FORM 10-Q

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

(Mark one)

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

For the quarterly period ended September 30, 1999

         OR

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

For the transition period from               to

Commission file number   0-27462

                                  RISCORP, INC.
             (Exact name of registrant as specified in its charter)

                  FLORIDA                                    65-0335150
         (State or other jurisdiction of                 (I.R.S. Employer
         incorporation or organization)                 Identification No.)

           One Sarasota Tower, Suite 608
           2 North Tamiami Trail
           Sarasota, Florida                                   34236
          (Address of principal executive offices)           (Zip Code)

                                   (941) 366-5015
                            (Registrant's telephone number,
                                    including area code)

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

Number of shares outstanding of the issuer's Common Stock:

 Class                                           Outstanding at October 31, 1999

 Class A Common Stock, $.01 par value                       14,258,671
 Class B Common Stock, $.01 par value                       24,334,443


                                    1
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                                                        INDEX



                                                                                                          Page No.
Part I     Financial Information

           Item 1.         Financial Statements
<S>                                                                                                  <C>

                           Consolidated Balance Sheets -
                               September 30, 1999 and December 31, 1998                                3 - 4

                      Consolidated Statements of Operations -
                          For the three months ended September 30, 1999 and 1998                        5

                      Consolidated Statements of Operations -
                          For the nine months ended September 30, 1999 and 1998                         6

                      Consolidated Statements of Cash Flows -
                          For the nine months ended September 30, 1999 and 1998                         7

                      Consolidated Statements of Comprehensive Loss -
                          For the nine months ended September 30, 1999 and 1998                         8

                      Notes to Consolidated Condensed Financial Statements                             9 - 12

           Item 2.    Management's Discussion and Analysis of Financial
                      Condition and Results of Operations                                             13 - 19


Part II    Other Information

           Item 1.         Legal Proceedings                                                           20 - 21

           Item 2.         Changes in Securities and Use of Proceeds                                        21

           Item 3.         Defaults Upon Senior Securities                                                  21

           Item 4.         Submission of Matters to a Vote of Security Holders                              21

           Item 5.         Other Information                                                                21

           Item 6.         Exhibits and Reports on Form 8-K                                                 22


                           Signatures                                                                       23


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                                     2
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Part I   Financial Information
Item 1.  Financial Statements
<TABLE>
<CAPTION>
                         RISCORP, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets
                                 (in thousands)


                                                                                          September 30       December 31
                                                                                             1999                1998
                                                                                          (Unaudited)
Assets

Investments:
<S>                                                                                      <C>                   <C>

   Fixed maturities available for sale, at fair value
      (amortized cost $72,733 in 1999 and $6,666 in 1998)                                $       72,709        $      6,716
   Fixed maturities  available for sale, at fair value (amortized cost $6,749 in
      1999 and $9,047 in 1998)-restricted                                                         6,795               9,264
                                                                                                  -----               -----
      Total investments                                                                          79,504              15,980

Cash and cash equivalents                                                                         2,202               6,864
Cash and cash equivalents-restricted                                                              1,904              14,842
Prepaid expenses                                                                                  4,614               5,171
Deferred income taxes                                                                               977               3,141
Accounts receivable--other                                                                        2,300               7,674
Income taxes recoverable                                                                          2,181              17,277
Property and equipment, net                                                                         228                 337
Receivable from Zenith                                                                               --              49,933
Other assets                                                                                        756               2,174
                                                                                                 ------               -----
      Total assets                                                                        $      94,666        $    123,393
                                                                                               ========        ============







See accompanying notes to consolidated financial statements.
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                                      3

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                         RISCORP, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets
                                 (in thousands)


                                                                                          September 30     December 31
                                                                                              1999            1998
Liabilities and Shareholders' Equity                                                       (Unaudited)
<S>                                                                                    <C>                 <C>

Liabilities - accrued expenses and other liabilities                                   $          4,889    $        27,827
                                                                                       ----------------    ---------------

Shareholders' equity:

   Class A Common Stock, $.01 par value, 100,000,000
       shares authorized; 14,371,253 shares issued                                                 143                 143
   Class B Common Stock, $.01 par value, 100,000,000
       shares authorized; 24,334,443 shares issued and outstanding                                 243                 243
   Preferred Stock, $.01 par value, 10,000,000 shares
       authorized; none issued and outstanding                                                      --                  --
   Additional paid-in capital                                                                  140,688             140,688
   Retained deficit                                                                            (51,309)            (45,680)
   Treasury Class A Common Stock - at cost, 112,582 shares                                          (1)                 (1)
   Accumulated Other Comprehensive Income:
      Net unrealized gains on investments                                                           13                 173
                                                                                               -------              ------
          Total shareholders' equity                                                            89,777              95,566
                                                                                               -------              ------
          Total liabilities and shareholders' equity                                     $      94,666      $      123,393
                                                                                             =========      ==============




See accompanying notes to consolidated financial statements.
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<CAPTION>




                         RISCORP, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations
                 (in thousands, except share and per share data)


                                                                                                 Three Months
                                                                                              Ended September 30
                                                                                      ------------------------------------
                                                                                           1999                 1998
                                                                                      ----------------     ---------------
                                                                                        (Unaudited)         (Unaudited)
   Revenue:
<S>                                                                                   <C>                  <C>

      Net investment income                                                           $        1,132       $       2,297
      Net realized gains                                                                          --                  74
      Other income                                                                               624                 141
                                                                                       --------------        -----------
          Total revenue                                                                        1,756               2,512


   Expenses:
       Commissions, underwriting, and administrative expenses                                  3,065               3,835
       Interest expense                                                                           49                 147
       Depreciation and amortization                                                              33                  39
                                                                                              ------              ------
          Total expenses                                                                       3,147               4,021
                                                                                              ------              ------
   Loss before income taxes                                                                   (1,391)             (1,509)
   Income tax expense                                                                             30                 189
                                                                                        ------------         ------------
   Net loss                                                                             $    (1,421)         $    (1,698)
                                                                                        ============         ============


   Per share data:
      Net loss per common share - basic                                                 $     (0.04)         $     (0.05)
                                                                                        ============         ============
      Net loss per common share - diluted                                               $     (0.04)         $     (0.05)
                                                                                        ============         ============

   Weighted average common shares outstanding                                             37,634,781          37,062,558
                                                                                         ===========          ==========
   Weighted average common and common share
            equivalents outstanding                                                       37,634,781          37,062,558
                                                                                         ===========          ==========


See accompanying notes to consolidated financial statements.

