SYMONS INTERNATIONAL GROUP, INC.
                               2000 Annual Report




Corporate Profile

Symons International Group, Inc. owns insurance companies engaged principally in
the nonstandard  automobile  insurance  market.  Superior  Insurance  Company of
Tampa, Florida, Pafco General Insurance Company of Indianapolis, Indiana and IGF
Insurance Company of Indianapolis,  Indiana  underwrite  nonstandard  automobile
insurance in the United States. Nonstandard automobile insurance is marketed and
sold  through  independent  agents to drivers who are unable to obtain  coverage
from insurers at standard or preferred rates.

As previously announced,  the Company is currently pursuing the sale of its crop
insurance operations.  Management expects to complete the sale during the second
quarter of 2001.  The financial  statements  included in this report reflect the
results of the crop insurance segment as "discontinued operations".

The common stock of Symons  International Group, Inc. trades on the OTC Bulletin
Board under the symbol "SIGC.OB".

Table of Contents
                                             Page
Financial Highlights                                                        2
Vice Chairman's Report                                                      3
Selected Financial Data                                                     5
Management's Discussion and Analysis of Financial
   Condition and Results and Operations                                     6
Consolidated Financial Statements                                          15
Notes to Consolidated Financial Statements                                 19
Reports of Independent Accountants                                         40
Stockholder Information                                                    42
Board of Directors and Executive Officers                                  44
Subsidiaries and Branch Offices                                            45




<PAGE>



Financial Highlights
(in thousands, except per share data)
For the years ended December 31,
<TABLE>
<CAPTION>

                                                     2000          1999         1998         1997          1996
                                                     ----          ----         ----         ----          ----
<S>                                                   <C>          <C>          <C>          <C>           <C>
Gross premiums written                                $174,461     $236,401     $310,164     $334,199      $195,440
Net operating earnings (loss) from continuing
operations (1)                                        (18,997)     (48,374)        (335)        7,739        10,419
Net earnings (loss) from discontinued
operations                                            (17,041)     (15,373)      (6,484)       13,560        11,495
Net earnings (loss)                                   (88,425)     (80,816)     (14,417)       16,305        13,256
Basic operating earnings (loss) per share from
continuing operations (1)                               (1.83)       (4.66)       (0.03)         0.74          1.38
Basic earnings (loss)  per share from
discontinued operations                                 (1.64)       (1.48)       (0.62)         1.30          1.53
Basic earnings (loss) per share                         (8.51)       (7.78)       (1.39)         1.56          1.76
Stockholders' equity (deficit)                       (112,445)     (24,980)       61,995       78,363        60,900
Return on average equity (2)                               N/A          N/A      (20.5%)        21.9%         61.4%
Book value (deficit) per share                         (10.83)       (2.41)         5.97         7.50          5.83
Market value per share                                    0.36         1.44         7.25        19.22         16.75
Weighted average outstanding shares-basic               10,385       10,385       10,402       10,450         7,537
</TABLE>

1)   Operating  earnings and per share amounts exclude  amortization,  interest,
     taxes,  realized  capital  gains and  losses,  minority  interest,  and any
     extraordinary items.
2)   Return on average equity cannot be calculated due to the accumulated
     deficit in stockholders' equity in 2000 and 1999.

                               CORPORATE STRUCTURE

                        Symons International Group, Inc.
                       -----------------------------------

                                      Superior Insurance Group Management, Inc.
    |                                                      |
IGF Holdings, Inc.                              Superior Insurance Group, Inc.
    |                    |                                 |
IGF Insurance               Pafco General          Superior Insurance
  Company                  Insurance Company             Company
                                                           |
                                         Superior Guaranty    Superior American
                                          Insurance Company   Insurance Company



<PAGE>


Vice Chairman's Report to our Shareholders

Dear Fellow Shareholder:

The year 2000 has finally come to a close,  from the financial  statements  that
follow;  it is hard to see the major  changes  that have taken place  within our
group.  I hope that this  letter  and the  following  report  will give you some
insight to the going forward operations.

The loss for 2000  included  a write down of  goodwill  of $33.5  million.  This
combined  with  operating  losses in the  non-standard  auto  insurance of $37.9
million and crop of $17 million  represents  the loss of $88.4 million for 2000.
We feel that we have cleaned out the  cupboard  and it's time to present  better
news to our shareholders.

During the last year we replaced the entire senior and middle  management of our
non-standard  operation,  Superior  Insurance  Group.  The new  management  have
reduced  our  premium  volume by  shedding  under  priced  business  and  poorer
performing  agents.  The premiums we wrote reduced from  $236,401,000 at Dec 31,
1999 to $174,461,000 at Dec. 31, 2000. With reducing volume we needed to cut the
cost of doing business. We closed Tampa's two large offices with staff exceeding
125,  consolidated  these operations into Atlanta and Indianapolis.  Local claim
service  helps reduce loss costs,  for this  reason,  we opened  claims  service
centers with limited staff in Alexandria,  VA, Glendale, CA, and are opening one
in Pennsylvania  soon. These are in addition to Atlanta and Indianapolis  claims
service centers.  We reduced full and part time employees from over 541 to about
390. We increased premium rates for our whole book of business by about 14%. The
higher  priced  business  we are  writing  today will allow us to  increase  our
premium base and start to re grow the business.

We now operate  through  independent  agents in twenty (20) states,  with better
operating  systems that have helped to reduce  overhead  costs.  We offer agents
direct  access  on-line to our policy system and will provide them with point of
sale quoting and binding with on-line real time underwriting in the near future.
The market for non standard and regular auto  insurance has  improved.  Over the
last year the number of suppliers  has reduced with those  remaining  increasing
prices. All automobile  insurance  companies reported much higher loss costs for
2000.  The market is responding  finally by tightening up what they will insure.
This moves drivers to our market.  Most of the insurance  companies  have or are
raising  rates  in  response  to  higher  losses.  The  demand  is  growing  for
non-standard  automobile  insurance,   the  higher  priced  area  of  automobile
insurance.  Growth  comes from more jobless  people  forced into our market as a
result of poor payment habits,  standard  companies  pulling back what they will
insure,  but the biggest demand is coming from the children of the baby-boomers.
It will be the  biggest  source of  drivers  to the  non-standard  market in its
history.

In order to be ready to write this  profitable  business,  we needed to look for
capital to deploy into our nonstandard  unit. The capital markets are shut to us
for now, so is the debt market. We have reinsurers, which helps us to write over
$100 million of our business,  but at a cost. We need to increase the capital of
Superior, and become less dependent on reinsurance. The company has been exposed
to earning  volatility from its crop  operations,  and with limited capital as a
result of past years losses we must reduce this exposure.

For all of these reasons we have chosen to look for a buyer of the assets of our
crop segment.  We have  recorded the crop  insurance  business as  discontinuing
operations in the following pages and are working with potential  buyers to sell
the assets. We will keep IGF Insurance Company for our auto business.  We expect
to finalize a transaction in the next few months.


<PAGE>



Following  a  successful  sale of IGF assets we will be out of the  direct  crop
business. Our companies will be a major player in the fast growing, non-standard
automobile insurance market.

Our  staff  has  gone  through  2 1/2  years  of  tough  sledding,  as have  our
shareholders.  Our  Board  of  Directors  have  worked  to help  management  and
shareholders to turn our fortune around. Our heartfelt thanks to all of you!

Yours truly,


Alan G. Symons
Vice Chairman



<PAGE>



SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
OF SYMONS INTERNATIONAL GROUP, INC.

The selected  consolidated  financial data  presented  below is derived from the
consolidated  financial  statements of the Company and its  subsidiaries for the
years ended December 31. This information should be read in conjunction with the
consolidated financial statements of the Company and the notes thereto, included
elsewhere in this report.
<TABLE>
<CAPTION>

                                                          2000         1999          1998         1997         1996
                                                          ----         ----          ----         ----         ----
Consolidated Statement of Operations Data:
(in   thousands,   except  per  share  amounts  and
ratios) (4)
<S>                                                   <C>          <C>           <C>          <C>          <C>
Gross Premiums Written                                $174,461     $236,401      $310,164     $334,199     $195,440
Net Premiums Earned                                    137,706      249,094       264,022      251,020      168,746
Fee Income                                              14,140       15,185        16,431       15,545        7,614
Net Investment Income                                   10,074       12,242        12,098       11,256        6,552
Income (Loss) from Continuing Operations               (71,384)     (65,443)       (7,933)       2,745        1,761
Income (Loss) from Discontinued Operations             (17,041)     (15,373)       (6,484)      13,560       11,495
NET INCOME (LOSS)                                     $(88,425)    $(80,816)     $(14,417)     $16,305      $13,256
                                                      =========    =========     =========     =======      =======
Per Common Share Data:
Basic Income (Loss) from Continuing
 Operations                                              $(6.87)      $(6.30)        $(.76)        $.26         $.23
Basic Income (Loss) from Discontinued
Operations                                                (1.64)       (1.48)         (.62)        1.30         1.53
BASIC NET INCOME (LOSS)                                  $(8.51)      $(7.78)       $(1.39)       $1.56        $1.76
Basic Weighted Average Shares Outstanding                10,385       10,385        10,402       10,450        7,537
GAAP Ratios:
Loss and LAE Ratio (1)                                     82.3%        92.7%         82.5%        78.0%        73.7%
Expense Ratio (2)                                          38.8%        31.6%         22.2%        23.4%        24.0%
COMBINED RATIO (3)                                        121.1%       124.3%        104.7%       101.4%        97.7%
Consolidated Balance Sheet Data:
Investments                                            $134,140     $201,887      $220,366     $213,829     $165,461
Total Assets                                            287,957      373,812       448,885      469,872      313,557
Losses and Loss Adjustment Expenses                     108,117      152,455       134,024      118,988       84,123
Total Long-term Debt or Preferred Securities            135,000      135,000       135,000      135,000       48,000
Total Shareholders' Equity (Deficit)                   (112,445)     (24,980)       61,995       78,363       60,900
Book Value (Deficit) Per Share                          $(10.83)      $(2.41)        $5.97        $7.50        $5.83

</TABLE>

(1)      Loss and LAE ratio:  The ratio of loss and loss adjustment  expenses
         incurred during the period,  as a percentage of premiums earned.

(2)      Expense ratio:  The ratio of policy  acquisition,  general and
         administrative  expenses less billing fees, as a percentage of
         premiums earned.

(3)      Combined ratio: The sum of the loss and LAE ratio plus the expense
         ratio as a percentage of premiums earned.

(4)      Loss from continuing  operations for the year 2000 includes a
         write-down of $33.5 million for goodwill. See Note 6 to consolidated
         financial statements for additional information.



<PAGE>




MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

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 nonstandard  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.

Overview

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

Strategic Alignment

In December  2000,  management  initiated a  strategic  review of the  Company's
operations.  This  review  resulted  in a plan to divest of the  Company's  crop
insurance  segment,  allowing  management  to  focus on  nonstandard  automobile
insurance.  (See Note 21 of the financial  statements which discusses results of
the  discontinued  crop  segment.) The plan  includes a sale of certain  revenue
producing  assets of the  Company's  crop segment  along with plans to wind-down
remaining crop segment obligations.

Accordingly,  financial  results of the crop insurance  segment are presented as
discontinued  operations  in  the  Company's  financial  statements.  Continuing
operations of the Company consist of the single nonstandard automobile insurance
segment.  Management  believes a  transaction  to complete  the sale of the crop
insurance book of business will be completed in the second quarter of 2001.

Nonstandard  Automobile Insurance Operations

Pafco,  Superior,  Superior Guaranty  Insurance Company  ("Superior  Guaranty"),
Superior American Insurance Company  ("Superior  American") and IGF, are engaged
in the  writing  of  insurance  coverage  for  automobile  physical  damage  and
liability  policies for 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 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.


<PAGE>



Results of Operations

Overview

2000 Compared to 1999

For the year 2000,  the  Company  reported a loss on  continuing  operations  of
$(71,384,000) or $(6.87) per share (basic and diluted) which includes a one-time
write  down of  goodwill  in the  amount  of  $33,464,000.  Loss  on  continuing
operations for the year 1999 was $(65,443,000) or $(6.30) per share. Loss before
income  taxes and  distributions  on minority  interest  was  $(59,946,000)  and
$(50,892,000) for 2000 and 1999,  respectively.  Operating  earnings (loss) from
continuing operations, measured as income/(loss) before amortization,  interest,
taxes,   realized   capital   gains  and  losses  and  minority   interests  was
$(18,997,000) or $(1.83) per share (basic and diluted) in 2000 and $(48,374,000)
or $(4.66) per share in 1999 (basic and  diluted).  Premium rate  increases  and
reductions in loss ratios are the primary factors  contributing to the reduction
in losses for 2000.

Discontinued  operations  reported losses of $(17,041,000) and $(15,373,000) for
2000 and 1999 respectively. Underwriting losses and operation costs in excess of
administrative expense reimbursements contributed to posted losses.

1999 Compared To 1998

The Company  reported a net loss on continuing  operations of  $(65,443,000)  or
$(6.30)  per  share  (basic  and  diluted)  compared  to a  loss  on  continuing
operations of  $(7,933,000)  or $(.76) per share in (basic and diluted) in 1998.
Results for 1999 were  negatively  impacted by lower premium volume and a higher
loss ratio.  These were the results of  competitive  pricing in the  nonstandard
automobile  insurance market,  untimely rate filings and problems encountered in
implementation of the Company's consolidated systems. The Company also increased
loss reserves for prior  accident years by  approximately  $16.4 million in 1999
due to adverse loss development.

Years Ended December 31,  2000 and 1999

Gross Premiums Written

Gross  premiums  written have  decreased  26.2% or $61,940,000 in 2000 from 1999
levels.  Premium rate increases of approximately 14% were implemented throughout
2000 which were offset by a reduction in policies in force of 29%. The reduction
in written premiums was further affected by a shift during the second quarter of
2000 to writing a higher mix of six-month  policies while  management  evaluated
rate adequacy.

Net Premiums Written

Net premiums written  represents 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,  a reinsurance agreement was negotiated to cede a
portion of the gross  written  premiums  to a third  party.  The  Company  ceded
approximately  45% of its  gross  written  premiums  under  such a  quota  share
reinsurance contract that was effective January 1, 2000.

