[GRAPHIC OMITED]


                                                                [GRAPHIC OMITED]


                        SYMONS INTERNATIONAL GROUP, INC.

                               2002 ANNUAL REPORT


<PAGE>


                        SYMONS INTERNATIONAL GROUP, INC.

                          ANNUAL REPORT TO SHAREHOLDERS

                                DECEMBER 31, 2002


CORPORATE  PROFILE

Symons International Group, Inc. owns insurance companies principally engaged in
the  sale  of  nonstandard  automobile insurance.  Superior Insurance Company of
Tampa,  Florida  and  Pafco  General  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.

The  Company  was  previously engaged in the crop insurance business through its
subsidiary, IGF Insurance Company.  On June 6, 2001, the Company exited the crop
insurance business when IGF Insurance Company sold its crop insurance operations
to  a third party. Accordingly, 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>
<CAPTION>

TABLE OF CONTENTS                                                                      PAGE
-------------------------------------------------------------------------------------  ----
<S>                                                                                     <C>
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     3
Chairman's Report to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . .     4
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     5
Management's Discussion and Analysis of Financial Condition and Results of Operations     6
Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . .    17
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . .    21
Reports of Independent Accountants. . . . . . . . . . . . . . . . . . . . . . . . . .    45
Shareholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    46
Roster of Directors and Executive Officers. . . . . . . . . . . . . . . . . . . . . .    47
Subsidiary and Branch Office Locations. . . . . . . . . . . . . . . . . . . . . . . .    48
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

FINANCIAL  HIGHLIGHTS
For  the  years  ended  December  31,
(In  thousands,  except  per  share  data)
                                                                             2002        2001        2000       1999       1998
                                                                          ----------  ----------  ----------  ---------  ---------
<S>                                                                       <C>         <C>         <C>         <C>        <C>
Gross premiums written . . . . . . . . . . . . . . . . . . . . . . . . .  $ 107,775   $ 161,092   $ 174,461   $236,401   $310,164
Net operating earnings (loss) from continuing operations (1) . . . . . .    (16,047)    (14,574)    (18,997)   (48,374)      (335)
Net earnings (loss) from discontinued operations . . . . . . . . . . . .          -      (2,156)    (17,041)   (15,373)    (6,484)
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . .    (35,260)    (32,892)    (88,425)   (80,816)   (14,417)
Basic operating earnings (loss) per share from continuing operations (1)      (1.55)      (1.40)      (1.83)     (4.66)     (0.03)
Basic earnings (loss)  per share from discontinued operations. . . . . .          -       (0.21)      (1.64)     (1.48)     (0.62)
Basic earnings (loss) per share. . . . . . . . . . . . . . . . . . . . .      (3.40)      (3.17)      (8.51)     (7.78)     (1.39)
Shareholders' equity (deficit) . . . . . . . . . . . . . . . . . . . . .   (178,879)   (144,012)   (112,445)   (24,980)    61,995
Return on average equity (2) . . . . . . . . . . . . . . . . . . . . . .  N/A         N/A         N/A         N/A          (20.5%)
Book value (deficit) per share . . . . . . . . . . . . . . . . . . . . .     (17.22)     (13.87)     (10.83)     (2.41)      5.97
Market value per share . . . . . . . . . . . . . . . . . . . . . . . . .       0.03        0.07        0.36       1.44       7.25
<FN>

(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  shareholders'  equity  in  2002,  2001,  2000  and  1999.
</TABLE>


                        SYMONS INTERNATIONAL GROUP, INC.


                               [GRAPHIC  OMITED]


                               [GRAPHIC  OMITED]


CORPORATE  STRUCTURE


<PAGE>
Chairman's  Report  to  Shareholders

May  27,  2003


Dear  Fellow  Shareholder:


Despite a difficult market that permeated the insurance industry since September
11,  2001,  we are seeing improvement in our company's operations as a result of
key  changes  we  have  made.

The  company  reached  a pinnacle in its operations in the late 1990's.  We were
writing  premiums  in  excess  of  $500 million and realizing pre-tax profits in
excess  of  $20  million.  The  latter  part  of  that  era  saw a change in the
underwriting  of insurance in those fields that we were most active, nonstandard
auto  insurance  and  crop  insurance.

The  largest  writer  in  the nonstandard field with premiums in the area of $10
billion decided in the latter half of the 90's that it would undertake a program
of  rate  cutting  to  gain  market  share  of  the business.  This forced other
nonstandard  insurers  to  reduce  or  hold  the  rates  at levels that were not
economical in an attempt to maintain business that would be otherwise lost.  The
results  were  that  we,  like  others  in the same field of insurance activity,
struggled  with  increasing  losses.  This  came at a time when the markets were
unable  to  effectively  increase  rates to meet the added cost of deteriorating
loss  experience.

We  cut  costs  of  operations in an effort to produce a profitable portfolio of
this  class  of  business.  We  took  the  dramatic step of releasing employees,
including  several  of  the  top  personnel in the company.  We culminated these
changes in 2002 by appointing Douglas Symons as Chief Executive Officer of Goran
Capital  Inc.

Further,  the company stopped writing business in jurisdictions where rates were
inadequate  and  concentrated on renewing the business that was performing best.
We  received  some help earlier on when the principal writer of nonstandard auto
insurance  decided  that  the  loss of profits they encountered by their zeal to
capture  a larger share of the business was not favoring them.  This return to a
more normal market assisted us, and along with other changes we made, we now see
improving  results.

We  put  the business of IGF on the block two years ago and sold it to a leading
writer  of  this  class  of  insurance.  2002 was their first full year with the
business  they  acquired  from  us.  They were hit with net losses that exceeded
earned  premiums  by  approximately  $50  million, which is an indication of the
feast  or  famine  nature  of  the  crop  insurance  business.

It  has  been a hard grind over the past several years.  Not only have we had to
deal  with  the  matters I mentioned, the insurance industry has been in turmoil
since  September  11,  2001  when  terrorist  losses  exceeded  $150  billion.

We  have  reduced the number of staff from 342 to 209 and our marketing, claims,
and  accounting  departments  have  been  placed under new management.  They are
doing an admirable job and with the strong executive team Douglas has assembled,
I  am  encouraged  that  we  are  on  the  road back to sensibility and profits.

The Board of Directors have stuck with us through these trying times and I would
be remiss if I did not thank them and congratulate the executives of the company
and  our  employees  for the brightening picture I feel they are bringing to us.




G.  Gordon  Symons



<PAGE>

SELECTED  CONSOLIDATED  HISTORICAL  FINANCIAL  DATA
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.  All information is in thousands, except share, per
share  and  ratio  data.
<TABLE>
<CAPTION>
<S>                                          <C>         <C>         <C>         <C>        <C>
                                                  2002        2001        2000       1999       1998
                                             ----------  ----------  ----------  ---------  ---------
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Gross Premiums Written. . . . . . . . . . .  $ 107,775   $ 161,092   $ 174,461   $236,401   $310,164
Net Premiums Earned . . . . . . . . . . . .     37,662      76,947     137,706    249,094    264,022
Fee Income. . . . . . . . . . . . . . . . .      9,341      12,295      14,140     15,185     16,431
Net Investment Income . . . . . . . . . . .      4,139       6,286      10,074     12,242     12,098

Income (Loss) from Continuing Operations. .  $ (35,260)  $ (30,736)  $ (71,384)  $(65,443)  $ (7,933)
Income (Loss) from Discontinued Operations.          -      (2,156)    (17,041)   (15,373)    (6,484)
                                             ----------  ----------  ----------  ---------  ---------
Net Income (Loss) . . . . . . . . . . . . .  $ (35,260)  $ (32,892)  $ (88,425)  $(80,816)  $(14,417)
                                             ==========  ==========  ==========  =========  =========

PER COMMON SHARE DATA:
Basic Income (Loss) from Continuing
   Operations . . . . . . . . . . . . . . .  $   (3.40)  $   (2.96)  $   (6.87)  $  (6.30)  $   (.76)
Basic Income (Loss) from Discontinued
   Operations . . . . . . . . . . . . . . .          -       (0.21)      (1.64)     (1.48)      (.62)
                                             ----------  ----------  ----------  ---------  ---------
Basic Net Income (Loss) . . . . . . . . . .  $   (3.40)  $   (3.17)  $   (8.51)  $  (7.78)  $  (1.38)
                                             ==========  ==========  ==========  =========  =========
Basic Weighted Average Shares Outstanding .     10,385      10,385      10,385     10,385     10,402
                                             ==========  ==========  ==========  =========  =========

RATIOS:
Loss and LAE Ratio (1). . . . . . . . . . .      127.9%       91.5%       82.3%      92.7%      82.5%
Expense Ratio (2) . . . . . . . . . . . . .       30.1%       36.7%       38.8%      31.6%      22.2%
                                             ----------  ----------  ----------  ---------  ---------
Combined Ratio (3). . . . . . . . . . . . .      158.0%      128.2%      121.1%     124.3%     104.7%
                                             ==========  ==========  ==========  =========  =========

CONSOLIDATED BALANCE SHEET DATA:
Total Investments . . . . . . . . . . . . .  $  54,673   $ 107,027   $ 134,140   $201,887   $220,366
Total Assets. . . . . . . . . . . . . . . .    148,072     244,132     287,957    373,812    448,885
Loss and Loss Adjustment Expense Reserves .     67,204      81,142     108,117    152,455    134,024
Trust Preferred Securities. . . . . . . . .    135,000     135,000     135,000    135,000    135,000
Total Shareholders' Equity (Deficit). . . .   (178,879)   (144,012)   (112,445)   (24,980)    61,995
Book Value (Deficit) Per Share. . . . . . .     (17.22)     (13.87)     (10.83)     (2.41)      5.97
<FN>

(1)  Loss  and LAE Ratio: The ratio of loss and loss adjustment expenses ("LAE")
     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 and the Expense Ratio.
</TABLE>

<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),"  "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)  the  effect on customers, agents,
employees and others due to the Company's receipt of going concern opinions from
its accountants; (ii) general economic conditions, including prevailing interest
rate  levels and stock market performance; (iii) factors affecting the Company's
nonstandard  automobile  operations  such  as  rate  increase  approval,  policy
renewals,  new  business  written  and  premium  volume;  and  (iv)  the factors
described  in  this  section  and  elsewhere  in  this  report.

OVERVIEW

Symons  International  Group, Inc. (the "Company") owns insurance companies that
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 73.8% owned subsidiary of Goran Capital Inc.
("Goran").

THE  COMPANY'S  ACCOUNTANTS  HAVE  ISSUED  A  GOING  CONCERN  OPINION

The  Company's  accountants  have  issued  reports  on  their  audits  of  the
Consolidated  Financial  Statements  of  the Company as of December 31, 2001 and
December 31, 2002 which address doubt as to the Company's ability to continue as
a  going concern given the recurring operating losses experienced by the Company
over  the  past  few  years  and  the  Company's  net  capital deficiency. See -
Liquidity  and  Capital  Resources  for  a  discussion  of management's plans to
address  these  matters.

STRATEGIC  ALIGNMENT

As  previously  announced, in the fourth quarter of 2000, management initiated a
strategic  review of the Company's operations. This review resulted in a plan to
divest  the  Company's  crop  insurance segment, allowing management to focus on
nonstandard  automobile  insurance.  In  June  2001,  the  Company sold its crop
segment  and adopted a plan to wind-down the 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.

NONSTANDARD  AUTOMOBILE  INSURANCE  OPERATIONS

Pafco,  Superior, Superior Guaranty Insurance Company ("Superior Guaranty"), and
Superior  American  Insurance  Company  ("Superior American") are engaged in the
writing  of  insurance  coverage  for  automobile  physical damage and liability
policies for nonstandard risks.  Nonstandard risk insureds are those individuals
who are unable to obtain insurance coverage through standard market carriers due
to  factors  such  as  poor  premium  payment  history,  driving  experience  or
violations,  particular  occupation  or  type  of  vehicle.  The  Company offers
several  different  policies that are directed towards different classes of risk
within  the  nonstandard market.  Premium rates for nonstandard risks are higher
than  for standard risks.  Since it can be viewed as a residual market, the size
of  the  nonstandard  private passenger automobile insurance market changes with
the  insurance  environment  and  grows  when the standard coverage becomes more
restrictive.  Nonstandard  policies have relatively short policy periods and low
limits  of  liability. 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.

RESULTS  OF  OPERATIONS

OVERVIEW

2002  Compared  to  2001

For  the  year  2002,  the  Company  reported a loss on continuing operations of
$(35,260,000)  or  $(3.40)  per  share  (basic  and diluted). Loss on continuing
operations  for  the year 2001 was $(30,736,000) or $(2.96) per share (basic and
diluted).  Loss  before  income taxes and distributions on minority interest was
$(19,236,000)  and  $(15,930,000)  for  2002  and  2001, respectively. Operating
earnings  (loss)  from  continuing  operations, measured as income/(loss) before
amortization,  interest,  taxes,  realized capital gains and losses and minority
interest  was $(16,047,000) or $(1.55) per share (basic and diluted) in 2002 and
$(14,574,000)  or  $(1.40)  per  share  in  2001  (basic  and  diluted).

The  loss  from  discontinued  operations  was nil and $(2,156,000) for 2002 and
2001,  respectively.

The  Company  is  continuing  to  implement rate increases, improve underwriting
actions  and  improve  the  claims  department process and procedures to achieve
profitability. A number of systems have been automated and service problems have
been  eliminated  or  significantly  reduced.

2001  Compared  To  2000

For  the  year  2001,  the  Company  reported a loss on continuing operations of
$(30,736,000)  or  $(2.96)  per  share  (basic  and diluted). Loss on continuing
operations  for  the year 2000 was $(71,384,000) or $(6.87) per share (basic and
diluted),  which  included  a  one-time  write down of goodwill in the amount of
$33,464,000. Loss before income taxes and distributions on minority interest was
$(15,930,000)  and  $(59,946,000)  for  2001  and  2000, respectively. Operating
earnings  (loss)  from  continuing  operations, measured as income/(loss) before
amortization,  interest,  taxes,  realized capital gains and losses and minority
interest  was $(14,574,000) or $(1.40) per share (basic and diluted) in 2001 and
$(18,997,000)  or  $(1.83)  per  share  in  2000  (basic  and  diluted).

The  loss  from  discontinued  operations was $(2,156,000) and $(17,041,000) for
2001  and 2000, respectively.  Underwriting losses and operating costs in excess
of  original  estimates  contributed  to  the  losses  in  2001.

YEARS  ENDED  DECEMBER  31,  2002  AND  2001

Gross  Premiums  Written

Gross  premiums written decreased 33.1% or $53,317,000 in 2002 from 2001 levels.
Premium  rate  increases of approximately 11.0% were implemented throughout 2002
and  were  offset  by  a  reduction  in  policies in force of 46.9%. The primary
reasons  for  this  decline  were  the  Company's withdrawal from certain highly
competitive  markets,  additional  strict  underwriting  initiatives intended to
increase  profitability,  and  the  regulatory and strategic actions accompanied
with  reduction  in  policies  in  force.

