SIG LOGO

                               1999 Annual Report

                                     [Large SIG logo with three photos]
Corporate Profile

Symons International  Group, Inc. owns niche insurance companies  principally in
the crop and nonstandard  automobile insurance markets. IGF Insurance Company of
Des  Moines,  Iowa is the fifth  largest  crop  insurer  in the  United  States.
Superior  Insurance  Group  is  the  twelfth  largest  provider  of  nonstandard
automobile  insurance in the United States.  The crop segment  markets and sells
crop  insurance  and  other fee  based  services  to  farmers.  The  nonstandard
automobile  division markets and sells insurance through the independent  agency
system to drivers who are unable to obtain coverage from insurers at standard or
preferred  rates.  This market is the fastest  growing  segment of the  personal
lines market.

The common stock of Symons  International Group, Inc. trades on The NASDAQ Stock
Market's National Market under the symbol "SIGC".


Table of Contents

Financial Highlights
Chairman's Report
Selected Financial Data

Management's Discussion and Analysis of Results of
  Operations and Financial Condition
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Report of Independent Accountants
Stockholder Information
Board of Directors and Executive Officers
Subsidiary and Branch Offices


GRAPH                 1995       1996          1997        1998     1999
                    $124,634    $305,499    $460,600    $553,190    $473,687

Gross Premiums Written By Year


<PAGE>



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

                                                     1999          1998         1997         1996          1995
                                                     ----          ----         ----         ----          ----
<S>                                                   <C>          <C>          <C>          <C>           <C>
Gross premiums written                                $473,687     $553,190     $460,600     $305,499      $124,634
Net operating earnings (loss) (1)                     (80,620)    $(17,239)      $11,845      $13,916        $5,048
Net earnings (loss)                                   (80,816)    $(14,417)      $16,305      $13,256        $4,821
Basic operating earnings (loss) per share (1)          $(7.76)      $(1.66)        $1.11        $1.85         $0.72
Basic earnings (loss) per share                        $(7.78)      $(1.39)        $1.56        $1.76         $0.69
Stockholders' equity (3)                              (24,980)      $61,995      $78,363      $60,900        $9,535
Return on average equity                                   N/A      (20.5%)        21.9%        61.4%         69.9%
Book value per share                                    (2.41)        $5.97        $7.50        $5.83         $1.36
Market value per share (2)                               $1.44        $7.25       $19.22       $16.75           N/A
Weighted average outstanding shares-basic               10,385       10,402       10,450        7,537         7,000
</TABLE>

1)       Operating earnings and per share amounts exclude the after tax effects
         of realized capital gains and losses and any extraordinary items.
2)       The Company's shares were first publicly traded on November 5, 1996.
3)       Return on average equity can not be calculated due to the accumulated
         deficit in shareholders' equity.

                                                             CORPORATE STRUCTURE
[graphic omitted]

                       Symons International Group, Inc.
                              Indianapolis, Indiana
                            Wholly-owned subsidiaries

                         -----------------------------------

                                     Superior Insurance Group Management, Inc.

                  |                                   |
           IGF Holdings,Inc.            Superior Insurance Group, Inc.

     |                       |             |                  |
North American Crop   IGF Insurance   PAFCO General    Superior Insurance
 Underwriters, Inc.         Company Insurance Company        Company

                                                             |
                                           Superior Guaranty   Superior American
                                           Insurance Company   Insurance Company


<PAGE>


Chairman's Report to our Shareholders

On this  Millennium New Year, I gathered with my family for a New Year's repast,
strangely  hopeful that it would see the beginning of a better  business  period
for our companies and us.  During the past two years we had  concentrated  money
and time on extensive  adjustments in our reporting and operational  systems and
in the past year  accelerated  our search for people who could add expertise and
experience  to the basic  divisions  of the Company,  nonstandard  auto and crop
insurance.

Many of our problems stemmed from our active  acquisition  program,  our premium
income rising from $103 million in 1994 to $553 million in 1998. The integration
of this business with its diverse data processing systems, has been an expensive
and  difficult  experience,  but I'm  pleased  to say we have  made  substantial
improvements and I expect these  modifications to show tangible  benefits in the
near future.  These systems play an important role in the  functionality  of the
Company and its  subsidiaries  but in addition can have a significant  effect on
the expense  ratio of our insurance  entities.  I will not dwell further on this
aspect  of our  operations,  but  those  shareholders  who have  been  active in
business,  know  that it is  impossible  to  survive  without  a  compliant  and
functional EDP program.

Our shareholders  know that we had significant  losses in our Crop Operations in
1998 and 1999, the most devastating  losses coming from a relatively new program
called  AgPI.  This  is a  form  of  business  interruption  insurance  designed
initially to fill a coverage  requirement  for processors of crops such as grain
dealers and  companies  that  purchase  the  products  grown by the farms.  This
business  produced in 1998  approximately $7 million of premium and we have paid
losses or established loss reserves against liabilities  totaling  approximately
$35  million.  The  reserves  are  established  by our staff,  then  reviewed by
professional  actuaries and our auditors. The business was issued on policies of
a third-party  insurance  company  licensed in  California  and  elsewhere,  and
reinsured to us. A portion of the losses  incurred  resulted from the actions of
certain  independent  brokers who sold  policies  to insureds  who knew they had
losses before they applied for the coverage. The issuing company settled certain
losses  over our  objections,  which  calls  into  question  whether  we have an
obligation to meet  liabilities of this magnitude.  All of this business and its
resultant losses,  whether reserved or paid, arose in 1998.  However,  the major
increase in  reserves  took place in 1999 when the  magnitude  of the loss could
finally be estimated.  The losses are excessive by any standard,  but regardless
of our  feelings  on the quantum of the losses and  practices  employed to write
this business, we have to pay some losses and reserve for others. The Company is
pursuing all applicable recovery rights.

Unlike many other forms of insurance, crop insurance is a year-by-year thing. As
the coverage is against losses occurring in the growing season,  it has no "long
tail"  exposure and it is generally  possible to determine the profit or loss to
the insurers at the end of the term.  We start with a clean sheet,  so to speak,
the exception being rare. There is cause for some optimism, concerning crop year
2000,  for not only has there been upward  movement in the price of the products
we insure but farmers realize that the Federal  Government program is the safety
net to the farmer and bankers are  demanding  more  coverage.  These two factors
will  increase the premium  volume and we have seen this in the number and value
of the  applications  received to date.  With the  substance of our  reinsurance
program and our emphasis on increased fee income,  we are  optimistic  about our
results for the current year.

Fee  income is earned  from  such  programs  as our Geo Ag,  which  uses  global
positioning  satellites  to grid map the farm and match with soil  sampling  for
precision farming. Our agronomy-trained staff is proving to farmers the benefits
of no-till  techniques,  to increase  yields and stop soil run-off and air blown
run-off. These techniques create carbon credits from the stalks remaining in the
ground over the winter and we assist the farmers by marketing  these  credits to
the power companies. We maintain a large staff of agronomists whose services are
sold to the farmers on such  matters as to the types of seed to plant for better
results,  the  best  fertilizer  to use in  certain  areas  of  the  farm,  such
information  coming as a product of the GPS  information we obtain on a specific
piece of land.


<PAGE>


In the past  three  years the  nonstandard  auto  insurance  market  was  overly
competitive as the larger  companies  fought to increase their market share. The
resultant  poor  underwriting   results  has  eventuated  a  return  to  sounder
underwriting  principles  in the past  short  while.  Our  problems  in the auto
division  were two fold;  excessive  competition  coupled with a rising  expense
ratio.  One of our  system  providers  went out of  business  and flaws in other
systems  inherited from  acquisitions  needed to be overhauled.  At considerable
expense  this has been  attended  to and we look for a return  to lower  expense
ratios which previously prevailed. Rates have been rising in most states as many
companies   have  reduced  their  market  share  in  an  attempt  to  return  to
profitability,  while  other  nonstandard  companies  have  withdrawn  from  the
business.

We  inaugurated  a  program  to  find  the  best  man  available  to head up our
nonstandard  business.  We  believe  Gene  Yerant who had an  impressive  record
building Leader National Insurance Company, a nonstandard provider, is the right
man for the job, and in January he assumed the Presidency of Superior  Insurance
Group.  The  Board  has  been  impressed  with the  progress  he has made in the
relatively  short  time  since he joined  us.  He has  effected  changes  in key
positions of senior  personnel and has achieved a major  improvement in the flow
of business. The agents, several of them returning to the Company with business,
have been most complimentary to these changes.

I believe we are  returning  to the  position we  maintained  when  results were
profitable and that evidence of that should not be very distant.

It has been a hard haul for our staff as changes  were  implemented  and I would
like to express my gratitude to those who have  remained  with us through  these
changing times. I specifically wish to thank the Board members for their support
as we tussled  with these  problems,  and while we are not out of the woods yet,
there is realistic cause for optimism.


<PAGE>


SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
 Years Ended December 31,

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA

OF SYMONS INTERNATIONAL GROUP, INC.

The selected  consolidated  financial data  presented  below is derived from the
consolidated financial statements of the Company and its Subsidiaries and should
be read in conjunction with the consolidated financial statements of the Company
and the notes thereto, included elsewhere in this Report.

Consolidated Statement of Operations Data:
(in thousands, except per share amounts and ratios)

<TABLE>
<CAPTION>
                                                          1999         1998          1997         1996         1995

<S>                                                   <C>          <C>           <C>          <C>          <C>
Gross Premiums Written                                $473,687     $553,190      $460,000     $305,499     $124,634
Net Premiums Earned                                    263,334      324,923       271,814      191,759       49,641
Fee Income                                              15,641       20,203        17,821        9,286        2,170
Net Investment Income                                   12,535       12,373        11,447        6,733        1,173
NET EARNINGS (LOSS)                                   $(80,816)    $(14,417)      $16,305      $13,256       $4,821
                                                      =========    =========      =======      =======       ======
Per Common Share Data:
Basic Earnings (Loss) Before Extraordinary Item          $(7.78)      $(1.39)        $1.63        $1.76        $0.69
BASIC NET EARNINGS (LOSS)                                $(7.78)      $(1.39)        $1.56        $1.76        $0.69
Basic Weighted Average Shares Outstanding               10,385       10,402        10,450        7,537        7,000
GAAP Ratios:
Loss and LAE Ratio (1)                                    100.7%        83.2%         78.2%        71.5%        72.5%
Expense Ratio (2)                                          35.8%        29.8%         22.0%        24.0%        18.6%
COMBINED RATIO (3)                                        136.5%       113.0%        100.2%        95.5%        91.1%
Consolidated Balance Sheet Data:
Investments                                           $204,928     $222,853      $216,518     $168,137      $25,902
Total Assets                                           499,811      569,437       526,293      344,679      110,516
Losses and Loss Adjustment Expenses                    214,948      200,972       136,722      101,719       59,421
Total Long-term Debt or Preferred Securities           135,000      135,000       135,000       48,000       11,776
Total Shareholders Equity                              (24,980)      61,995        78,363       60,900        9,535
Book Value Per Share                                    $(2.41)       $5.97         $7.50        $5.83        $1.36

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

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

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

</TABLE>


<PAGE>


                       [photograph of crop field and automobiles down left side]

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

FORWARD-LOOKING STATEMENTS

All statements,  trend analyses, and other information herein contained relative
to markets for the Company's products and/or trends in the Company's  operations
or  financial  results,  as well as other  statements  including  words  such as
"anticipate,"  "could," "feel (s)," "believe,"  "believes,"  "plan," "estimate,"
"expect," "should," "intend," "will," and other similar expressions,  constitute
forward-looking statements under the Private Securities Litigation Reform Act of
1995. These  forward-looking  statements are subject to known and unknown risks;
uncertainties  and other factors which may cause actual results to be materially
different  from  those  contemplated  by the  forward-looking  statements.  Such
factors include, among other things: (i) general economic conditions,  including
prevailing  interest  rate levels and stock  market  performance;  (ii)  factors
affecting  the  Company's  crop  insurance  operations  such as  weather-related
events,  final harvest  results,  commodity price levels,  governmental  program
changes,  new product  acceptance  and commission  levels paid to agents;  (iii)
factors  affecting  the  Company's  nonstandard  automobile  operations  such as
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 which
underwrite and market  nonstandard  private passenger  automobile  insurance and
crop 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 67.2%  subsidiary  of Goran
Capital Inc. ("Goran").