Net Premiums Earned

Premiums are earned ratably over the term of the underlying insurance contracts.
The reduction in net premiums  earned is reflective of the overall  reduction in
gross premiums written and the increase in ceded premiums.


<PAGE>



Fee Income

Fee income is derived from installment  billings and other services  provided to
policyholders.  The  reduction  in fee  income  of  6.9%  in the  year  2000  is
attributed  to the  reduction of insurance  policies in force of 29%,  offset by
earned fee rate increases from 1999.

Net Investment Income

Net  investment  income  decreased  17.7% in 2000 as compared  to 1999.  This is
reflective  of the  decline  in  invested  assets  during a period of  declining
premiums and the payout of the prior year losses when settled in 2000.

Net Realized Capital Losses

Net realized  capital losses were  $5,972,000 in 2000 as compared to $324,000 in
1999. Capital losses were realized in 2000 due to a liquidation and reinvestment
of a  portion  of the  equity  portfolio  during  the year as well as  continued
liquidation  of  investments  to fund  operations  during a period of  declining
premiums.

Losses and LAE

The loss and LAE ratio  (the ratio of claims and loss  adjusting  expenses  as a
percentage of earned  premium) was 82.3% for 2000 as compared to 92.7% for 1999.
The Company estimates accident year 2000 gross loss and LAE ratio to be 85.6% as
compared to its current estimate of 84.8% for accident year 1999.  Accident year
1999 reserves developed favorably during 2000, as a result, the current estimate
for accident year 1999 is 4.5% points lower than  projected as of year-end 1999.
The Company also  experienced  favorable  development on accident years 1998 and
prior.

The Company attributes the favorable development on prior years to actions taken
at the beginning of 2000 to  strengthen  its claims  function.  At that time the
Company replaced its existing claims  management team with new claims management
that improved the  performance  of the claims staff.  The new claims  management
also  evaluated the Company's  claims  practices and  procedures  and eliminated
those that interfered with timely and effective claims settlement.

Policy Acquisition and General and Administrative Expense

The Company reduced policy acquisition and general and  administrative  expenses
for the year 2000 to $67,538,000 or 28.1% from 1999 amounts of $93,922,000. This
reduction  is  reflective  of a 26.2%  decline  in gross  written  premiums,  an
increase  in ceding  commissions  associated  with the quota  share  reinsurance
contract,  and overall  operating  expense  reductions.  As a percentage  of net
premiums earned, the Company  experienced an increase in its gross expense ratio
from 31.6% to 38.8%.  This increase was the result of the Company  ceding 45% of
its gross written premium under a quota share reinsurance contract.

Amortization of Intangibles

Amortization  expense  increased  in 2000  due to an  impairment  charge  on the
carrying  value  of  goodwill   resulting  from  the  Superior  Insurance  Group
Management,   Inc.  ("Superior  Group  Management")  acquisition  in  1997.  The
impairment  charge and amortization  expense  recognized in 2000 on goodwill was
$34,806,000.  Amortization of debt  acquisition  costs of $171,000  comprise the
balance of the year 2000 expense.

Income Tax Expense (Benefit)

The  variance in the rate from the  federal  statutory  rate of 35%,  before the
effect of a valuation  allowance  on deferred tax assets,  is  primarily  due to
nondeductible goodwill amortization and alternative minimum taxes.

At December 31, 2000 the Company's net deferred tax assets are fully offset by a
valuation  allowance.  Therefore,  the Company has not recognized the benefit of
tax losses carried forward.  Earnings in future periods will result in no income
tax expense until the current operating loss carryforwards are utilized.

Years Ended December 31, 1999 and 1998

Gross Premiums Written

Gross premiums  written  decreased from  $310,164,000 in 1998 to $236,401,000 in
1999,  a reduction  of 23.8%.  This  reduction  is  primarily a result of system
implementation  problems  encountered  in the Company's  consolidated  operating
systems, along with increased competition in the nonstandard insurance sector.

Net Premiums Written

Net premiums written  decreased 9.2% in 1999 as compared to 1998. This reduction
was the  result  of the  reduction  of gross  premiums  written,  offset  by the
recapturing of gross premium ceded in 1998.

Net Premiums Earned

Premiums are earned ratably over the term of the underlying insurance contracts.
The reduction in net premiums  earned is reflective of the overall  reduction in
premiums written.

Fee Income

Fee income is derived from installment  billings and other services  provided to
policyholders.  Fee  income  declined  7.6% in 1999 as a result  of the  overall
reduction  in policies  in force of 16%,  offset by billing and service fee rate
increases put into effect during 1999.

Net Investment Income

Higher  yields  on the  investment  portfolio  resulted  in an  increase  in net
investment income for 1999.

Net Realized Capital Gains (Loss)

In 1999,  the  investment  portfolio  realized a loss of  $324,000  compared  to
realized  gains  in 1998 of  $4,124,000  which  emanated  from a high  level  of
activity in the equity portfolio in 1998.

Losses and LAE

The loss and LAE ratio was 92.7%  for 1999 as  compared  to 82.5% for 1998.  The
increase  reflects  adverse  development  on  accident  years  1998 and prior of
approximately  6.6%.  The Company's  current  estimate of loss and LAE ratio for
accident  year 1999 is 84.8% as compared  to its  current  estimate of 80.3% for
accident  year 1998.  The increase in the accident  year loss ratio results from
product and pricing decisions and increases in claim frequency.

Policy Acquisition and General and Administrative Expenses

Policy  acquisition  and  general and  administrative  expenses  have  increased
primarily  as a  result  of  problems  encountered  with  the  Company's  policy
administration systems which resulted in higher expenses being incurred in 1999.
As a percentage of net premiums earned,  the Company  experienced an increase in
its  expense  ratio  from  22.2%  in 1998 to 31.6% in  1999.  This  increase  is
attributed to higher expenses as well as a 23.8%  reduction in written  premiums
for 1999.


<PAGE>



Amortization of Intangibles

Amortization of intangibles  includes goodwill from the acquisition of Superior,
additional  goodwill from the  acquisition of the minority  interest  portion of
Superior  Group  Management  and  debt or  preferred  security  issuance  costs.
Amortization expense in 1999 of $2,194,000 is an increase of 7.5% over 1998.

Income Tax Expense (Benefit)

The variance in the rate from the federal statutory rate of 35% is primarily due
to nondeductible  goodwill  amortization,  alternative minimum taxes, tax versus
book basis in capital assets and securities disposed.

At December 31, 1999 the Company's net deferred tax assets are fully offset by a
valuation allowance. The Company will continue to assess the valuation allowance
and to the extent it is determined  that such  allowance is no longer  required,
the tax benefit of the  remaining  net deferred tax assets will be recognized in
the future.

Distributions on Preferred Securities

Distributions on the Preferred  Securities are calculated at 9.5% net of federal
income tax from the offering date of August 12, 1997.

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  who elect to make
their  premium  payments  in  installments.   Superior   Insurance  Group,  Inc.
("Superior Group") also receives management fees under its management  agreement
with its  insurance  subsidiaries.  When the  Florida  Department  of  Insurance
("FDOI") approved the acquisition of Superior by Superior Group  Management,  it
prohibited Superior from paying any dividends (whether extraordinary or not) for
four years from the date of acquisition  (May 1, 1996) without the prior written
approval of the FDOI,  which  restriction  expired in April 2000. 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 nonstandard  automobile insurance  subsidiaries'  primary source 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  2000 and 1999,  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  has and will cause the Company to
shorten  duration.  The  Company may incur cost of selling  longer  bonds to pay
claims.  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,  the Company issued through a wholly owned
trust  subsidiary $135 million  aggregate  principal  amount in Trust Originated
Preferred Securities ("Preferred  Securities").  The Preferred Securities have a
term of 30  years  with an  annual  interest  payments  of  $6.5  million  which
commenced February 15, 1998.


The Preferred Securities may be redeemed in whole or in part after 10 years.

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

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

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

These restrictions  currently apply as the Company's consolidated coverage ratio
was (1.52) in 2000, and will continue to apply until the Company's  consolidated
coverage  ratio is in  compliance  with the  terms of the trust  indenture.  The
Company is in compliance with these additional restrictions.

Net cash used by operating activities in 2000 aggregated $48,153,000 compared to
$13,916,000  in 1999 due to reduced cash  provided by  operations as a result of
lower premium volumes and continued losses.

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

GAAP stockholders'  equity reflected a deficit of $112.4 million at December 31,
2000,  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 13),  had  statutory  surplus of
approximately  $28 million at December  31,  2000.  (See Note 13 for  discussion
regarding the effects of codification on statutory surplus.)

Effects of Inflation

Due to the short  term that  claims are  outstanding  in the  product  lines the
Company underwrites, inflation does not pose a significant risk to the Company.


<PAGE>



Primary Differences Between GAAP and SAP

The financial  statements contained herein have been prepared in conformity with
GAAP which differ from  Statutory  Accounting  Practices  ("SAP")  prescribed or
permitted for insurance  companies by  regulatory  authorities  in the following
respects:  (i)  certain  assets  are  excluded  as  "Nonadmitted  Assets"  under
statutory  accounting;  (ii)  costs  incurred  by the  Company  relating  to the
acquisition  of new  business are expensed  for  statutory  purposes;  (iii) the
investment in wholly-owned  subsidiaries  is  consolidated  for GAAP rather than
valued on the  statutory  equity  method.  The net income or loss and changes in
unassigned surplus of the subsidiaries is reflected in net income for the period
rather  than  recorded  directly  to  unassigned  surplus;  (iv) fixed  maturity
investments  are  reported  at  amortized  cost or market  value  based on their
National  Association  of  Insurance  Commissioners  ("NAIC")  rating;  (v)  the
liability for losses and loss adjustment  expenses and unearned premium reserves
are recorded net of their reinsured amounts for statutory  accounting  purposes;
(vi) deferred  income taxes are not recognized on a statutory  basis;  and (vii)
credits for reinsurance are recorded only to the extent considered realizable.

New Accounting Standards

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 the FDOI have adopted the Codification.

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

SFAS No. 133,  Accounting for  Derivative  Instruments  and Hedging  Activities,
issued in June 1998, requires companies to recognize all derivative contracts as
either  assets or  liabilities  in the balance sheet and to measure them at fair
value.  If  certain  conditions  are  met,  a  derivative  may  be  specifically
designated as a hedge,  the objective of which is to match the timing of gain or
loss  recognition  on the hedging  derivative  with the  recognition  of (1) the
changes in the fair value of the hedge asset or liability that are  attributable
to the  hedged  risk  or (2)  the  earnings  effect  of  the  hedged  forecasted
transaction.  For a derivative not designated as a hedging instrument,  the gain
or loss is  recognized  in income in the  period of  change.  SFAS No.  133,  as
amended by SFAS No. 137 and 138, is effective for all fiscal  quarters of fiscal
years  beginning after June 15, 2000. The impact of SFAS No. 133 does not have a
material effect on the Company's financial position or results of operations.

In March 2000, the Financial  Accounting  Standards Board issued  Interpretation
No.  44  ("FIN  44"),  Accounting,  for  Certain  Transactions  Involving  Stock
Compensation,  an  interpretation  APB  Opinion  No.  25. FIN 44  clarifies  the
application of Opinion No. 25 for (a) the definition of employee for purposes of
applying  Opinion  No.  25,  (b) the  criteria  for  determining  whether a plan
qualifies as a non-compensatory plan, (c) the accounting consequences of various
modifications  to the  previously  fixed  stock  option  or  award,  and (d) the
accounting  for  an  exchange  of  stock  compensation   awards  in  a  business
combination.  FIN 44 is effective  July 2, 2000, but certain  conclusions  cover
specific  events that occur after either December 15, 1998, or January 12, 2000.
The impact of FIN 44 did not have a material  effect on the Company's  financial
position or results of operations.

Quantitative And Qualitative Disclosures About Market Risk

Insurance  company  investments must comply with applicable laws and regulations
which prescribe the kind, quality and concentration of investments.  In general,
these laws and  regulations  permit  investments,  within  specified  limits and
subject to certain qualifications,  in federal, state and municipal obligations,
corporate bonds, preferred and common securities, real estate mortgages and real
estate.  The Company's  investments in real estate and mortgage loans  represent
1.7% of the Company's aggregate  investments.  The investment  portfolios of the
Company at December 31, 2000, consisted of the following (in thousands):
<TABLE>
<CAPTION>

                                                                            Cost or
        Type of Investment                                               Amortized Cost   Market Value

Fixed maturities:
    United  States  Treasury  securities  and  obligations  of  United
<S>                                                                          <C>              <C>
    States government corporation and agencies                               $56,414          $56,648
    Obligations of states and political subdivisions                              --               --
    Corporate securities                                                      45,151           42,858
                                                                              ------           ------
Total Fixed Maturities                                                       101,565           99,506
Equity Securities:
    Common Stocks                                                             18,326           16,561
Short-Term investments                                                        14,986           14,872
Mortgage loans                                                                 1,870            1,870
Other invested assets                                                          1,331            1,331
                                                                               -----            -----
                                                                            $138,078         $134,140
</TABLE>

The following  table sets forth  composition  of the fixed  maturity  securities
portfolio of the Company by time to maturity as of December 31 (in thousands):
<TABLE>
<CAPTION>

                                                      2000                              1999
                                                      ----                              ----
                                                          Percent Total                      Percent Total
Time to Maturity                           Market Value     Market Value     Market Value      Market Value
----------------                           ------------     ------------     ------------      ------------

<S>                                              <C>                <C>            <C>                 <C>
1 year or less                                   $7,956             8.0%           $3,600              2.2%
More than 1 year through 5 years                 40,391             40.6           82,969              50.6
More than 5 years through 10 years               14,825             14.9           38,266              23.4
More than 10 years                               22,724             22.8           35,641              21.8
                                                 ------             ----           ------              ----
                                                 85,896             86.3          160,476              98.0
Mortgage-backed securities                       13,610             13.7            3,240               2.0
Total                                           $99,506           100.0%         $163,716            100.0%
                                                =======           ======         ========            ======
</TABLE>
The  following  table  sets forth the  ratings  assigned  to the fixed  maturity
securities of the Company as of December 31 (in thousands):
<TABLE>
<CAPTION>

                                                      2000                              1999
                                                      ----                              ----
                                                          Percent Total                      Percent Total
Rating (1)                                 Market Value     Market Value     Market Value      Market Value
----------                                 ------------     ------------     ------------      ------------

<S>                                             <C>                <C>           <C>                  <C>
Aaa or AAA                                      $65,421            65.8%         $100,546             61.4%
Aa or AA                                          1,732             1.7%            3,029              1.9%
A                                                11,530            11.6%           24,226             14.8%
Baa or BBB                                       14,861            14.9%           21,522             13.1%
Ba or BB                                          5,148             5.2%           13,691              8.4%
Other below investment grade                        814              .8%              702               .4%
                                                    ---              ---              ---               ---
Total                                           $99,506             100%         $163,716            100.0%
</TABLE>

(1)  Ratings  are  assigned  by  Standard  &  Poor's  Corporation,  and when not
     available,  are based on ratings  assigned  by Moody's  Investors  Service,
     Inc..