Net  Premiums  Written

Net  premiums  written represent the portion of premiums retained by the Company
after  consideration for risk sharing through reinsurance contracts. As a result
of  declines  in  surplus  in the Company's insurance subsidiaries and to manage
overall risk retention, in 2000 the Company entered into a reinsurance agreement
to cede a portion of its gross written premiums to National Union Fire Insurance
Company  ("National")  of  Pittsburgh,  Pennsylvania,  an unrelated third party.
During 2002, the Company ceded approximately 71.7% of its gross written premiums
on  new  and  renewal  business  to  reinsurers  under a quota share reinsurance
contract  that  was  effective  January  1,  2000.

Net  Premiums  Earned

Net  premiums  earned decreased 51.1% or $39,285,000 for the year ended December
31,  2002  as  compared  to the same period in 2001. 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.

Fee  Income

Fee  income  is derived from installment billings and other services provided to
policyholders.  For the year ended December 31, 2002, fee income decreased 24.0%
or  $2,954,000.  The  reduction  in fee income is attributed to the reduction of
insurance policies in force of 46.9% and the overall decline in written premium.

Net  Investment  Income

Net investment income decreased 34.1% or $2,147,000 in 2002 as compared to 2001.
This decrease is reflective of the decline in invested assets during a period of
declining  premiums,  the  liquidation  of  investments to pay prior year losses
settled  in 2002 and to settle the reinsurance payable to National. Furthermore,
return  on investments deteriorated due to a highly volatile market dominated by
unfavorable  economic  conditions  due  to  the  worldwide  recession.

Net  Realized  Capital  Losses

Net  realized  capital  losses  were  $(2,807,000)  in  2002  as compared to net
realized  capital  losses  of  $(1,185,000)  in  2001.  Capital  losses resulted
primarily  from  the  continued  liquidation  of  longer  duration  fixed income
securities  in  2002  in  order  to  fund  operational expenses, claim payments,
reinsurance  payments  to  National  under  unfavorable  market  conditions  and
permanent  impairment  of  other  than  temporary  investments.

Losses  and  Loss  Adjustment  Expenses

The  loss and loss adjustment expense ("LAE") ratio for the Company for the year
ended  December 31, 2002, was 127.9% of net premiums earned as compared to 91.5%
of  net  premiums earned for 2001. A portion of LAE, unallocated loss adjustment
expense  ("ULAE"),  is not ceded as part of the quota share reinsurance contract
mentioned  above  and  accounts for approximately 5 points of the increased loss
ratio in 2002 with the remainder of the increase due to adverse loss experience.

Policy  Acquisition  and  General  and  Administrative  Expense

The  Company  reduced policy acquisition and general and administrative expenses
for the year 2002 to $20,677,000 from the 2001 level of $40,535,000, a reduction
of  approximately  49.0%.  This  reduction is reflective of the decline in gross
written  premiums,  an  increase in ceding commissions associated with the quota
share  reinsurance contract and overall operating expense reduction initiatives.
As  a percentage of gross premiums earned, the Company experienced a decrease in
its  operating  expense ratio, net of fee income, from 36.7% in 2001 to 30.1% in
2002.

Interest  expense

The  Company  obtained  lines  of  credit  from Granite Reinsurance Company Ltd.
("Granite  Re"), a related party, in the amount of $2.5 million and $1.0 million
in  December  31,  2001  and October 2002, respectively. At December 31, 2002, a
total of $2.98 million was outstanding. These line of credit notes bear interest
at  the  rate  of  prime  plus  5.25%  for a total of 9.5% at December 31, 2002.
Interest  only  payments  are  due  monthly. The $2.5 million of the outstanding
balance is due December 20, 2004 and the remaining balance of $480,000 is due on
November  30, 2004. As of December 31, 2002 the interest expense on the lines of
credit  totaled  $211,000.

Amortization  of  Deferred  Financing  Costs

Amortization  expense  totaled  $171,000  for  the years-ended December 2002 and
2001.

Income  Taxes

At  December 31, 2002 the Company's net deferred tax assets were fully offset by
a  100%  valuation  allowance  that  resulted  in  no  tax  benefit  in  2002.

YEARS  ENDED  DECEMBER  31,  2001  AND  2000

Gross  Premiums  Written

Gross  premiums  written decreased 7.7% or $13,369,000 in 2001 from 2000 levels.
Premium  rate  increases of approximately 24.8% were implemented throughout 2001
that  were  offset  by a reduction in policies in force of 23.3%. The decline in
gross premiums also resulted from the Company exiting certain highly competitive
markets  and  instituting  other  underwriting  initiatives intended to increase
profitability,  which  had  the effect of reducing premium. Regulatory action in
certain  states  also  limited  premiums  written.

Net  Premiums  Written

Net  premiums  written represent the portion of premiums retained by the Company
after  consideration for risk sharing through reinsurance contracts. As a result
of  losses  in  the  Company's insurance subsidiaries and to manage overall risk
retention, the Company entered into a reinsurance agreement to cede a portion of
its  gross  written  premiums  to  a third party. During 2001, the Company ceded
approximately  54%  of its gross written premiums on new and renewal business to
the  reinsurers,  under  a  quota  share reinsurance contract that was effective
January  1,  2000.  In  addition,  the  Company  ceded a portion of its unearned
premium  reserve  bringing  the  total  cession  to  79%  in  2001.

Net  Premiums  Earned

Net  premiums  earned decreased 44.1% or $60,759,000 for the year ended December
31,  2001  as  compared  to the same period in 2000. Premiums are earned ratably
over  the  term  of  the  underlying  insurance  contracts. The reduction in net
premiums  earned is reflected of the overall reduction in gross premiums written
and  the  increase  in  ceded  premiums.

Fee  Income

Fee  income  is derived from installment billings and other services provided to
policyholders.  For the year ended December 31, 2001, fee income decreased 13.0%
or  $1,845,000  as  compared  to  the  same period in 2000. The reduction in fee
income  was  attributed to the reduction of insurance policies in force of 23.3%
and  the  overall  decline  in  written  premium.

Net  Investment  Income

Net investment income decreased 37.6% or $3,788,000 in 2001 as compared to 2000.
This  decrease  reflected  the  decline  in  invested  assets during a period of
declining  premiums  and the liquidation of investments to pay prior year losses
settled in 2001. Furthermore, return on investments deteriorated due to a highly
volatile  market  dominated  by  unfavorable  economic  conditions  due  to  the
worldwide  recession  and  effects  from  the  September 2001 terrorist attacks.

Net  Realized  Capital  Losses

Net  realized  capital  losses  were  $(1,185,000)  in  2001  as compared to net
realized  capital  losses  of $(5,972,000) in 2000. Capital losses resulted from
the  liquidation  of longer duration fixed income securities in 2001 in order to
rebalance  the  investment  activities  in  the  portfolio.  These  transactions
resulted  in  higher  cash  proceeds  that  were  reinvested in shorter duration
investment  instruments.  Capital losses were also realized due to the continued
liquidation  of  investments  to  fund  operations  and  claim  payments  under
unfavorable  market  conditions.


Losses  and  Loss  Adjustment  Expenses

The loss and LAE ratio for the Company for the year ended December 31, 2001, was
91.5%  of  net  premiums  earned as compared to 82.3% of net premiums earned for
2000.  A  portion  of  LAE,  ULAE,  is  not  ceded  as  part  of the quota share
reinsurance  contract mentioned above and accounts for approximately 4 points of
the  increased  loss  ratio  in  2001  with  the reminder of the increase due to
adverse  loss  expense.

Policy  Acquisition  and  General  and  Administrative  Expense

The  Company  reduced policy acquisition and general and administrative expenses
for the year 2001 to $40,535,000 from the 2000 level of $67,538,000, a reduction
of  approximately  40%. This reduction is reflected the decline in gross written
premiums,  an  increase  in  ceding  commissions associated with the quota share
reinsurance  contract  and overall operating expense reduction initiatives. As a
percentage  of  gross premiums earned, the Company experienced a decrease in its
operating expense ratio, net of fee income, from 38.8% in 2000 to 36.7% in 2001.
This  decrease  in  the expense ratio is the result of reduced operating expense
initiatives  and  an increase in ceding commissions earned under the quota share
reinsurance  contract.

Amortization  of  Intangibles

Amortization  expense decreased nearly 100%, or $34,806,000, in 2001 as compared
to  2000  as  the  goodwill  was  written  to  zero  at  December  31,  2000.

Income  Taxes

At  December 31, 2001 the Company's net deferred tax assets were fully offset by
a  100%  valuation  allowance  that  resulted  in  no  tax  benefit  in  2001.

LIQUIDITY  AND  CAPITAL  RESOURCES

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

Superior  Insurance Group, Inc. ("Superior Group") collects billing fees charged
to  Pafco  policyholders,  who  elect  to  make  their  premium  payments  in
installments,  and  managing  general  agent  ("MGA")  fees  charged to Superior
policyholders.  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,  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.  Pafco  cannot  pay
extraordinary  dividends,  within  the  meaning  of  the Indiana Insurance Code,
without  the  prior  approval  of  the  Indiana  Insurance  Commissioner.  The
management  fees charged to Pafco, Superior and IGF are subject to review by the
IDOI  and  FDOI.

The  nonstandard  automobile  insurance subsidiaries' primary source of funds is
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  in  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  2002  and  2001,  due  to  reduced  premium volume, the Company
liquidated  investments  to  pay  claims.  The Company historically has tried to
maintain  duration  averages  of 3.5 years.  However, the reduction in new funds
due  to  lower  premium volume caused the Company to shorten the duration of its
investments. The Company may incur additional costs in selling longer term bonds
to  pay  claims,  as  claim  payments  tend to lag premium receipts.  Due to the
decline in premium volume, the Company experienced a reduction in its investment
portfolio,  but to date has not experienced any problems meeting its obligations
for  claims  payments.

The  Company  has obtained a revolving credit facility ("Facility") with Granite
Reinsurance  Company  Ltd.,  a  related party, in the amount of $2.5 million due
December  20, 2004, and $1.0 million due November 30, 2004, in December 2001 and
October  2002, respectively. The terms of the Facility call for monthly interest
payments  at  the prime rate (as printed in the Wall Street Journal on the first
business  day  of  each  month)  plus 5.25% (the total rate was 9.5% at March 1,
2003)  computed on an annual basis and not to exceed 18% per annum calculated on
the  average  principal  outstanding  each  month.

On  August  12, 1997, the Company issued through a wholly owned trust subsidiary
$135 million aggregate principal amount in trust originated preferred securities
(the  "Preferred Securities").  The Preferred Securities have a term of 30 years
with  semi-annual  interest payments of $6.4 million that commenced February 15,
1998.  The  Company  may  redeem the Preferred Securities in whole or in part 10
years  after  the  issue  date.

The  Company  elected to defer the semi-annual interest payments due in February
and  August  2000,  2001, and 2002 and expects to continue this practice through
2003  and  2004.  The  payment  due  in  February 2003 was deferred.  The unpaid
interest  installment  amounts  accrue  interest  at  9.5%.

The  following  table  sets  forth (in thousands) the obligations of the Company
under  the Preferred Securities and other contractual obligations as of December
31,  2002:
<TABLE>
<CAPTION>

Contractual Obligations                                            Payments due by Period
-----------------------                                            ----------------------
                                                                                1 - 3     3 - 5
                                                    Total    Less than 1 year    years    years   More than 5 years
                                                   --------  -----------------  -------  -------  ------------------
<S>                                                <C>       <C>                <C>      <C>      <C>
Interest payments under
the Preferred Securities. . . . . . . . . . . . .  $378,929                  -  $96,779  $25,650  $          256,500
                                                   --------  -----------------  -------  -------  ------------------
Principal payments under the Preferred Securities  $135,000                  -        -        -  $          135,000
                                                   --------  -----------------  -------  -------  ------------------
Principal & Interest under the Facility . . . . .  $  3,546  $             283  $ 3,263        -                   -
-------------------------------------------------  --------  -----------------  -------  -------  ------------------
</TABLE>

The  Company  may  continue  to defer semi-annual interest payments for up to an
aggregate  of  five  (5)  years  as permitted by the indenture for the Preferred
Securities.  All  of  the  deferred  interest (approximately $84 million, if all
payments  due  in  2003  and  2004  are deferred) will become due and payable in
February 2005.  The Company relies on the payment of finance and service fees by
its  subsidiaries  to  fund its operations, including its payment of interest on
the  Preferred  Securities.  Certain  state regulators, including the FDOI, have
issued  orders  prohibiting  the Company's subsidiaries from paying such fees to
the  Company.  In  the  event  such  orders  continue,  the Company may not have
sufficient revenue to fund its operations or to pay the deferred interest on the
Preferred  Securities.  Such  failure to pay could result in a default under the
indenture  and  acceleration  of  the  payment  of  the  Preferred  Securities.

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

-    The  Company  may not incur additional indebtedness or guarantee additional
     indebtedness.
-    The Company may not make certain restricted payments including making loans
     or advances to affiliates, repurchasing common stock or paying dividends in
     excess  of  a  stated  limitation.
-    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  (0.95) in 2002, and will continue to apply until the Company's consolidated
coverage  ratio  complies  with  the  terms  of the trust indenture. The Company
complied with these additional restrictions as of December 31, 2001 and 2002 and
is  in  compliance  as  of  May  9,  2003.

Net  cash used by operating activities in 2002 aggregated $(61,652,000) compared
to  $(21,966,000) in 2001 due to reduced cash provided by operations as a result
of  lower  premium  volumes  and  the  reduced  number  of  policies  in  force.

The  Company experienced, beginning in the fourth quarter of 2001 and continuing
in January and February 2002, sustained adverse loss experience on a substantial
portion  of  its  new  business written in certain markets. In late February and
early  March  2002,  the  Company  commenced  further analysis of loss ratios by
individual agency and a review of claim settlement procedures. Based on this and
other  analysis, during 2002 the Company took a number of actions to improve the
financial  position  and  operating  results  of  the  Company  including:

-    Eliminated  reinstatements  in all markets, i.e., upon policy cancellation,
     the  insured  must obtain a new policy at prevailing rates and underwriting
     guidelines;
-    Terminated  or  placed  on  new  business moratorium several hundred agents
     whose loss ratios were abnormally high when compared to the average for the
     remaining agents (these agents accounted for approximately 16% of the total
     gross  written  premium  in  2001);
-    Increased  underwriting  requirements  in  certain markets including higher
     down  payments,  new  policy  fees  and  shorter  policy  terms;
-    Hired  a  new  vice  president  of  claims  with  significant  auto  claims
     experience  to  improve  the  claims  function.

The  above  actions  were  followed  by:

     -    Replacement  of the president of the non-standard automobile business;
     -    Consolidation  of  all underwriting activities, premium accounting and
          agency  licensing  to  the  Indianapolis,  IN office from Atlanta, GA;
     -    Closing  of  regional  offices  in  Denver,  CO;  Virginia  Beach  and
          Alexandria,  VA;  Glendale,  CA;  and  Jacksonville,  FL;
     -    Replacement  of  the  claims  department  national litigation manager;
     -    Replacement  of  the  marketing  manager  and  the  product  manager;
     -    Heavy  focus  on  the improvement of process and customer service; and
     -    Continued  transition  to  an  improved  policy  processing  system.