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<CAPTION>

                         RISCORP, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations
                 (in thousands, except share and per share data)


                                                                                                  Nine Months
                                                                                               Ended September 30
                                                                                       -----------------------------------
                                                                                            1999                1998
                                                                                       ---------------     ---------------
                                                                                        (Unaudited)         (Unaudited)
   Revenue:
   <S>                                                                                  <C>                <C>

            Net investment income                                                       $      4,166       $       7,927
      Net realized gains                                                                         150               4,268
      Other income                                                                               748                 234
      Premiums earned                                                                             --              25,819
      Fee income                                                                                  --               5,723
                                                                                        ------------       -------------
          Total revenue                                                                        5,064              43,971
                                                                                        ------------       -------------

   Expenses:
       Commissions, underwriting, and administrative expenses                                  7,419              30,703
       Interest expense                                                                        1,271                 624
       Depreciation and amortization                                                             109               3,139
      Losses and loss adjustment expenses                                                         --              24,016
      Unallocated loss adjustment expenses                                                        --               2,561
                                                                                        ------------       -------------
          Total expenses                                                                       8,799              61,043
                                                                                        ------------       -------------

   Loss from operations                                                                       (3,735)            (17,072)
   Loss on sale of net assets to Zenith                                                       (4,760)                 --
                                                                                        ------------       -------------
   Loss before income taxes                                                                   (8,495)            (17,072)
   Income tax (benefit) expense                                                               (2,866)                189
                                                                                        ------------       -------------
   Net loss                                                                             $     (5,629)      $     (17,261)
                                                                                        =============      ==============

   Per share data:
      Net loss per common share - basic                                                  $    (0.15)       $      (0.47)
                                                                                        ============       =============

     Net loss per common share - diluted                                                 $    (0.15)       $      (0.47)
                                                                                        ============       =============

   Weighted average common shares outstanding                                             37,491,031          36,949,133
                                                                                          ==========          ==========
   Weighted average common and common share
            equivalents outstanding                                                       37,491,031          36,949,133
                                                                                          ==========          ==========





See accompanying notes to consolidated financial statements.
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<CAPTION>



                         RISCORP, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                 (in thousands)


                                                                                                    Nine Months
                                                                                                Ended September 30
                                                                                          --------------------------------
                                                                                               1999             1998
                                                                                          ---------------   --------------
                                                                                            (Unaudited)       (Unaudited)
<S>                                                                                       <C>                <C>
Net cash used in operating activities                                                     $    (4,959)       $  (33,735)
                                                                                          -----------        ----------

Cash flows from investing activities:
     Purchase of fixed maturities available for sale                                         (386,472)          (51,070)
     Purchase of fixed maturities held to maturity                                                 --            (5,874)
     Proceeds from sales and maturities of fixed maturities available for sale                322,678            63,853
     Proceeds from maturities of fixed maturities held to maturity                                 --             6,000
     Proceeds from sale of equity securities                                                       --             1,324
     Proceeds from sale of equipment                                                               --               255
     Cash received from Zenith for sale of net assets                                          51,153            35,000
     Purchase of property and equipment                                                            --              (940)
     Cash assets transferred to Zenith                                                             --           (29,308)
                                                                                          -----------        ----------
       Net cash (used in) provided by investing activities                                    (12,641)           19,240
                                                                                          -----------        ----------

Cash flows from financing activities:
     Principal repayments of notes payable                                                          --             (245)
     Decrease in deposit balances payable                                                           --           (1,599)
     Transfer of cash and cash equivalents -
       restricted to cash and cash equivalents                                                 12,938             1,022
                                                                                          -----------        ----------
       Net cash provided by (used in) financing activities                                     12,938              (822)
                                                                                          -----------        ----------

Net decrease in cash and cash equivalents                                                      (4,662)          (15,317)

Cash and cash equivalents, beginning of period                                                  6,864            16,858
                                                                                          -----------        ----------
Cash and cash equivalents, end of period                                                  $     2,202        $    1,541
                                                                                          ===========        ==========

Supplemental disclosures of cash flow information:

     Cash paid during the period for:
           Interest                                                                       $     1,124        $      479
                                                                                          ===========        ==========
           Income taxes                                                                   $       196        $    3,644
                                                                                          ===========        ==========



See accompanying notes to consolidated financial statements.
</TABLE>


                                       7
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<TABLE>
<CAPTION>


                         RISCORP, INC. AND SUBSIDIARIES

                  Consolidated Statements of Comprehensive Loss
                                 (in thousands)


                                                                                      Nine Months Ended
                                                                                        September 30
                                                                            --------------------------------------
                                                                                   1999                1998
                                                                            -------------------  -----------------
                                                                               (Unaudited)          (Unaudited)
<S>                                                                         <C>                    <C>

Net loss                                                                    $      (5,629)         $  (17,261)
                                                                            -------------          ----------
Other comprehensive income (loss), before income taxes:
  Unrealized gains (losses) on securities available for sale:
    Unrealized holding gains (losses) arising during the period                     (245)               6,628
Income tax expense (benefit) related to items of other
  comprehensive income (loss)                                                        (86)               2,320
                                                                            ---------------        ------------
Other comprehensive income (loss), net of income taxes                              (159)               4,308
                                                                             --------------        ------------

Total comprehensive loss                                                    $      (5,788)         $  (12,953)
                                                                            =============          ==========




























See accompanying notes to consolidated financial statements.

</TABLE>

                                       8
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                         RISCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Condensed Financial Statements
                                   (Unaudited)


(1)    Basis of Presentation

       The accompanying  consolidated  unaudited interim financial statements of
       RISCORP, Inc. ("RISCORP") and subsidiaries (collectively,  the "Company")
       have  been  prepared  on  the  basis  of  generally  accepted  accounting
       principles  ("GAAP")  and,  in the  opinion of  management,  include  all
       adjustments,  consisting only of normal recurring adjustments,  necessary
       for a fair presentation of the Company's financial condition,  results of
       operations,  and cash flows for the periods presented. The preparation of
       financial  statements in conformity with GAAP requires management to make
       estimates and assumptions  that affect the reported amounts of assets and
       liabilities and disclosures of contingent  liabilities at the date of the
       financial  statements and the reported  revenues and expenses  during the
       reporting period. Actual results could differ from those estimates.

       The consolidated financial statements include the accounts and operations
       of RISCORP and its subsidiaries.  All significant  intercompany  balances
       have been eliminated.