<PAGE>



The investment  results of the Company's  continuing  operations for the periods
indicated are set forth below (in thousands):
<TABLE>
<CAPTION>

                                                                  Years Ended December 31,
                                                          2000               1999             1998
<S>                   <C>                                <C>               <C>              <C>
Net Investment income (1)                                $10,074           $12,242          $12,098
Average investment portfolio (2)                        $173,231          $214,690         $212,518
Pre-tax return on average investment portfolio              5.8%              5.7%             5.7%
Net realized gains (losses)                             $(5,972)            $(324)           $4,124
</TABLE>

(1)      Includes dividend income received in respect of holdings of common
         stock.
(2)      Average  investment  portfolio  represents  the average  (based on
         amortized cost) of the beginning and ending investment portfolio.

If interest  rates were to increase 10% from the  December 31, 2000 levels,  the
decline in fair value of the fixed maturity  securities would not  significantly
affect  the  Company's  ability to meet its  obligations  to  policyholders  and
debtors.

Market-Sensitive Instruments and Risk Management

The Company's  investment strategy is to invest available funds in a manner that
will  maximize  the  after-tax  yield of the  portfolio  while  emphasizing  the
stability and  preservation  of the capital base.  The Company seeks to maximize
the total return on investment  through active investment  management  utilizing
third-party  professional  administrators,  in accordance  with  pre-established
investment policy guidelines  established and reviewed regularly by the Board of
Directors of the Company.  Accordingly,  the entire  portfolio of fixed maturity
securities  is  available  to be sold in response to changes in market  interest
rate;  changes in relative  values of individual  securities  and asset sectors;
changes in prepayment risks;  changes in credit quality; and liquidity needs, as
well as other factors.

The  portfolio is invested in types of securities  and in an aggregate  duration
which reflect the nature of the  Company's  liabilities  and expected  liquidity
needs  diversified  among  industries,  issuers and  geographic  locations.  The
Company's  fixed maturity and common equity  investments  are  substantially  in
public companies.

The  following  table  provides   information  about  the  Company's   financial
instruments  that are  sensitive to changes in interest  rates.  For  investment
securities and debt  obligations,  the table  presents  principal cash flows and
related weighted-average interest rates by expected maturity date. Additionally,
the Company has assumed its available for sale  securities are similar enough to
aggregate those securities for presentation purposes.

                            Interest Rate Sensitivity
                      Principal Amount by Expected Maturity
                              Average Interest Rate
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                         Fair
                                                                                                         Value
                          2001       2002       2003      2004       2005     There-after     Total      12/31/00
                          ----       ----       ----      ----       ----     -----------     -----      --------
Assets
<S>                        <C>        <C>       <C>       <C>         <C>         <C>          <C>         <C>
Available for sale         $9,820     $7,380    $9,618    $13,557     $9,930      $51,260      $101,565    $99,506
Average interest rate
                             7.7%       7.9%      6.7%       6.7%       7.0%         7.0%          7.1%       7.1%

Liabilities
Preferred securities           --         --        --         --         --     $135,000      $135,000    $20,250
Average interest rate          --         --        --         --         --          9.5           9.5        9.5


</TABLE>

<PAGE>


CONSOLIDATED FINANCIAL STATEMENTS
as of December 31, 2000 and 1999
(in thousands, except share data)

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                        2000         1999

ASSETS:
Investments:
Available for sale:
<S>                                                                                  <C>         <C>
Fixed maturities, at market                                                          $99,506     $163,716
Equity securities, at market                                                          16,561       13,425
Short-term investments, at amortized cost, which approximates market                  14,872       21,820
Mortgage loans, at cost                                                                1,870        1,990
Other invested assets                                                                  1,331          936
                                                                                       -----          ---
TOTAL INVESTMENTS                                                                    134,140      201,887
Investments in and advances to related parties                                           680          406
Cash and cash equivalents                                                              1,363        2,139
Receivables net of allowance of $1,940 and $1,479                                     50,364       62,527
Reinsurance recoverable on paid and unpaid losses, net                                48,315       14,755
Prepaid reinsurance premiums                                                          24,773        1,082
Deferred policy acquisition costs                                                      6,454       13,908
Property and equipment, net of accumulated depreciation                               12,392       15,624
Intangible assets                                                                      4,547       39,525
Other assets                                                                           3,545        2,336
Net assets of discontinued operations                                                  1,384       19,623
                                                                                       -----       ------
TOTAL ASSETS                                                                        $287,957     $373,812
                                                                                    ========     ========

LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES:
Losses and loss adjustment expenses                                                 $108,117     $152,455
Unearned premiums                                                                     62,386       80,562
Reinsurance  payables  (including  payable to affiliates of $0 in 2000 and $2,124     62,059        5,861
in 1999)
Distributions payable on preferred securities                                         18,397        4,809
Other liabilities                                                                     14,443       20,105
                                                                                      ------       ------
TOTAL LIABILITIES                                                                    265,402      263,792
                                                                                     -------      -------
Minority interest:
Company-obligated  mandatorily  redeemable  preferred  stock of trust  subsidiary
    holding solely parent debentures                                                 135,000      135,000
Stockholders' deficit:
Common stock, no par value, 100,000,000 shares authorized,  and 10,385,399 shares
    issued and outstanding in both 2000 and 1999                                      38,136       38,136
Additional paid-in capital                                                             5,851        5,851
Unrealized loss on investments                                                        (3,938)      (4,898)
Retained deficit                                                                    (152,494)     (64,069)
                                                                                    ---------     --------
TOTAL STOCKHOLDERS' DEFICIT                                                         (112,445)     (24,980)
                                                                                    ---------     --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                         $287,957     $373,812
                                                                                    ========     ========
</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>


CONSOLIDATED  FINANCIAL  STATEMENTS for the years ended December 31, 2000,  1999
and 1998 (in  thousands,  except  per share  data)  CONSOLIDATED  STATEMENTS  OF
EARNINGS (LOSS)
<TABLE>
<CAPTION>
                                                                                         2000       1999         1998
                                                                                         ----       ----         ----
<S>                                                                                  <C>           <C>         <C>
Gross premiums written                                                               $174,461      $236,401    $310,164
Less ceded premiums                                                                   (78,621)        8,425     (40,423)
                                                                                      --------        -----     --------
    NET PREMIUMS WRITTEN                                                              $95,840      $244,826    $269,741
                                                                                      =======      ========    ========
    NET PREMIUMS EARNED                                                              $137,706      $249,094    $264,022
Fee income                                                                             14,140        15,185      16,431
Net investment income                                                                  10,074        12,242      12,098
Net realized capital gain (loss)                                                       (5,972)         (324)      4,124
                                                                                       -------         -----      -----
    TOTAL REVENUES                                                                    155,948       276,197     296,675
                                                                                      -------       -------     -------
Expenses:
    Losses and loss adjustment expenses                                               113,379       230,973     217,916
    Policy acquisition and general and administrative expenses                         67,538        93,922      74,970
    Amortization of intangibles and impairment                                         34,977         2,194       2,040
                                                                                       ------         -----       -----
    TOTAL EXPENSES                                                                    215,894       327,089     294,926
                                                                                      -------       -------     -------
    INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY
        INTEREST                                                                      (59,946)      (50,892)      1,749
                                                                                      --------      --------      -----
Income taxes:
    Current income tax expense (benefit)                                                  487          (968)      6,167
    Deferred income tax expense (benefit)                                              (2,636)        7,183      (4,896)
                                                                                       -------        -----      -------
    TOTAL INCOME TAXES                                                                 (2,149)        6,215       1,271
                                                                                       -------        -----       -----
    INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST
                                                                                      (57,797)      (57,107)        478
Minority interest:
Distributions on preferred securities, net of tax of $0 in 2000, $4,489 in 1999       (13,587)       (8,336)     (8,411)
                                                                                      --------       -------     -------
and $4,529 in 1998.
LOSS FROM CONTINUING OPERATIONS                                                       (71,384)      (65,443)     (7,933)
Discontinued operations:
Loss from operations of discontinued segment, less applicable income taxes
of $0 in 2000, $(5,170) in 1999 and $(3,309) in 1998                                  (16,141)      (15,373)     (6,484)
Loss on disposal of discontinued segment, less applicable taxes of nil                   (900)           --          --
                                                                                         -----           --          --
LOSS FROM DISCONTINUED OPERATIONS                                                     (17,041)      (15,373)     (6,484)
                                                                                      --------      --------     -------
NET LOSS                                                                             $(88,425)     $(80,816)   $(14,417)
                                                                                     =========     =========   =========
Weighted average shares outstanding - basic and fully diluted                          10,385        10,385      10,402
                                                                                       ======        ======      ======
Net loss from continuing operations per share - basic and fully diluted                $(6.87)       $(6.30)     $(0.76)
                                                                                       =======       =======     =======
Net loss of discontinued operations per share - basic and fully diluted                $(1.64)       $(1.48)     $(0.62)
                                                                                       =======       =======     =======
Net loss per share - basic and fully diluted                                           $(8.51)       $(7.78)     $(1.39)
                                                                                       =======       =======     =======
</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>



CONSOLIDATED FINANCIAL STATEMENTS
for the years ended  December  31,  2000,  1999 and 1998 (in  thousands,  except
number of shares)  CONSOLIDATED  STATEMENTS OF CHANGES IN  STOCKHOLDERS'  EQUITY
(DEFICIT)
<TABLE>
<CAPTION>
                                                                      Additional     Retained     Unrealized         Total
                                                  Common Stock           Paid        Earnings     Gain/(Loss)    Stockholders'
                                               Shares       Amount    In Capital    (Deficit)         On            Equity
                                                                                                  Investments

<S>                <C>                         <C>           <C>           <C>          <C>             <C>             <C>
BALANCE AT JANUARY 1, 1998                     10,451,667    $39,019       $5,925       $31,511         $1,908          $78,363

Comprehensive Income:
Net loss                                                                               (14,417)                        (14,417)
Change in unrealized gains (losses) on
securities                                                                                               (647)            (647)
                                                                                                         -----            -----
Comprehensive income                                   --         --           --      (14,417)          (647)         (15,064)
                                                       --         --           --      --------          -----         --------
Exercise of stock options                           4,332         --           37            --             --               37
Shares acquired                                  (70,600)      (883)        (111)         (347)             --          (1,341)
                                                 --------      -----        -----         -----             --          -------
BALANCE AT DECEMBER 31, 1998                   10,385,399    $38,136       $5,851       $16,747         $1,261          $61,995
                                               ----------    -------       ------       -------         ------          -------

Comprehensive Income:
Net loss                                                                               (80,816)             --         (80,816)
Change in unrealized gains (losses) on
securities                                                                                             (6,159)          (6,159)
                                                                                                       -------          -------
Comprehensive income (loss)                                                            (80,816)        (6,159)         (86,975)
                                                                                       --------        -------         --------

BALANCE AT DECEMBER 31, 1999                   10,385,399    $38,136       $5,851     $(64,069)       $(4,898)        $(24,980)
                                               ----------    -------       ------     ---------       --------        ---------

Comprehensive Income:
Net loss                                                                               (88,425)                        (88,425)
Change in unrealized gains (losses) on
securities                                                                                                 960              960
                                                                                                           ---              ---
Comprehensive income (loss)                                                            (88,425)            960         (87,465)
BALANCE AT DECEMBER 31, 2000                   10,385,399    $38,136       $5,851    $(152,494)       $(3,938)       $(112,445)
                                               ==========    =======       ======    ==========       ========       ==========
</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>


CONSOLIDATED FINANCIAL STATEMENTS
for the years ended December 31, 2000, 1999 and 1998 (in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                2000            1999           1998
                                                                                ----            ----           ----
Cash flows from operating activities
<S>                                                                            <C>               <C>          <C>
    Net loss                                                                   $(88,425)         $(80,816)    $(14,417)
    Adjustments to reconcile net loss to net cash provided from
        operations:
        Depreciation, amortization, impairment and other                         39,305             7,398        4,078
        Deferred income tax expense (benefit)                                    (2,636)            4,175        4,191
        Net realized capital (gain) loss                                          5,972               324       (4,124)
        Net changes in operating assets and liabilities (net of assets
        acquired):
           Receivables                                                           12,163            (3,248)       1,446
           Reinsurance recoverable on losses, net                               (33,560)           14,712        8,337
           Prepaid reinsurance premiums                                         (23,691)           18,924        7,788
           Federal income taxes recoverable (payable)                                --            11,340       (8,579)
           Deferred policy acquisition costs                                      7,454             2,424       (5,592)
           Other assets and liabilities                                          (6,870)            7,238       (4,728)
           Losses and loss adjustment expenses                                  (44,338)           18,431       15,036
           Unearned premiums                                                    (18,176)          (17,367)      (7,893)
           Reinsurance payables                                                  56,198             2,859       (6,267)
           Distribution payable on preferred securities                          13,587                --           --
           Net assets from discontinued operation                                34,862              (310)      31,987
                                                                                 ------              -----      ------
NET CASH PROVIDED/(USED)  BY OPERATIONS                                         (48,153)          (13,916)      21,263
    Cash flow from investing activities net of assets acquired:
        Net sales (purchases) of short-term investments                           6,947            (6,266)      (6,726)
        Proceeds from sales, calls and maturities of fixed maturities            76,947           195,784      120,985
        Purchases of fixed maturities                                            (9,937)         (181,197)    (141,125)
        Proceeds from sales of equity securities                                 17,491             9,617       65,916
        Purchase of equity securities                                           (25,195)           (9,786)     (42,572)
        Proceeds from repayment of mortgage loans                                   120               110          120
        Purchase of property and equipment                                       (1,685)           (8,437)      (4,787)
        Net investing activities from discontinued operations                      (150)           (1,385)      (7,060)
        Purchase of other investments                                              (414)              (45)        (401)
                                                                                   -----              ----        -----
NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES                                 64,124            (1,605)     (15,650)
    Cash flow from financing activities net of assets acquired:
       Other investing activities                                                    --                --       (1,304)
       Net financing activities from discontinued operations                    (16,473)            4,954          164
        Loans from and (repayments to) related parties                             (274)            2,438       (2,706)
                                                                                   -----            -----       -------
NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES:
                                                                                (16,747)            7,392       (3,846)
                                                                                --------            -----       -------
Increase (decrease) in cash and cash equivalents                                   (776)           (8,129)       1,767
Cash and cash equivalents, beginning of year                                      2,139            10,268        8,501
                                                                                  -----            ------        -----
Cash and cash equivalents, end of year                                           $1,363            $2,139      $10,268
                                                                                 ======            ======      =======
</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>


SYMONS INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

1.       Nature of Operations and Significant Accounting Policies:

Symons  International Group, Inc. (the "Company") is a 73.0% owned subsidiary of
Goran Capital Inc.  ("Goran").  The Company operates in one segment which is the
sale of nonstandard  automobile  insurance.  The Company's products are marketed
through independent agents and brokers. Its insurance  subsidiaries are licensed
in 35 states.