Shareholders' equity reflected a deficit of $(179) million at December 31, 2002,
which does not reflect the statutory surplus upon which the Company conducts its
various  insurance  operations.  The  Company's  insurance  subsidiaries,  not
including IGF, had statutory surplus of approximately $13.0 million as reflected
in  the  Company's  insurance subsidiaries annual statutory financial statements
filed  on  March  1,  2003.   Following  the  inclusion  in  the reserve amounts
pursuant to the consulting actuary's analysis, the Company had statutory surplus
of  $3.0  million  as  of December 31, 2002.  In May 2003, pursuant to a reserve
analysis  completed  by  the consulting actuary engaged by BDO Seidman, LLP, the
Company's  independent  auditor,  it was determined that reserves for losses and
loss  adjustment  expenses  for  Superior  and  Pafco should be increased. These
reserve  adjustments, along with resulting adjustments to the permitted carrying
values  of certain assets, were recorded in the 2002 audited statutory financial
statements  filed  for  Superior  and  Pafco  with  the  FDOI  and  the  IDOI,
respectively.

Given  the  financial  position and loss experience of the Company over the past
several  years  as  described  above,  the  Company's accountants have issued an
opinion  based  on  their  audit of the December 31, 2002 Consolidated Financial
Statements  which  includes an emphasis paragraph that addresses the question of
whether  or not the Company can continue as a going concern. The Company's plans
to  improve  financial  results  are  described  above.

     EFFECTS  OF  INFLATION

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

SIGNIFICANT  ACCOUNTING  POLICIES

The  Company's  financial  statements  reflect  the selection and application of
accounting  policies  that  require management to make significant estimates and
assumptions.  Management  believes  that  the  following  is  the  more critical
judgment  area  in  the  application  of  our accounting policies that currently
affect the Company's  financial condition and results of operations. The reserve
for  losses  and loss adjustment expenses includes estimates for reported unpaid
losses  and loss adjustment expenses, including a portion attributable to losses
incurred  but  not  reported.  These  reserves are not 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 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 on the estimated amount of a claim becomes
known  during  the  course  of its settlement.  The gross reserve for losses and
loss adjustment expenses is reported net of anticipated receipts for salvage and
subrogation.  See Note 7 to the Consolidated Financial Statements for additional
disclosure  regarding  the  reserve for losses and loss adjustment expenses. The
variation  between  the  estimated  loss and loss adjustment expenses and actual
experience  can  be  material.

PRIMARY  DIFFERENCES  BETWEEN  GAAP  AND  SAP

The  financial statements contained herein have been prepared in conformity with
generally  accepted  accounting  principles ("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 in which
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
recognized  as  specified  by  statutory  guidance;  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
(the  "Codification"),  which  replaced  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  practices  resulting  from codification that impacted the
Company's  insurance  subsidiaries,  among  other  things, limited the statutory
carrying  value  of electronic data processing equipment and deferred tax assets
in  determining  statutory  surplus.

In  June  2001, the Financial Accounting Standards Board (the "Board") finalized
FASB  Statements  No.  141,  Business  Combinations, No. 142, Goodwill and Other
Intangible  Assets, and No. 143, Accounting for Asset Retirement Obligations. In
August  2001,  the  Board  issued  FASB  Statement  No.  144, Accounting for the
Impairment  or Disposal of Long-lived Assets. These new standards were effective
in  2002  and did not have a material impact on the Company's financial position
or  results  of  operations.  In  December  2002,  the  FASB  issued  SFAS  148,
"Accounting for Stock-Based Compensation - Transition and Disclosure" (SFAS 148)
which  amends  SFAS 123, "Accounting for Stock-Based Compensation" (SFAS 123) to
provide  alternative  methods  of  transition for a voluntary change to the fair
value-based  method  of  accounting  for  stock-based  employee compensation. In
addition,  SFAS  148  amends  the disclosure requirements of SFAS 123 to require
more prominent disclosures in both annual and interim financial statements about
the method of accounting for stock-based employee compensation and the effect of
the  method  used  on  reporting results. The Company has decided to continue to
account  for  stock-based employee compensation using the intrinsic value method
under  APB  Opinion  No.  25,  "Accounting  for  Stock Issued to Employees," and
interpretations  as  permitted  under  SFAS  148.  Accordingly,  no compensation
expense is recorded if the current market price of the underlying stock does not
exceed  the  exercise  price  at  the  date  of  grant.

QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

Insurance  company  investments must comply with applicable laws and regulations
that  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 investment portfolios of the Company at December 31, 2002 consisted
of  the  following  (in  thousands):
<TABLE>
<CAPTION>
                                                                                        2002
                                                                                       -------
                                                                                 Cost or      Market
TYPE OF INVESTMENT                                                            Amortized Cost  Value
                                                                              -------------- -------
<S>                                                                 <C>              <C>     <C>
Fixed maturities:
     U. S. Treasury securities and other obligations of the United
     States government or agencies                                                  $17,814  $18,355
     Obligations of states and political subdivisions                                 4,828    5,005
     Corporate securities                                                            13,043   13,368
                                                                                    -------  -------
          Total fixed maturities                                                     35,685   36,728
Common stocks                                                                         9,667    6,404
Short-term investments                                                                8,495    8,495
Other invested assets                                                                 3,046    3,046
                                                                                    -------  -------
                                                                                    $56,893  $54,673
                                                                                    =======  =======
</TABLE>

The  following  table  sets  forth  the  composition of the fixed
maturity  securities portfolio of the Company by time to maturity as of December
31  (in  thousands):
<TABLE>
<CAPTION>
                                                 2002                         2001
                                                 ----                         ----
                                                    Percent Total                  Percent Total
Time to Maturity                     Market Value    Market Value   Market Value    Market Value
----------------------------------  --------------  --------------  -------------  -------------
<S>                                 <C>             <C>             <C>            <C>
1 year or less . . . . . . . . . .  $        8,866           24.1   $       7,998          10.2
More than 1 year through 5 years .          12,077           32.9          25,950          33.3
More than 5 years through 10 years           7,492           20.4          20,477          26.3
More than 10 years . . . . . . . .           3,288            9.0           4,091           5.3
                                    --------------  --------------  -------------  -------------
                                            31,723           86.4          58,516          75.1
Mortgage-backed securities . . . .           5,005           13.6          19,380          24.9
                                    --------------  --------------  -------------  -------------
Total. . . . . . . . . . . . . . .  $       36,728          100.0%  $      77,896         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>
                                           2002                           2001
                                           ----                           ----
                                                Percent Total                Percent Total
Rating (1)                      Market Value    Market Value   Market Value   Market Value
-----------------------------  --------------  --------------  ------------- -------------
<S>                            <C>             <C>             <C>            <C>
Aaa or AAA. . . . . . . . . .  $       24,677           67.2%  $      51,754          66.4%
Aa or AA. . . . . . . . . . .             971            2.6%          3,300           4.2%
A . . . . . . . . . . . . . .           4,262           11.6%          9,242          11.9%
Baa or BBB. . . . . . . . . .           5,479           14.9%          7,617           9.8%
Ba or BB. . . . . . . . . . .             281            0.8%          4,883           6.3%
Other below investment grade.           1,058            2.9%          1,100           1.4%
                               --------------  --------------  -------------  -------------
Total . . . . . . . . . . . .  $       36,728            100%  $      77,896           100%
                               ==============  ==============  =============  =============
<FN>
(1)  Ratings  are  assigned  by  Standard  &  Poor's  Corporation,  and when not
     available, are based on ratings assigned by Moody's Investors Service, Inc.
</TABLE>

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,
                                                   2002      2001       2000
                                                 --------  ---------  ---------
<S>                                              <C>       <C>        <C>
Net investment income (1) . . . . . . . . . . .  $ 4,139   $  6,286   $ 10,074
Average investment portfolio (2). . . . . . . .  $98,613   $123,859   $173,231
Pre-tax return on average investment portfolio.      4.2%       5.1%       5.8%
Net realized gains (losses) . . . . . . . . . .  $(2,807)  $ (1,185)  $ (5,972)
<FN>

(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.
</TABLE>


If  interest  rates  were to increase 10% from the December 31, 2002 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
creditors.

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 investments 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
rates;  changes  in  relative values of individual securities and asset sectors,
changes in prepayment risks, changes in credit quality, 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.

<PAGE>
<TABLE>
<CAPTION>
                  Interest Rate Sensitivity - Principal Amount by Expected Maturity
                             Average Interest Rate (Dollars in thousands)

                                     Cost  or  Amortized  Cost                                 Market
                       --------------------------------------------------------------------     Value
                         2003     2004     2005     2006     2007     Thereafter     Total   12/31/02
                       -------  -------  -------  -------  -------  ------------  --------- ---------
<S>                    <C>       <C>       <C>      <C>      <C>      <C>           <C>      <C>
ASSETS

Available for sale. .  $8,733   $4,428   $4,456   $4,728   $2,928   $    10,412   $ 35,685    36,728

Average interest rate    6.80%    7.20%    6.45%    5.95%    5.95%         6.98%      6.25%     6.25%

LIABILITIES
Preferred securities.       -        -        -        -        -   $   135,000   $135,000   $ 9,000
Average interest rate       -        -        -        -        -           9.5%       9.5%      9.5%
Credit Facility . . .       -   $2,980        -        -        -             -   $  2,980   $ 2,980
Average interest rate       -      9.5%       -        -        -             -        9.5%      9.5%
</TABLE>


REVISED  ESTIMATE  OF  LOSS  RESERVES  RECORDED  IN  PRIOR  YEARS

The  Company  revised its estimate of the loss reserves recorded in prior years.
At  end  of 2001 the Company's net loss and loss adjustment expense reserves for
nonstandard  auto  insurance  were $50,542,000. As claims that occurred prior to
year-end  2001  were reported, investigated and settled during 2002, the Company
reevaluated  and, as necessary, revised its estimates of loss reserves. Based on
current  information  that  reserve  at  the  end  of  2001  should  have  been
$63,317,000.   In  part  the reserve increase was the result of an unanticipated
increase  in  claim  frequency during the fourth quarter of 2001. Because of the
normal  lag  between  the  occurrence  of  an accident and the reporting of that
accident, the Company did not realize its claim frequency for the fourth quarter
of  2001 had increased until those claims were reported during 2002. The Company
believes  that  the frequency increase was caused by an increase in miles driven
which  resulted  from (1) a significant decrease in the price of gasoline, (2) a
reluctance  of people to fly on commercial airlines because of the September 11,
2001  terrorist  attacks,  and (3) a general improvement in economic conditions.
In  addition,  during  2002  Superior  experienced an unusual number of reopened
claims from older accident quarters.  At year-end 2001 the Company believed that
these  claims  were  closed  with no outstanding liability.  In response to this
unusual  activity  the  Company  took  appropriate  action to enhance its claims
function.

In  May 2003, pursuant to a reserve analysis completed by the consulting actuary
engaged  by  BDO  Seidman,  LLP,  the  Company's  independent  auditor,  it  was
determined  that  reserves  for losses and loss adjustment expenses for Superior
and  Pafco should increased as of December 31, 2002.  These reserve adjustments,
along  with  resulting  adjustments  to the permitted carrying values of certain
assets,  were  recorded in the 2002 audited statutory financial statements filed
for  Superior and Pafco with the Insurance Department of Florida and the Indiana
Department  of Insurance, respectively. In the statutory financial statements of
the  Company's  insurance  subsidiaries  the estimates of gross assumed loss and
loss  adjustment  expense  reserves  was  $59,971,000  and  net  loss  and  loss
adjustment  expense reserves was $37,886,000. Following the  adjustment pursuant
to  the  consulting  actuary's analysis, the revised estimates of gross loss and
loss adjustment expense reserves is $67,204,000 and net loss and loss adjustment
expense  reserves  is  $43,145,000.  These  reserves  are  based  on analysis of
historical data. Based on actions taken to enhance the Company's claim function,
management  anticipates that the majority of claims will be adjusted and settled
more  quickly  which  will  reduce  the  overall  costs  while those claims of a
questionable  nature  will be investigated more thoroughly. Also, the Company is
focusing  on reducing defense costs and is negotiating more favorable rates from
attorneys.  Finally,  the  Company  is  taking  steps to increase the amounts of
salvage  and  subrogation it collects as an offset to paid losses while reducing
the  expenses  associated  with  collecting  those  amounts.

The  business  written  by  the  Company  did  not expose it to highly uncertain
exposures  such  as  claims  for  asbestos-related  illnesses,  environmental
remediation  or  product  liability.  The surplus lines insurance written by the
Company  also  did  not  include  these  types  of  highly  uncertain exposures.
<TABLE>
<CAPTION>

CONSOLIDATED  BALANCE  SHEETS
As  of  December  31,  2002  and  2001
(In  thousands,  except  share  data)
                                                                              2002        2001
                                                                            ----------  ----------
<S>                                                                            <C>         <C>
ASSETS
Investments available for sale:
     Fixed maturities, at market . . . . . . . . . . . . . . . . . . . . .  $  36,728   $  77,896
     Equity securities, at market. . . . . . . . . . . . . . . . . . . . .      6,404      14,396
     Short-term investments, at amortized cost, which approximates market.      8,495      13,266
     Other invested assets . . . . . . . . . . . . . . . . . . . . . . . .      3,046       1,469
                                                                            ----------  ----------
Total investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . .     54,673     107,027
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . .        654       3,385
Receivables, net of allowance of $244 and $1,526, respectively . . . . . .     26,594      44,688
Reinsurance recoverable on paid and unpaid losses, net . . . . . . . . . .     25,918      31,546
Prepaid reinsurance premiums . . . . . . . . . . . . . . . . . . . . . . .     25,470      40,039
Deferred policy acquisition costs. . . . . . . . . . . . . . . . . . . . .          -         763
Property and equipment, net of accumulated depreciation. . . . . . . . . .      7,069       9,890
Deferred securities issuance costs . . . . . . . . . . . . . . . . . . . .      4,204       4,376
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      3,490       2,418
                                                                            ----------  ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 148,072   $ 244,132
                                                                            ==========  ==========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Liabilities:
     Loss and loss adjustment expense reserves . . . . . . . . . . . . . .  $  67,204   $  81,142
     Unearned premiums . . . . . . . . . . . . . . . . . . . . . . . . . .     35,797      59,216
     Reinsurance payables. . . . . . . . . . . . . . . . . . . . . . . . .     17,171      58,226
     Distributions payable on preferred securities . . . . . . . . . . . .     49,227      33,203
     Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . .      2,125       3,625
     Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .     13,827      17,136
Advances from related parties. . . . . . . . . . . . . . . . . . . . . . .      2,687         596
     Net liabilities of discontinued operations. . . . . . . . . . . . . .      3,913           -
                                                                            ----------  ----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . .    191,951     253,144
                                                                            ----------  ----------
Minority interest:
     Company-obligated mandatorily redeemable preferred stock of trust
           subsidiary holding solely parent debentures . . . . . . . . . .    135,000     135,000
                                                                            ----------  ----------
Shareholders' deficit:
     Common stock, no par value, 100,000,000 shares authorized, and
           10,385,399 shares issued and outstanding in both 2002 and 2001.     38,136      38,136
     Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . .      5,851       5,851
     Unrealized loss on investments available for sale . . . . . . . . . .     (2,220)     (2,613)
     Retained deficit. . . . . . . . . . . . . . . . . . . . . . . . . . .   (220,646)   (185,386)
                                                                            ----------  ----------
Total shareholders' deficit. . . . . . . . . . . . . . . . . . . . . . . .   (178,879)   (144,012)
                                                                            ----------  ----------
Total liabilities and shareholders' deficit. . . . . . . . . . . . . . . .  $ 148,072   $ 244,132
                                                                            ==========  ==========
</TABLE>