(2)     Execution of Merger Agreement with William D. Griffin

       On November 3, 1999,  RISCORP  entered into a definitive  agreement  (the
       "Merger Agreement") to merge with Griffin Acquisition Corp. ("Acquiror"),
       a company controlled by Mr. William D. Griffin,  the majority shareholder
       of RISCORP.  Pursuant to the terms of the Merger  Agreement,  each issued
       and outstanding share of Class A Common Stock will receive $2.85 in cash,
       plus a contingent  right to receive an additional pro rata cash amount if
       RISCORP recovers any additional  amounts from Zenith  Insurance  Company.
       Under the terms of the Merger Agreement,  Acquiror will assume all of the
       liabilities of RISCORP, including its pending litigation. The transaction
       is  subject  to  customary  closing  conditions,   including  shareholder
       approval  and is  expected  to close in the first  quarter of 2000.  This
       transaction, if consummated, will constitute a going private transaction.


(3)    Sale to Zenith Insurance Company

       As  previously  disclosed,  on April 1, 1998,  RISCORP and certain of its
       subsidiaries  sold  substantially  all of their  assets  and  transferred
       certain  liabilities to Zenith Insurance Company  ("Zenith")  pursuant to
       the terms of the Asset  Purchase  Agreement  among the parties dated June
       17, 1997, as amended (the "Asset Purchase Agreement"). In connection with
       the sale to Zenith,  the Company ceased  substantially  all of its former
       business operations,  including its insurance operations, effective April
       1, 1998. Accordingly, after such date, the Company's operations consisted
       principally of the  administration  of the  day-to-day  activities of the
       surviving corporate entities, compliance with the provisions of the Asset
       Purchase Agreement, and the investment,  protection,  and maximization of
       the remaining assets of the Company.  At the present time, RISCORP has no
       plans to resume any operating activities.

       On July 7, 1999,  the Company and Zenith  settled,  with certain  limited
       exceptions,  the  claims  arising  out of the sale.  The  Asset  Purchase
       Agreement  contemplated a post-closing purchase price adjustment based on
       the  difference  between the book value of the assets  purchased  and the

                                       9
<PAGE>

       book  value  of the  liabilities  assumed  as of  the  closing  date.  In
       connection with the  determination of the final purchase price, a dispute
       arose between the parties  regarding,  among other things, the book value
       of the assets and  liabilities  of the business,  Zenith's  assumption of
       certain  operating   liabilities  of  the  business,   and  each  party's
       indemnification obligations under the Asset Purchase Agreement. The terms
       of the settlement included,  among other things,  RISCORP's right to seek
       correction  of alleged  errors made by the neutral  auditor in connection
       with its  determination of certain  reinsurance  recoverable  adjustments
       contained in the Final Business  Balance  Sheet.  On October 7, 1999, the
       neutral auditor denied RISCORP's  request for correction of these errors.
       As a result,  RISCORP is evaluating all available remedies against Zenith
       and the neutral auditor with respect to those issues.

       In connection with the sale of RISCORP's  insurance  operations to Zenith
       on April 1, 1998, RISCORP voluntarily  consented to the Florida Insurance
       Department's  request that RISCORP discontinue writing any new or renewal
       insurance business for an indefinite period of time.


(4)    Issuance of Additional Shares of Stock

       In September  1996,  RISCORP  purchased all of the  outstanding  stock of
       Independent Association Administrators,  Inc. ("IAA") and Risk Inspection
       Services and  Consulting,  Inc.  ("RISC") in exchange for $11.5  million,
       consisting  principally  of 790,336  shares of  RISCORP's  Class A Common
       Stock valued at $10.9  million on the date of  acquisition.  IAA and RISC
       are workers' compensation management services companies offering services
       in Alabama.  On the  acquisition  date,  the excess of the purchase price
       over the fair value of the net assets  acquired was $11.4 million and was
       recorded as goodwill.  The  remaining  unamortized  goodwill  relating to
       those  acquisitions was $7.8 million at March 31, 1998 (just prior to the
       transfer of the goodwill to Zenith on April 1, 1998).

       Due to a decrease in the market value of RISCORP's  Class A Common Stock,
       790,336  additional  shares of  RISCORP's  Class A Common Stock valued at
       $0.6 million were issued in January  1998 to the former  shareholders  of
       IAA.


(5)    Commitments and Contingencies

       On August  20,  1997,  the  Occupational  Safety  Association  of Alabama
       Workers' Compensation Fund (the "Fund"), an Alabama self-insured workers'
       compensation  fund,  filed a breach of contract and fraud action  against
       the Company and others.  The Fund entered into a Loss Portfolio  Transfer
       and Assumption  Reinsurance Agreement dated August 26, 1996 and effective
       September 1, 1996 with RISCORP National Insurance Company ("RNIC"). Under
       the terms of the agreement,  RNIC assumed 100 percent of the  outstanding
       loss  reserves  (including  incurred  but  not  reported  losses)  as  of
       September  1,  1996.  Co-defendant  Peter  D.  Norman  ("Norman")  was  a
       principal  and  officer  of IAA prior to its  acquisition  by  RISCORP in
       September  1996.  The  complaint  alleges  that  Norman and IAA  breached
       certain  fiduciary duties owed to the Fund in connection with the subject
       agreement and transfer.  The complaint  alleges that RISCORP has breached
       certain  provisions  of the  agreement and owes the Fund monies under the
       terms of the agreement.  The Fund claims, per a Loss Portfolio Evaluation
       dated February 26, 1998, that the Fund overpaid RNIC by $6 million in the
       subject  transaction.  The  court  has  granted  RNIC's  Motion to Compel
       Arbitration per the terms and provisions of the agreement. On December 1,
       1998,  the  trial  court  issued  an  order   prohibiting   the  American
       Arbitration  Association from administering the arbitration  between RNIC
       and the Fund, and RNIC has appealed the trial court's ruling. The Alabama
       Supreme  Court has stayed the  current  arbitration.  Despite the Alabama
       Supreme  Court's stay, the dispute  between the Fund and RNIC is expected
       to be resolved through arbitration. The other defendants,  including IAA,


                                       10
<PAGE>

       have appealed to the Supreme Court of Alabama the trial court's denial of
       their motions to compel  arbitration.  RNIC intends to vigorously  defend
       the Fund's claim.