The  following  is a  description  of the  significant  accounting  policies and
practices employed:

a.   Basis of Presentation:  The consolidated financial statements include the
     accounts,  after intercompany  eliminations,  of the
     Company and its wholly-owned subsidiaries as follows:

     Superior  Insurance Group Management,  Inc ("Superior Group  Management") a
     holding company for the nonstandard automobile operations which includes:

         Superior Insurance Group, Inc. ("Superior Group") a management company
         for the nonstandard  automobile operations;

         Superior Insurance Company ("Superior") an insurance company domiciled
         in Florida;

         Superior American Insurance Company  ("Superior American") an insurance
         company domiciled in Florida;

         Superior Guaranty Insurance Company ("Superior Guaranty") an insurance
         company domiciled in Florida;

         Pafco General Insurance Company ("Pafco") an insurance company
         domiciled in Indiana;

     IGF Holdings, Inc. ("IGFH") a holding company;

         IGF Insurance Company ("IGF") an insurance company domiciled in Indiana
(See Note 21).

b.   Use  of  Estimates:   The  preparation  of  financial  statements  requires
     management to make estimates and assumptions  that affect amounts  reported
     in the financial  statements  and  accompanying  notes.  Such estimates and
     assumptions  could change in the future as more  information  becomes known
     which could impact the amounts reported and disclosed herein.

c.   Significant  Estimates:  The most  significant  estimates in the  Company's
     balance sheet are the  determination of prepaid policy  acquisition  costs,
     the reserve for  insurance  losses and loss  adjustment  expenses,  and the
     reserve  estimated for discontinued  operations.  Management's  estimate of
     prepaid  policy  acquisition  costs  is  based on  historical  studies  and
     assumptions  made  regarding  costs  incurred.   Management's  estimate  of
     insurance  losses  and loss  adjustment  expenses  is  based  on past  loss
     experience and  consideration of current claim trends as well as prevailing
     social,  economic and legal  conditions.  Although  management's  estimates
     currently are not expected to change in the foreseeable  future,  the costs
     the Company  will  ultimately  incur could differ from the amounts that are
     assumed to be incurred based on the assumptions made.

d.   Premiums:  Premiums  are  recognized  as income  ratably  over the life of
     the  related  policies  and are stated net of ceded premiums.  Unearned
     premiums are computed on the daily pro rata basis.



<PAGE>



e.   Investments:  Investments are presented on the following basis:

     Fixed maturities and equity securities are classified as available for sale
     and are  carried  at market  value  with the  unrealized  gain or loss as a
     component of stockholders'  equity,  and accordingly,  has no effect on net
     income.

     Real estate at cost, less allowances for depreciation.

     Mortgage loans at outstanding principal balance.

     Realized gains and losses on sales of investments are recorded on the trade
     date and are recognized in net income on the specific identification basis.
     Interest and dividend income are recognized as earned.

f.   Cash and Cash  Equivalents:  For purposes of the statement of cash flows,
     the Company  includes in cash and cash  equivalents all  cash on hand and
     demand deposits with original maturities of three months or less.

g.   Deferred Policy  Acquisition  Costs:  Deferred policy acquisition costs are
     comprised of agents'  commissions,  premium taxes,  certain other costs and
     investment  income  (starting  in 1999) which are  related  directly to the
     acquisition of new and renewal business, net of expense allowances received
     in connection with  reinsurance  ceded,  which have been accounted for as a
     reduction of the related policy acquisition costs. These costs are deferred
     and  amortized  over  the  terms of the  policies  to  which  they  relate.
     Acquisition costs that exceed estimated losses and loss adjustment expenses
     and  maintenance  costs are charged to expense in the period in which those
     excess costs are determined.

h.   Property  and  Equipment:  Property  and  equipment  are  recorded at cost.
     Depreciation for buildings is based on the  straight-line  method over 31.5
     years and the  straight-line  method for other  property and equipment over
     their  estimated  useful lives ranging from five to seven years.  Asset and
     accumulated  depreciation  accounts  are relieved  for  dispositions,  with
     resulting gains or losses reflected in net income.


i.   Intangible  Assets:  Intangible assets consist  primarily of goodwill,  and
     debt  acquisition  costs.  Prior to 2000,  goodwill  was  amortized  over a
     25-year period on a straight-line basis based upon management's estimate of
     the expected benefit period.  See Note 6 regarding the goodwill  impairment
     charge recorded in 2000. Deferred debt acquisition costs are amortized over
     the term of the debt.

j.   Asset  Impairment  Policy:  The Company  reviews the carrying values of its
     long-lived  and  identifiable  intangible  assets for  possible  impairment
     whenever  events or changes in  circumstances  indicate  that the  carrying
     amount of the  assets  may not be  recoverable.  See Note 6  regarding  the
     goodwill impairment charge recorded in 2000. Any long-lived assets held for
     disposal are reported at the lower of their carrying  amounts or fair value
     less cost to sell.

k.   Losses  and  Loss  Adjustment  Expenses:   Reserves  for  losses  and  loss
     adjustment  expenses include  estimates for reported unpaid losses and loss
     adjustment  expenses and for estimated losses and loss adjustment  expenses
     that have been  incurred but not  reported.  These  reserves  have not been
     discounted.   Reserves  are   established   using   individual   case-basis
     evaluations  and  statistical  analysis  as  claims  are  reported.   Those
     estimates  are  subject  to the  effects  of  trends in loss  severity  and
     frequency.   While   management   believes  the  reserves  make  reasonable
     provisions  for its unpaid loss and loss  adjustment  expense  obligations,
     those  provisions  are  necessarily  based on estimates  and are subject to
     variability.  Changes in the estimated  reserves are charged or credited to
     operations as  additional  information  of the estimated  amount of a claim
     becomes known during the course of its  settlement.  The gross reserves for
     losses  and  loss  adjustment  expenses  are  reported  net of  anticipated
     receivables  for salvage and  subrogation of  approximately  $6,983,000 and
     $8,506,000 at December 31, 2000 and 1999, respectively.

l.   Preferred  Securities:  Preferred  securities  represent  Company-obligated
     mandatorily  redeemable  securities of a trust  subsidiary  holding  solely
     parent  debentures  and are  reported  at  their  liquidation  value  under
     minority  interest.  Distributions  on these securities are charged against
     consolidated earnings.

m.   Income Taxes:  The Company  utilizes the liability method of accounting for
     deferred income taxes. Under the liability method, companies will establish
     a deferred  tax  liability or asset for the future tax effects of temporary
     differences  between  book and taxable  income.  Valuation  allowances  are
     established  when  necessary  to reduce  deferred  tax assets to the amount
     expected  to be  realized.  Income  tax  expense  is  the  tax  payable  or
     refundable  for the period  plus or minus the  change  during the period in
     deferred tax assets and liabilities.

n.   Reinsurance:  Reinsurance  premiums,  commissions,  and reserves related to
     reinsured  business are accounted for on a basis consistent with those used
     in accounting  for the original  policies and the terms of the  reinsurance
     contracts.  Premiums  ceded to other  companies  have  been  reported  as a
     reduction of premium income.

o.   Accounting Changes: In June 1998 SFAS No. 133, as amended,  "Accounting for
     Derivative  Instruments and Hedging Activities" was issued, to be effective
     for fiscal  quarters and fiscal years  beginning  after June 15, 2000.  The
     Company does not have any  derivative  instruments  or hedging  activities,
     therefore  there has been no  material  impact on the  Company's  financial
     statements or notes thereto.

     In  March  2000,   the   Financial   Accounting   Standards   Board  issued
     Interpretation  No. 44 ("FIN 44"),  Accounting,  for  Certain  Transactions
     Involving Stock Compensation,  an interpretation APB Opinion No. 25. FIN 44
     clarifies  the  application  of Opinion  No. 25 for (a) the  definition  of
     employee  for  purposes of applying  Opinion No. 25, (b) the  criteria  for
     determining  whether a plan qualifies as a  non-compensatory  plan, (c) the
     accounting  consequences of various  modifications  to the previously fixed
     stock  option or award,  and (d) the  accounting  for an  exchange of stock
     compensation awards in a business combination.  FIN 44 is effective July 2,
     2000, but certain conclusions cover specific events that occur after either
     December 15, 1998, or January 12, 2000. The impact of FIN 44 did not have a
     material  effect  on  the  Company's   financial  position  or  results  of
     operations.

p.   Earnings Per Share: The Company's basic earnings per share calculations are
     based  upon  the  weighted   average  number  of  shares  of  common  stock
     outstanding during each period. Common stock equivalents are anti-dilutive,
     therefore,  fully diluted  earnings per share is the same as basic earnings
     per share.

q.   Reclassifications:  Amounts from prior periods have been  reclassified  for
     comparability to the 2000 presentation.

2.   Corporate Reorganization and Acquisitions:

On August 12, 1997,  the Company  purchased the remaining  minority  interest in
Superior Group Management for $61 million in cash. The excess of the acquisition
price over the minority interest  liability was assigned to goodwill as the fair
market value of assets and liabilities  approximated  their carrying value.  See
Note 6 regarding the goodwill impairment charge recorded in 2000.


<PAGE>

<TABLE>
<CAPTION>


3.       Investments:

Investments are summarized as follows (in thousands):

                                                      Cost or                                   Estimated
                                                    Amortized             Unrealized             Market
December 31, 2000                                       Cost               Gain Loss              Value

Fixed Maturities:
U.S.  Treasury  securities and obligations of U.S.
<S>                                                    <C>              <C>          <C>         <C>
    government corporations and agencies               $42,934          $265         $(161)      $43,038
Mortgage backed securities                              13,480           156           (26)       13,610
                                                        ------           ---           ----       ------
    TOTAL  U.S.   TREASURY  AND  OTHER  GOVERNMENT
    OBLIGATIONS                                         56,414           421          (187)       56,648
Corporate securities                                    45,151           148        (2,441)       42,858
                                                        ------           ---        -------       ------
    TOTAL FIXED MATURITIES                             101,565           569        (2,628)       99,506
Equity securities                                       18,326         1,567        (3,332)       16,561
Short-term investments                                  14,986            --          (114)       14,872
Mortgage loans                                           1,870            --            --         1,870
Other invested assets (including real estate)            1,331            --            --         1,331
                                                         -----            --            --         -----
    TOTAL INVESTMENTS                                 $138,078        $2,136       $(6,074)     $134,140
                                                      ========        ======       ========     ========

                                                      Cost or                                   Estimated
                                                    Amortized             Unrealized             Market
December 31, 1999                                       Cost               Gain Loss              Value

Fixed Maturities:
U.S.  Treasury  securities and obligations of U.S.
    government corporations and agencies               $56,941            $2       $(2,673)      $54,270
Mortgage backed securities                               3,309            --           (69)        3,240
                                                         -----            --           ----        -----
    TOTAL  U.S.   TREASURY  AND  OTHER  GOVERNMENT
    OBLIGATIONS                                         60,250             2        (2,742)       57,510
Corporate securities                                   109,025            14        (2,833)      106,206
                                                       -------            --        -------      -------
    TOTAL FIXED MATURITIES                             169,275            16        (5,575)      163,716
Equity securities                                       15,352           884        (2,811)       13,425
Short-term investments                                  21,820            --            --        21,820
Mortgage loans                                           1,990            --            --         1,990
Other invested assets (including real estate)              936            --            --           936
                                                           ---            --            --          ----
    TOTAL INVESTMENTS                                 $209,373          $900       $(8,386)     $201,887
                                                      ========          ====       ========     ========
</TABLE>

At December 31, 2000,  94% of the Company's  fixed  maturities  were  considered
investment  grade  by The  Standard  & Poors  Corporation  or  Moody's  Investor
Services,  Inc.  Securities with quality ratings,  Baa and above, are considered
investment grade  securities.  In addition,  the Company's  investments in fixed
maturities did not contain any significant  geographic or industry concentration
of credit risk.