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

<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED  STATEMENTS  OF  OPERATIONS
For  the  years  ended  December  31,  2002,  2001  and  2000
(In  thousands,  except  per  share  data)
                                                                                    2002        2001       2000
                                                                                  ---------  ----------  ---------
<S>                                                                               <C>        <C>         <C>
Gross premiums written . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $107,775   $ 161,092   $174,461
Less ceded premiums. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (77,291)   (105,158)   (78,621)
                                                                                  ---------  ----------  ---------
Net premiums written . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 30,484   $  55,934   $ 95,840
                                                                                  =========  ==========  =========
Net premiums earned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 37,662   $  76,947   $137,706
Fee income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     9,341      12,295     14,140
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     4,139       6,286     10,074
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1,675         874          -
Net realized capital loss. . . . . . . . . . . . . . . . . . . . . . . . . . . .    (2,807)     (1,185)    (5,972)
                                                                                  ---------  ----------  ---------
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    50,010      95,217    155,948
                                                                                  ---------  ----------  ---------
Expenses:
     Losses and loss adjustment expenses . . . . . . . . . . . . . . . . . . . .    48,187      70,441    113,379
     Policy acquisition and general and administrative expenses. . . . . . . . .    20,677      40,535     67,538
     Interest expense . .      . . . . . . . . . . . . . . . . . . . . . . . . .       211           -          -
     Amortization of deferred financing costs, and  intangibles and impairment .       171         171     34,977
                                                                                  ---------  ----------  ---------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    69,246     111,147    215,894
                                                                                  ---------  ----------  ---------
Loss from continuing operations before income taxes and minority interest. . . .   (19,236)    (15,930)   (59,946)
                                                                                  ---------  ----------  ---------
Income taxes:
     Current income tax expense (benefit). . . . . . . . . . . . . . . . . . . .         -           -        487
     Deferred income tax expense (benefit) . . . . . . . . . . . . . . . . . . .         -           -     (2,636)
                                                                                  ---------  ----------  ---------
Total income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         -           -     (2,149)
                                                                                  ---------  ----------  ---------
Loss from continuing operations before minority interest . . . . . . . . . . . .   (19,236)    (15,930)   (57,797)
Minority interest:
     Distributions on preferred securities net of tax of nil
      in 2002, 2001, and  2000.                                                      (16,024)   (14,806)  (13,587)
                                                                                   ----------  ---------  --------
Loss from continuing operations. . . . . . . . . . . . . . . . . . . . . . . . .   (35,260)    (30,736)   (71,384)
Discontinued operations:
     Loss from operations of discontinued segment, less applicable income taxes
     Of nil in 2002, 2001, and 2000.. . . . . . . . . . . . . . . . . . . .. . .         -           -    (16,141)
     Loss on disposal of discontinued segment, less applicable taxes of nil. . .         -      (2,156)      (900)
                                                                                  ---------  ----------  ---------
     Loss from discontinued operations. . . . . . . . . . . . . . . . . . .. . .         -      (2,156)   (17,041)
                                                                                  ---------  ----------  ---------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $(35,260)  $ (32,892)  $(88,425)
                                                                                  =========  ==========  =========
Weighted average shares outstanding - basic and fully diluted. . . . . . . . . .    10,385      10,385     10,385
                                                                                  =========  ==========  =========
Net loss from continuing operations per share - basic and fully diluted. . . . .  $  (3.40)  $   (2.96)  $  (6.87)
                                                                                  =========  ==========  =========
Net loss of discontinued operations per share - basic and fully diluted. . . . .  $      -   $   (0.21)  $  (1.64)
                                                                                  ---------  ==========  =========
Net loss per share - basic and fully diluted . . . . . . . . . . . . . . . . . .  $  (3.40)  $   (3.17)  $  (8.51)
                                                                                  =========  ==========  =========
</TABLE>

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

<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED  STATEMENTS  OF  CHANGES  IN  SHAREHOLDERS'  EQUITY  (DEFICIT)
For  the  years  ended  December  31,  2002,  2001  and  2000
(In  thousands,  except  number  of  shares)
                                                                         Unrealized
                                                             Additional  Gain/(Loss)  Retained      Total
                                                             Paid-In         On       Earnings  Shareholders'
                                          Common Stock       Capital     Investments  (Deficit)     Equity
                                          ------------       --------   ------------  ----------   ----------
                                        Shares      Amount
                                     ------------  --------
<S>                                  <C>           <C>       <C>           <C>         <C>          <C>
Balance at January 1, 2000. . . . .    10,385,399  $ 38,136  $      5,851  $  (4,898)  $ (64,069)  $ (24,980)
                                     ------------  --------  ------------  ----------  ----------  ----------

Comprehensive income:
Net loss. . . . . . . . . . . . . .             -         -             -          -     (88,425)    (88,425)
Change in unrealized gains (losses)
 on securities. . . . . . . . . . .             -         -             -        960           -         960
                                     ------------  --------  ------------  ----------  ----------  ----------
Comprehensive income (loss) . . . .             -         -             -        960     (88,425)    (87,465)
                                     ------------  --------  ------------  ----------  ----------  ----------

Balance at December 31, 2000. . . .    10,385,399    38,136         5,851     (3,938)   (152,494)   (112,445)
                                     ------------  --------  ------------  ----------  ----------  ----------

Comprehensive income:
Net loss. . . . . . . . . . . . . .             -         -             -          -     (32,892)    (32,892)
Change in unrealized gains (losses)
 on securities. . . . . . . . . . .             -         -             -      1,325           -       1,325
                                     ------------  --------  ------------  ----------  ----------  ----------
Comprehensive income (loss) . . . .             -         -             -      1,325     (32,892)    (31,567)
                                     ------------  --------  ------------  ----------  ----------  ----------

Balance at December 31, 2001. . . .    10,385,399    38,136         5,851     (2,613)   (185,386)   (144,012)
                                     ============  ========  ============  ==========  ==========  ==========

Comprehensive income:
Net loss. . . . . . . . . . . . . .             -         -             -          -     (35,260)    (35,260)
Change in unrealized gains (losses)
 on securities. . . . . . . . . . .             -         -             -        393           -         393
                                     ------------  --------  ------------  ----------  ----------  ----------
Comprehensive income (loss) . . . .             -         -             -        393     (35,260)    (34,867)
                                     ------------  --------  ------------  ----------  ----------  ----------

Balance at December 31, 2002. . . .    10,385,399  $ 38,136  $      5,851  $  (2,220)  $(220,646)  $(178,879)
                                     ============  ========  ============  ==========  ==========  ==========

</TABLE>

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

<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
For  the  years  ended  December  31,  2002,  2001  and  2000
(In  thousands)
                                                                        2002       2001       2000
                                                                      ---------  ---------  ---------
<S>                                                                     <C>        <C>        <C>
Cash flows from operating activities
 Net loss. .       . . . . . . . . . . . . . . . . . . . . . . . . .  $(35,260)  $(32,892)  $(88,425)
  Adjustments to reconcile net loss to net cash provided by
   (used in) operations:
   Depreciation, amortization, impairment and other .   .. . . . . .     3,810      2,710     39,305
   Deferred income tax expense (benefit). . . . . . . .  . . . . . .         -          -     (2,636)
   Net realized capital loss. . . . . . . . . . . . . ..   . . . . .     2,807      1,185      5,972
  Net changes in operating assets and liabilities:
   Receivables. . . . . . . . . . . . . . . . . . . . . . .. . . . .    18,095      5,676     12,163
   Reinsurance recoverable on losses, net . . . . . . . . .. . . . .     5,628     16,769    (33,560)
   Prepaid reinsurance premiums . . . . . . . . . . . . . .. . . . .    14,569    (15,266)   (23,691)
   Deferred policy acquisition costs. . . . . . . . . . . .. . . . .       763      5,691      7,454
   Other assets and liabilities . . . . . . . . . . . . . .. . . . .    (1,966)     7,445     (6,868)
   Losses and loss adjustment expenses. . . . . . . . . . .. . . . .   (13,938)   (26,975)   (44,338)
   Unearned premiums. . . . . . . . . . . . . . . . . . . .. . . . .   (23,419)    (3,170)   (18,176)
   Reinsurance payables . . . . . . . . . . . . . . . . . .. . . . .   (41,055)    (3,833)    56,198
   Distributions payable on preferred securities. . . . . .. . . . .    16,024     14,806     13,587
  Net assets/(liabilities) from discontinued operations. .       . .    (7,710)     5,888     34,862
                                                                      ---------  ---------  ---------
Net cash (used in) operations. . . . . . . . . . . . . . . . . . . .   (61,652)   (21,966)   (48,153)
                                                                      ---------  ---------  ---------

Cash flows from investing activities, net of assets acquired:
      Net sales  of short-term investments . . . . . . . . . . . . .     4,770      1,606      6,947
      Purchases of fixed maturities. . . . . . . . . . . . . . . . .   (28,723)   (34,204)    (9,937)
      Proceeds from sales, calls and maturities of fixed maturities.    70,821     60,262     76,947
      Purchase of equity securities. . . . . . . . . . . . . . . . .      (884)   (11,668)   (25,195)
      Proceeds from sales of equity securities . . . . . . . . . . .     5,428     10,820     17,491
      Proceeds from repayment of mortgage loans. . . . . . . . . . .         -      1,870        120
      Purchase of property and equipment . . . . . . . . . . . . . .      (681)    (1,378)    (1,685)
      Net sales (purchase) of other investments. . . . . . . . . . .       866        (92)      (414)
      Net investing activities from discontinued operations. . . . .     5,663     (4,456)      (150)
                                                                      ---------  ---------  ---------
Net cash provided by  investing activities . . . . . . . . . . . . .    57,260     22,760     64,124
                                                                      ---------  ---------  ---------

Cash flow from financing activities, net of assets acquired:
      Loans from and (repayments to) related parties . . . . . . . .     2,091      1,276       (274)
      Proceeds from related parties .  . . . . . . . . . . . . . . .    (2,477)         -          -
      Net financing activities from discontinued operations. . . . .     2,047        (48)   (16,473)
                                                                      ---------  ---------  ---------
Net cash provided by / (used in) financing activities: . . . . . . .     1,661      1,228    (16,747)
                                                                      ---------  ---------  ---------

Increase (decrease) in cash and cash equivalents . . . . . . . . . .    (2,731)     2,022       (776)
Cash and cash equivalents, beginning of year . . . . . . . . . . . .     3,385      1,363      2,139
                                                                      ---------  ---------  ---------
Cash and cash equivalents, end of year . . . . . . . . . . . . . . .  $    654   $  3,385   $  1,363
                                                                      =========  =========  =========
</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 73.8% owned subsidiary of
Goran  Capital Inc. ("Goran").  The Company operates in one segment, the sale of
nonstandard  automobile  insurance.  The Company's products are marketed through
independent  agents and brokers. The Company's active insurance subsidiaries are
licensed  in  19  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;  and

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

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

     IGF  Insurance  Company  ("IGF")  an insurance company domiciled in Indiana
     (See  Note  19).

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. Actual results could
     differ  from  those  estimates.

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. 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. Actual results could differ from
     these  estimates.

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

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
     considered a component of shareholders' equity. Accordingly, any change in
     the unrealized gain or loss has no effect on net income.

     Real  estate  is  carried  at  cost,  less  an  allowance for depreciation.

     Mortgage  loans  are  carried  at  outstanding  principal  balance.

     Realized  gains  and losses on the sale 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 presentation in 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  that 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 term 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  the 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
     years.  Other  property  and  equipment is depreciated on the straight-line
     basis  over their estimated useful lives ranging from three to seven years.
     Asset  and  accumulated  depreciation  accounts are relieved for disposals,
     with  resulting  gains  or  losses  included  in  net  income.

I.   INTANGIBLE  ASSETS: Intangible assets consist primarily of debt acquisition
     costs  and  goodwill,  in  years  2000 and prior. Deferred debt acquisition
     costs  are amortized over the term of the debt. 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 5 regarding
     the  goodwill  impairment  charge  recorded  in  2000.

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 5 regarding the
     goodwill impairment charge recorded in 2000. Any long-lived assets held for
     disposal  are  reported at the lower of carrying amount or fair value, less
     expected  costs  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,  including  a portion attributable to losses 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 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  on  the
     estimated  amount  of  a  claim  becomes  known  during  the  course of its
     settlement.  The  gross  reserve for losses and loss adjustment expenses is
     reported  net  of  anticipated  receipts  for  salvage  and  subrogation of
     approximately  $4,535,000  and  $5,822,000  at  December 31, 2002 and 2001,
     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.   EARNINGS PER SHARE: The Company's basic earnings per share calculations are
     based  on the weighted average number of shares of common stock outstanding
     during  each  period. As the Company has reported losses in 2002, 2001, and
     2000,  common stock equivalents are anti-dilutive; therefore, fully diluted
     earnings  per  share  is  the  same  as  basic  earnings  per  share.

P.   STOCK-BASED  COMPENSATION:  As  discussed  further  in note 16, the Company
     accounts  for  stock-based  employee compensation using the intrinsic value
     method  under  APB  Opinion 25, "Accounting for Stock Issued to Employees,"
     and  related  interpretations  as permitted under SFAS 148, "Accounting for
     Stock-Based  Compensation  -  Transition  and  Disclosure"  (SFAS  148).
     Accordingly,  no  compensation expense is recognized if the market price of
     the  underlying  stock  does  not  exceed the exercise price at the date of
     grant.  However, SFAS 123, "Accounting for Stock-Based Compensation," (SFAS
     123)  as  amended  by  SFAS  148  requires the Company to present pro forma
     information  as  if it had accounted for its stock-based compensation under
     the  fair  value  method  of  SFAS 123. The following table illustrates the
     effect  on  net income and earnings per share as if the Company had applied
     the  fair  value recognition provisions of SFAS 123 to stock-based employee
     compensation.

<TABLE>
<CAPTION>
                                                            2002       2001       2000
                                                           ---------  ---------  ---------
<S>                                                        <C>        <C>        <C>
Net loss as reported. . . . . . . . . . . . . . . . . . .  $(35,260)  $(32,892)  $(88,425)
Add: Compensation expense for stock-based
 compensation included in reported net income,
net of related tax effects. . . . . . . . . . . . . . . .        --         --         --
Deduct: Total stock-based compensation expense
 determined under fair-value-based method, net of related
 tax effects. . . . . . . . . . . . . . . . . . . . . . .      (143)      (204)      (284)
                                                           ---------  ---------  ---------
Pro forma net loss. . . . . . . . . . . . . . . . . . . .  $(35,403)  $(33,096)  $(88,709)

Net loss per share:
Basic and fully diluted, as reported. . . . . . . . . . .  $  (3.40)  $  (3.17)  $  (8.51)
Basic and fully diluted, pro forma. . . . . . . . . . . .  $  (3.41)  $  (3.19)  $  (8.54)
</TABLE>

Q.          NEW  ACCOUNTING  PRONOUNCEMENTS:      In  June  2001,  the Financial
Accounting  Standards  Board  (the  "Board")  finalized FASB Statements No. 141,
Business  Combinations,  No.  142, Goodwill and Other Intangible Assets, and No.
143,  Accounting  for  Asset  Retirement  Obligations. In August 2001, the Board
issued  FASB  Statement  No.  144,  Accounting for the Impairment or Disposal of
Long-lived Assets. These new standards were effective in 2002 and did not have a
material impact on the Company's financial position or results of operations. In
December  2002,  the  FASB  issued  SFAS  148,  "Accounting  for  Stock-Based
Compensation  -  Transition  and  Disclosure"  (SFAS 148) which amends SFAS 123,
"Accounting  for  Stock-Based  Compensation"  (SFAS  123) to provide alternative
methods  of  transition for a voluntary change to the fair value-based method of
accounting  for  stock-based employee compensation. In addition, SFAS 148 amends
the disclosure requirements of SFAS 123 to require more prominent disclosures in
both  annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reporting
results. The Company has decided to continue to account for stock-based employee
compensation  using  the  intrinsic  value  method  under  APB  Opinion  No. 25,
"Accounting  for  Stock  Issued  to Employees," and interpretations as permitted
under  SFAS 148. Accordingly, no compensation expense is recorded if the current
market  price  of the underlying stock does not exceed the exercise price at the
date  of  grant.