       On March 13, 1998, RISCORP Insurance Company ("RIC") and RISCORP Property
       &  Casualty  Insurance  Company  ("RPC")  were added as  defendants  in a
       purported  class action lawsuit filed in the United States District Court
       for the Southern  District of Florida,  styled  Bristol Hotel  Management
       Corporation,  et. al., v. Aetna  Casualty & Surety  Company,  a/k/a Aetna
       Group,  et. al. Case No.  97-2240-CIV-MORENO.  The plaintiffs  purport to
       bring this action on behalf of themselves  and a class  consisting of all
       employers   in  the  State  of   Florida   who   purchased   or   renewed
       retrospectively  rated or adjusted workers'  compensation policies in the
       voluntary  market since 1985. The suit was  originally  filed on July 17,
       1997  against   approximately  174  workers'   compensation  insurers  as
       defendants.  The  complaint was  subsequently  amended to add the RISCORP
       defendants.  The amended  complaint  named a total of  approximately  161
       insurer  defendants.   The  suit  claims  that  the  defendant  insurance
       companies  violated the Sherman  Antitrust Act, the Racketeer  Influenced
       and Corrupt  Organizations  Act ("RICO"),  and the Florida Antitrust Act,
       committed  breach of contract  and civil  conspiracy,  and were  unjustly
       enriched by unlawfully  adding improper and illegal charges and fees onto
       retrospectively  rated  premiums and  otherwise  charging  more for those
       policies  than allowed by law. The suit seeks  compensatory  and punitive
       damages,  treble  damages  under  the  Antitrust  and  RICO  claims,  and
       equitable relief.  RIC and RPC moved to dismiss the amended complaint and
       have also filed certain motions to dismiss the amended complaint filed by
       various other defendants.

       On August 26, 1998,  the district  court issued an order  dismissing  the
       entire suit against all  defendants  on one of the grounds  identified in
       the various  motions to dismiss  filed by the  defendants.  The  district
       court  indicated  that all other grounds and motions to dismiss that were
       pending at that time were mooted by the dismissal. On September 13, 1998,
       the  plaintiffs  filed a Notice of  Appeal.  On  February  9,  1999,  the
       district court issued,  sua sponte, an Order of  Reconsideration in which
       the court indicated its desire to vacate the dismissal of the RICO claims
       and pendant state claims based on a recent  decision of the United States
       Supreme Court. On June 9, 1999, the Eleventh Circuit remanded the case to
       the district  court,  and the  district  court has assigned the case to a
       magistrate for handling pre-trial matters. At a status conference held on
       October 20, 1999, the magistrate  established deadlines for the filing of
       a motion for leave to amend the complaint,  for supplemental  briefing on
       pending motions, and set a hearing for March 7, 2000.  Management intends
       to defend  vigorously  any and all claims  asserted  against  RIC and RPC
       included in any amended complaint that may be permitted.

       On July 9, 1999, a shareholder class action lawsuit was filed against the
       Company, two of its executive officers, and two former executive officers
       in the United States  District Court for the Middle  District of Florida.
       The  plaintiff  in  this  action  purports  to  represent  the  class  of
       shareholders  who  purchased  shares of  RISCORP's  Class A Common  Stock
       between November 19, 1997 and July 20, 1998. The complaint alleges, among
       other  things,  that the  financial  statements  included in the periodic
       reports  filed by RISCORP with the  Securities  and  Exchange  Commission
       during  the class  period  contain  false and  misleading  statements  of
       material fact and omissions,  in violation of Sections 10(b) and 20(a) of
       the  Securities  Exchange  Act  of  1934,  as  amended,  and  Rule  10b-5
       promulgated  thereunder.  These  allegations  principally  relate  to the
       difference  between the net book value of the Company as reflected on its
       published  financial  statements during the class period and the net book
       value of the assets  transferred  to Zenith as  determined by the neutral
       auditors  and  neutral  actuaries  pursuant  to the  terms  of the  Asset
       Purchase  Agreement between the parties.  The complaint seeks unspecified
       compensatory  damages.  RISCORP  believes  that these  claims are without
       merit and intends to vigorously defend this suit.



                                       11
<PAGE>

       The  Company,  in the ordinary  course of  business,  is party to various
       lawsuits.  Based on information presently available,  and in the light of
       legal and other defenses available to the Company, contingent liabilities
       arising  from such  threatened  and pending  litigation  in the  ordinary
       course of business  are not  presently  considered  by  management  to be
       material.

       Other  than  as  noted  herein,   no  provision  had  been  made  in  the
       accompanying consolidated financial statements for the foregoing matters.
       Certain of the related legal expenses may be covered under  directors and
       officers' insurance coverage maintained by the Company.


(6)    Reclassifications

       For comparative purposes,  certain amounts in the accompanying  financial
       statements have been reclassified from amounts previously reported. These
       reclassifications  had no effect  on  previously  reported  shareholders'
       equity or net loss.



                                       12
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Forward-Looking Statements

       This Quarterly Report on Form 10-Q contains  forward-looking  statements,
       particularly  with respect to Risk Factors,  Legal  Proceedings,  and the
       Liquidity and Capital  Resources  section of Management's  Discussion and
       Analysis of Financial  Condition  and Results of  Operations.  Additional
       written or oral forward-looking  statements may be made by RISCORP,  Inc.
       ("RISCORP") and its subsidiaries (collectively,  the "Company") from time
       to time in  filings  with  the  Securities  and  Exchange  Commission  or
       otherwise. Such forward-looking statements are within the meaning of that
       term in  Sections  27A of the  Securities  Act of 1933,  as amended  (the
       "Securities Act") and Section 21E of the Securities Exchange Act of 1934,
       as amended (the "Exchange  Act").  Such  statements may include,  without
       limitation,  projections of revenues,  income,  losses, cash flows, plans
       for future operations,  financing needs, estimates concerning the effects
       of litigation or other disputes,  as well as assumptions regarding any of
       the foregoing.

       Forward-looking   statements   are   inherently   subject  to  risks  and
       uncertainties,  some of which  cannot be  predicted.  Future  events  and
       actual  results  could  differ  materially  from  those  set  forth in or
       underlying the forward-looking  statements. Many factors could contribute
       to such  differences  and include,  among others,  the actual  outcome of
       pending  litigation  both on  behalf  of and  against  the  Company,  the
       Company's  ability to gain approval and receive  payment from the Florida
       Department  of Labor  for  certain  refund  applications,  the  Company's
       ability to receive payment for the alleged errors and  understatement  of
       the Final Business Balance Sheet by the Independent Expert, the Company's
       need for  additional  capital to meet operating  requirements,  and other
       factors mentioned elsewhere in this report.

Recent Developments

       Execution of Merger Agreement with William D. Griffin

       See Part 1, Item 1, Notes to Consolidated Condensed Financial Statements,
       Note 2, for further  discussion  of the proposed  merger with the Griffin
       Acquisition  Corp.,  an entity  formed by Mr.  William  D.  Griffin,  the
       majority shareholder of RISCORP.

       Asset Purchase Agreement with Zenith

       See Part 1, Item 1, Notes to Consolidated Condensed Financial Statements,
       Note 3 for further discussion of the Zenith transaction.

       Legal Developments

       See "Part II, Item 1, Legal Proceedings."

