22.1% for the three
and six  months  ended  June 30,  1997 as  compared  to 22.6%  and 25.4% for the
corresponding   periods  in  1996,   due  to   technological   and   operational
efficiencies, economies of scale and tighter expense controls.

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

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

Interest expense decreased $321,174 and increased $712,767 for the three and six
months ended June 30, 1997 as compared to the corresponding periods in the prior
year due primarily to interest  incurred  since April 30, 1996 on the GGS Senior
Credit Facility. The GGS Senior Credit Facility will be repaid with the proceeds
from SIG's Offering of the Preferred Securities.

Income tax expense  was 36.1% and 34.0% of pre-tax  income for the three and six
months ended June 30, 1997 as compared to 21.4% and 24.0% in 1996.  The increase
was due to a higher  proportion of earnings in U.S.  operations and sales of tax
exempt  securities  in  1996  as part  of the  restructuring  of the  investment
portfolio.

Financial Condition and Capital Reserves and Liquidity

The  Company's   total  assets  of  $603,494,731  at  June  30,  1997  increased
$222,152,959 from $ 381,341,772 as of December 31, 1996. The primary reasons for
this increase were an increase of  $22,945,917  in cash and invested  assets and
increases in receivables and reinsurance assets due to growth in premium volume.
The  increase in cash and  invested  assets was due to the increase in cash flow
from operations.  The Company did not significantly change its investment mix or
philosophy in 1997.


                                      -20-

<PAGE>



Net cash provided by operating activities in 1997 aggregated 25,806,106 compared
to $5,741,915 in 1996.  This increase in funds provided was caused by additional
cash of 7,906,267 from net earnings  adjusted for non-cash expenses and realized
gains or losses,  continued  premium growth and the normal receipt of funds from
the FCIC in the first quarter on the crop insurance operations.

Net cash used in investing  activities  decreased  from  $79,872,523  in 1996 to
$15,206,222 in the second quarter of 1997 reflecting the acquisition of Superior
in 1996  offset in part by the  application  of funds  received  from  operating
activities.

In  1997,  financing  activities  utilized  cash of  $203,237  compared  to cash
provided of $71,556,608 in 1996. The Company paid principal of $3,128,000 on its
term  debt as  scheduled.  The  contribution  from the GS  Funds  of  $2,304,000
represents a contribution to GGS Holdings that was ultimately contributed to the
insurance  subsidiaries  for  surplus.  The  Company  also  contributed  cash to
maintain its 52% share.  The crop insurance  segment had no need to borrow funds
on its revolver in 1997 due to the proceeds it received from the initial  public
offering and continued growth and profitable operations.


                                      -21-

<PAGE>



PART II - OTHER INFORMATION

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

ITEM 2.       CHANGES IN SECURITIES
              None

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES
              None

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

ITEM 5.       OTHER INFORMATION
              None

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


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




Dated: August 12, 1997                               By:__/s/ Alan G. Symons____
                                                     Alan G. Symons
                                                     President





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



                                      -22-