R.     RECLASSIFICATIONS:           Certain amounts from prior periods have been
reclassified  to  allow  for  comparability  to  the  2002  presentation.


2.     INVESTMENTS

Investments  are  summarized  as  follows  (in  thousands):
<TABLE>
<CAPTION>
                                                   Cost or                             Estimated
                                                   Amortized   Unrealized    Unrealized    Market
December 31, 2002                                     Cost        Gain          Loss        Value
                                                   ----------  -----------  ------------  -------
<S>                                                <C>         <C>          <C>           <C>
Fixed Maturities:
U.S. Treasury securities and obligations of U.S.
  government corporations and agencies. . . . . .  $   17,814  $       541  $         -   $18,355
Mortgage backed securities. . . . . . . . . . . .       4,828          182           (5)    5,005
                                                   ----------  -----------  ------------  -------
  Total U.S. Treasury and other government
  obligations. . . . . . . . . . . . . . . . . .      22,642          723           (5)   23,360
Corporate securities. . . . . . . . . . . . . . .      13,043        1,129         (804)   13,368
                                                   ----------  -----------  ------------  -------
  Total fixed maturities. . . . . . . . . . . . .      35,685        1,852         (809)   36,728
Equity securities . . . . . . . . . . . . . . . .       9,667          126       (3,389)    6,404
Short-term investments. . . . . . . . . . . . . .       8,495            -            -     8,495
Other invested assets (including real estate) . .       3,046            -            -     3,046
                                                   ----------  -----------  ------------  -------

  Total investments . . . . . . . . . . . . . . .  $   56,893  $     1,978  $    (4,198)  $54,673
                                                   ==========  ===========  ============  =======
</TABLE>

<TABLE>
<CAPTION>
                                                    Cost or                             Estimated
                                                   Amortized   Unrealized    Unrealized    Market
December 31, 2001                                     Cost        Gain          Loss        Value
                                                   ----------  -----------  ------------  -------
<S>                                                <C>         <C>          <C>           <C>
Fixed Maturities:
U.S. Treasury securities and obligations of U.S.
  government corporations and agencies . . .    .  $   29,912  $       609  $      (311)  $ 30,210
Mortgage backed securities. . . . . . . . . . . .      17,500        1,928          (47)    19,381
                                                   ----------  -----------  ------------  --------
  Total U.S. Treasury and other government
  obligations . . . . .  . . . . . . . . . . .  .      47,412        2,537         (358)    49,591
Corporate securities. . . . . . . . . . . . . . .      29,528          430       (1,653)    28,305
                                                   ----------  -----------  ------------  --------
  Total fixed maturities. . . . . . . . . . . . .      76,940        2,967       (2,011)    77,896
Equity securities . . . . . . . . . . . . . . . .      17,965           27       (3,596)    14,396
Short-term investments. . . . . . . . . . . . . .      13,266            -            -     13,266
Other invested assets (including real estate) . .       1,469            -            -      1,469
                                                   ----------  -----------  ------------  --------

Total investments . . . . . . . . . . . . . . . .  $  109,640  $     2,994  $    (5,607)  $107,027
                                                   ==========  ===========  ============  ========
</TABLE>



At  December  31,  2002,  The  Standard  & Poors Corporation or Moody's Investor
Services,  Inc.  considered  96.4%  of the Company's fixed maturities investment
grade.  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, 2002, by contractual maturity, are shown in the table that follows. Expected
maturities  will  differ  from contractual maturities because borrowers may have
the  right  to call or prepay obligations with or without penalty and securities
may  have  to  be  liquidated  to  cover  operational  losses  (in  thousands):
<TABLE>
<CAPTION>
                                                          Estimated
                                        Amortized Cost   Market Value
                                        ---------------  -------------
<S>                                     <C>              <C>
Due in one year or less. . . . . . . .  $         8,733  $       8,866
Due after one year through five years.           11,712         12,077
Due after five years through ten years            7,448          7,492
Due after ten years. . . . . . . . . .            2,965          3,288
Mortgage-backed securities . . . . . .            4,828          5,005
                                        ---------------  -------------
                                        $        35,686  $      36,728
                                        ===============  =============
</TABLE>


Gains and losses realized on sales of investments are as follows (in thousands):
<TABLE>
<CAPTION>
                         2002      2001      2000
                       --------  --------  --------
<S>                    <C>       <C>       <C>
Proceeds from sales .  $76,249   $71,082   $94,558
Gross gains realized.    2,502       481     1,359
Gross losses realized   (5,309)   (1,666)   (7,331)
</TABLE>


Net  investment  income  for  the  years  ended  December  31 are as follows (in
thousands):
<TABLE>
<CAPTION>
                                  2002     2001      2000
                                -------  -------  --------
<S>                              <C>      <C>      <C>
Fixed maturities. . . . . . . .  $4,221   $5,666   $ 8,795
Equity securities . . . . . . .     145      213       304
Cash and short-term investments     204      469     1,077
Mortgage loans. . . . . . . . .       -       65         -
Other . . . . . . . . . . . . .       -      769         -
                                 -------  -------  --------
Total investment income . . . .   4,570    7,182    10,176
Investment expenses . . . . . .    (431)    (896)     (102)
                                 -------  -------  --------
Net investment income . . . . .  $4,139   $6,286   $10,074
                                 =======  =======  ========
</TABLE>

Investments  with  a market value of $13,126,139 and $13,663,118 (amortized cost
of  $12,908,173 and $13,348,887) as of December 31, 2002 and 2001, 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.

<PAGE>

3.     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.
Policy  acquisition  costs  both  acquired  and  deferred,  and  the  related
amortization  charged  to  income  were  as  follows  (in  thousands):
<TABLE>
<CAPTION>
                              2002       2001       2000
                            ---------  ---------  ---------
<S>                         <C>        <C>         <C>
Balance, beginning of year  $    763   $  6,454   $ 13,908
Costs deferred during year    18,861     28,056     29,999
Amortization during year .   (19,624)   (33,747)   (37,453)
                            ---------  ---------  ---------
Balance, end of year . . .  $      -   $    763   $  6,454
                            ---------  =========  =========
</TABLE>


4.     PROPERTY  AND  EQUIPMENT

Property  and equipment at December 31 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                                              Accumulated
                                   2002 Cost  Depreciation  2002 Net  2001 Net
                                 -----------  ------------  --------- -------
<S>                             <C>            <C>        <C>        <C>
Land . . . . . . . . . . . . .  $         100  $       -  $     100  $  100
Buildings. . . . . . . . . . .          4,279      1,877      2,402   2,655
Office furniture and equipment          2,108      1,684        424     808
Automobiles. . . . . . . . . .             76         49         27      42
Computer equipment . . . . . .         14,801     10,685      4,116   6,285
                                -------------  ---------  ---------  ------
Total. . . . . . . . . . . . .  $      21,364  $  14,295  $   7,069  $9,890
                                =============  =========  =========  ======
</TABLE>


Accumulated  depreciation  at  December  31, 2001 was $10,792,000.  Depreciation
expense related to property and equipment for the years ended December 31, 2002,
2001  and  2000  was  $3,658,000,  $3,738,000  and  $3,498,000,  respectively.

5.     INTANGIBLE  ASSETS

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

Intangible  assets  at  December  31  are  as  follows  (in  thousands):

<TABLE>
<CAPTION>
                                                Accumulated
                                     2002 Cost  Amortization  2002 Net  2001 Net
                                    ---------  -------------  ---------  -------
<S>                                 <C>            <C>        <C>        <C>
Deferred securities issuance costs  $       5,132  $     928  $   4,204  $4,376
</TABLE>


Accumulated  amortization  at  December  31,  2001  was  $755,000.  Amortization
expense related to intangible assets for the years ended December 31, 2002, 2001
and  2000  was  $173,000,  $171,000,  and  $34,977,000  respectively.


6.     PREFERRED  SECURITIES

On  August  12,  1997,  the  Company's  trust  subsidiary issued $135 million in
preferred securities ("Preferred Securities") bearing interest at an annual rate
of  9.5%.  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.

The  Preferred  Securities  represent  Company-obligated  mandatorily redeemable
securities  of  a  trust  subsidiary holding solely parent debentures and have a
term  of  30  years  with  semi-annual interest payments commencing February 15,
1998.  The Company may redeem the Preferred Securities in whole or in part after
10  years.  The  annual  Preferred  Security  obligations  of  approximately $13
million  per  year  were anticipated to be funded from the Company's nonstandard
automobile  management  company  from  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 due in February and August 2000, 2001 and 2002
and  February  2003 and expects to continue this practice through 2003 and 2004.
All  of the deferred interest (approximately $84 million, if all payments due in
2003  and  2004  are deferred) will become due and payable in February 2005. The
Company relies on the payment of finance and service fees by its subsidiaries to
fund  its  operations,  including  its  payment  of  interest  on  the Preferred
Securities.  Certain  state  regulators,  including  the  Florida  Department of
Insurance  ("FDOI"),  have  issued orders prohibiting the Company's subsidiaries
from  paying  such  fees to the Company.  In the event such orders continue, the
Company  may  not  have  sufficient revenue to fund its operations or to pay the
deferred interest on the Preferred Securities.  Such failure to pay could result
in  a  default  under  the  indenture  and  acceleration  of  the payment of the
Preferred  Securities.

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").  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:

-    The  Company  may not incur additional indebtedness or guarantee additional
     indebtedness.
-    The Company may not make certain restricted payments including making loans
     or advances to affiliates, repurchasing common stock or paying dividends in
     excess  of  a  stated  limitation.
-    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  (0.95) in 2002, and will continue to apply until the Company's consolidated
coverage  ratio  complies  with  the  terms of the trust indenture.  The Company
complied with these additional restrictions as of December 31, 2001 and 2002 and
is  in  compliance  as  of  May  9,  2003.

<PAGE>
7.     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>
                                  2002      2001      2000
                                 -------  --------  ---------
<S>                              <C>      <C>       <C>
Balance at January 1. . . . . .  $81,142  $108,117  $152,455
Less reinsurance recoverables .   30,600    23,252    13,527
                                 -------  --------  ---------
     Net balance at January 1 .   50,542    84,865   138,928
                                 -------  --------  ---------
Incurred related to
current year. . . . . . . . . .   35,413    69,667   127,497
Prior years . . . . . . . . . .   12,775       774   (14,118)
                                 -------  --------  ---------
     Total incurred . . . . . .   48,188    70,441   113,379
                                 -------  --------  ---------
Paid related to
Current year. . . . . . . . . .   19,211    46,973    85,334
Prior years . . . . . . . . . .   36,374    57,791    82,108
                                 -------  --------  ---------
     Total paid . . . . . . . .   55,585   104,764   167,442
                                 -------  --------  ---------
     Net balance at December 31   43,145    50,542    84,865
Plus reinsurance recoverables .   24,059    30,600    23,252
                                 -------  --------  ---------
     Balance at December 31 . .  $67,204  $ 81,142  $108,117
                                 =======  ========  =========
</TABLE>


Reserve  estimates are regularly adjusted in subsequent reporting periods as new
facts  and  circumstances  emerge  to  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  operations  in  the period when the need for the adjustment
becomes  known.  The  foregoing reconciliation indicates unfavorable development
of $12,775,000 on the December 31, 2001 reserves.  A portion of the 2001 reserve
development  was  caused  by  a  larger  than normal number of previously closed
claims  that  reopened  in  2002.  The remainder of the 2001 reserve development
resulted  from  a  higher  than  expected  frequency and severity on nonstandard
automobile  claims.

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  indicate the involvement of a
specific insurance policy.  In addition, reserves have been established to cover
additional  exposure  on  both  known  and  unasserted  claims.

8.     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.

<PAGE>

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>
                                                     2002      2001      2000
                                                   --------  --------  ---------
<S>                                                <C>       <C>       <C>
Computed income taxes (benefit) at statutory rate  $(6,732)  $(5,576)  $(20,981)
Goodwill. . . . . . . . . . . . . . . . . . . . .        -         -     12,176
Distribution in excess of basis . . . . . . . . .      637         -          -
Other . . . . . . . . . . . . . . . . . . . . . .       73        32     (4,042)
                                                   --------  --------  ---------
Total . . . . . . . . . . . . . . . . . . . . . .   (6,022)   (5,544)   (12,847)
Valuation allowance . . . . . . . . . . . . . . .    6,022     5,544     10,698
                                                   --------  --------  ---------
Income tax expense. . . . . . . . . . . . . . . .  $     -   $     -   $ (2,149)
                                                   ========  ========  =========
</TABLE>

The  net  deferred  tax  asset at December 31, 2002 and 2001 is comprised of the
following  (in  thousands):
<TABLE>
<CAPTION>
                                             2002       2001
                                            ---------  ---------
<S>                                         <C>        <C>
Deferred tax assets:
Unpaid losses and loss adjustment expenses  $  1,112   $  1,300
Unearned premiums. . . . . . . . . . . . .       656      1,159
Allowance for doubtful accounts. . . . . .       190        629
Unrealized losses on investments . . . . .       777        914
Net operating loss carryforwards . . . . .    13,344     18,279
Capital loss carryforwards . . . . . . . .     4,055      2,107
Accrued interest payable . . . . . . . . .    17,230     11,621
Other. . . . . . . . . . . . . . . . . . .     1,806      1,452
                                            ---------  ---------
   Deferred tax assets . . . . . . . . . .    39,170     37,461
                                            ---------  ---------
Deferred tax liabilities:
Deferred policy acquisition costs. . . . .       713       (168)
Other. . . . . . . . . . . . . . . . . . .      (877)      (924)
                                            ---------  ---------
   Valuation allowance . . . . . . . . . .   (39,006)   (36,369)
                                            ---------  ---------
   Net deferred tax assets . . . . . . . .  $      -   $      -
                                            =========  =========
</TABLE>


At  December 31, 2002 and 2001, the Company's net deferred tax assets were fully
offset  by  a  valuation  allowance.

As  of  December  31, 2002, the Company has unused net operating loss carryovers
available  as  follows  (in  thousands):
<TABLE>
<CAPTION>

Year of expiration:
<S>                  <C>
2019. . . . . . . .  $21,030
2020. . . . . . . .   17,095
                     -------
      Total . . . .  $38,125
                     =======
</TABLE>


Federal  income  tax  filings  of  the Company for years prior to 2000 have been
examined  by  the  Internal  Revenue  Service.