Overview

       General

       As  discussed  more  fully  in  Note  3  to  the  consolidated  financial
       statements,  RISCORP and certain of its subsidiaries  sold  substantially
       all of their  assets and  transferred  certain  liabilities  to Zenith on
       April 1, 1998. In connection with the sale to Zenith,  the Company ceased
       substantially  all of  its  former  business  operations,  including  its
       insurance operations,  effective April 1, 1998.  Accordingly,  after such
       date,  the  Company's   operations   have  consisted   primarily  of  the
       administration  of the day-to-day  activities of the surviving  corporate

                                       13
<PAGE>
       entities, compliance with the provisions of the Asset Purchase Agreement,
       and the investment,  protection, and maximization of the remaining assets
       of the Company.  At the present time,  RISCORP has no plans to resume any
       operating activities.

       Since  April 1, 1998,  the  Company  has had no  employees  or  insurance
       operations, and has provided no services to self-insurance funds or other
       insurance related entities.  Because of these significant  changes in the
       operating  activities of the Company after April 1, 1998, a comparison of
       the results of operations for the nine months ended September 30, 1999 to
       the comparable period in 1998 is meaningless.  Therefore,  the results of
       operations  for the nine months ended  September  30, 1999 are  explained
       separately without comparison to the comparable prior period. The results
       of operations for the three months ended September 30, 1999 are explained
       separately with comparison to the comparable prior period. The results of
       operations  of the Company  prior to the April 1, 1998 sale to Zenith are
       included to comply with the  requirements of the Securities  Exchange Act
       of 1934, as amended,  and the rules and regulations of the Securities and
       Exchange  Commission;  however,  those  results  of  operations  are  not
       indicative  of the  operations of the Company since April 1, 1998 and are
       not indicative of the anticipated future operations of the Company.

       Results of Operations

       During the nine months ended  September 30, 1999,  the Company's  primary
       operating  activities  were the  investment  of the $25  million  initial
       payment  received from Zenith on April 2, 1998,  the  investment of other
       invested assets  retained by the Company,  compliance with the provisions
       of the Asset  Purchase  Agreement,  converting  the taxes  recoverable to
       cash,  collecting  the sale proceeds from Zenith,  the  investment of the
       $50.8  million of sale  proceeds  and interest  collected  from Zenith on
       March 26, 1999, efforts to maximize asset recoveries,  negotiation of the
       terms of the proposed  merger with  Griffin  Acquisition  Corp.,  and the
       administration  of the day-to-day  activities of the surviving  corporate
       entities.  Compliance with the provisions of the Asset Purchase Agreement
       included the transfer of all of the assets and liabilities,  not retained
       by the Company,  to Zenith,  and assisting with the orderly transition of
       the Company's insurance operations to Zenith.

       Nine Months Ended September 30, 1999

       An analysis  of certain  balances  contained  on the  September  30, 1999
       consolidated balance sheet is as follows:

                 At  September  30,  1999,  the  $1.9  million  of cash and cash
                equivalents-restricted  consisted  of amounts  on  deposit  with
                various  governmental  agencies.  The $12.9 million  decrease in
                restricted  cash and cash  equivalents  during  the  first  nine
                months of 1999 is the result of the release of the funds held in
                the Zenith escrow account.

                 The $63.5  million  increase in  investments  from December 31,
                1998 to September  30, 1999  resulted  from the  collection  and
                subsequent  investment  of the proceeds  from the sale to Zenith
                and of certain tax refunds,  the release of the cash  previously
                held in escrow,  and the investment of funds  previously held in
                bank accounts.

                 The elimination of the receivable from Zenith from December 31,
                1998 to September 30, 1999  resulted from the  collection of the
                remaining receivable from the sale to Zenith in March 1999.

                 The $15.1  million  decrease in income taxes  recoverable  from
                December  31,  1998 to  September  30, 1999 is the result of the
                collection of taxes due from tax agencies.

                                       14
<PAGE>

                 The $1.4  million  decrease in other  assets from  December 31,
                1998 to  September  30, 1999  resulted  from the  collection  of
                interest in March 1999 due from the sale to Zenith.

                 The $4.6  million of prepaid  expenses  at  September  30, 1999
                consisted of $3.5  million of prepaid  insurance  coverages  and
                $1.1  million of  retainers  paid to certain  professionals  and
                consultants.

                 The $2.2 million  decrease in deferred  income taxes during the
                first  nine  months  of 1999 is due to the  reclassification  of
                taxes collected in October 1999 to income taxes recoverable.

                 The $5.4 million decrease in accounts receivable - other during
                the first nine months of 1999 is due to the  collection  of $4.8
                million  of certain  insurance  proceeds,  $0.5  million of 1997
                return premiums, and $0.1 million of service fees.

                 A summary of the  accrued  expenses  and other  liabilities  at
                September 30, 1999 is as follows (in thousands):

                      Payable to Zenith                                $    222
                      Income taxes payable                                2,141
                      Accrued professional services                       1,739
                      Trade accounts payable                                242
                      Other accruals and payables                           545
                                                                      ---------

                      Total                                             $ 4,889
                                                                        =======

       The Company's operating results for the nine months ended September
       30, 1999 resulted in a net loss of $5.6 million.

       The $4.2  million  of net  investment  income for the nine  months  ended
       September  30, 1999  consisted of $1.3 million of interest  income on the
       receivable  from  Zenith,  $0.3  million of interest  income on the $12.8
       million balance previously held in escrow, and $2.6 million of investment
       portfolio income.

       Operating  expenses for the nine months  ended  September  30, 1999
       totaled $8.8 million and  consisted of the following:

               The $7.4 million of commissions, underwriting, and administrative
              expenses  consisted of $0.9 million of management  expenses,  $1.2
              million of accounting and auditing expenses, $2.7 million of legal
              expenses,  $1.7 million of recurring  operating  expenses  such as
              rent, telephone, insurance, and similar costs, and $0.9 million of
              other expenses.

               The $1.3 million of interest expense consisted principally of the
              interest  paid in March 1999 on the  settlement  of a class action
              lawsuit.

               Depreciation and amortization  expense was $109,000.  The Company
              transferred  all  assets  subject  to  amortization  to  Zenith in
              connection with the sale and retained $0.4 million of fixed assets
              (consisting  principally  of  computer  equipment)  that are being
              depreciated over three years.

       During the nine months ended  September 30, 1999, the Company  recorded a
       loss on sale of net assets to Zenith of $4.8  million due to the terms of
       the  Settlement  Agreement,  as  discussed  more  fully  in Note 3 to the
       consolidated financial statements.