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 which are directed towards  different classes of risk within
the nonstandard market.  Premium rates for nonstandard risks are higher than for
standard  risks.  Since it can be viewed as a residual  market,  the size of the
nonstandard  private  passenger  automobile  insurance  market  changes with the
insurance  environment  and  grows  when  the  standard  coverage  becomes  more
restrictive.  Nonstandard  policies have relatively short policy periods and low
limits of liability.  Due to the low limits of coverage, the period of time that
elapses  between the  occurrence  and  settlement  of losses  under  nonstandard
policies  is  shorter  than  many  other  types of  insurance.  Also,  since the
nonstandard  automobile insurance business typically  experiences lower rates of
retention than standard  automobile  insurance,  the number of new policyholders
underwritten  by  nonstandard   automobile   insurance  carriers  each  year  is
substantially  greater  than the  number of new  policyholders  underwritten  by
standard carriers.


<PAGE>


Crop Insurance Operations

General

The two  principal  components  of the  Company's  crop  insurance  business are
multiple-peril  crop  insurance  (MPCI) and private named peril crop  insurance,
primarily crop hail insurance.  Crop insurance is purchased by farmers to reduce
the risk of crop loss from  adverse  weather  and other  uncontrollable  events.
Farms are subject to drought,  floods and other natural disasters that can cause
widespread  crop losses and, in severe  cases,  force  farmers out of  business.
Historically,  one out of every  twelve  acres  planted by farmers  has not been
harvested  because of adverse weather or other natural  disasters.  Because many
farmers rely on credit to finance their purchases of such agricultural inputs as
seed,  fertilizer,  machinery and fuel, the loss of a crop to a natural disaster
can reduce their ability to repay these loans and to find sources of funding for
the following year's operating expenses.

The Company generates revenue like other private insurers  participating in MPCI
program in two ways.  First, it markets,  issues and administers  policies,  for
which  it  receives  administrative  fees;  and  second,  it  participates  in a
profit-sharing arrangement with the federal government. However, the Company may
also pay a portion of the aggregate  loss, in respect of the business it writes,
if the losses  exceed  certain  levels.  The  Company  writes MPCI and crop hail
insurance through approximately 2,850 independent agencies in 46 states.

In addition to MPCI, the Company offers stand alone crop hail  insurance,  which
insures growing crops against damage  resulting from hail storms and involves no
federal  participation.  The Company  also offers a  proprietary  product  which
combines the application and underwriting  process for MPCI and hail coverages -
HailPlus(TM).  This product  tends to produce less volatile loss ratios than the
stand alone  product  since the  combined  product  generally  insures a greater
number of acres,  thereby  spreading  the risk of damage  over a larger  insured
area.   Approximately  37%  of  the  Company's  hail  policies  are  written  in
combination with MPCI. Although both crop hail and MPCI provide coverage against
hail damage,  the private crop hail coverages allow farmers to receive  payments
for hail damage which would not be severe  enough to require a payment  under an
MPCI policy.  The Company believes that offering crop hail insurance  enables it
to sell more policies than it otherwise would.

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

The Company has started three new business  initiatives  related to  agriculture
risk management:  agronomy services, price risk management,  and carbon emission
reduction  credits.  Each will provide the  opportunity to increase fee revenue.
Fee revenue  provides the Company with limited risk and high profit margins from
its same base of operations and thus contributes to capital and surplus growth.

The Company, through its IGF subsidiary,  has launched additional pilot programs
- IGF  Agronomics,  IGF Price Risk  Management,  and  Carbon  Credits - aimed at
generating  fee income in addition to  continuing  its GeoAgPLUS  services.  IGF
Agronomics  is a new program where  farmer-clients  work  hand-in-hand  with IGF
employed  professional  agronomists to maximize the producer's return by helping
lower costs and increase yields. This is accomplished  through the employment of
best management  practices ranging from tillage  techniques to seed selection to
fertilizer and pesticide application programs.  Research shows that every dollar
spent by farmers on  agronomy  services  yields a multiple  positive  return per
acre.  IGF Price Risk  Management is then designed to help farmers  market their
crop  so  as to  generate  a  return  sufficient  to at  least  cover  costs  of
production, if not generate a profit. Finally, IGF is established as a solicitor
and  accumulator of Carbon  Emission  Reduction  Credits  (CERC1s).  CERCs are a
tradable   commodity  sought  by  power  companies  and  other  industries  with
operations resulting in a net addition of carbon dioxide (CO2) to the atmosphere
due to upcoming  restrictions  on such  emissions  imposed by  regulators  under
international treaties. Certain agricultural practices, many already employed by
American  farmers,  result in a net "sink" or actual  reduction  of emissions by
avoidance or  substitution  (removing  CO2) thereby  generating  CERCs.  IGF has
already  participated  in one  large  sale  of  CERCs  and is  awaiting  Federal
standards criteria for expanding this initiative.

Geo AgPLUS(TM)  Services ("Geo Ag") provides to the farmer measuring,  gridding,
and soil sampling services combined with fertility maps and the software that is
necessary to run their  precision  farming  program.  Grid soil  sampling,  when
combined with precision farming technology, allows the farmer to apply the right
amount of fertilization, thus balancing soil nutrients for a maximum crop yield.
Precision farming technology increases the yield to the farmer, reduces the cost
of unnecessary fertilization, and enhances the environment by reducing overflows
of  fertilization  into the  ecosystem.  Geo  AgPLUS(TM)  is an IGF  trademarked
precision farming service operating through a division that is now marketing its
fee based services to the farmer.

Seasonality

The crop insurance  business is seasonal by geographic  region;  spring crops in
northern and midwestern states,  fall crops in southern states such as fruit and
nuts,  winter crops in coastal  states such as California  and summer cash crops
grown in all states. The Company also insures long term crops such as timber and
nurseries. While this seasonality is time specific for each crop, the associated
tasks of sales and marketing primarily occur before each respective crop growing
season. The customer support,  applications and claims processing tasks are time
and event driven within the mid to later part of the growing season;  many times
being finished  after the growing  season and harvest is completed.  The bulk of
the loss  adjustment  activities for the spring and fall crops occur between May
and November.  These same activities occur for winter crops,  such as fruits, in
January and February, and for cash crops throughout the year.

Throughout  the year the Company  provides  to its  customers  services  such as
education, agronomy training, soil sampling, grid mapping for precision farming,
insurance advice and loss adjusting.

Certain Accounting Policies for Crop Insurance Operations

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

The Company also  receives  from the FCIC (i) an expense  reimbursement  payment
(made on the farmer's  behalf) equal to a percentage of gross  premiums  written
for each Buy-Up  Coverage  policy it writes and (ii) a loss  adjustment  expense
("LAE") reimbursement payment equal to a percentage of MPCI imputed premiums for
each CAT coverage policy it writes. The Buy-Up Expense Reimbursement Payment was
reduced in 1999 to 24.5%, from 27.0% in 1998 of the MPCI Premium on regular MPCI
yield-based  policies  and  21.1%  Crop  Revenue  Coverage  (CRC)  revenue-based
policies.   For  generally  accepted  accounting   principles  income  statement
purposes,  the Buy-Up Expense Reimbursement Payment is treated as a contribution
to income and reflected as an offset against policy  acquisition and general and
administrative  expenses.  The CAT LAE  Reimbursement  Payment  is,  for  income
statement  purposes,  recorded as an offset against LAE, up to the actual amount
of LAE incurred by the Company in respect of such policies. The remainder of the
payment, if any, is recorded as Other Income.

In June 1998,  the United States  Congress  passed  legislation  which  provided
permanent funding for the crop insurance  industry.  However,  it also contained
the Expense Reimbursement reductions noted above that began in 1999. In addition
the new law  reduced  the CAT LAE  Reimbursement  Payment  from  14.1% to 11% of
imputed  premium  and the $60 CAT  administrative  fee  previously  retained  by
private carriers must, beginning in 1999, be remitted in full to the FCIC.

Although the Company had hoped to offset these reductions  through growth in fee
income from non-federally subsidized programs, it was not fully able to do so in
1999.

In 1996, the Company instituted a policy of recognizing (i) 35% of its estimated
MPCI gross premiums written for each of the first and second  quarters,  20% for
the third quarter and 10% for the fourth quarter, (ii) commission expense at the
applicable rate of MPCI gross premiums written recognized,  (iii) Buy-Up Expense
Reimbursement at the applicable rate of MPCI gross premiums  written  recognized
along with  normal  operating  expenses  incurred  in  connection  with  premium
writings and (iv) an estimate of underwriting  profit based on historic results.
In the third quarter,  if a sufficient  volume of  policyholder  acreage reports
have been  received and  processed by the Company,  the  Company's  policy is to
recognize  MPCI gross  premiums  written  for the first nine  months  based on a
re-estimate which takes into account actual gross premiums processed and growing
conditions.  If an  insufficient  volume of  policies  has been  processed,  the
Company's  policy  is to  recognize  in the third  quarter  20% of its full year
estimate of MPCI gross premiums written,  unless other  circumstances  require a
different approach. The remaining amount of gross premiums written is recognized
in the fourth  quarter,  when all  amounts  are  reconciled.  The  Company  also
recognizes the MPCI  underwriting  gain or loss during each quarter,  reflecting
the Company's  best estimate of the amount of such gain or loss to be recognized
for the full year,  based on, among other  things,  historical  results,  plus a
provision  for  adverse  development.  In  the  third  and  fourth  quarters,  a
reconciliation  amount is recognized for the underwriting  gain or loss based on
final premium and latest available loss information. The growing seasons vary by
region  and crop.  The  determination  of  amounts of risk and volume of premium
often is arrived at after the attachment of risk. For these reasons,  management
believes that the best method to arrive at an allocation of premium, expense and
estimate of profit and loss is as stated above.

Currently,  the National  Association of Insurance  Commissioners (" NAIC") does
not provide  guidelines  for the  reporting of  underwriting  gains/losses.  The
Company's  position is embedded in the  understanding  that these  amounts  more
closely relate to ceding  commission  rather than normal revenues.  Underwriting
gain is a function of premiums  less loss,  which in  non-MPCI  insurance  would
result in  commissions,  which are returned to the Company  from the  reinsurer.
Amounts are a function of the ceding commission related to the MPCI business and
have been reported as such (included with the other  commission  expense items).
These  amounts are reported as a reduction to commission  expense  (gain) from a
statutory basis. The Company's position has been to maintain consistency.

The Company is currently  involved with an industry  taskforce  working with the
NAIC and the FCIC to develop  standard  accounting and reporting  procedures for
this  line of  business.  The  taskforce's  goal is to  provide  to the NAIC the
standard  methodology,  which can be  incorporated no earlier than the year 2000
codification.  Currently  there are  seventeen  companies  writing  this line of
business with varying reporting formats.