<PAGE>


The amortized  cost and estimated  market value of fixed  maturities at December
31,  2000,  by  contractual  maturity,  are  shown in the table  which  follows.
Expected  maturities will differ from contractual  maturities  because borrowers
may have the right to call or prepay  obligations  with or without  penalty  (in
thousands):
<TABLE>
<CAPTION>

                                                               Estimated Market
                                             Amortized Cost          Value
Maturity:
<S>                                                    <C>                <C>
    Due in one year or less                            $7,972             $7,956
    Due after one year through five years              41,668             40,391
    Due after five years through ten years             15,162             14,825
    Due after ten years                                23,283             22,724
    Mortgage-backed securities                         13,480             13,610
                                                       ------             ------
TOTAL                                                $101,565            $99,506
                                                     ========            =======
</TABLE>

Gains and losses realized on sales of investments are as follows (in thousands):

<TABLE>
<CAPTION>

                                     2000       1999           1998
                                     ----       ----           ----

<S>                               <C>          <C>             <C>
Proceeds from sales               $94,558      $205,511        $187,021
Gross gains realized                1,359         2,983          10,684
Gross losses realized             $(7,331)      $(3,307)       $(6,560)
</TABLE>

  Net  investment  income for the years  ended  December  31 are as follows  (in
thousands):
<TABLE>
<CAPTION>

                                     2000            1999          1998
                                     ----            ----          ----

<S>                                    <C>            <C>         <C>
Fixed maturities                       $8,795         $11,372     $10,802
Equity securities                         304             376         551
Cash and short-term investments         1,077           1,139       1,185
Mortgage loans                             --             152         173
Other                                      --           (174)          32
                                           --           -----          --
Total investment income                10,176          12,865      12,743
Investment expenses                     (102)           (623)        (645)
                                        -----           -----        -----
Net investment income                 $10,074         $12,242     $12,098
                                      =======         =======     =======
</TABLE>

Investments with a market value of $7,495,000 and $10,793,000 (amortized cost of
$7,545,000 and $10,789,000 as of December 31, 2000 and 1999, respectively), were
on deposit in the United States.  The deposits are required by various insurance
departments and others to support licensing requirements and certain reinsurance
contracts.

4.       Deferred Policy Acquisition Costs:

Policy  acquisition  costs are  capitalized  and amortized  over the life of the
policies.  Policy  acquisition  costs are those  costs  directly  related to the
issuance  of  insurance  policies  including  commissions,  premium  taxes,  and
underwriting  expenses net of  reinsurance  commission  income on such policies.
During  1999 the  Company  changed  its method of  calculating  deferred  policy
acquisition  costs by  including  investment  income in the  computation.  Prior
period calculations did not consider investment income. The effect of the change
was to increase policy  acquisition  costs by approximately  $4,071,000 in 1999.
Policy   acquisition   costs  both  acquired  and  deferred,   and  the  related
amortization charged to income were as follows (in thousands):


<PAGE>
<TABLE>
<CAPTION>




                                  2000            1999           1998
                                  ----            ----           ----

<S>                                <C>             <C>         <C>
Balance, beginning of year         $13,908         $16,332     $10,740
Costs deferred during year          29,999          40,241      53,658
Amortization during year          (37,453)        (42,665)     (48,066)
                                  --------        --------     --------
Balance, end of year                $6,454         $13,908     $16,332
                                    ======         =======     =======
</TABLE>

5.       Property and Equipment:

Property and equipment at December 31 are summarized as follows (in thousands):
<TABLE>
<CAPTION>

                                                                  Accumulated
                                                   2000 Cost     Depreciation      2000 Net     1999 Net
                                                   ---------     ------------      --------     --------

<S>                                                       <C>               <C>          <C>          <C>
Land                                                      $100              $--          $100         $100
Buildings                                                4,361            1,397         2,964        2,749
Office furniture and equipment                           3,681            2,742           939        1,649
Automobiles                                                 84               27            57           92
Computer equipment                                      14,018            5,686         8,332       11,034
                                                        ------            -----         -----       ------
Total                                                  $22,244           $9,852       $12,392      $15,624
                                                       =======           ======       =======      =======

</TABLE>

Accumulated  depreciation  at  December  31, 1999 was  $8,932,000.  Depreciation
expense related to property and equipment for the years ended December 31, 2000,
1999 and 1998 were $3,498,000, $2,909,000 and $1,626,000, respectively.

6.       Intangible Assets:

In accordance  with SFAS No. 121,  "Accounting  for the Impairment of Long-lived
Assets", the Company has determined the carrying value of goodwill that resulted
from the acquisition of Superior Group Management  exceeds its fair value and an
impairment  charge equal to the carrying value should be recorded as of December
31, 2000. This determination was made considering the series of continued losses
which the  company  has  experienced,  the  reduction  in the volume of premiums
written, as well as an evaluation of future cash flows. Based on the assessment,
a charge of $33,464,000  was recorded in the fourth quarter of 2000 to write-off
the remaining carrying value of the related goodwill. Such charge is included as
amortization of intangibles expense in the accompanying financial statements.

Intangible assets at December 31 are as follows (in thousands):
<TABLE>
<CAPTION>

                                     Accumulated
                      2000 Cost     Amortization      2000 Net     1999 Net
                      ---------     ------------      --------     --------

<S>                       <C>              <C>               <C>      <C>
Goodwill                  $38,262          $38,262           $--      $34,453
Deferred debt costs         5,132              585         4,547        4,718
Other                       1,293            1,293            --          354
                            -----            -----            --          ---
                          $44,687          $40,140        $4,547      $39,525
                          =======          =======        ======      =======

</TABLE>

Accumulated  amortization at December 31, 1999 was $5,163,000.  Amortization and
impairment expense related to intangible assets for the years ended December 31,
2000, 1999 and 1998 was $34,977,000, $2,194,000 and $2,040,000 respectively.


7.       Preferred Securities:

On August 12,  1997,  the  Company's  trust  subsidiary  issued $135  million in
preferred   securities   ("Preferred   Securities")  at  a  rate  of  9.5%  paid
semi-annually.   The  principal  assets  of  the  trust  subsidiary  are  senior
subordinated  notes of the Company in the principal  amount of $135 million with
an interest  rate and  maturity  date  substantially  identical  to those of the
Preferred  Securities.  Expenses of the issue  aggregated  $5.1  million and are
amortized over the term of the Preferred Securities (30 years).

The Preferred  Securities  represent  Company-obligated  mandatorily  redeemable
securities of subsidiary  holding solely parent debentures and have a term of 30
years with  semi-annual  interest  payments  commencing  February 15, 1998.  The
Preferred Securities may be redeemed in whole or in part by the holders after 10
years. The annual Preferred  Security  obligations of approximately  $13 million
per year is funded from the Company's nonstandard automobile management company.
The  nonstandard  auto funds are the result of  management  and billing  fees in
excess of  operating  costs.  Under the terms of the  indenture,  the Company is
permitted  to defer  semi-annual  interest  payments  for up to five years.  The
Company elected to defer the interest  payments  beginning in February 2000. The
Company presently intends to defer the interest payment due in August 2001.

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

o        The Company may not incur  additional  indebtedness  or  guarantee
         additional indebtedness.
o        The Company may not make certain restricted payments including loans or
         advances to  affiliates,  stock  repurchases  and a  limitation  on the
         amount of dividends is inforce.
o        The  Company  may  not  increase  its  level  of  non-investment  grade
         securities  defined as equities,  mortgage  loans,  real  estate,  real
         estate loans and non-investment grade fixed income securities.

These restrictions  currently apply as the Company's consolidated coverage ratio
was (1.52) in 2000, and will continue to apply until the Company's  consolidated
coverage  ratio is in  compliance  with the  terms of the trust  indenture.  The
Company is in compliance with these additional restrictions.

8.       Unpaid Losses and Loss Adjustment Expenses:

Activity in the  liability  for unpaid  losses and loss  adjustment  expenses is
summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                 2000       1999        1998
                                                 ----       ----        ----
<S>                                          <C>          <C>          <C>
Balance at January 1                         $152,455     $134,024     $118,988
Less reinsurance recoverables                  13,527       17,844       34,181
                                               ------       ------       ------
    NET BALANCE AT JANUARY 1                  138,928      116,180       84,807
                                              -------      -------       ------
Incurred related to:
Current year                                  127,497      214,606      204,818
Prior years                                   (14,118)      16,367       13,098
                                              --------      ------       ------
    TOTAL INCURRED                            113,379      230,973      217,916
                                              -------      -------      -------
Paid related to:
Current year                                   85,334      122,380      123,581
Prior years                                    82,108       85,845       62,962
                                               ------       ------       ------
    TOTAL PAID                                167,442      208,225      186,543
                                              -------      -------      -------
    NET BALANCE AT DECEMBER 31                 84,865      138,928      116,180
Plus reinsurance recoverables                  23,252       13,527       17,844
                                               ------       ------       ------
    BALANCE AT DECEMBER 31                   $108,117     $152,455     $134,024
                                             ========     ========     ========
</TABLE>

Reserve estimates are regularly adjusted in subsequent reporting periods, as new
facts and  circumstances  emerge which indicate that a modification of the prior
estimate is necessary. The adjustment,  referred to as "reserve development," is
inevitable  given the  complexities of the reserving  process and is recorded in
the  statements  of  earnings  in the  period  when the need for the  adjustment
becomes  apparent.  The foregoing  reconciliation  indicates  favorable  reserve
development  of  $14,118,000  on the December 31, 1999,  reserves and  deficient
reserve  developments  of  $16,367,000  and  $13,098,000  on the  reserves as of
December  31, 1998 and  December  31,  1997,  respectively.  The 1998  deficient
reserve  development  occurred  primarily due to  volatility  in the  historical
trends for nonstandard  automobile  business as the result of significant growth
during 1996 and 1997. The 1999 deficient reserve development  resulted primarily
from a higher than  expected  frequency and severity on  nonstandard  automobile
claims.  The  favorable  reserve  development  during 2000 resulted from a major
restructuring  and  strengthening of the nonstandard  automobile claims function
effective  at the  beginning  of 2000.  At that time the  Company  replaced  its
existing  claims  management  team  with new  claims  management  that  improved
performance of the claims staff. The new claims management implemented practices
and procedures to improve the effectiveness and timeliness of claims settlement.

The  anticipated  effect of inflation is implicitly  considered  when estimating
losses  and  loss  adjustment  expenses  liabilities.  While  anticipated  price
increases due to inflation are  considered  in  estimating  the ultimate  claims
costs,  increases in average claim  severities is caused by a number of factors.
Future  severities  are  projected  based  on  historical  trends  adjusted  for
implemented  changes  in  underwriting  standards,  policy  provisions,   claims
management  practices and procedures,  and general economic trends.  Anticipated
severity trends are monitored relative to actual development and are modified if
necessary.

Liabilities for loss and loss  adjustment  expenses have been  established  when
sufficient  information  has been  developed to indicated the  involvement  of a
specific insurance policy. In addition,  reserves have been established to cover
additional exposure on both known and unasserted claims.

9.       Income Taxes:

The Company files a consolidated federal income tax return with its wholly-owned
subsidiaries.  Intercompany tax sharing  agreements  between the Company and its
wholly-owned subsidiaries provide that income taxes will be allocated based upon
separate return  calculations  in accordance  with the Internal  Revenue Code of
1986, as amended.

A reconciliation of the differences between federal tax computed by applying the
federal  statutory  rate of 35% to income before income taxes and the income tax
provision is as follows (in thousands):
<TABLE>
<CAPTION>

                                                     2000          1999         1998
                                                     ----          ----         ----

<S>                                                <C>           <C>            <C>
Computed income taxes (benefit) at statutory rate  $(20,981)     $(17,812)      $612
Goodwill                                             12,176           779        503
Other                                                (4,042)        2,121        156
                                                     -------        -----        ---
Total                                               (12,847)      (14,912)     1,271
Valuation allowance                                  10,698        21,127         --
                                                     ------        ------         --
Income Tax Expense (Benefit)                        $(2,149)       $6,215      1,271
                                                    ========       ======      =====
</TABLE>



<PAGE>



The net  deferred  tax asset at December  31, 2000 and 1999 is  comprised of the
following (in thousands):
<TABLE>
<CAPTION>

                                                                               2000        1999

Deferred tax assets:
<S>                                                                          <C>           <C>
    Unpaid losses and loss adjustment expenses                               $2,787        $3,284
    Unearned premiums                                                         2,633         5,563
    Allowance for doubtful accounts                                           1,302         1,022
    Unrealized losses on investments                                          1,378         2,637
    Net operating loss carryforwards                                         18,118        13,989
    Other                                                                     8,758           303
                                                                              -----           ---
        DEFERRED TAX ASSETS                                                  34,976        26,798
                                                                             ------        ------
Defered tax liabilities:
Defered policy acquisition costs                                             (2,259)       (4,872)
Other                                                                          (892)         (799)
                                                                               -----         -----
        VALUATION ALLOWANCE                                                 (31,825)      (21,127)
                                                                            --------      --------
        NET DEFERRED TAX ASSETS                                           $        --   $        --
                                                                          ===========   ===========
</TABLE>

At December 31, 2000 the Company's net deferred tax assets are fully offset by a
valuation allowance. The company will continue to assess the valuation allowance
and to the extent it is determined  that such  allowance is no longer  required,
the tax benefit of the  remaining  net deferred tax assets will be recognized in
the future.

As of December 31, 2000,  the Company has unused net operating  loss  carryovers
available as follows (in thousands):

                   Years ending not later than December 31:         Amount
                                                                    ------

                       2002                                             $126
                       2019                                           31,859
                       2020                                           34,265
                                                                      ------
                           TOTAL                                     $66,250
                                                                     =======

Federal  income tax filings  attributed to the Company have been examined by the
IRS through 1999.

10.      Leases:

The Company leases  buildings,  furniture,  cars and equipment  under  operating
leases.  Operating leases generally  include renewal options for periods ranging
from two to seven  years  and  require  the  Company  to pay  utilities,  taxes,
insurance and maintenance expenses.

The following is a schedule of future minimum lease  payments  under  cancelable
and  non-cancelable  operating  leases  for  each of the five  years  succeeding
December 31, 2000 and thereafter, excluding renewal options (in thousands):

Year Ending December 31:
2001                                                                  $1,680
2002                                                                   1,677
2003                                                                     809
2004                                                                      38
2005 and Thereafter                                                       --

Rental  expense  charged  to  operations  in 2000,  1999 and  1998  amounted  to
$1,848,000, $2,370,000 and $1,742,000 respectively, including amounts paid under
short-term cancelable leases.