                                       15
<PAGE>

       The weighted average common and common share equivalents  outstanding for
       the nine months ended  September  30, 1999 was  37,491,031 as compared to
       36,949,133  for the nine months ended  September 30, 1998.  These amounts
       include,  for each period  presented,  the vested portion only, as of the
       end of such  period,  of shares  issued in April 1998 under a  Restricted
       Stock Award  Agreement  between RISCORP and Phoenix  Management  Company,
       Ltd.

       Three Months Ended September 30, 1999 and 1998

       The Company's  operating results for the three months ended September 30,
       1999 and 1998  resulted in a net loss of $1.4  million and $1.7  million,
       respectively.

       The components of net investment  income for the three months ended
       September 30, 1999 and 1998 are summarized as follows (in millions):

                                                            1999         1998
                                                        ----------    ----------

            Interest income on the balance in escrow       $  0.1       $  0.1
            Other investment income                           1.0          0.6
            Interest income on the Zenith sale proceeds       --           1.6
                                                            ------      -------
                      Total                                $  1.1       $  2.3
                                                            ======       ======

       The components of commissions,  underwriting, and administrative expenses
       for the three months ended  September 30, 1999 and 1998 are summarized as
       follows (in millions):

                                                            1999          1998
                                                         ----------   ----------

                 Management expenses                       $  0.3       $  0.3
                 Accounting and auditing expense              0.5          0.4
                 Legal expenses (income)                      1.2         (1.0)
                 Recurring operating expenses
                    (rent, telephone, insurance, and
                    similar costs)                            1.1          0.9
                 Non-recurring expenses                       --           3.2
                                                            -----       ------
                 Total                                      $ 3.1       $  3.8
                                                            =====       ======

     Interest expense for the three months ended September 30, 1999 and 1998 was
     $49,000 and $147,000,  respectively.

     Depreciation and amortization expense was $33,000 and $39,000 for the three
     months  ended  September  30,  1999 and  1998,  respectively.  The  Company
     transferred all assets subject to amortization to Zenith in connection with
     the sale and retained $0.4 million of fixed assets (consisting  principally
     of computer equipment) that is being depreciated over three years.

     The weighted  average common and common share  equivalents  outstanding for
     the three months ended  September  30, 1999 was  37,634,781  as compared to
     37,062,558  for the three months ended  September  30, 1998.  Those amounts
     include, for each period presented,  the vested portion only, as of the end
     of such period,  of shares  issued in April 1998 under a  Restricted  Stock
     Award Agreement between RISCORP and Phoenix Management Company, Ltd.


                                       16
<PAGE>
       Three Months Ended March 31, 1998

       The  discussion  that follows  relates to the  operations  and  operating
       philosophy  of the  Company's  activities  that existed prior to April 1,
       1998 and addresses the operating results for the three months ended March
       31, 1998.

       Prior to 1996, the Company's at-risk  operations were focused in Florida.
       During  1996,  the Company  acquired  RNIC and its 19 state  licenses and
       assumed  business  from several self  insurance  funds outside of Florida
       that allowed the Company to diversify its at-risk operations.

       The  majority  of the  Company's  premiums  were  written in  Florida,  a
       regulated  pricing state where premiums for guaranteed cost products were
       based on state-approved rates. However,  prior to the sale to Zenith, the
       Company also offered policies that were subject to premium  reductions on
       high  deductible  plans,  participating  dividend  plans,  or other  loss
       sensitive plans.  Pricing for those plans tended to be more competitively
       based, and the Company experienced  increased competition during 1997 and
       1998 in pricing those plans.

       In June 1997,  the Company  implemented a strategic  plan to  consolidate
       several of its field  offices and  announced  its  intention to close all
       field offices, except Charlotte, North Carolina, and Birmingham, Alabama,
       by the end of 1997, and to cease writing new business in certain  states,
       including  Oklahoma,  Virginia,  Missouri,  Mississippi,  Louisiana,  and
       Kansas.  The  estimated  impact of the  decision to  discontinue  writing
       business  in those  states  was a  reduction  of $16  million  in  direct
       premiums written.

       The Company  attempted  to lower claim  costs by  applying  managed  care
       techniques and programs to workers' compensation claims,  particularly by
       providing prompt medical intervention,  integrating claims management and
       customer  service,  directing care of injured employees through a managed
       care provider network,  and availing itself of potential recoveries under
       subrogation and other programs.

       Part of the Company's claims management philosophy was to seek recoveries
       for claims that were  reinsured or that could be  subrogated or submitted
       for reimbursement  under various states' recovery programs.  As a result,
       the  Company's  losses  and  loss  adjustment  expenses  were  offset  by
       estimated  recoveries from  reinsurers  under specific excess of loss and
       quota share reinsurance  agreements,  subrogation from third parties, and
       state "second disability" funds, including the Florida Special Disability
       Trust Fund ("SDTF").

       The direct, assumed, ceded, and net earned premiums for the first quarter
       of 1998 are summarized as follows (in thousands):

                     Direct premiums earned                         $ 48,416
                     Assumed premiums earned                              79
                     Premiums ceded to reinsurers                    (22,676)
                                                                    ---------
                     Net premiums earned                            $ 25,819
                                                                    ========


       There were no direct,  assumed,  ceded,  or net earned premiums after the
       April 1, 1998  sale to  Zenith.  At March 31,  1998,  there  were  18,145
       policies in force.

       Fee income for the first  three  months of 1998 was $5.7  million.  After
       April 1, 1998,  the  Company  ceased  generating  fee  income  when those
       activities were transferred to Zenith.

                                       17
<PAGE>

       Net realized  gains during the first  quarter of 1998 were $1.5  million,
       consisting  principally  of the  $1.3  million  gain  on the  sale  of an
       interest in a joint venture.

       Net investment  income for the three months ended March 31, 1998 was $3.3
       million,  consisting entirely of earnings from the investment  portfolio,
       excluding realized gains and losses.

       For the three months ended March 31, 1998, the loss ratio was 93 percent,
       losses and loss adjustment  expenses were $24 million,  unallocated  loss
       adjustment  expenses were $2.6 million,  commissions,  underwriting,  and
       administrative  expenses were $15.5  million,  interest  expense was $0.5
       million, and depreciation and amortization expense was $3.1 million.

       The weighted average common and common share equivalents  outstanding for
       the three months ended March 31, 1998 was 36,868,114.