<PAGE>
9.     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,  2002  and  thereafter,  excluding renewal options (in thousands):
<TABLE>
<CAPTION>

Years Ending December 31:
<S>                        <C>
2003. . . . . . . . . . .  $617
2004. . . . . . . . . . .   438
2005. . . . . . . . . . .   338
2006. . . . . . . . . . .   117
2007 and Thereafter . . .    83
</TABLE>

Rental  expense  charged  to  operations  in  2002,  2001  and  2000 amounted to
$1,009,516,  $1,688,000  and  $1,848,000,  respectively,  including amounts paid
under  short-term  cancelable  leases.

10.     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  88.3%  of uncollateralized amounts recoverable are with companies
which  maintain an A.M. Best rating of at least A+.  Another 2.7% 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.

Superior  commuted  the  accident  year 2001 and 2000 portion of the reinsurance
treaty  with  National  Union  Fire  Insurance  Company  ("National").  Superior
recognized  the amounts received from National as a reduction of losses and loss
adjustments  expenses  paid  (thereby  increasing  losses  and  loss  adjustment
expenses  incurred)  to  recognize  the  effect  of  releasing National from its
obligations  under  the  treaty.  There was no effect on premiums earned, losses
incurred,  loss  adjustment  expense  incurred or commission in the current year
income  statement  due  to  this  commutation.

The  Company  sold  100%  of its 2001 crop year business to Acceptance Insurance
Companies  Inc.  ("Acceptance"),  effective  June  6,  2001.  The agreements are
without  recourse as they relate to the net profit or loss on the 2001 crop year
book  of business. The sale was approved by the Indiana Department of Insurance.

<PAGE>
Reinsurance  activity  for  2002, 2001 and 2000, which includes reinsurance with
related  parties,  is  summarized  as  follows  (in  thousands):

<TABLE>
<CAPTION>
               2002                                         Direct   Assumed    Ceded      Net
                                                           --------  ------    -------    ------
      Premiums written                                     $107,708     $67    $(77,291)   $30,484
      Premiums earned                                       129,370     212     (91,920)    37,662
      Incurred losses and loss adjustment expenses          114,056     147     (66,016)    48,187
      Commission expenses (income)                           11,038     (1)     (24,656)   (13,619)

               2001                                         Direct   Assumed    Ceded      Net
               ----                                        --------  -------    ------    -------
<S>                                                           <C>      <C>    <C>       <C>     <C>
      Premiums written                                     $159,821  $1,271   $(105,158)  $ 55,934
      Premiums earned                                       163,828   2,484     (89,365)    76,947
      Incurred losses and loss adjustment expenses          132,589   2,616     (64,764)    70,441
      Commission expenses (income)                           18,979     151     (25,716)    (6,586)

               2000                                         Direct   Assumed    Ceded       Net
               ----                                        -------   -------   -----       -----
      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
</TABLE>


Amounts  recoverable  from  reinsurers  relating  to  unpaid  losses  and  loss
adjustment expenses were $24,060,000 and $30,181,000 as of December 31, 2002 and
2001,  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.

11.     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.

The  following  balances  were  outstanding  at  December  31  (in  thousands):
<TABLE>
<CAPTION>
                                                             2002     2001
                                                           --------  ------
<S>                                                        <C>       <C>
Due from directors and officers . . . . . . . . . . . . .  $    44   $  42
Other receivables from and (payables to) related parties.   (2,731)   (638)
                                                           --------  ------
Total receivables (payables). . . . . . . . . . . . . . .  $(2,687)  $(596)
                                                           ========  ======

Reinsurance payable to affiliates . . . . . . . . . . . .  $   502   $ 617
                                                           ========  ======
</TABLE>


The  following  transactions  occurred  with  related parties in the years ended
December  31  (in  thousands):
<TABLE>
<CAPTION>
                                                     2002    2001     2000
                                                    ------  ------  --------
<S>                                                 <C>     <C>     <C>
Reinsurance under various treaties, net:
Ceded premiums earned. . . . . . . . . . . . . . .  $   0   $   3   $   186
Ceded losses and loss adjustment expenses incurred    (85)   (419)   (4,858)
Ceded commissions. . . . . . . . . . . . . . . . .      0       1        (1)
Consulting fees charged by various related parties     48      16     1,895
</TABLE>

The  amounts due from officers and directors are non-interest-bearing loans. The
Company  paid  $1,846,000  in 2000 for consulting and other services to a vendor
owned  in  part  by  the  brother of the Company's president. The consulting and
other  services  were for the conversion of 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.

Superior  Group  obtained a line of credit from Granite Re in the amount of $2.5
million  and  $1 million in December 31, 2001 and October 2002, respectively. At
December  31,  2002, $2.98 million was outstanding under the line. These line of
credit  notes  bear interest at the rate of prime plus 5.25% for a total of 9.5%
at  December  31, 2002. Interest only payments are due monthly. The $2.5 million
outstanding is due December 20, 2004 and $480 thousand is due November 30, 2004.

12.     REGULATORY  MATTERS

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

On  June  6,  2001,  IGF  sold substantially all of its crop insurance assets to
Acceptance.  On June 29, 2001, following the sale of IGF's crop insurance assets
and  as  a result of losses experienced by IGF in its crop insurance operations,
the  IDOI and IGF entered into a consent order (the "Consent Order") relating to
IGF.  IGF has discontinued writing new business and its operations are presently
in  run  off.  The IDOI has continued to monitor the status of IGF.  The Consent
Order  prohibits  IGF  from  taking  any  of the following actions without prior
written  consent  of  the  IDOI:

-    Sell  or  encumber  any  of  its  assets,  property,  or business in force;
-    Disburse  funds,  except to pay direct unaffiliated policyholder claims and
     normal  operating  expenses  in the ordinary course of business (which does
     not  include  payments  to affiliates except for the reimbursement of costs
     for  running IGF by the Company, and does not include payments in excess of
     $10,000);
-    Lend  its  funds  or  make  investments,  except  in  specified  types  of
     investments;
-    Incur  debts  or  obligations, except in the ordinary course of business to
     unaffiliated  parties;
-    Merge  or  consolidate  with  another  company;
-    Enter  into  new,  or  amend  existing, reinsurance agreements; - Complete,
     enter  into  or amend any transaction or arrangement with an affiliate, and
-    Disburse  funds  or  assets  to  any  affiliate.

The  Consent  Order  also  requires IGF to provide the IDOI with monthly written
updates  and  immediate  notice  of  any material change regarding the status of
litigation  with  Continental  Casualty  Company,  statutory reserves, number of
non-standard automobile insurance policies in-force by state, and reports of all
non-claims  related  disbursements.  IGF's  failure  to  comply with the Consent
Order  could  cause  the  IDOI  to  begin proceedings to have a rehabilitator or
liquidator  appointed  for IGF or to extend the provisions of the Consent Order.

Pafco has been subject to an agreed to order of the IDOI since February 17, 2000
that  requires  Pafco,  among  other  matters,  to:

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

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

In March 2000, Pafco agreed with the Iowa Department of Insurance ("IADOI") that
it  would  not  write  any new non-standard business in Iowa, until such time as
Pafco has reduced its overall non-standard automobile policy counts in the state
or  has:

-    Increased  surplus,  or
-    Has  achieved  a net written premium to surplus ratio of less than three to
     one,  or
-    Has  surplus  reasonable  to  its  risk.

Pafco has continued to service existing policyholders and renew policies in Iowa
and  provide  policy  count  information  on a monthly basis in conformance with
IADOI  requirements.

Superior  and  Pafco provide monthly financial information to the departments of
insurance in certain states in which they write business at the states' request.

On  July  7, 2000, the FDOI issued a notice of its intent to issue an order (the
"Notice") which principally addressed certain policy and finance fee payments by
Superior  to  Superior  Group.  A  formal  administrative  hearing to review the
Notice  and  a  determination  that  the order contemplated by the Notice not be
issued  was  held  in  February  2001.  The  administrative  law judge entered a
recommended  order on June 1, 2001 that was acceptable to the Company. On August
30,  2001,  the  FDOI  rejected the recommended order and issued its final order
which the Company believes improperly characterized billing and policy fees paid
by  Superior to Superior Group.  On September 28, 2001, Superior filed an appeal
of  the  final  order to the Florida District Court of Appeal. On March 4, 2002,
the FDOI filed a petition in the Circuit Court of the Second Judicial Circuit in
and  for  Leon  County,  Florida  seeking  court enforcement of the FDOI's final
order. Superior filed a motion with the FDOI for stay of the FDOI's final order.
Superior  also  filed a motion for stay with the District Court of Appeal, which
was  denied pending a ruling from the FDOI.  On April 5, 2002 the FDOI granted a
stay  of  the final order that was conditional upon the cessation of the payment
of  billing  fees by Superior to Superior Group and the posting of a $15 million
appeal  bond.  Superior  did  not  agree to the conditions imposed by the FDOI's
conditional  stay.  On  May  6,  2002  Superior filed a motion with the District
Court  of Appeal seeking a stay of the final order pending Superior's appeal or,
in  the  alternative,  a consolidation of the FDOI's enforcement action with the
pending appeal.  On June 19, 2002, the District Court of Appeal entered an order
which  struck the FDOI's conditional requirement for the stay that Superior post
a  $15  million  appeal  bond.  However,  the order denied Superior's request to
consolidate  the appeal with the enforcement action.  On September 26, 2002, the
District  Court  of  Appeal affirmed the final order of the FDOI. On October 31,
2002  the  Circuit Court entered a final order which granted the FDOI's petition
for  enforcement of the FDOI's final order and which requires Superior to comply
with  the  FDOI  final  order.

In  accordance  with  the FDOI's final order, Superior ceased payment of finance
and service fees as of October 1, 2002 and has requested repayment from Superior
Group of $15 million of finance and service fees paid from 1997 through 1999 and
additional finance and service fees paid thereafter in the approximate amount of
$20  million.  Without the payment of finance and service fee income to Superior
Group or an amendment to the management agreement or reallocation of operational
responsibilities,  Superior  Group could not operate profitably. Accordingly, on
October  1,  2002,  Superior  Group discontinued the provision of certain claims
services  to  Superior. Superior is currently exchanging proposals with the FDOI
to  establish  an  acceptable repayment plan in accordance with the final order.

On  September  10,  2002,  the FDOI filed a petition in the Circuit Court of the
Second  Judicial  Circuit  in  and for Leon County, Florida for an order to show
cause  and  notice  of automatic stay which sought the appointment of a receiver
for  the  purpose  of rehabilitation of Superior.  The court entered an order to
show  cause,  temporary injunction and notice of automatic stay on September 13,
2002 and a hearing was held on October 24, 2002.  On November 1, 2002, the court
entered  an order that denied the FDOI's petition for appointment of a receiver.
On  November 8, 2002, the FDOI filed a motion for rehearing, which was denied on
December  17,  2002.

On  November  20,  2002,  the FDOI issued a notice and order to show cause which
seeks to suspend or revoke Superior's certificate of authority principally based
upon  allegations  that  Superior did not comply with the FDOI's August 30, 2001
final order during the pendency of the appeal of the order to the District Court
of  Appeal.  Superior  believes  that  it has fully and timely complied with the
final  order  and that the action brought by the FDOI is barred by res judicata.
A  formal  administrative  hearing to review the notice and a determination that
the  order or administrative action contemplated by the notice not be issued was
held  in May 2003. The administrative law judge has not yet issued a recommended
order,  which  the  FDOI  may  accept  or  reject.

 On  March  21,  2003,  the  FDOI  filed a Motion for Enforcement of Final Order
Granting Petition to Enforce Agency Action (the "Motion for Enforcement") in the
Circuit  Court  of  the  Second Judicial Circuit in and for Leon County, Florida
which  sought to hold Superior in contempt for failure to comply with the FDOI's
final  order  during  the  pendency of Superior's appeal to the Florida District
Court of Appeal. On May 7, 2003 a hearing was held on the Motion for Enforcement
and  an  order  has  not  yet  been  issued.

On  October  9,  2001,  the  State Corporation Commission of Virginia ("Virginia
Commission")  issued  an  order  to  take  notice  regarding an order suspending
Superior's  license  to write business in that state.  An administrative hearing
for  a  determination  that the suspension order not be issued was held March 5,
2002.  On  May  3,  2002, the hearing examiner issued his report and recommended
that  Superior's  license not be suspended and that Superior file its risk based
capital  plans and monthly and quarterly financial information with the Virginia
Bureau  of  Insurance  ("Bureau").  On  June  19,  2002  the Virginia Commission
entered  an  order which adopted the findings of the hearing examiner, continued
the  matter  until  such time as the Bureau requests further action and requires
the  continued  monitoring of the financial condition of Superior by the Bureau.
On  October  11,  2002,  the Virginia Commission filed an administrative Rule to
Show  Cause.  A hearing was scheduled for November 18, 2002 to determine whether
Superior's  license  to  transact  insurance  business  in  Virginia  should  be
suspended.  Because  of  Superior's  improved  financial condition, the Virginia
Commission  continued  the  hearing  indefinitely.  The  nonstandard  automobile
insurance  policies  written in Virginia by Superior accounted for approximately
13.1%  and  14.5% of the total gross written premiums of the Company in 2001 and
in  2002,  respectively.

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

Risk-Based  Capital  Requirements

In  order  to enhance the regulation of insurer solvency, the NAIC has adopted a
formula  and  model law to implement risk-based capital ("RBC") requirements for
property  and  casualty  insurance  companies designed to assess minimum capital
requirements  and  to  raise  the  level  of  protection  that statutory surplus
provides  for  policyholder  obligations, Indiana and Florida have substantially
adopted  the  NAIC  model law and Indiana directly, and Florida indirectly, have
adopted  the  NAIC  model  Formula.  The  RBC  formula for property and casualty
insurers:  (i  )  underwriting,  which  encompasses  the  risk  of  adverse loss
developments  and inadequate pricing; (ii) declines in asset values arising from
credit  risk; (iii) declines in asset values arising from investment risks; (iv)
off-balance  sheet  risk  arising  from  adverse  experience from non-controlled
asset, guarantees for affiliates, contingent liabilities and reserve and premium
growth.  Pursuant  to the model law, insurers having less statutory surplus that
that  required  by  the  RBC  calculation  will be subject to varying degrees of
regulatory  action,  depending  on  the  level  of  capital  inadequacy.

The  RBC  model law provides for four levels of regulatory action. The extent of
regulatory  intervention  and  action  increases  as the level of surplus to RBC
decreases.  The  first level, the Company Action Level (as defined by the NAIC),
requires  and insurer to submit a plan of corrective actions to the regulator if
surplus  falls  below  200%  of  the  RBC amount. The Regulatory action level re
quires  an  insurer  to submit a plan containing corrective actions and requires
the relevant insurance commissioner to perform and examination or other analysis
and  issue a corrective order if surplus falls below 150% of the RBC amount. The
Authorized  Control  Level  gives the relevant insurance commissioner the option
either  to  take  the aforementioned actions or to rehabilitate or liquidate the
insurer  if  surplus  falls  below  70%  of  the  RBC  amount.