<PAGE>



Selected Segment Data of the Company

The  following  table  presents   historical  segment  data  for  the  Company's
nonstandard automobile and crop insurance operations. This data does not reflect
results of operations  attributable  to corporate  overhead,  interest costs and
amortization of intangibles.
<TABLE>
<CAPTION>

                                                                               Year Ended December 31,

Nonstandard  - Automobile Insurance Operations:
(in thousands, except ratios)                                              1999         1998          1997
                                                                           ----         ----          ----

<S>                                                                      <C>           <C>          <C>
    Gross premiums written                                               $235,773      $303,737     $323,915
                                                                         --------      --------     --------
    Net premiums written                                                 $244,826      $269,741     $256,745
                                                                         --------      --------     --------
    Net premiums earned                                                  $249,094      $264,022     $251,020
    Fee income                                                             15,185        16,431       15,515
    Net investment income                                                  12,339        11,958       10,969
    Net realized capital gain (loss)                                         (281)        4,124        9,462
                                                                             -----        -----        -----
Total Revenues                                                            276,337       296,535      286,966
                                                                          -------       -------      -------
    Losses and loss adjustment expenses                                   230,973       217,916      195,900
    Policy acquisition and general administrative expenses                 91,859        73,346       72,463
                                                                           ------        ------       ------
Total Expenses                                                            322,832       291,262      268,363
                                                                          -------       -------      -------
Earnings before income taxes                                             $(46,495)       $5,273      $18,603
                                                                         ---------       ------      -------
GAAP RATIOS (Nonstandard  Automobile Only)
Loss and LAE ratio (1)                                                       92.7%         82.5%        78.0%
Expense ratio, net of billing fees (2)                                       30.8%         21.6%        22.7%
                                                                             -----         -----        -----
Combined ratio (3)                                                          123.5%        104.1%       100.7%
Crop Insurance Operations:
    Gross premiums written                                               $237,286      $243,026     $126,401
                                                                         --------      --------     --------
    Net premiums written                                                  $12,737       $62,467      $20,796
                                                                          -------       -------      -------
    Net premiums earned                                                   $14,240       $60,901      $20,794
    Fee income                                                                456         3,772        2,276
    Net investment income                                                     293           275          191
    Net realized capital gain (loss)                                           21           217          (18)
                                                                               --           ---          ----
Total Revenues                                                             15,010        65,165       23,243
                                                                           ------        ------       ------
    Losses and loss adjustment expenses                                    34,225        52,550       16,550
    Policy acquisition and general and administrative expenses (4)            215        21,906      (14,404)
    Interest and amortization of intangibles                                1,113           502          235
                                                                            -----           ---          ---
Total Expenses                                                             35,553        74,958        2,381
                                                                           ------        ------        -----
    Earnings (loss) before income taxes                                  $(20,543)      $(9,793)     $20,862
                                                                         =========      ========     =======

</TABLE>

(1) Loss and LAE  ratio:  The  ratio of losses  incurred  during  the  financial
    reporting  year plus the cost to settle  losses  during the same period as a
    percentage of premiums earned.

(2) Expense ratio: The ratio of policy acquisition, general administrative
    expenses, as percentage of premiums earned.

(3)  Combined ratio:  The sum of the loss, plus LAE, plus the expense ratio as a
     percentage  of  premiums  earned.  Loss is the claims  incurred on policies
     written.  LAE is loss  adjusting  expense on claims for which policies have
     been written.

(4) Negative   crop   expenses   are  caused  by   inclusion   of  MPCI  expense
    reimbursements  and underwriting  gain as a set off to expense.  See certain
    accounting policies for crop insurance operations.

 [photograph of automobiles and crop field down left side]
Results of Operations

Overview

1999 Compared To 1998

The Company recorded a net loss of $(80,816,000) or $(7.78) per share (basic and
diluted) compared to a net loss of $(14,417,000) or $(1.39) per share (basic and
diluted) in 1998. The loss in 1999 was due to reduced  earnings in both crop and
nonstandard automobile operations. Results for 1999 for the crop operations were
significantly  impacted by an increase in claims settlements and reserves for an
agricultural  business  interruption  product  that was  offered in 1998 and has
since been  discontinued  ("AgPI").  The MPCI  produced a profit while the named
perils and hail  programs  had  combined  loss and expense  ratios of 117.5% and
84.6%, respectively.  Results for 1999 for the nonstandard automobile operations
were  impacted by a higher loss ratio and lower premium  volume.  These were the
result of problems encountered with untimely rate filings, implementation of the
Company's  new  operating  system and  competitive  pressure.  The Company  also
increased loss reserves for prior accident years by approximately  $16.4 million
in 1999 due to adverse loss development.

1998 Compared To 1997

The Company recorded a net loss of $(14,417,000) or $(1.39) per share (basic and
diluted)  compared to net earnings of $16,305,000 or $1.56 per share (basic) and
$1.52 per share (diluted) in 1997. The loss in 1998 was due to reduced  earnings
in both crop and  nonstandard  automobile  operations.  Results for 1998 for the
crop operations  were  significantly  impacted by catastrophic  crop hail losses
primarily   from   Hurricane   Bonnie  and  other  weather   related  events  of
approximately $14 million pre-tax. Contributing to the lower results were higher
than expected related to the alliance with Continental  Casualty Company ("CNA")
for its crop insurance  business (the "CNA  Transaction") of approximately  $3.0
million  pre-tax  and a lower  underwriting  gain on MPCI  (11.2% in 1998 versus
25.0% in 1997) due  primarily to severe  drought  conditions in certain parts of
the  country,  overly wet  conditions  in other  parts of the country and higher
frequency of CRC claims due to extremely low commodity prices.  Results for 1998
for the nonstandard  automobile  operations were impacted by a higher loss ratio
and lower premium  volume.  These were the result of problems  encountered  with
timely rate filings,  implementation  of the Company's new operating  system and
competitive  pressure.  The  Company  also  increased  loss  reserves  for prior
accident  years by  approximately  $13.0  million  in 1998 due to  adverse  loss
development.

Years Ended December 31, 1999 and 1998

Gross Premiums Written

Consolidated  Gross Premiums Written decreased 14.4% in 1999 due to a withdrawal
from certain  areas of hail sales,  a reduction in the price of crops leading to
less insurable values upon which to price insurance,  a reduction in nonstandard
auto sales due to increased  competition,  rate  increases and  withdrawal  from
certain small volume states. The following shows gross premiums written for crop
insurance products:
<TABLE>
<CAPTION>

(in thousands)      1999      1998
<S>              <C>        <C>
CAT imputed      $  39,727  $  50,127
MPCI               179,727    157,225
Crop Hail           53,647     76,198
Named perils         3,816      2,074
AgPI                    96      7,529
                 ---------  ---------
                 $ 277,013  $ 293,153
Less CAT imputed   (39,727)   (50,127)
                 ---------  ---------
Total            $ 237,286  $ 243,026
</TABLE>

Net Premiums Written

Net premiums written decreased 22.5% in 1999 as compared to 1998 due to a larger
quota  share  reinsurance  cover for hail,  from 25.0% in 1998 to 69.0% in 1999,
along with lower written premiums in the auto segment.

Net Premiums Earned

Net  premiums  earned  decreased  19.0% in 1999 as  compared  to the prior  year
reflecting  reduction  in  gross  and net  premiums  written.  The  ratio of net
premiums earned to net premiums written for the nonstandard  automobile  segment
was 101.7% in 1999 due to lower written premium in the auto segment.

Fee Income

Fee income  decreased  22.6% in 1999 compared to 1998. Fee income on nonstandard
automobile  operations  decreased as a result of lower gross  premiums  written.
Crop fees  primarily  include  CAT fees and  service  fees  such as GeoAg  which
totaled $456,000 in 1999 compared to $3,772,000 in 1998, a decline of 87.9%. The
primary  reason for the  decline is due to the law  change  prohibiting  company
retention of the CAT fee.

Net Investment Income

Net investment income increased 1.3% in 1999 compared to 1998. Such increase was
due to higher yields.

Net Realized Capital Gains (Losses)

In 1999, the investment  portfolio realized a small loss of $303,000 compared to
a  realized  gain in 1998 of  $4,314,000  which  emanated  from a high  level of
activity in the equity portfolio in 1998.

Losses and LAE

The loss and LAE ratio  (the  ratio of claims  and loss  adjusting  expense as a
percentage  of earned  premiums)  ("Loss  and LAE  Ratio")  for the  nonstandard
automobile  segment was 92.7% for 1999 as  compared to 82.5% for 1998.  The crop
hail Loss and LAE  Ratio  was  240.6%  in 1999  compared  to 79.4% in 1998.  The
increase  in the Loss  and LAE  Ratio  for the  nonstandard  automobile  segment
reflects adverse  development on prior years of approximately  6.6%. The Company
estimates its nonstandard  automobile 1999 accident year loss ratio was 86.2% as
compared to its current estimate of 81.1% in accident year 1998. The increase in
the accident  year loss ratio  results from  product and pricing  decisions  and
increases in claim  frequency.  The increase in the crop hail Loss and LAE Ratio
primarily  reflects the adverse  reserve  development  on 1998 AgPI  losses.  In
addition,  the pricing for crop insurance was inadequate and crop  experience in
the whole market was poor. The reinsurance  program helped reduce the net effect
to the Company as detailed in the reinsurance section.  During 1998, premiums of
$7.5 million were recognized  from AgPI;  however,  the Company  suffered losses
during  1999  from  this  program.   Adverse  development,   almost  exclusively
associated with AgPI, on 1998 crop Loss and LAE reserves  affected 1999 by $14.1
million.

Policy Acquisition and General and Administrative Expenses

Policy acquisition and general and  administrative  expenses have increased as a
result of the following.  As previously reported,  the Company had problems with
its policy  administration  systems  which  resulted  in higher  expenses  being
incurred in 1999.  The crop  operation  wrote  approximately  the same number of
policies but at a lower average premium than in 1998 due to depressed  commodity
prices.  Thus,  as a  percentage,  the  Company  experienced  an increase in its
expense  ratio  in 1999.  Policy  acquisition  and  general  and  administrative
expenses reduced to $94,137,000 or 35.7% of net premiums earned in 1999 compared
to $96,876,000 or 29.8% of net premiums earned for 1998.

The following  represents the breakdown of crop policy  acquisition  and general
and administrative expenses:
<TABLE>
<CAPTION>

(in thousands)                                 1999      1998
                                           --------  --------

<S>                                        <C>       <C>
MPCI expense reimbursements                $(38,580) $(37,982)
MPCI  underwriting  gain, net of stop loss
and CNA reinsurance in 1998                 (18,404)  (14,902)
Commissions                                  44,797    50,089
Ceding commission income                    (12,266)   (6,899)
Operating expenses                           24,668    31,600
                                           --------  --------

Total                                      $    215  $ 21,906
</TABLE>
                                           ========  ========

MPCI  expense  reimbursements  declined  to 21.5% of MPCI  premiums  for 1999 as
compared  to 24.2%  in 1998 due to  federally  mandated  reductions.  Commission
expense as a percentage of gross written  premiums were, in 1999, 16.2% of gross
written premiums compared to 17.1% in 1998.  Operating  expenses as a percentage
of  gross  written  premiums  were  9.3% in 1999  compared  to  10.8%  in  1998.
Nonstandard  automobile expenses net of fee income were 30.8% of earned premiums
in 1999 compared to 21.6% in 1998.