       Liquidity and Capital Resources

       The Company  historically  met its cash  requirements  and  financed  its
       growth through cash flows generated from  operations and borrowings.  The
       Company's  primary sources of cash flow from operations were premiums and
       investment  income,  and its cash requirements  consisted  principally of
       payment of losses and loss adjustment expenses,  support of its operating
       activities,  including  various  reinsurance  agreements and managed care
       programs  and   services,   capital   surplus  needs  for  the  insurance
       subsidiaries,  and other general and administrative expenses. RISCORP and
       certain of its subsidiaries  sold  substantially  all of their assets and
       transferred certain liabilities to Zenith on April 1, 1998. In connection
       with that sale to Zenith,  the Company  ceased  substantially  all of its
       former  business  operations and,  accordingly,  after April 1, 1998, the
       Company's primary source of cash flows has been generated from investment
       income.  The  Company's  future  cash  requirements  are  expected  to be
       satisfied through investment income and the liquidation of investments.

       Cash flows from  operations for the nine months ended  September 30, 1999
       and 1998 was ($5) million and ($33.7) million,  respectively.  The change
       from  1998 to 1999  was  due  primarily  to the  sale to  Zenith  and the
       cessation of substantially all the Company's former business operations.

       The Company has projected  cash flows through  December 1999 and believes
       it  has  sufficient  liquidity  and  capital  resources  to  support  its
       operations.

       As of September 30, 1999 and 1998,  RISCORP's insurance  subsidiaries had
       combined  statutory  capital  and  surplus  of $129  million  and  $134.9
       million,  respectively.  The  individual  capital  and surplus of each of
       RISCORP's insurance  subsidiaries  exceeded the minimum statutory capital
       and surplus required by their respective state of domicile.

       The  National   Association  of  Insurance   Commissioners   has  adopted
       risk-based capital standards to determine the capital  requirements of an
       insurance  carrier  based on the risks  inherent in its  operations.  The
       standards,  which  have not yet been  adopted  in  Florida,  require  the
       computation  of a risk-based  capital  amount that is then  compared to a
       carrier's  actual  total  adjusted  capital.   The  computation  involves
       applying factors to various financial data to address four primary risks:
       asset risk,  insurance  underwriting  risk,  credit risk, and off-balance
       sheet risk. Those standards provide for regulatory  intervention when the
       percentage  of  total  adjusted  capital  to  authorized   control  level
       risk-based  capital  is below  certain  levels.  At  December  31,  1998,
       RISCORP's insurance  subsidiaries' statutory surplus was in excess of any
       risk-based capital action level requirements.



                                       18
<PAGE>

       Year 2000

       The term "Year 2000  issue" is a general  term used to  describe  various
       problems  that  may  result  from  the  improper  processing  of date and
       date-sensitive  calculations by computers and other machinery as the Year
       2000 is approached  and reached.  These  problems may arise from hardware
       and software  unable to  distinguish  dates in the "2000's" from dates in
       the "1900's" and from other sources, such as the use of special codes and
       conventions that make use of a date field.

       Effective April 1, 1998,  RISCORP ceased  substantially all of its former
       business operations, including its core insurance and managerial services
       operations. RISCORP's computer systems and proprietary computer software,
       including the policy issue and management  system and the claims systems,
       were included in the assets sold to Zenith pursuant to the Asset Purchase
       Agreement.

       Effective April 1, 1998, the Company entered into a computer  outsourcing
       agreement.  Under the terms of that  agreement,  the vendor is to provide
       the Company with computer configuration,  software installation,  network
       configuration and maintenance,  telecommunication coordination,  computer
       maintenance,  and other computer-related services. The agreement is for a
       period of 36 months.

       Due to the cessation of its  operations,  RISCORP does not believe it has
       any material third-party relationships that present significant Year 2000
       risks.  The  Company  has  requested   confirmation  from  the  financial
       institutions with which it maintains  accounts that such institutions are
       Year 2000 compliant.

       Based on its limited operations, the Company believes its most reasonable
       likely  worst  case  scenario  Year  2000  problem  would be a  temporary
       inability  to access its accounts  with  financial  institutions  if such
       institutions'  systems are not Year 2000  compliant.  Because the Company
       does not expect that the Year 2000 will have a material adverse effect on
       the  Company,  it has  determined  that it is  unnecessary  to  develop a
       contingency plan.




                                       19
<PAGE>
Part II    Other Information

Item 1.    Legal Proceedings

           On August 20, 1997, the  Occupational  Safety  Association of Alabama
           Workers'  Compensation  Fund (the  "Fund"),  an Alabama  self-insured
           workers'  compensation  fund,  filed a breach of  contract  and fraud
           action  against the Company and others.  The Fund entered into a Loss
           Portfolio Transfer and Assumption  Reinsurance Agreement dated August
           26, 1996 and effective  September 1, 1996 with RNIC.  Under the terms
           of the agreement,  RNIC assumed 100 percent of the  outstanding  loss
           reserves (including incurred but not reported losses) as of September
           1, 1996.  Co-defendant Peter D. Norman ("Norman") was a principal and
           officer of IAA prior to its acquisition by RISCORP in September 1996.
           The complaint  alleges that Norman and IAA breached certain fiduciary
           duties owed to the Fund in connection with the subject  agreement and
           transfer.  The  complaint  alleges that RISCORP has breached  certain
           provisions  of the agreement and owes the Fund monies under the terms
           of the agreement.  The Fund claims,  per a Loss Portfolio  Evaluation
           dated February 26, 1998, that the Fund overpaid RNIC by $6 million in
           the  subject  transaction.  The court has  granted  RNIC's  Motion to
           Compel Arbitration per the terms and provisions of the agreement.  On
           December 1, 1998,  the trial court  issued an order  prohibiting  the
           American  Arbitration  Association from administering the arbitration
           between RNIC and the Fund,  and RNIC has  appealed the trial  court's
           ruling. The Alabama Supreme Court has stayed the current arbitration.
           Despite the Alabama  Supreme  Court's stay,  the dispute  between the
           Fund and RNIC is  expected to be resolved  through  arbitration.  The
           other  defendants,  including IAA, have appealed to the Supreme Court
           of  Alabama  the  trial  court's  denial of their  motions  to compel
           arbitration. RNIC intends to vigorously defend the Fund's claim.