11.      Reinsurance:

The Company  limits the  maximum  net loss that can arise from a large risk,  or
risks in concentrated areas of exposure,  by reinsuring  (ceding) certain levels
of risks with other insurers or reinsurers,  either on an automatic  basis under
general  reinsurance   contracts  known  as  "treaties"  or  by  negotiation  on
substantial  individual risks. Such reinsurance  includes quota share, excess of
loss,  stop-loss and other forms of reinsurance on essentially  all property and
casualty  lines of  insurance.  The  Company  remains  contingently  liable with
respect to reinsurance  ceded,  which would become an ultimate  liability of the
Company in the event that such  reinsuring  companies  might be unable,  at some
later date,  to meet their  obligations  under the  reinsurance  agreements.  In
addition, the Company assumes reinsurance on certain risk.

Approximately 89.7% of  uncollateralized  amounts recoverable are with companies
which  maintain an A.M. Best rating of at least A+.  Another 5.6% of recoverable
amounts are with Granite  Reinsurance Company Ltd. ("Granite Re"), an affiliated
foreign  corporation  which has not applied  for an A.M.  Best  rating,  related
primarily to  commercial  business  which is ceded 100% to Granite Re, which are
fully  collateralized.  Company  management  believes  amounts  recoverable from
reinsurers are collectible.

In the fourth quarter of 1998, the Company  commuted its nonstandard  automobile
quota share reinsurance  treaties with an unrelated party at no gain or loss and
completely absolved the reinsurer of all future liabilities.

Reinsurance  activity for 2000, 1999 and 1998,  which includes  reinsurance with
related parties, is summarized as follows (in thousands):

<TABLE>
<CAPTION>

                         2000                               Direct       Assumed         Ceded          Net
                         ----                               ------       -------         -----          ---

<S>                                                       <C>             <C>         <C>           <C>
Premiums Written                                          $168,626        $5,835      $(78,621)     $95,840
Premiums Earned                                            187,720         4,918       (54,932)     137,706
Incurred losses and loss adjustment expenses               144,987         4,828       (36,436)     113,379
Commission expenses (income)                                21,234         1,041       (14,043)       8,232

                         1999

Premiums Written                                          $233,514        $2,887        $8,425     $244,826
Premiums Earned                                            252,357            88        (3,351)     249,094
Incurred losses and loss adjustment expenses               231,197         7,838        (8,062)     230,973
Commission expenses (income)                                27,352           633           435       28,420

                         1998
Premiums Written                                          $301,552        $8,612      $(40,423)    $269,741
Premiums Earned                                            305,946         8,980       (50,904)     264,022
Incurred losses and loss adjustment expenses               257,416        (6,796)      (32,704)     217,916
Commission expenses (income)                                39,954        10,438       (16,684)      33,708

</TABLE>
Amounts   recoverable  from  reinsurers  relating  to  unpaid  losses  and  loss
adjustment expenses were $23,252,000 and $13,527,000 as of December 31, 2000 and
1999,  respectively.  These  amounts  are  reported as assets and are not netted
against the liability for loss and loss adjustment  expenses in the accompanying
Consolidated Balance Sheets.


<PAGE>



12.      Related Parties:

The Company and its  subsidiaries  have entered into  transactions  with various
related parties including  transactions  with Goran and its affiliates,  Granite
Insurance Company (Granite) and Granite Re, Goran's subsidiaries.

The following balances were outstanding at December 31 (in thousands):

                                                  2000         1999

Advances to related parties:
Due from directors and officers                    $291        $265
Other receivables from related parties              389         141
                                                    ---         ---
    Total Receivables                              $680        $406
                                                   ----        ----

Reinsurance payable to affiliates                   $--      $2,124
                                                    ---      ------

The  following  transactions  occurred  with related  parties in the years ended
December 31 (in thousands):
<TABLE>
<CAPTION>

                                                              2000       1999       1998
                                                              ----       ----       ----
Reinsurance under various treaties, net:
<S>                                                            <C>      <C>      <C>
    Ceded premiums earned                                      $186     $2,850   $19,250
    Ceded losses and loss adjustment expenses incurred       (4,858)     2,932    12,850
    Ceded commissions                                            (1)       114     4,048
Consulting fees charged by various related parties            1,895      3,652     3,134
</TABLE>

The amounts due from officers and directors are non-interest  bearing loans. The
Company paid  $1,846,000,  $3,112,000  and  $2,832,000 in 2000,  1999, and 1998,
respectively,  for consulting  and other services  relative to the conversion to
the  Company's   nonstandard   automobile  operating  system.  The  Company  has
capitalized these costs as part of its nonstandard  automobile operating system.
Approximately 90% of these payments are for services provided by consultants and
vendors  unrelated  to the  Company.  During  1998,  1999 and a portion  of 2000
Stargate Solutions  ("Stargate")  managed the work of the unrelated  consultants
and vendors and, as compensation for such work,  retained  approximately  10% of
the  payments  referred  to above in return for  management  services  provided.
During 1998, Stargate was owned beneficially by certain directors of the Company
and a relative of those  directors.  Also included in consulting fees to related
parties is nil and $520,000 and $270,000 in 2000,  1999 and 1998,  respectively,
for payments to Onex,  Inc.,  an officer of whom was on the  Company's  Board of
Directors, with regard to employment matters.

13.      Regulatory Matters:

Pafco  and  IGF,  domiciled  in  Indiana,   prepare  their  statutory  financial
statements in accordance  with accounting  practices  prescribed or permitted by
the Indiana  Department  of Insurance  ("IDOI").  Statutory  requirements  place
limitations  on the amount of funds which can be  remitted  to the Company  from
Pafco  and  IGF.  The  Indiana  statute  allows  10% of  surplus  as  regard  to
policyholders  or  100%  of net  income,  whichever  is  greater,  to be paid as
dividends only from earned surplus.  The Superior  insurance  company  entities,
domiciled in Florida, prepare their statutory financial statements in accordance
with accounting  practices  prescribed or permitted by the Florida Department of
Insurance ("FDOI").  In the consent order approving the acquisition of Superior,
the FDOI  prohibited  Superior  from paying any dividends for four years without
the prior  written  approval of the FDOI.  The dividend  restriction  expired in
April 2000. 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  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.

The  NAIC  has   promulgated   risk-based   capital   (RBC)   requirements   for
property/casualty  insurance  companies  to evaluate  the  adequacy of statutory
capital and surplus in relation to investment and insurance risks, such as asset
quality, asset and liability matching,  loss reserve adequacy and other business
factors.  Regulatory  compliance is  determined  by a ratio of the  enterprise's
regulatory  total  adjusted  capital,  as defined by the NAIC, to its authorized
control level RBC, as defined by NAIC.  Generally,  a ratio in excess of 200% of
authorized  control level RBC requires no  corrective  actions by the company or
regulators.

Based upon the foregoing formula, as of December 31, 2000, the RBC caluculations
for IGF, Superior and Pafco were in excess of 200%.

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

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

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

o    Continue  to comply  with  prior  IDOI  agreements  and  orders to  correct
     business  practices,  under  which (as  previously  disclosed)  Pafco  must
     provide  monthly  financial  statements  to the  IDOI,  obtain  prior  IDOI
     approval of reinsurance  arrangements and of 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. On April 24, 2000 the
IDOI concluded its target examination of Pafco, covering loss reserves,  pricing
and reinsurance and no action was taken thereon.

Pafco informed the Iowa Department of Insurance  (IADOI) of its decision to stop
writing  new  automobile  business  in Iowa while  Pafco  reviews and revises it
program in the state. Pafco has agreed with the IADOI that it will not write any
new  nonstandard  business,  until such time as Pafco has  reduced  its  overall
nonstandard automobile policy counts in the state or has: (i) increased surplus;
or (ii) 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.

With  regard  to IGF and as a result  of the  losses  experienced  by IGF in the
discontinued crop insurance operations,  IGF has agreed with the IDOI to provide
monthly financial statements and consult monthly with the IDOI, and obtain prior
approval  for  affiliated  party  transactions.  On  January  24,  2000 the IDOI
concluded its target examination of IGF regarding 1998 loss reserves principally
related to AgPI and no  further  action by IGF was  required  as a result of the
examination.

The FDOI has concluded its market conduct, data processing,  year 2000 readiness
and financial  examinations  as of June 30, 1999 and no  significant  action was
taken as a result.  The financial review of Superior for the year ended December
31,  1999 by the FDOI has  been  completed  and no  report  has yet been  issued
thereon.

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  Insurance Group, Inc.  ("Superior  Group"),  another subsidiary of the
Company.   A  formal   administrative   hearing  to  review  the  Notice  and  a
determination  that the order  contemplated by the Notice not be issued was held
February,   2001.  A  recommended  order  has  not  yet  been  rendered  by  the
administrative  law judge. The FDOI could reject findings in a recommended order
and issue an order which could restrict Superior from paying certain billing and
policy fees to Superior  Group and include a  requirement  that  Superior  Group
repay to its subsidiary,  Superior,  billing and policy fees from prior years in
an amount of  approximately  $35.2  million.  A  restriction  on the  ability of
Superior to pay future billing and policy fees to Superior Group may necessitate
that the  Company  take  certain  actions,  which may be subject  to  regulatory
approvals,   to  reallocate   operating   revenues  and  expenses   between  its
subsidiaries.  The Company  would  vigorously  contest the  issuance of any such
order.

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

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 in a manner satisfactory to
the  Company  could  result in future  regulatory  actions or  proceedings  that
materially and adversely affect the Company.

IGF records certain  reinsurance  transactions  related to the discontinued crop
insurance  business  transacted  with the federal  government  in a manner which
differs from  prescribed  statutory  accounting  practices.  This is a permitted
practice by IDOI which has no effect on statutory surplus or net income.

Net  loss of the  insurance  subsidiaries,  as  determined  in  accordance  with
statutory accounting  practices ("SAP"),  was $17.1 million,  $32.3 million, and
$21.5 million, for 2000, 1999, and 1998,  respectively.  Consolidated  statutory
capital  and  surplus  was  approximately  $39.4  million  and $57.1  million at
December 31, 2000 and 1999, respectively.

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

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

14.      Commitments and Contingencies:

The Company,  IGFH and IGF are parties to a Strategic Alliance Agreement ("SAA")
dated February 28, 1998 with Continental  Casualty  Company  (referred to in the
SAA as "CNA").  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 an amount equal to "Average
Pre Tax Income" as defined by the SAA. The SAA further  provides  that within 30
days after  exercise of the put, IGF will execute a promissory  note payable six
months after the exercise of the Put Mechanism in the principal  amount equal to
the amount owed, as specified by the SAA. In a letter dated March 20, 2001,  CNA
advised  the  Company  that it  calculated  the  principal  amount due CNA to be
$26,265,403.  CNA also has  asserted  a claim for  amounts  allegedly  due under
certain  reinsurance  agreements  with the Company  for the 2000 crop year.  The
Company believes it has claims against CNA and defenses to CNA's exercise of the
Put  Mechanism  that may offset or reduce  amounts  owed by the  Company to CNA.
Moreover,  the Company  believes that the impending sale of IGF's crop insurance
business may provide an  opportunity  for the parties to resolve  their  claims.
However,  there can be no assurance  that the ultimate  resolution of the claims
asserted by CNA will not have material adverse effects on the Company's,  IGFH's
and IGF's financial condition or results of operations.

On  February  23,  2000,  a  complaint  for class  action was filed  against the
Company,  Goran,  three individuals who were or are officers or directors of the
Company or of Goran,  PricewaterhouseCoopers  LLP and Schwartz Levitsky Feldman,
LLP.  The case  purports  to be  brought  on  behalf  of a class  consisting  of
purchasers  of the Company's  stock or Goran's stock during the period  February
27, 1998,  through and including  November 18, 1999.  Plaintiffs  allege,  among
other things,  that defendants  misrepresented  the reliability of the Company's
reported financial statements,  data processing and financial reporting systems,
internal  controls  and loss  reserves  in  violation  of  Section  10(b) of the
Securities  Exchange  Act of 1934  ("1934  Act") and SEC Rule 10b-5  promulgated
thereunder.  The  individual  defendants  are  also  alleged  to  be  liable  as
"controlling  persons"  under  ss.20(a)  of the 1934 Act.  The  Company  and the
individual  defendants  filed a motion  to  dismiss  the  amended,  consolidated
complaint  for  failure  to  state  a  claim  and  for  failure  to  plead  with
particularity  as  required by Fed.  R. Civ.  P.9(b) and the Private  Securities
Litigation  Reform Act of 1995.  The  accounting  firms  also  filed  motions to
dismiss.  Briefing on the motions was  completed on December  18, 2000,  and the
motions presently are pending before the court.

IGF,  several  brokers  and a third  party  carrier  are  parties to a number of
pending  legal  proceedings  relating  to  agricultural  business  interrruption
policies  ("AgPI")  sold  during  1998 by the now  discontinued  crop  insurance
segment.  During 2000 all claims by the  policyholders in the AgPI lawsuits that
had been  brought  prior to December  31,  2000 were  settled by the third party
carrier  of the  policies.  In  January  2001,  one new case  was  filed by four
policyholders who had previously fully settled their AgPI claims through binding
settlement    agreements.    Discovery    is    proceeding.    IGF   remains   a
defendant/cross-claimant  relating to cross  claims in six  lawsuits  pending in
California  state court (King and Fresno  counties) and discovery is proceeding.
Over the  objections  of IGF, the third party  carrier  settled some of the AgPI
cases for amounts in excess of policy limits.  IGF and Mutual  Service  Casualty
Insurance Company, the third party carrier of the AgPI policies,  have submitted
their  claims  against  each other  related to the AgPI  settlements  to binding
arbitration. As of December 31, 2000, IGF had paid an aggregate of approximately
$28,900,000 to AgPI policyholders of which approximately $5,200,000 was incurred
during  2000.  The  unpaid  reserves  for  AgPI as of  December  31,  2000  were
$10,912,000. Certain of the settlements made by the third party carrier exceeded
established  reserves for the particular  cases  involved.  The Company does not
believe it will  ultimately be responsible for the full amount of the settlement
amounts  paid by the third party  carrier.  Based on the  information  presently
available,  the Company  believes that it has  recognized,  through loss and LAE
payments and reserves,  its ultimate loss exposure  related to AgPI. The Company
believes its  financial  reserves for the lawsuits are  sufficient  to cover the
resulting liability,  if any, that may arise from these matters.  However, there
can be no  assurance  that the  Company's  ultimate  liability  for AgPI related
claims will not be materially  greater than the aggregate $39.8 million in gross
losses already recorded in the consolidated financial statements related to this
product and will not have a material adverse effect on the Company's  results of
operations or financial condition.