In 1998 the Company reserved for uncollectable  items as a result of issues with
the operating system acquired as part of the CNA transaction.

Amortization of Intangibles

Amortization of intangibles  includes goodwill from the acquisition of Superior,
additional  goodwill from the  acquisition of the minority  interest  portion of
Superior Insurance Group Management, Inc. ("Superior Group Management, formerly,
GGS Management Holdings, Inc. ("GGSH")),  the acquisition of North American Crop
Underwriters,  Inc.  ("NACU") and debt or  preferred  security  issuance  costs.
Amortization expense in 1999 of $2,453,000 is an increase of 3.1 % over 1998.

Interest Expense

Interest  expense  in 1999  represents  the  crop  segment's  borrowings  on its
seasonal line of credit at weighted  average rate of 7.02% and from the FCIC, at
15%  interest.  Due to the  payments of  approximately  $21.9  million for gross
losses  in 1999 on AgPI,  the cash  reserves  of IGF  were  lower  than in 1998.
Therefore,  IGF  deferred  remittance  to the FCIC of  uncollected  premiums  in
accordance with the Standard Reinsurance Agreement ("SRA").

Income Tax Expense (Benefit)

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

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

Approximately  $21.4 million of the 1999 net operating  loss ("NOL") was carried
back to the 1997 tax year which  resulted in a refund claim.  The ability of the
Company  to  utilize  the 1999  NOL is  dependent  upon  future  taxable  income
generated by the Company.

Years Ended December 31, 1998 and 1997

Gross Premiums Written

Consolidated gross premiums written increased 20.1% in 1998 due to growth in the
crop  operations  from the  integration  of business  from the CNA  Transaction,
internal growth and AgPI revenue. Crop gross premiums written increased 92.3% in
1998 from 1997.

Nonstandard automobile gross premiums written decreased 6.2% in 1998 as compared
to 1997 due primarily to reduced  volume in the states of Florida and California
for the reasons previously disclosed. Remaining gross premiums written represent
commercial  business  which was ceded 100% to Granite  Reinsurance  Company Ltd.
("Granite Re"), an affiliate of the Company.

Net Premiums Written

Net premiums written  increased in 1998 as compared to 1997 due to the growth in
gross premiums written offset by quota share reinsurance.

In 1998, the Company ceded 10% of its nonstandard automobile premiums as part of
a quota share treaty. This treaty and all previous quota share treaties for 1997
and 1998 were  commuted  effective  October 1, 1998 and the  Company  received a
return of unearned  premiums  and loss  reserves  from such  treaties as of that
date. For the first three quarters of 1997, the Company ceded 20% of nonstandard
automobile  premiums  and ceded 25% of such  premiums  in the fourth  quarter of
1997.  In 1998,  the  Company  ceded 25% of its crop hail  premiums as part of a
quota share treaty as compared to 40% in 1997.  Named peril  premiums were ceded
at a 50% rate in both 1998 and 1997 under a quota share treaty.

Net Premiums Earned

Net premiums earned  increased in 1998 as compared to 1997 reflecting  growth in
gross and net premiums written. The ratio of net premiums earned to net premiums
written for the nonstandard  automobile segment was 97.9% in 1998 as compared to
97.8% in 1997.

Fee Income

Fee income  increased  13.4% in 1998 compared to 1997. Fee income on nonstandard
automobile  operations  increased as a result of higher fees as a percentage  of
gross premiums written, 5.41% in 1998 and 4.79% in 1997, offset by lower premium
volume.  Crop fees  primarily  included CAT fees.  CAT fees increased in 1998 as
compared to 1997 due to growth in premium  volume.  Fees in 1998 also  increased
due to the introduction of Geo Ag and other processing fees.

Net Investment Income

Net investment income increased 8.1% in 1998 compared to 1997. Such increase was
due to greater invested assets offset somewhat by declining yields due to market
conditions.

Net Realized Capital Gains

Capital transaction activity primarily reflects activity in the Company's equity
portfolio.  The  higher  level of  gains  in 1997  reflects  the  strong  market
conditions  during  that  year.  Gains  decreased  in 1998 as a result of market
conditions. In the fourth quarter of 1998, the Company significantly reduced its
exposure to equities  reflecting  the Company's  concern with the market and its
desire to increase investment income.


<PAGE>


Losses and LAE

The Loss and LAE Ratio for the nonstandard automobile segment was 82.5% for 1998
as  compared  to 78.0% for  1997.  The crop hail Loss and LAE Ratio was 79.4% in
1998  compared to 75.1% in 1997.  The increase in the Loss and LAE Ratio for the
nonstandard  automobile  segment reflects adverse  development on prior years of
approximately  5.0%.  The Company  estimates  its  nonstandard  automobile  1998
accident  year loss ratio was 77.5% as compared to 76.1% in accident  year 1997.
The  increase in the accident  year loss ratio  results from product and pricing
decisions and increases in frequency in certain  product lines.  The increase in
the crop hail loss and LAE Ratio  includes  $10.7  million  for the  effects  of
catastrophic  events net of reinsurance  recoveries.  The crop hail Loss and LAE
Ratio prior to reinsurance  recoveries  was 100.6%.  The named perils loss ratio
was 100% and the AgPI  loss  ratio  was 100% in 1998 due to  losses  on  certain
coverages due to unusual weather related events estimated to be $3.3 million.

Policy Acquisition and General and Administrative Expenses

Policy  acquisition and general and  administrative  expenses  increased in 1998
over  1997 as a result  of the  increased  volume of  business  produced  by the
Company.  Policy  acquisition  and general and  administrative  expenses rose to
$96,876,000  or 29.8% of net premiums  earned in 1998 compared to $59,778,000 or
22.0% of net premiums earned for 1997.

MPCI  expense  reimbursements  declined  to 24.2% of MPCI  premiums  for 1998 as
compared  to  28.2%  in 1997  due to  federally  mandated  reductions.  The MPCI
underwriting  gain,  net of stop loss costs,  decreased  to 9.5% of CAT and MPCI
premiums  in 1998  (after  adding  $4,861,000  in 1998  as a  result  of the CNA
Transaction) compared to 21.9% in 1997 due to severe drought in certain sections
of the country and overly wet conditions in other  sections of the country.  The
Company  considers the 1998 underwriting gain to be well below average while the
1997 gain was well above  average.  Commission  expense as a percentage of gross
written  premiums  (including  CAT)  increased in 1998 to 17.1% of gross written
premiums  compared to 16.1% in 1997 due to the  integration of business from the
CNA Transaction and competitive  industry  pressure.  Ceding  commission  income
increased  in 1998  compared  to  1997  due to a  increase  in  ceded  premiums.
Operating  expenses as a percentage of gross written  premiums  (including  CAT)
increased in 1998 to 10.8%  compared to 10.2% 1997.  Operating  expenses in 1998
include $3 million,  or 1.0% of gross written  premiums  (including CAT), of one
time  costs  primarily  related  to the  integration  of  business  from the CNA
Transaction.  These additional one-time expenses, due to a reduction of offices,
severances and write down of assets,  were recorded as normal operating expenses
and were  deducted  in 1998 as  incurred in  accordance  with  APB16.  Operating
expenses in 1998 also include a $3.2 million  reserve,  or 1.1% of gross written
premiums (including CAT), for potential processing errors during 1998 on assumed
premiums from business  from the CNA  Transaction.  This increase in reserve was
due to the  integration of a processing  system  acquired in the CNA Transaction
that did not  reconcile  properly.  The Company  reserved for this  unreconciled
amount subsequently  throughout 1999. The Company has determined that the amount
is not  recoverable,  and it has  been  written  off in 1998  and set off to the
reserve in 1998.

Nonstandard  automobile expenses net of fee income were 21.6% of earned premiums
in 1998 compared to 22.7% in 1997.

Amortization of Intangibles

Amortization of intangibles  includes goodwill from the acquisition of Superior,
additional  goodwill from the  acquisition of the minority  interest  portion of
Superior  Group  Management  and the  acquisition  of NACU and debt or preferred
security  issuance costs. The increase in 1998 over 1997 reflected a full year's
impact of amortization of goodwill  associated with the purchase of the minority
interest position in Superior Group Management and a full year's amortization of
deferred  issuance  costs  on the  Company's  manditorily  redeemable  preferred
securities issued by the Company's trust subsidiary ("Preferred Securities").


<PAGE>


Interest Expense

Interest  expense  in 1998  represents  the  crop  segment's  borrowings  on its
seasonal  line of credit.  Interest  expense for 1997 includes both interest for
the crop segment and interest on the Superior Insurance Group ("Superior Group")
Senior  Credit  Facility  which  was  repaid in 1997  from the  proceeds  of the
offering of the Preferred Securities.

Income Tax Expense (Benefit)

The variance in the rate from the federal statutory rate of 35% is primarily due
to nondeductible goodwill amortization.

Distributions on Preferred Securities

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

Liquidity and Capital Resources

    The  primary  source  of funds  available  to the  management  and  holdings
companies are fees from policy  holders,  management fees and dividends from its
primary  subsidiaries.  The Company also receives $150,000 quarterly pursuant to
an administration agreement with IGF to cover the costs of executive management,
accounting, investing, marketing, data processing and reinsurance.

Superior  Group  collects  billing  fees charged to  policyholders  of Pafco and
Superior  who elect to make their  premium  payments in  installments.  Superior
Group also receives  management  fees under its management  agreement with Pafco
and Superior.  When the Florida Department of Insurance  ("Florida  Department")
approved the acquisition of Superior by Superior Group Management, it prohibited
Superior from paying any dividends (whether extraordinary or not) for four years
from the date of acquisition (May 1, 1996) without the prior written approval of
the  Florida  Department.  Extraordinary  dividends,  within the  meaning of the
Indiana  Insurance  Code,  cannot be paid by Pafco without the prior approval of
the Indiana  Insurance  Commissioner.  The management  fees charged to Pafco and
Superior by Superior  Group are subject to review by the Indiana  Department  of
Insurance ("Indiana Department") and Florida Department.

    The nonstandard  automobile insurance  subsidiaries' primary source of funds
are  premiums,  investment  income and  proceeds  from the  maturity  or sale of
invested  assets.  Such funds are used  principally  for the  payment of claims,
payment of claims settlement costs,  operating  expenses  (primarily  management
fees),  commissions  to  independent  agents,  dividends  and  the  purchase  of
investments.  There is  variability  to cash outflows  because of  uncertainties
regarding settlement dates for liabilities for unpaid losses.  Accordingly,  the
Company maintains  investment programs intended to provide adequate funds to pay
claims.  During 1999,  due to a slow down in premium  volume,  the Company began
liquidating  investments to pay claims.  The Company  historically  has tried to
maintain duration averages of 3.5 years. However, the reduction in new funds due
to lower premium has and will cause the Company to shorten duration. The Company
may incur a cost of selling  longer bonds to pay claims.  Claim payments tend to
lag  premium  receipts.  Due to the decline in premium  volume,  the Company has
experienced  a  reduction  in its  investment  portfolio  but to  date  has  not
experienced any problems meeting its obligations for claims payments.

    Cash  flows in the  Company's  MPCI  business  differ  from cash  flows from
certain more  traditional  lines.  The Company pays insured losses to farmers as
they are  incurred  during  the  growing  season,  with the full  amount of such
payments being reimbursed to the Company by the federal  government within three
business  days.  MPCI premiums are not received from farmers until covered crops
are  harvested.  Collected and  uncollected  premiums are required to be paid in
full  to the  FCIC by the  Company,  with  interest  at  15%,  if not  paid by a
specified date during the crop year.