           On  March  13,  1998,  RIC and RPC  were  added  as  defendants  in a
           purported  class action  lawsuit filed in the United States  District
           Court for the  Southern  District of Florida,  styled  Bristol  Hotel
           Management Corporation,  et. al., v. Aetna Casualty & Surety Company,
           a/k/a  Aetna  Group,  et.  al.  Case  No.   97-2240-CIV-MORENO.   The
           plaintiffs purport to bring this action on behalf of themselves and a
           class  consisting  of all  employers  in the  State  of  Florida  who
           purchased  or  renewed  retrospectively  rated or  adjusted  workers'
           compensation  policies in the voluntary  market since 1985.  The suit
           was  originally  filed on July 17,  1997  against  approximately  174
           workers'  compensation  insurers as  defendants.  The  complaint  was
           subsequently  amended  to add the  RISCORP  defendants.  The  amended
           complaint named a total of approximately 161 insurer defendants.  The
           suit claims  that the  defendant  insurance  companies  violated  the
           Sherman   Antitrust   Act,  the  Racketeer   Influenced  and  Corrupt
           Organizations Act ("RICO"),  and the Florida Antitrust Act, committed
           breach of contract and civil  conspiracy,  and were unjustly enriched
           by  unlawfully  adding  improper  and  illegal  charges and fees onto
           retrospectively  rated premiums and otherwise charging more for those
           policies  than  allowed  by law.  The  suit  seeks  compensatory  and
           punitive damages, treble damages under the Antitrust and RICO claims,
           and  equitable  relief.  RIC and RPC  moved to  dismiss  the  amended
           complaint and have also filed certain  motions to dismiss the amended
           complaint filed by various other defendants.

           On August 26, 1998, the district court issued an order dismissing the
           entire suit against all  defendants on one of the grounds  identified
           in the  various  motions  to  dismiss  filed by the  defendants.  The
           district  court  indicated  that all other  grounds  and  motions  to
           dismiss that were pending at that time were mooted by the  dismissal.
           On September 13, 1998,  the plaintiffs  filed a Notice of Appeal.  On
           February 9, 1999, the district court issued,  sua sponte, an Order of
           Reconsideration in which the court indicated its desire to vacate the



                                       20
<PAGE>
           dismissal  of the RICO claims and  pendant  state  claims  based on a
           recent  decision of the United States Supreme Court. On June 9, 1999,
           the Eleventh Circuit remanded the case to the district court, and the
           district  court has assigned  the case to a  magistrate  for handling
           pre-trial  matters.  At a status conference held on October 20, 1999,
           the magistrate  established  deadlines for the filing of a motion for
           leave to amend the complaint,  for  supplemental  briefing on pending
           motions,  and set a hearing for March 7, 2000.  Management intends to
           defend  vigorously  any and all claims  asserted  against RIC and RPC
           included in any amended complaint that may be permitted.

           On July 9, 1999, a shareholder class action lawsuit was filed against
           the Company, two of its executive officers,  and two former executive
           officers in the United States  District Court for the Middle District
           of Florida.  The  plaintiff in this action  purports to represent the
           class of  shareholders  who  purchased  shares of  RISCORP's  Class A
           Common  Stock  between  November  19,  1997 and July  20,  1998.  The
           complaint alleges,  among other things, that the financial statements
           included in the periodic reports filed by RISCORP with the Securities
           and Exchange  Commission  during the class period  contain  false and
           misleading statements of material fact and omissions, in violation of
           Sections 10(b) and 20(a) of the  Securities  Exchange Act of 1934, as
           amended,  and Rule 10b-5  promulgated  thereunder.  These allegations
           principally  relate to the  difference  between the net book value of
           the Company as reflected on its published financial statements during
           the class period and the net book value of the assets  transferred to
           Zenith as  determined by the neutral  auditors and neutral  actuaries
           pursuant  to the terms of the Asset  Purchase  Agreement  between the
           parties.  The  complaint  seeks  unspecified   compensatory  damages.
           RISCORP  believes  that these claims are without merit and intends to
           vigorously defend this suit.

           The Company, in the ordinary course of business,  is party to various
           lawsuits.  Based on information presently available, and in the light
           of legal and other  defenses  available  to the  Company,  contingent
           liabilities  arising from such  threatened and pending  litigation in
           the  ordinary  course of business  are not  presently  considered  by
           management to be material.

           Other  than as  noted  herein,  no  provision  had  been  made in the
           accompanying  consolidated  financial  statements  for the  foregoing
           matters.  Certain of the related legal  expenses may be covered under
           directors and officers' insurance coverage maintained by the Company.

Item 2.    Changes in Securities and Use of Proceeds

       None.

Item 3.Defaults Upon Senior Securities

       None.

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

           None.

Item 5.    Other Information

On         October 24, 1999,  Frederick M. Dawson,  President,  Chief  Executive
           Officer and a director of RISCORP,  died of complications  from colon
           cancer.  Mr. Dawson provided  services to RISCORP through The Phoenix
           Management  Company,   Ltd.  ("Phoenix")  pursuant  to  a  management
           agreement  which  became  effective  on  April 1,  1998,  immediately
           following  the  sale of  substantially  all of  RISCORP's  assets  to
           Zenith.  As a result of Mr.  Dawson's  death,  the Board of Directors
           named Walter E. Riehemann, General Counsel, to also fill the position
           of President of RISCORP.  The Board of Directors is evaluating  what,
           if any, additional succession plans are necessary or appropriate as a
           result  of  Mr.  Dawson's  death,   including,   without  limitation,
           evaluating  whether the  management  agreement with Phoenix should be
           amended or terminated.



                                       21
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Item 6.Exhibits and Reports on Form 8-K

           a)      Exhibits

                 2.1      Plan and Agreement of Merger by and between Griffin
                          Acquisition Corp., William D. Griffin and RISCORP,
                          Inc., dated November 3, 1999.

                 9.1      Voting Agreement by and among RISCORP,  Inc., William
                          D. Griffin, The RISCORP Group Holding Company Limited
                          Partnership,   William  D.  Griffin   Family  Limited
                          Partnership,  Charlotte  K.  Griffin  Trust Number 3,
                          Anna F. Griffin Trust Number 3, and John Ford Griffin
                          Trust Number 3, dated as of November 3, 1999.

                 10.1     First Amendment to Shareholder  Protection  Rights
                          Agreement by and between  RISCORP,  Inc. and First
                          Union National Bank, dated November 3, 1999.

                 10.2     First  Amendment to Directors  Agreement by and among
                          RISCORP,  Inc.,  William D. Griffin, Frederick M.
                          Dawson,  Walter L. Revell,  Seddon Goode, Jr., and
                          George E. Greene III, dated September 18, 1997.

                 11       Statement Re Computation of Per Share Net Loss

                 27       Financial Data Schedule


           b)      Reports on Form 8-K

                  RISCORP  filed a current  report on Form 8-K on July 14,  1999
                  disclosing the principal  terms of its settlement  with Zenith
                  Insurance Company.




                                       22
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                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                  RISCORP, INC.
                  (Registrant)




                  By:       /s/Walter E. Riehemann

                  Walter E. Riehemann
                  President

                  Date:    November 12, 1999





                  By: /s/Edward W. Buttner IV

                  Edward W. Buttner IV, CPA
                  Principal Accounting Officer

                  Date:    November 12, 1999


                                       23
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