At  the time of filing of the unaudited annual statutory financial statements of
the  Company's  insurance  subsidiaries  with the IDOI and the FDOI for the year
ended  December  31,  2002,  the RBC calculations for Pafco and Superior were in
excess  of  200% of the RBC amount, a level which requires no corrective action.
The RBC calculation for IGF as of December 31, 2002 was in excess of 100% of the
RBC  amount,  which  is  above  the  authorized  control  level.

In  May 2003, pursuant to a reserve analysis completed by the consulting actuary
engaged  by  BDO  Seidman,  LLP, the Company's independent auditor, reserves for
losses  and loss adjustment expenses for Superior and Pafco were increased as of
December  31, 2002.  These reserve adjustments, along with resulting adjustments
to  the  permitted carrying values of certain assets of Superior, investments in
Superior  American  and  Superior  Guaranty,  were  recorded in the 2002 audited
statutory financial statement filed for Superior and Pafco with the FDOI and the
IDOI,  respectively.  Based  on  the  adjusted  audited  statutory  financial
statements,  the  surplus  for Superior fell below 70% of the RBC amount and the
surplus  level  for  Pafco  was  above 150% of the RBC amount as of December 31,
2002.  As  a  result,  there  may  be additional regulatory actions taken by the
insurance  regulators  in  states  in  which  the  companies  write  business.

The  NAIC  Insurance  Regulatory  Information  System  ("IRIS")  was  developed
primarily  to  assist  state  insurance departments in executing their statutory
mandate  to oversee the financial condition of insurance companies.  IRIS ratios
consist  of  twelve  ratios with defined acceptable ranges.  They are used as an
initial  screening  process  for  identifying  companies  that may be in need of
special  attention.  Companies that have several ratios that fall outside of the
acceptable  range  are  selected  for  closer  review  by the NAIC.  If the NAIC
determines  that  more  attention  may  be  warranted,  one  of  five  priority
designations  is  assigned and the insurance department of the state of domicile
is  then  responsible  for  follow-up  action.

Based  on  the December 31, 2002 statutory financials filed with the NAIC, Pafco
had  values outside of the acceptable ranges for five IRIS tests. These included
the  two-year overall operating ratio, the investment yield ratio, the change in
surplus  ratio,  the  liabilities  and  liquid  assets  ratio, and the estimated
current  reserve  deficiency  to  policyholders'  surplus  ratio.

Based  on  the  December  31,  2002  statutory  financials  filed with the NAIC,
Superior  had values outside of the acceptable ranges for six IRIS tests.  These
included  the  surplus aid to policyholders' surplus ratio, the two-year overall
operating  ratio,  the change in surplus ratio, the liabilities to liquid assets
ratio, the one-year reserve development to policyholders' surplus ratio, and the
two-year  reserve  development  to  policyholders'  surplus  ratio.

As  of  December  31,  2002, IGF had values outside of the acceptable ranges for
five  IRIS tests.  These included the change in net writings ratio, the two-year
overall  operating ratio, the change in surplus ratio, the liabilities to liquid
assets  ratio,  and  the  agent's  balances  to  policyholders'  surplus  ratio.

13.     COMMITMENTS  AND  CONTINGENCIES

Superior  Guaranty  is  a defendant in a case filed on November 26, 1996, in the
Circuit  Court  for  Lee County, Florida entitled Raed Awad v. Superior Guaranty
Insurance  Company,  et  al.,  Case No. 96-9151 CA LG.  The case purported to be
brought on behalf of a class consisting of purchasers of insurance from Superior
Guaranty.  The plaintiffs alleged that Superior Guaranty charged premium finance
service  charges  in violation of Florida law.  The parties have reached a class
settlement  which  has  been  approved  by  the court that is not expected to be
material  to  Superior  Guaranty.

As  previously reported, IGF, which is a wholly owned subsidiary of the Company,
had been a party to a number of pending legal proceedings and claims relating to
agricultural  production  interruption  insurance  policies (the "AgPI Program")
which were sold during 1998.  All of the policies of insurance which were issued
in the AgPI Program were issued by and under the name of Mutual Service Casualty
Insurance  Company  ("MSI"), a Minnesota corporation with its principal place of
business  located  in Arden Hills, Minnesota.  Sales of this product resulted in
large  underwriting  losses  by  IGF.

Approximately  $29  million  was paid through December 31, 2002 in settlement of
legal proceedings and policyholder claims related to the AgPI Program.  All AgPI
policyholder  claims  were  settled  during 2000. However, on January 12, 2001 a
case  was  filed in the Superior Court of California, County of Fresno, entitled
S&W  Seed Company, Dudley Silveira, Ric Blanchard and Darrell Silveira v. Mutual
Service  Casualty  Insurance  Company,  IGF  Insurance  Company,  and  Dibuduo &
Defendis  Insurance  Agency, Inc.; Case No. OICE CG 00137.  The case was brought
by four AgPI policyholders who had previously settled their AgPI claims pursuant
to  binding  settlement  agreements  who  now  seek  additional  compensation by
asserting through litigation that IGF and the third party carrier paid less than
the  policy  limits  they  were promised when they purchased the policy and that
each  settling  policyholder was forced to accept the lesser amount due to their
economic  duress  -  a legal theory recognized in California if certain elements
can  be  established.  The plaintiff's amended their complaint four times during
2002.  A  demurrer to the fourth amended complaint was filed by MSI and a motion
to  strike was filed by IGF, which were denied.  IGF  filed a motion for summary
judgment  to  dismiss  the claims in the plaintiff's fourth amended complaint on
the  basis that releases previously executed by the plaintiffs are binding.  The
court  granted  the  motion  for summary judgment.  The cross claims between the
selling brokers and MSI and IGF remain pending.  The trial is scheduled to begin
in  August  2003.

Superior  Guaranty  is  a  defendant  in a case filed on October 8, 1999, in the
Circuit  Court for Manatee County, Florida entitled Patricia Simmons v. Superior
Guaranty  Insurance  Company,  Case  No. 1999 CA-4635.  The case purported to be
brought on behalf of a class consisting of purchasers of insurance from Superior
Guaranty.  The  Plaintiff  alleged  that  the  defendant  charged  interest  in
violation  of  Florida law.  The parties have settled the case in an amount that
is  not  material  to  the  Company's  financial  condition.

The  Company  is a defendant in a case filed on February 23, 2000, in the United
States District Court for the Southern District of Indiana entitled Robert Winn,
et  al. v. Symons International Group, Inc., et al., Cause No. IP 00-0310-C-B/S.
Other  parties  named as defendants are 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 (the "1934 Act") and SEC
Rule 10b-5 promulgated thereunder. The individual defendants are also alleged to
be  liable  as  "controlling  persons"  under  Sec.20  (a)  of the 1934 Act.  As
previously  reported in the Company's September 30, 2002 Form 10-Q, the Company,
Goran  and  the  individual  defendants  entered  into  an  agreement  with  the
plaintiffs  for  settlement.  The  settlement  is  subject  to certain terms and
conditions  and  court  approval.

As  previously  reported, the Company and two of its subsidiaries, IGFH and IGF,
were  parties  to  a "Strategic Alliance Agreement" dated February 28, 1998 (the
"SAA") with Continental Casualty Company ("CNA"), pursuant to which IGF acquired
certain  crop insurance operations of CNA. The obligations of the Company, IGFH,
IGF and CNA under the SAA are the subject of an action filed on June 4, 2001 and
pending  in  United  States District Court for the Southern District of Indiana,
Indianapolis  Division.  Claims  have  also  been asserted in the action against
Goran,  Granite  Re,  Pafco,  Superior and certain members of the Symons family.
Discovery  is proceeding.  Although the Company continues to believe that it has
claims  against  CNA  and  defenses  to  CNA's claims which may offset or reduce
amounts owing by the Company or its affiliates to CNA, there can be no assurance
that  the  ultimate resolution of the claims asserted by CNA against the Company
and  its  affiliates  will not have a material adverse effect upon the Company's
and  its  affiliates'  financial  condition  or  results  of  operations.

Superior  was  a  defendant  in a case filed on May 8, 2001 in the United States
District  Court  Southern  District of Florida entitled The Chiropractic Centre,
Inc.  v. Superior Insurance Company, Case No. 01-6782.  The case purported to be
brought  on behalf of a class consisting of healthcare providers improperly paid
discounted  rates  on  services  to  patients  based  upon  a preferred provider
contract  with  a  third  party.  The plaintiff alleged that Superior breached a
third  party  beneficiary  contract, committed fraud and engaged in racketeering
activity  in  violation of federal and Florida law by obtaining discounted rates
offered  by  a  third  party  with  whom  the plaintiff contracted directly.  On
September 30, 2002, the court issued an administrative order which dismissed the
case.  The court's order administratively closing the case could be temporary or
permanent.  Superior  believes  that the allegations of wrongdoing as alleged in
the  complaint  were  without  merit  and  in  the event the order is temporary,
Superior  intends  to  vigorously  defend  the  claims  brought  against  it.

IGF  is a defendant in a case filed on December 31, 2002 in the Circuit Court of
Greene County, Missouri entitled Kevin L. Stevens v. Wilkerson Insurers, et al.,
Case  No.  102CC5135.  Other  parties  named  as  defendants  are Goran, Goran's
subsidiaries,  Symons  International  Group  (Florida),  Inc.  and  Granite  Re,
Superior Group Management, Superior, Superior American, Superior Guaranty, Pafco
and  three  individuals  who  were  or are officers or directors of the Company.
Motions  to  dismiss  Goran, Symons International Group (Florida), Inc., Granite
Re,  Superior  Group  Management, Superior, Superior American, Superior Guaranty
and  certain  named  individuals  for lack of personal jurisdiction are pending.
The  case  purports to be brought on behalf of an IGF insured seeking to recover
alleged damages based on allegations of bad faith, negligent claims handling and
breach  of fiduciary duties with respect to a claim which arose from an accident
caused  by  the IGF insured.  IGF believes that the allegations of wrongdoing as
alleged  in the complaint are without merit and intends to vigorously defend the
claims  brought  against  it.

See  Note  12  to the Consolidated Financial Statements, Regulatory Matters, for
additional  contingencies  involving  insurance  regulatory  matters.

The  Company  and  its  subsidiaries  are  named  as defendants in various other
lawsuits  relating  to  their  business  and  arising  in the ordinary course of
business.  Legal  actions arise from claims made under insurance policies issued
by  the  Company's  subsidiaries.  The  Company,  through  its  claims reserves,
reserves for both the amount of estimated damages attributable to these lawsuits
and  the  estimate  costs of litigation.  The Company believes that the ultimate
disposition  of  these  lawsuits  will  not  materially  affect  the  Company's
operations  or  financial  position.

<PAGE>

14.     SUPPLEMENTAL  CASH  FLOW  INFORMATION

Cash  paid/(received) for income taxes and interest is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
                                                               2002   2001     2000
                                                               -----  -----  --------
<S>                                                            <C>    <C>    <C>
Cash paid/(received) for federal income taxes, net of refunds
                                                               $   -  $   -  $(6,134)
                                                               =====  =====  ========
Cash paid for interest. . . . . . . . . . . . . . . . . . . .  $ 211  $   -  $     -
                                                               =====  =====  ========
</TABLE>

15.     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 quote 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, 2002 was
     approximately  $9,000,000.

16.     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.

Information  regarding  the  SIG  Stock  Option  Plan  is  summarized  below:
<TABLE>
<CAPTION>
                                              2002                 2001                 2000
                                            Weighted             Weighted            Weighted
                                             Average              Average             Average
                                   2002     Exercise     2001     Exercise     2000  Exercise
                                   Shares     Price     Shares     Price     Shares     Price
                                 ----------  -------  ----------  -------  ---------- -------
<S>                              <C>         <C>      <C>         <C>      <C>         <C>
Outstanding at the beginning of
 the year . . . . . . . . . . .  1,271,333   $0.8283  1,344,833   $0.9400    213,033   $6.3125
Granted . . . . . . . . . . . .          -         -          -         -  1,287,000    0.5436
Exercised . . . . . . . . . . .          -         -          -         -          -         -
Forfeited/Surrendered . . . . .   (386,333)   1.4650    (73,500)   2.8474   (155,200)   5.0391
                                 ----------           ----------           ----------
Outstanding at the end of the
 Year . . . . . . . . . . . . .    885,000    0.5503  1,271,333    0.8283  1,344,833    0.9400
                                 ==========           ==========           ==========
Options exercisable at year end    590,167    0.5520    465,333    1.3180     73,500    6.3125
Available for future grant. . .    615,000         -    228,667         -    155,167         -
</TABLE>

<TABLE>
<CAPTION>
                                                        Options                 Options
                                          Weighted    Outstanding             Exercisable
                                           Average      Weighted                 Weighted
                                          Remaining     Average                  Average
                             Number       Life (in      Exercise      Number     Exercise
Range of Exercise Prices   Outstanding     Years)        Price      Exercisable   Price
-------------------------  -----------  ------------   ---------    ----------  --------
<S>                        <C>          <C>           <C>           <C>          <C>
0.50 - $0.8750 . . . . .      884,500           7.4  $     0.5477      763,000  $  0.5477
6.3125 . . . . . . . . .          500           5.5        6.3125          500     6.3125
                           -----------                              -----------
                              885,000                                  763,500
                           ==========                               ===========
</TABLE>

The  Board  of  Directors of Superior Group Management (formally, GGS Management
Holdings,  Inc.)  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>
                                            2002            2001              2000
                                          Weighted         Weighted        Weighted
                                          Average          Average          Average
                                  2002    Exercise  2001   Exercise  2000  Exercise
                                  Shares   Price   Shares   Price   Shares   Price
                                 --------  ------  -------  ------  -------  ------
<S>                              <C>       <C>     <C>      <C>     <C>      <C>
Outstanding at the beginning
 of the year. . . . . . . . . .   83,332   $57.65  83,432   $54.42  92,232   $51.75
Granted . . . . . . . . . . . .        -        -       -        -       -        -
Forfeited . . . . . . . . . . .  (55,555)   57.65    (100)   57.65  (8,800)   51.48
                                 --------  ------  -------          -------
Outstanding at the end of the
 year . . . . . . . . . . . . .   27,777    57.65  83,332    57.65  83,432    54.42
                                 ========          =======          =======
Options exercisable at year end   27,777    57.65  83,332    57.65  66,726    54.42
Available for future grant. . .   83,334        -  27,779        -  27,679        -

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                                                  Options      Options
                                                                Outstanding   Exercisable
                                                      Weighted    Weighted    Weighted
                                                      Average     Average     Average
                                      Number         Remaining    Exercise     Number    Exercise
Range of Exercise Prices           Outstanding     Life (in years)  Price    Exercisable   Price
-------------------------         ------------     --------------  -------   ----------    -----
<S>                        <C>                  <C>              <C>          <C>          <C>
44.17. . . . . . . . . .               13,889          3.1 yrs  $   44.17       13,889  $   44.17
71.14. . . . . . . . . .               13,888          3.1 yrs  $   71.14       13,888  $   71.14
</TABLE>

The  Company  accounts for stock-based employee compensation using the intrinsic
value  method  under  APB  Opinion  No.  25,  "Accounting  for  Stock  Issued to
Employees"  and  interpretation as permitted under SFAS No. 148, "Accounting for
Stock-Based  Compensation - Transition and Disclosure'' (SFAS 148). Accordingly,
no  compensation  cost is recorded if the current market price of the underlying
stock does not exceed the exercise price at the date of grant.  See Note 1 for a
pro  forma  disclosure  of the effect stock-based compensation would have had on
net  loss  and  net  loss  per  share  had  the  Company  applied the fair value
accounting  provisions  of  SFAS  123  to  stock-based employee compensation and
non-employee  director  compensation.