<PAGE>


    During  1999,  IGF  borrowed  funds  under its  revolving  line of credit to
finance  payables to the FCIC for collected and  uncollected  premiums (the "IGF
Revolver").  In 1999,  the maximum  borrowing  amount under the IGF Revolver was
$15,000,000. The IGF Revolver carried a weighted average interest rate of 8.75%,
6.96%  and  7.02% in 1997,  1998 and 1999,  respectively.  Payables  to the FCIC
accrue  interest  at a rate of  15%,  as do the  receivables  from  farmers.  By
utilizing the IGF Revolver, which bears interest at a floating rate equal to the
prime rate minus .75% in 1999  (prime  rate plus 1.00% in 1998),  IGF avoids the
higher interest expense to the FCIC while continuing to earn 15% interest on the
receivables due from the farmer.  The IGF Revolver  contains  certain  covenants
which (i) restricts IGF's ability to accumulate  common stock, (ii) sets minimum
standards for investments and policyholder surplus and (iii) limits the ratio of
net written premiums to surplus.  The IGF Revolver also contains other customary
covenants which,  among other things,  restricts IGF's ability to participate in
mergers,  acquire  another  enterprise or  participate  in the  organization  or
creation of any other  business  entity.  At December 31, 1999, IGF had borrowed
the full  amount  available.  This  line of  credit  has been  extended  through
December 15, 2000;  however,  the authorized  line of credit has been reduced to
$8,000,000 as of March 17, 2000,  all of which was  available  April 1, 2000. At
December 31, 1999, IGF was not in compliance  with a minimum  statutory  surplus
covenant; however, IGF received a waiver of such covenant for December 31, 1999.
IGF does expect to meet the minimum statutory surplus covenant for 2000.

During 1999 the Company  deferred  remittance of uncollected  premium amounts to
the FCIC and  therefore  incur  interest  of 15% on such  amounts.  The  Company
expects to continue this practice in 2000.

    On August 12, 1997, the Company's  trust  subsidiary  issued $135 million in
Preferred  Securities  at a rate of 9.5%  paid  semi-annually.  These  Preferred
Securities  are  backed  by  Senior  Subordinated  Notes to the  trust  from the
Company.  The  proceeds  of the  Preferred  Securities  offering  were  used  to
repurchase the remaining  minority interest in Superior Group  Management,  Inc.
(formerly GGS Management Holdings,  Inc.) for $61 million,  repay the balance of
the Superior Group Senior Credit Facility of $44.9 million and contribute  $10.5
million to the nonstandard automobile insurers with the balance held for general
corporate  purposes.  Expenses  of the issue  aggregated  $5.1  million  and are
amortized  over the term of the Preferred  Securities  (30 years).  In the third
quarter of 1997,  the Company wrote off the remaining  unamortized  costs of the
Superior Group Senior Credit Facility of  approximately  $1.1 million pre-tax or
approximately $0.07 per share (basic) as an extraordinary item.

    The Preferred  Securities have a term of 30 years with semi-annual  interest
payments  which  commenced  February 15, 1998.  The Preferred  Securities may be
redeemed in whole or in part after 10 years.

    The Preferred Security interest  obligation of approximately $13 million was
funded from the Company's nonstandard  automobile management company and surplus
funds  available  in the Company in 1999.  During 1999 the Company  paid the two
Preferred  Securities  interest  payments.   Semi-annual  interest  payments  of
$6,412,500  were made in February and August 1999. In February 2000, the Company
deferred  the  interest  payment  in  accordance  with the  terms  of the  Trust
Indenture.  The Company may defer payment of any or all interest payments for up
to five years. The unpaid interest  installment amounts accrue interest at 9.5%.
The  Company  presently  intends to defer  interest  payments  in the year 2000;
however,  it will  reconsider  this  intention  depending  upon  cash  flow  and
profitability.

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

o The Company may not incur  additional  indebtedness  or  guarantee  additional
Indebtedness.

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

         These  restrictions  currently  apply  as  the  Company's  consolidated
coverage ratio was (4.9) in 1999, and will continue to apply until the Company's
consolidated  coverage  ratio  is in  compliance  with the  terms  of the  Trust
Indenture.  The Company is in compliance with these additional restrictions and,
therefore,  this does not  represent a default by the  Company on the  Preferred
Securities.

         Net cash  provided/(used)  by operating  activities in 1999  aggregated
$(17,490,000)  compared to  $15,328,000  in 1998 due to reduced cash provided by
operations as a result of the net loss.

         The Company believes cash flows in the nonstandard  automobile  segment
from  premiums,  investment  income and billing fees are sufficient to meet that
segment's   obligations  to  policyholders   and  operating   expenses  for  the
foreseeable  future.  This is due  primarily to the lag time between  receipt of
premiums  and  claims  payments.  Therefore,  the  Company  does not  anticipate
borrowings  for this  segment.  The Company also believes cash flows in the crop
segment from  premiums and expense  reimbursements  are  sufficient  to meet the
segment's  obligations  for the  foreseeable  future.  Due to the more  seasonal
nature of the crop  segment's  operations,  it may be  necessary to obtain short
term funding at times  during a calendar  year by drawing on the IGF Revolver or
deferring remittance of premiums to the FCIC. Except for this short term funding
and normal  increases  therein  resulting  from an increase  in the  business in
force,  the  Company  does not  anticipate  any  significant  short or long term
additional borrowing needs for crop business. Accordingly, while there can be no
assurance as to the  sufficiency of the Company's  cash flow in future  periods,
the Company  believes  that its cash flow will be  sufficient to meet all of the
Company's  operating  expenses and  operating  debt service (not  including  the
Preferred)  for the  foreseeable  future  and,  therefore,  does not  anticipate
additional borrowings.

While GAAP  shareholders'  equity reflected a deficit of $25 million at December
31,  1999,  it does not  reflect  the  statutory  equity  upon which the company
conducts  its various  insurance  operations.  Its  insurance  subsidiaries  had
statutory surplus of approximately $50 million at December 31, 1999.

         Effects of Inflation

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

Primary Differences Between GAAP and SAP

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

New Accounting Standards

On March 4, 1998, the AICPA  Accounting  Standards  Executive  Committee  issued
Statement of Position No. 98-1 (SOP 98-1),  "Accounting for the Cost of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 was issued to address
diversity in practice  regarding  whether and under what conditions the costs of
internal-use software should be capitalized. SOP 98-1 is effective for financial
statements for years  beginning after December 15, 1998. The Company has adopted
the new  requirements of the SOP in 1999. There is no material impact on the net
earnings in 1999.

The NAIC is  considering  the  adoption of a  recommended  statutory  accounting
standard  for crop  insurers,  the impact of which is  uncertain  since  several
methodologies are currently being examined.  Although the Indiana Department has
permitted  the  Company to  continue,  for its  statutory  financial  statements
through  December 31, 1999,  its practice of recording its MPCI business as 100%
ceded  to  the  FCIC  with  net  underwriting   results   recognized  in  ceding
commissions,  the Indiana  Department  has indicated  that in the future it will
require the Company to adopt the MPCI  accounting  practices  recommended by the
NAIC or any similar  practice  adopted by the Indiana  Department.  Since such a
standard  would be adopted  industry wide for crop  insurers,  the Company would
also be required to conform its future GAAP financial  statements to reflect the
new MPCI statutory  accounting  methodology  and to restate all historical  GAAP
financial  statements  consistent with this methodology for  comparability.  The
Company  cannot  predict the  accounting  methodology  that will  eventually  be
implemented or when the Company will be required to adopt such methodology.  The
Company  anticipates  that any such new  crop  accounting  methodology  will not
affect GAAP net income.

In 1998, the NAIC adopted the  Codification of Statutory  Accounting  Principles
guidance,  which replaced the current Accounting Practices and Procedures manual
as the  NAIC's  primary  guidance  on  statutory  accounting.  The  NAIC  is now
considering amendments to the Codification guidance that would also be effective
upon  implementation.  The NAIC has  recommended an effective date of January 1,
2001. The Codification  provides  guidance for areas where statutory  accounting
has been silent and changes current statutory accounting in some areas.

It is not known whether the Indiana  Department and the Florida  Department will
adopt the Codification or make any changes to the guidance.  The Company has not
estimated the potential  effect of the  Codification  guidance if adopted by the
departments of insurance. However, the actual effect of adoption could differ as
changes  are  made  to the  Codification  guidance,  prior  to  its  recommended
effective date of January 1, 2001.

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

Quantitative And Qualitative Disclosures About Market Risk

Insurance  company  investments must comply with applicable laws and regulations
which prescribe the kind, quality and concentration of investments.  In general,
these laws and  regulations  permit  investments,  within  specified  limits and
subject to certain qualifications,  in federal, state and municipal obligations,
corporate bonds, preferred and common securities, real estate mortgages and real
estate.  The Company's  investments in real estate and mortgage loans  represent
1.1% of the Company's aggregate  investments.  The investment  portfolios of the
Company at December 31, 1999, consisted of the following:
<TABLE>
<CAPTION>

                                                                   Cost or

Type of Investment (in thousands)                              Amortized Cost   Market Value

Fixed maturities:
    United  States  Treasury  securities  and  obligations  of  United
<S>                                                                    <C>      <C>
    States government corporation and agencies                         $ 62,553 $ 59,782
    Obligations of states and political subdivisions                       --       --
    Corporate securities                                                109,794  106,966
                                                                       -------- --------
Total Fixed Maturities                                                  172,347  166,748
Equity Securities:
    Common Stocks                                                        15,352   13,425
Short-Term investments                                                   21,820   21,820
Mortgage loans                                                            1,990    1,990
Other invested assets                                                       945      945
                                                                       -------- --------
Total Investments                                                      $212,454 $204,928

                                                                       ======== ========
</TABLE>

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

         (in thousands)                                         1998                              1999
                                                                ----                              ----
                                                                     Percent Total                    Percent Total

         Time to Maturity                            Market Value      Market Value    Market Value     Market Value
         ----------------                            ------------      ------------    ------------     ------------

<S>                                                        <C>                 <C>           <C>                <C>
         1 year or less                                    $7,937              4.2%          $4,268             2.6%
         More than 1 year through 5 years                  50,099             26.2%          85,033            51.0%
         More than 5 years through 10 years                35,215             18.4%          38,566            23.1%
         More than 10 years                                23,034             12.1%          35,641            21.4%
                                                           ------             -----          ------            -----
                                                          116,285             60.9%         163,508            98.1%
         Mortgage-backed securities                        74,717             39.1%           3,240             1.9%
         Total                                           $191,002            100.0%        $166,748           100.0%
                                                         ========            ======        ========           ======

</TABLE>

The  following  table  sets forth the  ratings  assigned  to the fixed  maturity
securities of the Company as of December 31:
<TABLE>
<CAPTION>

         (in thousands)                                         1998                              1999
                                                                ----                              ----
                                                                     Percent Total                    Percent Total

         Rating (1)                                  Market Value      Market Value    Market Value     Market Value
         ----------                                  ------------      ------------    ------------     ------------

<S>                                                       <C>                 <C>          <C>                 <C>
         Aaa or AAA                                       $72,520             37.9%        $102,818            61.7%
         Aa or AA                                           1,486               .8%           3,029             1.8%
         A                                                 79,809             41.8%          24,986            15.0%
         Baa or BBB                                        23,450             12.3%          21,522            12.9%
         Ba or BB                                          13,737              7.2%          13,691             8.2%
         Other below investment grade                          --                --             702              .4%
                                                               --                --             ---              ---

         Total                                           $191,002           $100.0%        $166,748           100.0%

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

The  investment  results of the Company for the periods  indicated are set forth
below:
<TABLE>
<CAPTION>

         (in thousands)                                                   Years Ended December 31,
                                                                   1997              1998              1999

<S>                                                                  <C>                <C>             <C>
         Net Investment income (1)                                    $11,447            $12,373         $12,535
         Average investment portfolio (2)                            $189,473           $217,298        $216,707
         Pre-tax return on average investment portfolio                  6.0%               5.7%            5.8%
         Net realized gains (losses)                                   $9,444             $4,341          $(303)
         ---------------

         (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>

The Company has the ability to hold its fixed  maturity  securities to maturity.
If interest  rates were to increase 10% from the  December 31, 1999 levels,  the
decline in fair value of the fixed maturity  securities would not  significantly
affect  the  Company's  ability to meet its  obligations  to  policyholders  and
debtors.