The  Company  is  a  joint  and  several  guarantor  in  a  $7.25  million  debt
collateralized  by operating  assets held in an entity in which the Company is a
50% owner. The estimated fair market value of the assets approximates the debt.

Two actions have been brought in Florida against Superior Guaranty  purported to
be  brought  on behalf of a class of  persons  alleging  to be  charged  service
charges or finance  charges in  violation of Florida law. The Company has agreed
to  class  certification  of  one  of the  actions.  The  class  is  limited  to
individuals  allegedly  aggrieved  from four  years  prior to the  filing of the
complaint,  which would exclude the  plaintiff in the other action.  The Company
believes that it has  substantially  complied with the premium financing statute
and intends to vigorously defend any potential loss under both of these actions.

An assertion has been made in Florida alleging that Superior  improperly reduced
medical  benefits  payable and  improperly  calculated  interest in violation of
Florida law. The case purports to be brought on behalf of a class  consisting of
(i)  healthcare  providers  that  rendered  treatment  to Superior  insureds and
claimants of Superior insureds and (ii) such insured and claimants.  The Company
believes  the  claims is without  merit and  intends  to  vigorously  defend the
charges brought against it.

An assertion has been made in Florida against  Superior  purported to be brought
on behalf of a class consisting of healthcare  providers that rendered treatment
to and obtained a valid assignment of benefits from Superior.  The court granted
Superior's  motion to dismiss  the  amended  complaint  and  indicated  that the
allegations of the plaintiff's  amended  complaint were  inappropriate for class
certification.  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.

The  California  Department  of Insurance  ("CDOI") had  previously  advised the
Company  that it was  reviewing  a  possible  assessment  which  could  total $3
million.  This  possible  assessment  relates to the  charging  of brokers  fees
charged  to  policyholders  by  independent  agents  who  placed  business  with
Superior.  The CDOI indicated that such brokers fees charged by the  independent
agent to the  policyholder  were  improper and  requested  reimbursement  to the
policyholders by Superior. The Company did not receive any of these broker fees.
There was no action by the CDOI during 2000  regarding  the broker fees.  As the
ultimate  outcome  of this  potential  assessment  is not deemed  probable,  the
Company  has not accrued any amount in its  consolidated  financial  statements.
There  was  no  significant  development  on  this  matter  during  1999  and an
assessment has not been formally made by the CDOI.  The Company will  vigorously
defend any potential assessment and believes it will prevail.

In 2000 a product  of the now  discontinued  crop  operations  was  underwritten
insuring the revenue received by potato  producers from their 2000 harvest.  The
policy was  designed  to augment  the  multiperil  crop  insurance  program  for
potatoes. The ultimate liability from those policies will not be known until the
entire  harvest  has been  sold in  August.  Because  the price of  potatoes  at
year-end was lower than  expected  price,  the Company  established a $4,500,000
gross loss reserve for its unpaid loss obligations on this product. Although the
Company believes the loss reserve is reasonable the ultimate  liability may vary
from this estimate and there can be no assurance  that the ultimate  losses will
not exceed the reserves established to date.

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 positions.

15.      Supplemental Cash Flow Information:

Cash paid/(received) for income taxes and interest are summarized as follows (in
thousands):
<TABLE>
<CAPTION>

                                                                             2000         1999         1998
                                                                             ----         ----         ----

      Cash  paid/(received)  for federal income taxes,  net of refunds
<S>                                                                      <C>         <C>             <C>
      refunds                                                            $(6,134)    $(17,952)       $1,752
      Cash paid for interest on trust preferred                             $  --      $12,825      $12,825


</TABLE>

<PAGE>



16.      Disclosures About Fair Values of Financial Instruments:

The following  discussion  outlines the  methodologies  and assumptions  used to
determine  the  estimated  fair value of the  Company's  financial  instruments.
Considerable judgment is required to develop these fair values and, accordingly,
the estimates shown are not necessarily  indicative of the amounts that would be
realized  in a  one-time,  current  market  exchange  of all  of  the  Company's
financial instruments.

a)   Fixed Maturity, Equity Securities,  and Other Investments:  Fair values for
     fixed maturity and equity securities are based on quoted market prices.

b)   Short-term Investments,  and Cash and Cash Equivalents:  The carrying value
     for  assets  classified  as  short-term  investments,  and  cash  and  cash
     equivalents in the accompanying  Consolidated  Balance Sheets  approximates
     their fair value.

c)   Short-term Debt: The carrying value for short-term debt  approximates  fair
     value.

d)   Preferred  Securities:  There is not an  active  market  for the  preferred
     securities; however, the estimated market value as of December 31, 2000 was
     $20,250,000.

17.      Stock Option Plans:

On November 1, 1996, the Company adopted the Symons  International  Group,  Inc.
1996 Stock Option Plan (the "SIG Stock Option Plan").  The SIG Stock Option Plan
provides the Company authority to grant nonqualified stock options and incentive
stock options to officers and key employees of the Company and its  subsidiaries
and  nonqualified  stock  options to  non-employee  directors of the Company and
Goran.  Options have been granted at an exercise  price equal to the fair market
value of the  Company's  stock at date of grant.  All of the  outstanding  stock
options vest and become  exercisable in three equal  installments  on the first,
second and third  anniversaries  of the date of grant.  On October 14, 1998, all
SIG  options  were  repriced to $6.3125 per share.  In  November  1999,  certain
officers  and non  employee  directors  of the  Company  surrendered  a total of
1,153,600 stock options.

Information regarding the SIG Stock Option Plan is summarized below:
<TABLE>
<CAPTION>

                                                        2000                        1999                      1998
                                                      Weighted                    Weighted                  Weighted
                                                       Average                     Average                   Average
                                                      Exercise                    Exercise                  Exercise
                                          Shares        Price        Shares         Price       Shares        Price
                                          ------        -----        -------        -----       ------        -----
Outstanding  at the  beginning of the
<S>                                         <C>          <C>          <C>            <C>        <C>            <C>
 year                                       213,033      $6.3125      1,457,833      $6.3125    1,000,000      $6.3125
Granted                                   1,287,000       0.5436             --       6.3125      478,000       6.3125
Exercised                                                               (1,667)       6.3125      (4,332)       6.3125
Forfeited/Surrendered                     (155,200)       5.0391    (1,243,133)       6.3125     (15,835)       6.3125
                                          ---------       ------    -----------       ------     --------       ------
Outstanding at the end of the year        1,344,833       0.9400        213,033       6.3125    1,457,833       6.3125
                                          =========       ======        =======       ======    =========       ======
Options exercisable at year end              73,500      $6.3125        120,366      $6.3125      760,289      $6.3125
Available for future grant                  155,167                   1,286,967                    42,167


</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                                                         Options                        Options
                                                                       Outstanding                    Exercisable
                                                        Weighted         weighted                       Weighted
                                                        Average          Average                        Average
                                        Number      Remaining Life    Exercise Price     Number      Exercise Price
                                                              -----            -----                          -----
Range of Exercise Prices             Outstanding       (in years)                      Exercisable
------------------------             -----------       ----------                      -----------
<S>                                   <C>                     <C>             <C>            <C>            <C>
         $0.50 - $0.8750              1,253,000               9.4             $.5448             --              --
             $6.3125                     91,833               6.9            $6.3125         73,500         $6.3125
                                         ------               ---                            ------
                                      1,344,833               9.2                            73,500
                                      =========               ===                            ======
</TABLE>


The Board of Directors of Superior Group  Management  adopted the GGS Management
Holdings,  Inc. Stock Option Plan (the "Superior Group  Management  Stock Option
Plan"),  effective  April 30, 1996. The Superior Group  Management  Stock Option
Plan authorizes the granting of nonqualified and incentive stock options to such
officers and other key  employees as may be designated by the Board of Directors
of  Superior  Group  Management.   Options  granted  under  the  Superior  Group
Management  Stock Option Plan have a term of ten years and vest at a rate of 20%
per year for the five years after the date of the grant.  The exercise  price of
any options  granted under the Superior  Group  Management  Stock Option Plan is
subject  to the  following  formula:  50% of each  grant of  options  having  an
exercise price determined by the Board of Directors of Superior Group Management
at its discretion,  with the remaining 50% of each grant of options subject to a
compound  annual increase in the exercise price of 10%, with a limitation on the
exercise price escalation as such options vest.

Information  regarding  the  Superior  Group  Management  Stock  Option  Plan is
summarized below:
<TABLE>
<CAPTION>


                                                                         Options                        Options
                                                                       Outstanding                    Exercisable
                                                        Weighted         weighted                       Weighted
                                                        Average          Average                        Average
                                        Number      Remaining Life    Exercise Price     Number      Exercise Price
                                                              -----            -----                          -----
Range of Exercise Prices             Outstanding       (in years)                      Exercisable
------------------------             -----------       ----------                      -----------
<S>                                         <C>              <C>              <C>            <C>             <C>
              $44.17                        41,717           5.3 yrs          $44.17         33,364          $44.17
         $58.79 - $64.67                    41,715           5.3 yrs          $64.66         33,362          $64.66
</TABLE>

The Company applies  Accounting  Principles Board Opinion No. 25, "Accounting of
Stock Issued to Employees"  and related  interpretation  in  accounting  for its
stock option plans.  Accordingly,  no compensation  cost has been recognized for
such plans.  Had compensation  cost been determined,  based on the fair value at
the grant dates for options granted under both the SIG Stock Option Plan and the
Superior  Group  Management  Stock  Option  Plan  during  2000,  1999  and  1998
consistent with the method of SFAS No. 123, "Accounting for
<TABLE>
<CAPTION>

                                                      2000                       1999                      1998
                                                    Weighted                   Weighted                  Weighted
                                                     Average                   Average                    Average
                                                    Exercise                   Exercise                  Exercise
                                         Shares       Price       Shares        Price        Shares        Price
                                         ------       -----       ------        -----        ------        -----
Outstanding  at the  beginning of the
<S>                                        <C>          <C>          <C>           <C>          <C>          <C>
 year                                      92,232       $51.75       94,732        $51.75       95,282       $51.75
Granted                                        --           --           --            --           --           --
Forfeited                                 (8,800)       $51.48      (2,500)        $51.75        (550)        51.75
                                          -------       ------      -------        ------        -----        -----
Outstanding at the end of the year         83,432       $54.42       92,232        $51.75       94,732       $51.75
                                           ======       ======       ======        ======       ======       ======
Options exercisable at year end            66,726                    42,448                     24,601
Available for future grant                 27,679                    18,879                     16,379
</TABLE>

Stock-Based  Compensation,"  the  Company's pro forma net earnings and pro forma
earnings per share for the years ended  December  31, 2000,  1999 and 1998 would
have been as follows:

<TABLE>
<CAPTION>

(Dollars  in  thousands,  except per    2000 As        2000        1999 As        1999         1998 As       1998
share amounts)                         Reported     Pro forma     Reported      Pro forma     Reported     Pro forma
                                       --------     ---------     --------      ---------     --------     ---------
<S>                                     <C>           <C>          <C>            <C>          <C>          <C>
Net earnings (loss)                     $(88,425)     $(88,709)    $(80,816)      $(82,513)    $(14,417)    $(16,352)
Basic earnings (loss) per share           $(8.51)       $(8.54)      $(7.78)        $(7.95)                   $(1.57)
                                                                                               $(1.39)
Fully  diluted  earnings  (loss) per
share                                     $(8.51)       $(8.54)      $(7.78)        $(7.95)      $(1.39)      $(1.57)
</TABLE>

The fair value of each  option  grant used for  purposes of  estimating  the pro
forma  amounts  summarized  above is  estimated  on the date of grant  using the
Black-Scholes  option-price model with the weighted average assumptions shown in
the following table:

                                                        SIG             SIG
                                                      2000 Grants   1998 Grants

Risk-free interest rates                                      5%         5.4%
Dividend yields                                               --          --
Volatility factors                                          106%          41%
Weighted average expected life                         4.0 Years     3.2 Years
Weighted average fair value per share                      $0.40        $5.73

18.      Quarterly Financial Information (unaudited):

Quarterly  financial  information  of  continuing  operations  is as follows (in
thousands):
<TABLE>
<CAPTION>
(in thousands)                                             First      Second      Third      Fourth     Total
                                               -----      ------      -----      ------     -----
                        2000
<S>                                                      <C>         <C>        <C>         <C>          <C>
Gross written premiums                                   $59,859     $30,032    $45,842     $38,728      $174,461
Net premiums written                                      30,469      19,346     28,086      17,939        95,840
Net premiums earned                                       43,042      37,376     30,857      26,431       137,706
Total revenues                                            50,254      41,822     33,997      29,875       155,948
Net operating loss from continuing operations (1)
                                                         (5,511)     (4,837)    (5,952)     (2,697)      (18,997)
Net earnings (loss) from continuing operations           (9,388)    (10,365)   (12,528)    (39,103)      (71,384)
Basic  operating  loss  per  share  from  continuing
operations (1)                                             (.53)       (.47)      (.57)       (.26)        (1.83)
Net earnings (loss) from  continuing  operations per
share - basic and diluted                                  (.91)       (.99)     (1.21)      (3.76)        (6.87)

                        1999
Gross written premiums                                   $61,299     $66,345    $57,485     $51,272      $236,401
Net premiums written                                      73,686      64,153     56,078      50,909       244,826
Net premiums earned                                       65,397      66,837     59,238      57,622       249,094
Total revenues                                            71,768      73,437     64,780      66,212       276,197
Net  operating   earnings   (loss)  from  continuing
operations (1)                                             1,938    (12,867)   (16,696)    (20,749)      (48,374)
Net earnings (loss) from continuing operations           (3,102)    (10,792)   (13,793)    (37,756)      (65,443)
Basic  operating  earnings  (loss)  per  share  from
continuing operations (1)                                    .19      (1.24)     (1.61)      (2.00)        (4.66)
Net earnings (loss) from  continuing  operations per
share - basic and diulted                                  (.30)      (1.04)     (1.33)      (3.63)        (6.30)

</TABLE>
(1)  Operating  earnings and per share amounts exclude  amortization,  interest,
     taxes,  realized  capital  gains and  losses,  minority  interest,  and any
     extraordinary items.