For  purposes  of  applying  SFAS  123,  the fair value of each option grant was
estimated  using  the  Black-Scholes  option-pricing  model  with  the following
assumptions:
<TABLE>
<CAPTION>
                                     SIG            SIG            SIG
                                 2002 Grants    2001 Grants     2000 Grants
                                -----------  -------------     -----------
<S>                                    <C>          <C>          <C>
Risk-free interest rates. . . . . . .  N/A          N/A                   5%
Dividend yields . . . . . . . . . . .  N/A          N/A                   -
Volatility factors. . . . . . . . . .  N/A          N/A                 106%
Weighted average expected life. . . .  N/A          N/A           4.0 Years
Weighted average fair value per share  N/A          N/A          $     0.40
</TABLE>


17.     MANAGEMENT'S  PLANS

The  Company  reported net losses of $(35.3) million and $(32.9) million for the
years  2002  and  2001,  respectively,  and  is  a  party  to  a number of legal
proceedings  and  claims.  While  shareholders' equity at December 31, 2002 is a
deficit  of  approximately  $(179) million, the Company has partially offsetting
thirty-year  mandatorily  redeemable  trust  preferred stock outstanding of $135
million,  which  are not due for redemption until 2027.  Accumulated interest of
approximately  $84  million  will  be  due  in  February  2005.  The  insurance
subsidiaries,  excluding  IGF,  have  statutory  surplus  of  approximately $30
million.  Management has initiated substantial changes in operational procedures
in  an  effort  to  return  the  Company to profitable levels and to improve its
financial  condition.  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 show positive trends for improving profitability of nonstandard
automobile  insurance  underwriters.

During  January and February 2002, the Company sustained adverse loss experience
on  a  substantial  portion  of its new business written in certain markets.  In
late  February  and  early March 2002, the Company commenced further analysis of
loss  ratios  by  individual agency and a review of claim settlement procedures.
Based  on  this  and  other  analysis,  the  Company took a number of actions to
improve  the  financial position and operating results of the Company including:

-    Eliminated  reinstatements  in all markets, i.e., upon policy cancellation,
     the  insured  must obtain a new policy at prevailing rates and underwriting
     guidelines;
-    Terminated  or  placed  on  new  business moratorium several hundred agents
     whose loss ratios were abnormally high when compared to the average for the
     remaining agents (these agents accounted for approximately 16% of the total
     gross  written  premium  in  2001);
-    Increased  underwriting  requirements  in certain markets including: higher
     down  payments,  new  policy  fees,  and  shorter  policy  terms;
-    Hired  a  consultant  with  significant  auto  claims  experience to review
     processes  and  suggest  modifications  to  the  claims  function.

The  above  actions  were  followed  by:
-    Replacement  of  the  president  of  the  non-standard automobile business;
-    Hiring  an  experienced  vice  president  of  claims;
-    Consolidation  of  all  underwriting  activities,  premium  accounting, and
     agency  licensing  to  the  Indianapolis,  IN  office  from  Atlanta,  GA;
-    Closing  of  regional offices in Denver, CO; Virginia Beach and Alexandria,
     VA;  Glendale,  CA;  and  Jacksonville,  FL;
-    Replacement  of  the  claims  department  national  litigation  manager;
-    Replacement  of  the  marketing  manager  and  the  product  manager;
-    Heavy  focus  on  the  improvement  of  process  and  customer service; and
-    Continued  transition  to  an  improved  policy  processing  system.

These  actions  have  resulted in improved operations and a lower expense ratio.
Employee  staffing levels decreased 40% from 346 to 209 at December 31, 2001 and
2002,  respectively.  The  Company  continues  to review all job functions in an
effort  to  improve  efficiencies.

Management  believes  that  despite  the  historical  losses, it has developed a
business  plan  that  can  improve the Company's operating results and financial
condition  in  2003.

<PAGE>

18.     QUARTERLY  FINANCIAL  INFORMATION  (UNAUDITED)

Quarterly  financial  information  of  continuing  operations  is as follows (in
thousands):
<TABLE>
<CAPTION>
                                                             2002
                                                             ----
                                       First     Second    Third     Fourth      Total
                                      --------  --------  --------  ---------  ---------
<S>                                   <C>       <C>       <C>       <C>        <C>
Gross written premiums . . . . . . .  $43,755   $21,499   $17,449   $ 25,072   $107,775
Net premiums written . . . . . . . .   12,782     5,640     4,169      7,893     30,484
Net premiums earned. . . . . . . . .   11,766     9,876     7,721      8,299     37,662
Total revenues . . . . . . . . . . .   15,280    13,460    11,957      9,314     50,011
Net operating loss
From continuing operations (1) . . .   (3,102)   (4,967)   (1,013)    (6,965)   (16,047)
Net loss from continuing operations.   (7,729)   (9,421)   (4,584)   (13,526)   (35,260)
Basic operating loss per share
from continuing operations . . . . .     (.30)     (.48)     (.10)      (.67)     (1.55)
Net loss from continuing operations
Per share - basic and diluted. . . .     (.74)     (.91)    (0.44)     (1.31)     (3.40)

                                                             2001
                                                             ----
                                       First     Second    Third     Fourth      Total
                                       --------  --------  --------  -------     ------
Gross written premiums . . . . . . .  $48,222   $46,868   $27,268   $ 38,734   $161,092
Net premiums written . . . . . . . .   16,829    24,620    14,607       (122)    55,934
Net premiums earned. . . . . . . . .   18,728    23,031    22,839     12,349     76,947
Total revenues . . . . . . . . . . .   22,483    27,858    28,874     16,002     95,217
Net operating loss from
Continuing operations (1). . . . . .   (5,011)   (2,848)   (4,029)    (2,686)   (14,574)
Net loss from continuing operations.   (9,432)   (7,009)   (6,824)    (7,471)   (30,736)
Basic operating loss per share
from continuing operations . . . . .     (.48)     (.27)     (.39)      (.26)     (1.40)
Net loss from continuing operations
Per share - basic and diluted. . . .     (.91)     (.68)     (.66)      (.71)     (2.96)
<FN>

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


19.     DISCONTINUED  OPERATIONS

As  previously  announced,  the  Company  sold  its crop insurance operations to
Acceptance on June 6, 2001. This business was predominantly written through IGF.
The  divestiture  of  the  crop  insurance segment transferred ownership of 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
have  been  reflected  as  "Discontinued  Operations"  in  the  accompanying
consolidated  financial  statements.

Summarized  results  of  operations  and  financial  position  for  discontinued
operations  were  as  follows:


<PAGE>
STATEMENTS  OF  OPERATIONS
(in  thousands)
<TABLE>
<CAPTION>



Year Ended December 31,                                      2002      2001       2000
                                                           --------  ---------  ---------
<S>                                                        <C>        <C>        <C>
Gross premiums written. . . . . . . . . . . . . . . . . .  $  (314)  $256,722   $241,748
                                                           ========  =========  =========
Net premiums written. . . . . . . . . . . . . . . . . . .  $    (5)  $   (308)  $ 26,466
                                                           ========  =========  =========

       Net premiums earned. . . . . . . . . . . . . . . .  $     8   $   (308)  $ 26,531
       Net investment and fee income. . . . . . . . . . .    1,058      1,657      1,229
       Net realized capital gain. . . . . . . . . . . . .   (2,935)       799         10
                                                           --------  ---------  ---------
Total revenues. . . . . . . . . . . . . . . . . . . . . .   (1,869)     2,148     27,770
                                                           --------  ---------  ---------

       Loss and loss adjustment expenses. . . . . . . . .      204      3,559     40,690
       Policy acquisition and general and administrative
      expenses. . . . . . . . . . . . . . . . . . . . . .   (2,073)       654      2,059
       Interest and amortization expense. . . . . . . . .        -         91      1,162
                                                           --------  ---------  ---------
Total expenses. . . . . . . . . . . . . . . . . . . . . .   (1,869)     4,304     43,911
                                                           --------  ---------  ---------

Loss before income taxes. . . . . . . . . . . . . . . . .        -     (2,156)   (16,141)

Income taxes:
        Current income tax (benefit). . . . . . . . . . .        -          -          -
        Deferred income tax expense . . . . . . . . . . .        -          -          -
                                                           --------  ---------  ---------
Total income tax expense (benefit). . . . . . . . . . . .        -          -          -
                                                           --------  ---------  ---------

Loss from operations of discontinued segment. . . . . . .        -          -    (16,141)
Loss on disposal of discontinued segment. . . . . . . . .        -     (2,156)      (900)
                                                           --------  ---------  ---------
Net loss from discontinued operations . . . . . . . . . .  $     -   $ (2,156)  $(17,041)
                                                           ========  =========  =========
</TABLE>




<PAGE>
-------------------------------------------------------------------------------
MANAGEMENT'S  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  a  system  of  internal  controls, which is designed to
provide  reasonable  assurance  that  accounting  records  are  reliable  and to
safeguard the Company's assets.  The independent accounting firm of BDO Seidman,
LLP  has audited and reported on the Company's consolidated financial statements
for 2002, 2001 and 2000. 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  Board  of  Directors, two 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  Board  of  Directors.


                               [GRAPHIC  OMITED]


                               [GRAPHIC  OMITED]


Douglas  H.  Symons
President,  Chief  Executive  Officer  and  Secretary
June  3,  2003

<PAGE>
BOARD  OF  DIRECTORS  AND  SHAREHOLDERS  OF SYMONS INTERNATIONAL GROUP, INC. AND
SUBSIDIARIES
INDIANAPOLIS,  INDIANA

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Symons
International  Group,  Inc.  and subsidiaries (the "Company") as of December 31,
2002  and  2001,  and  the  related  consolidated statements of earnings (loss),
changes  in  shareholders'  equity  (deficit) and cash flows for the years ended
December  31,  2002,  2001  and  2000.  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.

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 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, 2002 and 2001, and
the  results  of  their  operations  and  their  cash  flows for the years ended
December  31,  2002,  2001  and  2000  in  conformity with accounting principles
generally  accepted  in  the  United  States  of  America.

The  accompanying  Consolidated Financial Statements have been prepared assuming
that  the  Company  will continue as a going concern. As discussed in Note 17 to
the consolidated financial statements, the Company has suffered recurring losses
from operations and has a net capital deficiency, and as discussed in Note 13 is
a  party  to  a  number of legal proceedings and claims, that raises substantial
doubt  about  its  ability to continue as a going concern. Management's plans in
regard  to  these  matters  are  also  described  in  Note  17. The consolidated
financial  statements  do not include any adjustments that might result from the
outcome  of  this  uncertainty.

As  discussed  in  note  12, the Company's insurance subsidiaries are subject to
evaluation and regulation under the NAIC Insurance Regulatory Information System
(IRIS)  and  risk-based  capital  (RBC)  requirements  for property and casualty
insurance  companies.  The  resulting  IRIS  test  results  and RBC calculations
reported  by  the  subsidiaries  as  of December 31, 2002, may result in various
levels  of  corrective  action,  including  regulatory  control,  by the Indiana
Department  of  Insurance  and  the  Florida  Department  of  Insurance.



/s/  BDO  Seidman,  LLP

BDO  Seidman,  LLP
Grand  Rapids,  Michigan
May  9,  2003

<PAGE>


SHAREHOLDER  INFORMATION

Corporate  Offices          Registrar  and  Transfer  Agent
Symons  International  Group,  Inc.     National  City  Bank
4720  Kingsway  Drive          4100  West  150th  Street
Indianapolis,  Indiana  46205     3rd  Floor
(317)  259-6300          Cleveland,  Ohio  44135-1385

Independent  Public  Accountants     Annual  Meeting  of  Shareholders
BDO  Seidman,  LLP          4720  Kingsway  Drive
99  Monroe,  Avenue,  N.W.,  Suite  800     Indianapolis,  Indiana  46205
Grand  Rapids,  Michigan  49503-2698     July  11,  2003  at  10:00  A.M.  (EST)


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, 2002, filed with the Securities and Exchange
Commission,  may be obtained, without charge, upon request to the individual and
address  noted  under  Shareholder  Inquiries.


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.
<TABLE>
<CAPTION>

                              Stock Trading Prices


                                   2002        2001
                                  -----        -----
<S>                             <C>    <C>   <C>    <C>
Quarter Ended                   High   Low   High   Low
-------------                   ----  ---  ----  ----

March 31                        $.09  $ .05  $1.19  $.41

June 30                         $.06  $ .03  $ .59  $.35

September 30                    $.05  $ .01  $ .51  $.06

December 31                     $.06  $ .02  $ .17  $.04
</TABLE>

Quotations  reflect  inter-dealer  prices  without  retail  mark-up, markdown or
commission  and  may  not  represent  actual  transactions.

As of March 31, 2003, the Company had approximately 1,200 shareholders, 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, 2002, 2001 and 2000, nor does
the  Company  presently plan to pay cash dividends on its common stock. Dividend
payments  to  the  Company  by  its  insurance  subsidiaries  are  subject  to
restrictions  and  limitations  under  applicable  laws under which an insurance
subsidiary  may  not  pay dividends without prior notice to, or approval by, the
subsidiary's  domiciling  insurance  regulator.  The  indenture  relating to the
Preferred  Securities  currently  prohibits  the  payment  of  dividends  on the
Company's  common  stock.  See Management's Discussion and Analysis of Financial
Condition  and Results of Operations and the notes to the Consolidated Financial
Statements  for  additional  discussion regarding restrictions on the payment of
dividends.

<PAGE>
SHAREHOLDER  INQUIRIES

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

BOARD  OF  DIRECTORS

G.  GORDON  SYMONS
Chairman  of  the  Board
Symons  International  Group,  Inc.  and
Goran  Capital  Inc.

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

President  and  Chief  Executive  Officer
Goran  Capital  Inc.

TERRY  W.  ANKER
Chairman  of  the  Board
Anthology  Companies

MICHAEL  D.  PUCKETT
President  and  Chief  Financial  Officer
CFG  Wealth  Management

<PAGE>
EXECUTIVE  OFFICERS

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

GREGG  F.  ALBACETE
Vice  President  and  Chief  Information  Officer
Symons  International  Group,  Inc.

DAVID  N.  HAFLING
Vice  President  and  Chief  Actuary
Symons  International  Group,  Inc.

BRUCE  K.  DWYER
Chief  Financial  Officer
Symons  International  Group,  Inc.


COMPANY,  SUBSIDIARY  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
          --------------

SUBSIDIARY  AND  BRANCH  OFFICES

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

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

Superior  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

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

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

Superior  Insurance  Company  -  Claims  Office
5503  W  Waters  Avenue,  Suite  500
Tampa,  Florida  33634
Tel:  813-887-4878
Fax:  813-243-0268

Superior  Insurance  Company-  Claims  Office
4500  PGA  Boulevard,  Suite  304A
Palm  Beach  Gardens,  Florida  33418
Tel:  561-622-7831
Fax:  561-622-9741