Market-Sensitive Instruments and Risk Management

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

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

<TABLE>
<CAPTION>
                            Interest Rate Sensitivity

                      Principal Amount by Expected Maturity

                              Average Interest Rate

                                                        (dollars in thousands)


                                                                                                              Fair Value

                                                                                    There-after                12/31/99
                                                                                    -----------                --------
                            2000        2001        2002       2003        2004                     Total
                            ----        ----        ----       ----        ----                     -----


Assets

<S>                          <C>        <C>         <C>        <C>         <C>          <C>         <C>          <C>
Available for sale           $4,278     $19,812     $20,268    $24,034     $24,715      $87,189     $180,296     $166,748
Average interest rate          6.5%        7.0%        7.3%       6.0%        6.1%         6.4%         6.5%         6.5%

Liabilities

IGF line of credit          $15,000        $ --        $ --       $ --        $ --         $ --      $15,000      $15,000
Preferred securities           $ --        $ --        $ --       $ --        $ --     $135,000     $135,000     $135,000
Average interest rate          8.5%         --%         --%        --%         --%         9.5%         9.4%         9.4%


</TABLE>


<PAGE>


Impact of the Year 2000 Issue

The Company successfully completed the appropriate  assessment,  remediation and
testing  processes  necessary  in all  of its  primary  locations,  Des  Moines,
Atlanta,  Indianapolis  and Tampa,  to  resolve  the year 2000 issue in a timely
fashion.  No significant issues were identified by management,  and there was no
interruption to the Company's business processing system as a result of the year
2000 issue.  Total costs  associated with the year 2000 issue were $9.4 million,
of which $7.7 million was capitalized. The Company had already made the decision
to transition  off all of its  nonstandard  auto legacy systems and this process
had been in progress  since 1996.  These new systems are Y2K  compliant and were
completed  prior to December  31,1999.  The  majority of costs  capitalized  are
hardware and software costs.


<PAGE>


CONSOLIDATED FINANCIAL STATEMENTS
as of December 31, 1999 and 1998
(in thousands, except share data)
<TABLE>
<CAPTION>

CONSOLIDATED BALANCE SHEETS
                                                                                        1999          1998


                                                                                        ----          ----

ASSETS:
Investments:
Available for sale:
<S>                                                                                 <C>           <C>
Fixed maturities, at market                                                         $166,748      $191,002
Equity securities, at market                                                          13,425        13,264
Short-term investments, at amortized cost, which approximates market                  21,820        15,597
Mortgage loans, at cost                                                                1,990         2,100
Other invested assets                                                                    945           890
                                                                                         ---           ---
TOTAL INVESTMENTS                                                                    204,928       222,853
Investments in and advances to related parties                                         1,462         3,545
Cash and cash equivalents                                                              3,097        14,800
Receivables (net of allowance for doubtful  accounts of $2,918 in 1999 and $6,393
    in 1998)                                                                          86,450       120,559
Reinsurance recoverable on paid and unpaid losses, net                                98,258        71,640
Prepaid reinsurance premiums                                                          10,463        31,172
Federal income taxes recoverable                                                       6,820        12,672
Deferred policy acquisition costs                                                     13,920        16,332
Deferred income taxes                                                                     --         5,146
Property and equipment, net of accumulated depreciation                               21,936        18,863
Intangible assets                                                                     43,221        45,781
Other assets                                                                           9,256         6,074
                                                                                       -----         -----
TOTAL ASSETS                                                                        $499,811      $569,437
                                                                                    ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES:

Losses and loss adjustment expenses                                                 $214,948      $200,972
Unearned premiums                                                                     90,008       110,664
Reinsurance  payables  (including  payable to affiliate of $2,124 in 1999 and nil     35,850        25,484
in 1998)

Notes payable                                                                         16,929        13,744
Distributions payable on preferred securities                                          4,809         4,809
Other                                                                                 27,247        16,769
                                                                                      ------        ------
TOTAL LIABILITIES                                                                    389,791       372,442
                                                                                     -------       -------
Minority interest:
Company-obligated  mandatorily  redeemable  preferred  stock of trust  subsidiary
    holding solely parent debentures.                                                135,000       135,000
Stockholders' equity:
Common stock, no par value, 100,000,000 shares authorized,  and 10,385,399 shares
    issued and outstanding in both 1999 and 1998                                      38,136        38,136
Additional paid-in capital                                                             5,851         5,851
Unrealized gain on investments,  net of deferred tax of $(2,637) in 1999 and $680
    in 1998                                                                           (4,898)        1,261
Retained earnings                                                                    (64,069)       16,747
                                                                                     --------       ------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                                 (24,980)       61,995
                                                                                     --------       ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                $499,811      $569,437
                                                                                    ========      ========
The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>

<PAGE>


CONSOLIDATED  FINANCIAL  STATEMENTS  for the years ended December 31, 1999 1998,
and 1997 (in  thousands,  except  per share  data)  CONSOLIDATED  STATEMENTS  OF
EARNINGS (LOSS)
<TABLE>
<CAPTION>

                                                                                         1999       1998         1997
                                                                                         ----       ----         ----
<S>                                                                                  <C>          <C>          <C>
Gross premiums written                                                               $473,687     $553,190     $460,600
Less ceded premiums                                                                  (216,124)    (220,982)    (183,059)
                                                                                     ---------    ---------    ---------
    NET PREMIUMS WRITTEN                                                             $257,563     $332,208     $277,541
                                                                                     ========     ========     ========

    NET PREMIUMS EARNED                                                              $263,334     $324,923     $271,814
Fee income                                                                             15,641       20,203       17,821
Net investment income                                                                  12,535       12,373       11,447
Net realized capital gain (loss)                                                         (303)       4,341        9,444
                                                                                         -----       -----        -----
    TOTAL REVENUES                                                                    291,207      361,840      310,526
                                                                                      -------      -------      -------
Expenses:
    Losses and loss adjustment expenses                                               265,198      270,466      212,450
    Policy acquisition and general and administrative expenses                         94,137       96,876       59,778
    Interest expense                                                                      620          163        3,158
    Amortization of intangibles                                                         2,687        2,379        1,197
                                                                                        -----        -----        -----
    TOTAL EXPENSES                                                                    362,642      369,884      276,583
                                                                                      -------      -------      -------
    EARNINGS (LOSS) BEFORE INCOME TAXES, MINORITY INTEREST, AND EXTRAORDINARY
        ITEM                                                                          (71,435)      (8,044)      33,943
                                                                                      --------      -------      ------
Income taxes:
    Current income tax expense (benefit)                                               (6,820)      (1,706)      13,105
    Deferred income tax expense (benefit)                                               7,865         (332)      (1,124)
                                                                                        -----         -----      -------
    TOTAL INCOME TAXES                                                                  1,045       (2,038)      11,981
                                                                                        -----       -------      ------
    NET EARNINGS (LSS) BEFORE MINORITY INTEREST AN D EXTRAORDINARY ITEM
                                                                                      (72,480)      (6,006)      21,962
Minority Interest:
Earnings in consolidated subsidiary                                                        --           --       (1,824)
Distributions on preferred securities, net of tax                                      (8,336)      (8,411)      (3,120)
                                                                                       -------      -------      -------
NET EARNINGS (LOSS) BEFORE EXTRAORDINARY ITEM                                         (80,816)     (14,417)      17,018
Extraordinary item, net of tax                                                             --           --         (713)
NET EARNINGS (LOSS)                                                                  $(80,816)    $(14,417)     $16,305
                                                                                     =========    =========     =======
Weighted average shares outstanding - Basic                                            10,385       10,402       10,450
                                                                                       ======       ======       ======
Weighted average shares outstanding - Fully Diluted                                    10,385       10,402       10,699
                                                                                       ======       ======       ======
Net earnings (loss) before extraordinary item per share - Basic                        $(7.78)      $(1.39)       $1.63
                                                                                       =======      =======       =====
Net earnings (loss) before extraordinary item per share - Fully Diluted                $(7.78)      $(1.39)       $1.59
                                                                                       =======      =======       =====
Net earnings (loss) per share - Basic                                                  $(7.78)      $(1.39)       $1.56
                                                                                       =======      =======       =====
Net earnings (loss) per share -Fully Diluted                                           $(7.78)      $(1.39)       $1.52
                                                                                       =======      =======       =====
The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>

<PAGE>


CONSOLIDATED FINANCIAL STATEMENTS
for the years ended  December 31, 1999,  1998,  and 1997
(in  thousands,  except number of shares)
CONSOLIDATED  STATEMENTS OF CHANGES IN  STOCKHOLDERS' EQUITY
(DEFICIT)
<TABLE>
<CAPTION>

                                                                      Additional                Unrealized         Total
                                                  Common Stock           Paid       Retained    Gain/(Loss)    Stockholders'
                                               Shares       Amount    In Capital    Earnings        On            Equity
                                                                                                Investments

<S>                <C>                         <C>            <C>           <C>        <C>               <C>           <C>
BALANCE AT JANUARY 1, 1997                     10,450,000     38,969        5,905      15,206            820           60,900

Comprehensive Income:
Net earnings                                           --         --           --      16,305             --           16,305
Change in unrealized gains (losses) on
securities                                             --         --           --          --          1,088            1,088
                                                       --         --           --          --          -----            -----
Comprehensive income                                   --         --           --      16,305          1,088           17,393
                                                       --         --           --      ------          -----           ------
Adjustments of offering costs                          --         50           --          --             --               50
Exercise of stock options                           1,667         --           20          --             --               20
                                                    -----         --           --          --             --               --

BALANCE AT DECEMBER 31, 1997                   10,451,667     39,019        5,925      31,511          1,908           78,363
                                               ----------     ------        -----      ------          -----           ------

Comprehensive Income:
Net earnings (loss)                                    --         --           --    (14,417)             --         (14,417)
Change in unrealized gains (losses) on
securities                                             --         --           --          --          (647)            (647)
                                                       --         --           --          --          -----            -----
Comprehensive income (loss)                            --         --           --    (14,417)          (647)         (15,064)
                                                       --         --           --    --------          -----         --------
Exercise of stock options                           4,332         --           37          --             --               37
Shares acquired                                  (70,600)      (833)        (111)       (347)             --          (1,341)
                                                 --------      -----        -----       -----             --          -------

BALANCE AT DECEMBER 31, 1998                   10,385,399     38,186        5,851      16,747          1,261           61,995
                                               ----------     ------        -----      ------          -----           ------