In the fourth quarter of 2000, the Company recorded an impairment charge related
to goodwill of $33.5 million.

In the fourth quarter of 1999, the Company provided for a valuation allowance on
its net deferred tax assets of $23.1 million.

During  the  fourth  quarter  of 1999  the  Company  increased  reserves  on its
nonstandard  automobile  business  by $6.9  million  for both  current and prior
accident years.

19.      Subsequent Events

On February  19,  2001,  CNA  exercised a Put  Mechanism  under the SAA with the
Company,  IGFH  and  IGF.  See  Note  14 -  Commitments  and  Contingencies  for
additional discussion regarding the effect of the Put Mechanism.

20.      Management's Plans

The Company  reported,  net losses of $88.4  million  and $80.8  million for the
years 2000 and 1999 respectively. While the stockholders' equity at December 31,
2000 is a deficit of approximately $112.4 million, the Company has a thirty year
mandatorily  redeemable trust preferred stock  outstanding of $135 million at an
interest rate of 9.5%. The Preferred Securities are not due for redemption until
2027. The insurance  subsidiaries have statutory surplus of approximately  $39.4
million upon which the Company conducts its insurance  operations ($28.0 million
of statutory surplus after codification).  Management has initiated  substantial
changes  in  operational  procedures  in an  effort  to return  the  Company  to
profitable  levels and to improve  its  financial  condition.  Early in the year
2000,  the  nonstandard  auto  insurance  segment hired new  President,  a Chief
Information Officer,  and pricing and claims management.  The Company has and is
continuing to raise its rates in a market environment where increasing rates and
withdrawal  from the  market  by  other  companies  shows  positive  trends  for
improving profitability of nonstandard automobile underwriters.

Management  believes  that despite the recent  losses and the  deterioration  in
stockholders equity and statutory surplus, it has developed a business plan that
if successfully implemented, can substantially improve operating results and its
financial condition.

21.      Discontinued Operations

In December  2000, the Company  initiated the  divestiture of its crop insurance
segment.  This business was predominantly  written through IGF. The transaction,
if  completed,  will  transfer  ownership  of certain crop  insurance  accounts,
effective  with the 2001 crop cycle.  Management  does not expect any  remaining
crop  business to be  material  to the  consolidated  financial  statements  and
accordingly has discontinued reporting crop insurance as a business segment. The
results  of the crop  insurance  segment  has been  reflected  as  "Discontinued
Operations" in the accompanying consolidated financial statements.


<PAGE>



Summarized  results  of  operations  and  financial  position  for  discontinued
operations were as follows:
<TABLE>
<CAPTION>

Statements of Earnings (Losses)
(in thousands)
Year Ended December 31,                                                   2000            1999            1998

<S>                                                                     <C>             <C>             <C>
Gross premiums written                                                  $241,748        $237,286        $243,026
                                                                        ========        ========        ========
Net premiums written                                                     $26,466         $12,737         $62,467
                                                                         =======         =======         =======

     Net premiums earned                                                 $26,531         $14,240         $60,901
     Net investment and fee income                                         1,229             749           4,047
     Net realized capital gain                                                10              21             217
                                                                              --              --             ---
Total revenues                                                            27,770          15,010          65,165

     Loss and loss adjustment expenses                                    40,690          34,225          52,550
     Policy acquisition and general and administrative expenses            2,059             215          21,906
     Interest and amortization expense                                     1,162           1,113             502
                                                                           -----           -----             ---
Total expenses                                                            43,911          35,553          74,958

Loss before income taxes                                                 (16,141)        (20,543)         (9,793)

Income taxes:
     Current income tax (benefit)                                             --          (5,852)         (7,873)
     Deferred income tax expense                                              --             682           4,564
                                                                              --             ---           -----
Total income tax expense (benefit)                                            --          (5,170)         (3,309)
                                                                              --          -------         -------

Loss from operations of discontinued segment                             (16,141)        (15,373)         (6,484)
Loss on disposal of discontinued segment                                    (900)             --              --
                                                                            -----             --              --
Net loss from discontinued operations                                   $(17,041)       $(15,373)        $(6,484)
                                                                        =========       =========        ========
</TABLE>


Net Assets of Discontinued Operations:  (in thousands)                      2000
                                                                            ====

Assets:
Cash and invested assets                                                  $3,522
Receivables, net of allowance for doubtful accounts                       22,491
Reinsurance recoverable on paid and unpaid losses, net                    84,242
Prepaid reinsurance premiums                                              10,361
Property and equipment, net of accumulated depreciation                    5,730
Intangible assets                                                          4,280
Other assets                                                               2,124

Liabilities:
Losses and loss adjustment expenses                                       70,848
Unearned premiums                                                         10,361
Reinsurance Payables                                                      41,143
Notes payable                                                              1,534
Other liabilities                                                          7,480
                                                                           -----

Net assets of discontinued operations                                     $1,384
                                                                          ======



<PAGE>


MANAGEMENT RESPONSIBILITY


Management recognizes its responsibility for conducting the Company's affairs in
the  best  interests  of  all  its  shareholders.   The  consolidated  financial
statements and related  information in this Annual Report are the responsibility
of  management.  The  consolidated  financial  statements  have been prepared in
accordance with generally accepted  accounting  principles which involve the use
of judgement and estimates in applying the accounting principles selected. Other
financial  information  in this  Annual  Report is  consistent  with that in the
consolidated financial statements.

The Company maintains systems of internal controls which are designed to provide
reasonable  assurance that accounting records are reliable and to safe-guard the
Company's  assets.  The  independent  accounting  firm of BDO  Seidman,  LLP has
audited and reported on the Company's consolidated financial statements for 2000
and 1999.  Their  opinion is based upon audits  conducted by them in  accordance
with  generally  accepted  auditing  standards  to  obtain  assurance  that  the
consolidated financial statements are free of material misstatements.

The Audit  Committee  of the Board of  Directors,  the members of which  include
outside directors,  meets with the independent  external auditors and management
representatives  to review the internal  accounting  controls,  the consolidated
financial  statements  and other  financial  reporting  matters.  In addition to
having  unrestricted  access  to the  books  and  records  of the  Company,  the
independent  external  auditors  also  have  unrestricted  access  to the  Audit
Committee. The Audit Committee reports its findings and makes recommendations to
the Board of Directors.



/s/ Douglas H. Symons
Chief Executive Officer
March 13, 2001


<PAGE>




Board of Directors And Stockholders of Symons International Group, Inc.
And Subsidiaries

Symons International Group, Inc.
Indianapolis, Indiana

We  have  audited  the  accompanying   consolidated  balance  sheets  of  Symons
International  Group,  Inc. and subsidiaries  (the "Company") as of December 31,
2000 and 1999,  and the related  consolidated  statements  of  earnings  (loss),
changes  in  stockholders'  equity  (deficit)  and cash flows for the years then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits. The consolidated  statements of earnings (loss),
changes in stockholders'  equity and cash flows of Symons  International  Group,
Inc. and  subsidiaries  for the year ended  December  31, 1998,  were audited by
other  auditors  whose  report dated April 13,  1999,  expressed an  unqualified
opinion on those statements.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall  consolidated  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the 2000 and 1999 consolidated  financial statements referred to
above present  fairly,  in all material  respects,  the  consolidated  financial
position of Symons International Group, Inc. and subsidiaries as of December 31,
2000 and 1999, and the results of their  operations and their cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the Untied States of America.




BDO  Seidman, LLP
Grand Rapids, Michigan
March 13, 2001


<PAGE>


Board of Directors And Stockholders of Symons International Group, Inc.
And Subsidiaries

In our opinion,  the  consolidated  statements  of earnings  (loss),  changes in
stockholders'  equity (deficit),  and cash flows for the year ended December 31,
1998 present  fairly,  in all material  respects,  the results of operations and
cash flows of Symons  International Group, inc. and Subsidiaries (the "Company")
for the year ended  December 31, 1998 in conformity  with  accounting  practices
generally accepted in the United States of America.  These financial  statements
are the  responsibility of the Company's  management;  our  responsibility is to
express  an  opinion  on  these  financial  statements  based on our  audit.  We
conducted our audit of these  statements in accordance  with auditing  standards
generally  accepted in the United States of America,  which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements  assessing the accounting  principles used and significant  estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion  expressed
above. We have not audited the consolidated  financial statements of the company
for any period subsequent to December 31, 1998.


/s/ PricewaterhouseCoopers LLP
Indianapolis, Indiana
April 13, 1999




<PAGE>


Stockholder Information

Corporate Offices
Symons International Group, Inc.
4720 Kingsway Drive
Indianapolis, Indiana  46205
(317) 259-6300

Registrar and Transfer Agent
National City Bank
4100 West 150th Street
3rd Floor
Cleveland, Ohio  44135-1385

Independent Public Accountants
BDO Seidman, LLP
99 Monroe, Avenue, N.W., Suite 800
Grand Rapids, Michigan  49503-2698

Annual Meeting of Stockholders
4720 Kingsway Drive
Indianapolis, Indiana  46205
May 30, 2001
10:00 A.M. (E.S.T.)


Annual Report on Form 10-K
A copy of the Annual Report on Form 10-K for Symons  International  Group,  Inc.
for the year ended  December 31, 2000,  filed with the  Securities  and Exchange
Commission,  may be obtained, without charge, upon request to the individual and
address noted under Shareholder Inquiries.


<PAGE>


Market and Dividend Information

As of July 1, 2000 Symons International Group, Inc.'s common stock began trading
on the OTC  Bulletin  Board  under the  symbol  SIGC.OB.  Prior to this date the
Company's stock was traded on the NASDAQ Stock Market's National Market.

                              STOCK TRADING PRICES


                                    2000              1999

Quarter Ended                High      Low       High        Low

March 31                      $2.16      $.86     $9.625     $4.125

June 30                       $1.31      $.22     $6.375     $4.000

September 30                  $1.25      $.53     $8.438     $4.250

December 31                    $.81      $.16     $5.625     $1.156

As previously reported on October 25, 2000 the Nasdaq Listing and Hearing Review
Council  affirmed the  decision of the Nasdaq  Listing  Qualifications  Panel to
delist the Company's securities from the Nasdaq National Market.

As of March 20, 2001, the Company had approximately  1,200 stockholders based on
the  number of holders of record  and an  estimate  of the number of  individual
participants represented by securities position listings.

Symons  International  Group,  Inc. did not declare or pay cash dividends on its
common stock during the years ended December 31, 2000 and 1999. The Company does
not presently plan to pay cash dividends on its common stock.

<PAGE>


Shareholder Inquiries

Inquiries should be directed to:
Douglas H. Symons
Chief Executive Officer
Symons International Group, Inc.
Tel:  (317) 259-6413
E-mail:  dsymons@sigins.com

Board of Directors

G. Gordon Symons
Chairman of the Board
Symons International Group, Inc.
Goran Capital Inc.

Alan G. Symons
President and Chief Executive Officer
Goran Capital Inc.

Vice Chairman of the Board
Symons International Group, Inc.

Douglas H. Symons
President and Chief Executive Officer
Symons International Group, Inc.

Vice Chairman of the Board
Symons International Group, Inc.

Vice President and Chief Operating Officer
Goran Capital Inc.

John K. McKeating
Retired former President and Owner
Vision 2120 Optometric Clinics

Robert C. Whiting
President, Prime Advisors, Ltd.

Larry S. Wechter
Managing Director and Chief Executive Officer
Monument Advisers, Inc.

Gene Yerant
Executive Vice President
Symons International Group, Inc.
Chief  Operating  Officer and President
Superior Insurance Group, Inc.



<PAGE>


Executive Officers

Douglas H. Symons
President, Chief Executive Officer and Secretary
Symons International Group, Inc.

Earl R. Fonville
Vice President, Chief Financial Officer
Symons International Group, Inc.

Gene Yerant
Executive Vice President
Symons International Group, Inc.
Chief Operating  Officer and President
Superior Insurance Group, Inc.

Gregg Albacete
Chief Information Officer
Symons International Group, Inc.

Company, Subsidiaries and Branch Offices

CORPORATE OFFICE

Symons International Group, Inc.
4720 Kingsway Drive
Indianapolis, Indiana  46205
Tel:  317-259-6300
Fax:  317-259-6395
Website:  www.sigins.com

SUBSIDIARIES AND BRANCHES

Superior Insurance Group, Inc.
4720 Kingsway Drive
Indianapolis, Indiana  46205
Tel:  317-259-6300
Fax:  317-259-6395

Pafco General Insurance Company
4720 Kingsway Drive
Indianapolis, Indiana  46205
Tel:  317-259-6300
Fax:  317-259-6395

Superior Insurance Company
280 Interstate North Circle, N.W., Suite 500
Atlanta, Georgia  30339
Tel:  770-952-4885
Fax:  770-988-8583

IGF Insurance Company
4720 Kingsway Drive
Indianapolis, Indiana  46205
Tel:  317-259-6300
Fax:  317-259-6395


Superior Insurance Company
1745 West Orangewood Road, Suite 210
Orange, California  92826
Tel:  714-978-6811
Fax:  714-978-0353




Superior Insurance Company
6303 Little River Turnpike
Suite 220
Alexandria, Virginia  22312
703-916-8001

Opens May 15th
Superior Insurance Company
150 Monument Road, Suite 610
Bala Cynwyd, Pennsylvania    19004-1701
No Phone Available At This Time