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

BALANCE AT DECEMBER 31, 1999                   10,385,399     38,186        5,851    (64,069)        (4,898)         (24,980)
                                               ==========     ======        =====    ========        =======         ========
</TABLE>

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


<PAGE>


CONSOLIDATED FINANCIAL STATEMENTS
for the years ended December 31, 1999, 1998, and 1997 (in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                1999            1998           1997
                                                                                ----            ----           ----
Cash flows from operating activities
<S>                                                                            <C>             <C>            <C>
    Net earnings (loss)                                                        $(80,816)       $(14,417)      $16,305
    Adjustments to reconcile net earnings (loss) to net cash provided
        from operations:
        Minority interest                                                            --             ---         1,824
        Depreciation, amortization and other                                      9,262           5,901         5,136
        Deferred income tax expense (benefit)                                     8,460             326        (1,124)
        Net realized capital (gain) loss                                            281          (4,341)       (9,444)
        Net changes in operating assets and liabilities (net of assets
        acquired):
           Receivables                                                           34,110          (8,690)      (27,050)
           Reinsurance recoverable on losses, net                               (26,618)         18,610       (41,956)
           Prepaid reinsurance premiums                                          20,708           5,434       (21,624)
           Federal income taxes recoverable (payable)                             5,852         (11,167)       (1,186)
           Deferred policy acquisition costs                                      2,412          (5,592)        2,060
           Other assets and liabilities                                           5,174         (24,339)        4,999
           Losses and loss adjustment expenses                                   13,976          64,200        35,053
           Unearned premiums                                                    (20,657)         (3,971)       27,350
           Reinsurance payables                                                  10,366          (6,626)       25,602
                                                                                 ------          -------       ------
NET CASH PROVIDED/(USED)  FROM OPERATIONS                                       (17,490)         15,328        15,945
                                                                                --------         ------        ------
    Cash flow from investing activities net of assets acquired:

        Purchase of minority interest and subsidiaries                               --          (3,000)      (61,000)
        Net sales (purchases) of short-term investments                          (6,223)         (6,726)          694
        Proceeds from sales, calls and maturities of fixed maturities
                                                                                195,250         127,428       224,037
        Purchases of fixed maturities                                          (181,197)       (147,428)     (263,560)
        Proceeds from sales of equity securities                                  9,617          65,916        34,475
        Purchase of equity securities                                            (9,786)        (42,572)      (35,358)
        Net proceeds from (purchase) sales of other investments
                                                                                     35              (3)          210
        Purchase of property and equipment                                       (9,301)         (9,265)       (5,662)
                                                                                 -------         -------       -------
NET CASH USED IN INVESTING ACTIVITIES                                            (1,605)        (15,650)     (106,164)
                                                                                 -------        --------     ---------
    Cash flow from financing activities net of assets acquired:

        Proceeds from issuance of preferred securities                               --             ---       129,947
        Proceeds from initial public offering, net of expenses
                                                                                     --             ---           ---
        Net proceeds from line of credit                                          3,185           7,855         4,182
        Payments made on term debt                                                   --             ---       (48,000)
        Proceeds from consolidated subsidiary minority interest owner
                                                                                     --             ---         2,304
        Other investing activities                                                   --          (1,303)           20
        Loans from and (repayments to) related parties                            4,207          (2,706)          (53)
                                                                                  -----          -------          ----
NET CASH PROVIDED FROM FINANCING ACTIVITIES:
                                                                                  7,392           3,846        88,400
                                                                                  -----           -----        ------
Increase (decrease) in cash and cash equivalents                                (11,703)          3,524        (1,819)
Cash and cash equivalents, beginning of year                                     14,800          11,276        13,095
                                                                                 ------          ------        ------
Cash and cash equivalents, end of year                                           $3,097         $14,800       $11,276
                                                                                 ======         =======       =======
The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>

<PAGE>


[HEADER]



SYMONS INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
-------------------------------------------------------------------------------

1.   Nature of Operations and Significant Accounting Policies:

Symons  International Group, Inc. (the "Company") is a 67.2% owned subsidiary of
Goran Capital Inc.  ("Goran").  The Company is primarily involved in the sale of
nonstandard automobile insurance and crop insurance.  The Company's products are
marketed through independent agents and brokers. Its insurance  subsidiaries are
licensed in 35 states,  primarily in the Midwest and Southern United 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")
     (formerly,  GGS Management Holdings,  Inc. ("GGSH")) -a holding company for
     the nonstandard automobile operations which includes:

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

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

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

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

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

IGF Holdings, Inc. ("IGFH")-a holding company for the crop operations which
 includes IGF and Hail Plus Corp.;

         IGF Insurance Company (IGF)-an insurance company domiciled in Indiana;

         North American Crop Underwriters, Inc. (NACU) - a managing general
         agency with exclusive focus on crop insurance.

     On August 12,  1997,  the Company  acquired  the 48%  minority  interest in
     Superior Group  Management  from Goldman Funds through a purchase  business
     combination. (See Note 2.)

     On July 8, 1998,  the Company  acquired  NACU  through a purchase  business
     combination.  The Company's Consolidated Statement of Earnings for the year
     ended  December  31,  1998  includes  the  results  of  operations  of NACU
     subsequent to July 8, 1998. (See Note 2.)

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

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

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

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

     Real estate-at cost, less allowances for depreciation.

     Mortgage loans-at outstanding principal balance.

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

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

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

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

h.   Intangible Assets:  Intangible assets consists  primarily of goodwill,  and
     debt  acquisition  costs.  Goodwill is amortized over a 25-year period on a
     straight-line  basis  based  upon  management's  estimate  of the  expected
     benefit period. Deferred debt acquisition costs are amortized over the term
     of the debt.

i.   Losses  and  Loss  Adjustment  Expenses:   Reserves  for  losses  and  loss
     adjustment  expenses include  estimates for reported unpaid losses and loss
     adjustment  expenses and for  estimated  losses  incurred but not reported.
     These  reserves  have  not been  discounted.  The  Company's  loss and loss
     adjustment  expense  reserves  include  an  aggregate   stop-loss  program.
     Reserves  are  established  using  individual   case-basis  valuations  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 are  adequate,  the  provisions  for losses and loss
     adjustment  expenses are necessarily  based on estimates and are subject to
     considerable 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 reserves for
     losses and loss adjustment expenses are reported net of the receivables for
     salvage and subrogation of approximately $8,506 and $10,684 at December 31,
     1999 and 1998, respectively.

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

k.   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.  Changes in future tax rates
     will result in  immediate  adjustments  to deferred  taxes.  (See Note 10.)
     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.

l.   Reinsurance: Reinsurance premiums, commissions, expense reimbursements, and
     reserves  related  to  reinsured   business  are  accounted  for  on  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.

m.   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. Any long-lived assets held for
     disposal are reported at the lower of their carrying  amounts or fair value
     less cost to sell.

n.   Certain  Accounting  Policies for Crop Insurance  Operations:  In 1996, IGF
     instituted a policy of recognizing (i) 35% of its estimated  multiple peril
     crop  insurance  (MPCI)  gross  premiums  written for each of the first and
     second quarters,  20% for the third quarter and 10% for the fourth quarter;
     (ii)  commission  expense at the  applicable  rate of MPCI  gross  premiums
     written recognized; and (iii) Buy-up Expense Reimbursement at a rate of 25%
     in  1999,  27% in  1998,  and 29% in 1997 of MPCI  gross  premiums  written
     recognized along with normal operating expenses incurred in connection with
     premium  writings.  In  the  third  quarter,  if  a  sufficient  volume  of
     policyholder acreage reports have been received and processed by IGF, IGF's
     policy is to  recognize  MPCI  gross  premiums  written  for the first nine
     months based on a reestimate which takes into account actual gross premiums
     processed. If an insufficient volume of policies has been processed,  IGF's
     policy is to recognize in the third  quarter 20% of its full year  estimate
     of MPCI  gross  premiums  written,  unless  other  circumstances  require a
     different  approach.  The  remaining  amount of gross  premiums  written is
     recognized  in the fourth  quarter,  when all amounts are  reconciled.  IGF
     recognizes  MPCI  underwriting  gain or loss  during  the first and  second
     quarters,  as well as the third quarter,  reflecting IGF's best estimate of
     the amount of such gain or loss to be recognized  for the full year,  based
     on, among other things,  historical  results,  plus a provision for adverse
     developments.  In the third and fourth quarters, a reconciliation amount is
     recognized  for the  underwriting  gain or loss based on final  premium and
     latest available loss information.

o.   Accounting Changes: In 1998, the Company adopted the provisions of SFAS No.
     130, "Reporting  Comprehensive Income" and SFAS No. 131, "Disclosures About
     Segments of an  Enterprise  and  Related  Information."  SFAS 130  requires
     companies to disclose  comprehensive income in their financial  statements.
     In addition to items included in net income,  comprehensive income includes
     items currently charged or credited directly to stockholders'  equity, such
     as the change in unrealized appreciation (depreciation) of securities. SFAS
     131 established new standards for reporting  operating  segments,  products
     and services,  geographic areas and major  customers.  Segments are defined
     consistent with the basis management used internally to assess  performance
     and allocate resources.

     On March 4, 1998, the AICPA Accounting Standards Executive Committee issued
     Statement  of Position  No. 98-1 (SOP  98-1),  "Accounting  for the Cost of
     Computer  Software  Developed or Obtained  for Internal  Use." SOP 98-1 was
     issued to address  diversity in practice  regarding  whether and under what
     conditions the costs of internal-use  software  should be capitalized.  SOP
     98-1 is  effective  for  financial  statements  for years  beginning  after
     December 15, 1998. In 1999, the Company adopted the new requirements of the
     SOP which did not have significant effect on net earnings during 1999.


<PAGE>


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

p.   Earnings Per Share: The Company's basic earnings per share calculations are
     based  upon  the  weighted   average  number  of  shares  of  common  stock
     outstanding  during each period.  The fully diluted  earnings per share for
     1997 was computed  using actual  weighted  average  shares  outstanding  of
     10,450,000  plus 249,000  assumed  shares from stock option  proceeds based
     upon the treasury stock method. Due to the net loss in 1998 and 1999, fully
     diluted earnings per share is the same as basic earnings per share.

2.       Corporate Reorganization and Acquisitions:

On August 12, 1997,  the Company  purchased the remaining  minority  interest in
Superior Group Management for $61 million in cash. The excess of the acquisition
price over the minority interest liability aggregated  approximately $36,045 and
was  assigned to goodwill  as the fair  market  value of assets and  liabilities
approximated their carrying value.

In July 1998,  IGFH  acquired all of the  outstanding  shares of common stock of
NACU,  a  Henning,   Minnesota  based  managing  general  agency  which  focuses
exclusively  on crop  insurance.  The  acquisition  price for NACU was $4,000 of
which  $3,000 was paid in cash and the  remaining  $1,000  payable  July 1, 2001
without interest.

The  acquisition of NACU was accounted for as a purchase and recorded as follows
(in thousands):

<TABLE>
<CAPTION>

<S>                                                           <C>
                 Assets acquired                              $21,035

                 Liabilities assumed                           19,705
                                                               ------

                 Net assets acquired                            1,330

                 Purchase price                                 4,000
                                                                -----

                 Excess purchase price (goodwill)              $2,670
                                                               ======

</TABLE>

The  Company's  results  from  operations  for the year ended  December 31, 1998
include the results of NACU subsequent to July 8, 1998.


<PAGE>


3.   Investments:

Investments are summarized as follows:
<TABLE>
<CAPTION>

                                                      Cost or                                   Estimated
                                                    Amortized             Unrealized             Market
December 31, 1999 (in thousands)                        Cost               Gain Loss              Value

Fixed Maturities:
U.S.  Treasury  securities and obligations of U.S.
<S>                                                     <C>                <C>      <C>           <C>
    government corporations and agencies                62,553             2        (2,773)       59,782
Foreign governments                                        ---           ---           ---           ---
Obligations of states and political subdivisions                         ---
Corporate securities                                   109,794            14        (2,842)      106,966
                                                       -------            --        -------      -------
    TOTAL FIXED MATURITIES                             172,347            16        (5,615)      166,748
                                                       -------            --        -------      -------
Equity securities                                       15,352           884        (2,811)       13,425
Short-term investments                                  21,820           ---           ---        21,820
Mortgage loans                                           1,990           ---           ---         1,990
Other invested assets                                      945           ---           ---           945
                                                           ---           ---           ---           ---

                                                       212,454           900        (8,426)      204,928
                                                       =======           ===        =======      =======
                TOTAL INVESTMENTS
</TABLE>

<TABLE>
<CAPTION>
                                                      Cost or                                   Estimated
                                                     Amortized            Unrealized             Market
December 31, 1998 (in thousands)                        Cost               Gain Loss              Value

Fixed Maturities:
U.S.  Treasury  securities and obligations of U.S.
<S>                                                    <C>            <C>             <C>       <C>
    government corporations and agencies               $71,033        $1,956          $(174)    $72,815
Foreign governments                                        ---           ---            ---         ---
Obligations of states and political subdivisions         6,765           ---           (115)      6,650
Corporate securities                                   110,657         1,579           (699)    111,537
                                                       -------         -----           -----    -------
    TOTAL FIXED MATURITIES                             188,455         3,535           (988)    191,002
                                                       -------         -----           -----    -------
Equity securities                                       13,918           755         (1,409)     13,264
Short-term investments                                  15,597           ---            ---      15,597
Mortgage loans                                           2,100           ---            ---       2,100
Other invested assets                                      890             0              0         890
                                                           ---             -              -         ---

                                                      $220,960        $4,290        $(2,397)   $222,853

                                                      ========        ======        ========   ========
                TOTAL INVESTMENTS
</TABLE>

At December 31, 1999,  91.4% of the Company's  fixed  maturities were considered
investment  grade  by The  Standard  & Poors  Corporation  or  Moody's  Investor
Services,  Inc.  Securities  with quality  ratings Baa and above are  considered
investment grade  securities.  In addition,  the Company's  investments in fixed
maturities did not contain any significant  geographic or industry concentration
of credit risk.


<PAGE>


The amortized  cost and estimated  market value of fixed  maturities at December
31,  1999,  by  contractual  maturity,  are  shown in the table  which  follows.
Expected  maturities will differ from contractual  maturities  because borrowers
may have the right to call or prepay obligations with or without penalty:
<TABLE>
<CAPTION>

                                                                                     Estimated Market
                                                                   Amortized Cost          Value

(in thousands)
Maturity:
<S>                                                                           <C>                <C>
    Due in one year or less                                                   4,276              4,268
    Due after one year through five years                                    86,884             85,033
    Due after five years through ten years                                   40,779             38,566
    Due after ten years                                                      37,099             35,641
    Mortgage-backed securities                                                3,309              3,240
                                                                              -----              -----
TOTAL                                                                      $172,347           $166,748
                                                                           ========           ========
</TABLE>

Gains and losses realized on sales of investments are as follows:
<TABLE>
<CAPTION>

(in thousands)                                                       1999       1998           1997
                                                                     ----       ----           ----

<S>                                                              <C>             <C>           <C>
Proceeds from sales                                              $205,826        $194,514      $254,470
Gross gains realized                                                3,007          10,901        10,639
Gross losses realized                                              (3,310)          6,560         1,195


</TABLE>

<PAGE>



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

<TABLE>
<CAPTION>
                                                                 1999            1998              1997
                                                                 ----            ----              ----

<S>                                                               <C>         <C>               <C>
Fixed maturities                                                  $11,522     $11,034           $10,061
Equity securities                                                     376         551               305
Cash and short-term investments                                     1,382       1,245             1,385
Mortgage loans                                                        152         173               182
Other                                                               (174)          32              (39)
                                                                    -----          --              ----
Total investment income                                            13,258      13,035            11,894
Investment expenses                                                 (723)        (662)            (447)
                                                                    -----        -----            -----
Net investment income                                             $12,535     $12,373           $11,447
                                                                  =======     =======           =======
</TABLE>

  Investments  with a market  value of $12,728  and $14,950  (amortized  cost of
  $12,760 and $14,726) as of December 31, 1999 and 1998,  respectively,  were on
  deposit in the United States and Canada.  The deposits are required by various
  insurance departments and others to support licensing requirements and certain
  reinsurance contracts, respectively.

4.   Deferred Policy Acquisition Costs:

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

(in thousands)                                                   1999            1998           1997
                                                                 ----            ----           ----

<S>                                                               <C>         <C>            <C>
Balance, beginning of year                                        $16,332     $10,740        $12,800
Costs deferred during year                                         43,714      53,658         57,155
Amortization during year                                         (46,126)     (48,066)       (59,215)
                                                                 --------     --------       --------
Balance, end of year                                              $13,920     $16,332        $10,740
                                                                  =======     =======        =======
</TABLE>

5.   Property and Equipment:

Property and equipment at December 31 are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                                 Accumulated

                                                   1999 Cost     Depreciation      1999 Net     1998 Net
                                                   ---------     ------------      --------     --------

<S>                                                       <C>              <C>           <C>          <C>
Land                                                      $260             $ --          $260         $260
Buildings                                                7,412            1,232         6,180        6,348
Office furniture and equipment                           6,833            4,080         2,753        2,990
Automobiles                                                134               42            92           55
Computer equipment                                      20,889            8,238        12,651        9,210
                                                        ------            -----        ------        -----
Total                                                  $35,528          $13,592       $21,936      $18,863
                                                       =======          =======       =======      =======

</TABLE>

Accumulated  depreciation at December 31, 1998 was $9,401.  Depreciation expense
related to property and  equipment for the years ended  December 31, 1999,  1998
and 1997 were $4,382, $3,109 and $1,764, respectively.

6.   Intangible Assets:

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

<TABLE>
<CAPTION>
                                                                  Accumulated

                                                   1999 Cost     Depreciation      1999 Net     1998 Net

<S>                                                    <C>               <C>          <C>          <C>
Goodwill                                               $42,785           $4,641       $38,144      $39,332
Deferred debt costs                                      5,131              413         4,718        4,889
Other                                                   1,299               940          359         1,560
                                                        ------              ---          ----        -----
                                                      $49,215            $5,994      $43,221       $45,781
                                                      ========           ======      ========      =======

</TABLE>

Accumulated  amortization at December 31, 1998 was $3,697.  Amortization expense
related to  intangible  assets for the years ended  December 31, 1999,  1998 and
1997 was $2,453, $2,379 and $1,197 respectively.

7.   Notes Payable:

At December 31,  1999,  IGF  maintained  a revolving  bank line of credit in the
amount of $15,000  (the "IGF  Revolver").  At December  31,  1999 and 1998,  the
outstanding balance was $15,000 and $12,000 respectively.  Interest on this line
of credit was at the New York prime rate (8.50% at December 31, 1999) minus .75%
adjusted daily.  This line is  collateralized  by the  crop-related  uncollected
premiums,  reinsurance  recoverable  on  paid  losses,  Federal  Crop  Insurance
Corporation (FCIC) annual settlement,  and a first lien on the real estate owned
by IGF. The IGF Revolver  contains  certain  covenants which (i) restricts IGF's
ability to accumulate  common stock; (ii) sets minimum standards for investments
and policyholder  surplus; and (iii) limits the ratio of net written premiums to
surplus.  At  December  31,  1999,  IGF was not in  compliance  with the minimum
statutory surplus covenant. However, IGF has received a waiver from the bank for
December 31, 1999.

The weighted average  interest rate on the line of credit was 7.02%,  6.96%, and
8.75% during 1999, 1998 and 1997, respectively.

Notes  payable at December 31, 1999 also  includes a $1,000 note due 2001 on the
purchase of NACU at no  interest.  The balance of notes  payable at December 31,
1999  includes  three  smaller  notes  (less  than  $300  each)  assumed  in the
acquisition  of NACU due  2002-2006  with  periodic  payments at interest  rates
ranging from 7% to 9.09%.

8.   Preferred Securities:

On August 12,  1997,  the  Company's  trust  subsidiary  issued $135  million in
preferred   securities   ("Preferred   Securities")  at  a  rate  of  9.5%  paid
semi-annually.   The  principal  asset  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.  The Preferred Securities were offered under Rule 144A of
the SEC  ("Preferred  Securities  Offering") and,  pursuant to the  Registration
Rights Agreement executed at closing,  the Company filed a Form S-4 Registration
Statement with the SEC on September 16, 1997 to effect the Exchange  Offer.  The
S-4 Registration  Statement was declared effective on September 30, 1997 and the
Exchange  Offer  successfully  closed on October 31,  1997.  The proceeds of the
Preferred  Securities  Offering were used to repurchase  the remaining  minority
interest in Superior Group Management for $61 million,  repay the balance of the
term debt of $44.9 million the balance,  after expenses,  of  approximately  $24
million was  contributed to the nonstandard  automobile  insurers of which $10.5
million was contributed in 1997.  Expenses of the issue  aggregated $5.1 million
and are amortized over the term of the Preferred  Securities (30 years).  In the
third quarter of 1997, the Company wrote off the remaining  unamortized costs of
the term debt of approximately  $1.1 million pre-tax or approximately  $0.07 per
share which was recorded as an extraordinary item.

The Preferred  Securities  represent  company-obligated  mandatorily  redeemable
securities of subsidiary  holding solely parent debentures and have a term of 30
years with  semi-annual  interest  payments  commencing  February 15, 1998.  The
Preferred  Securities  may be redeemed  in whole or in part after 10 years.  The
Preferred  Security  obligations of approximately $13 million per year is funded
from the  Company's  nonstandard  automobile  management  company  and  dividend
capacity from the crop operations.  The nonstandard auto funds are the result of
management and billing fees in excess of operating costs.

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

o The Company may not incur  additional  indebtedness  or  guarantee  additional
indebtedness.

o        The Company may not make certain restricted payments including loans or
         advances to  affiliates,  stock  repurchases  and a  limitation  on the
         amount of dividends is inforce.

o        The  Company  may  not  increase  its  level  of  non-investment  grade
         securities  defined as equities,  mortgage  loans,  real  estate,  real
         estate loans and non-investment grade fixed income securities.

These restrictions  currently apply as the Company's consolidated coverage ratio
was (4.89) in 1999, and will continue to apply until the Company's  Consolidated
Coverage  Ratio is in  compliance  with the  terms of the Trust  Indenture.  The
Company is in compliance with these additional restrictions and therefore,  this
does not represent a default by the Company on the Preferred Securities.

Assuming the Preferred  Securities  Offering took place at January 1, 1997,  the
proforma  effect of this  offering on the  Company's  consolidated  statement of
earnings from  continuing  operations for the year ended December 31, 1997 is as
follows:

                                                                   Unaudited
                                                                (In thousands)

   Revenues                                                       $313,014
   Net earnings from continuing operations                         $15,314
   Net earnings  from  continuing  operations  per common            $1.43
     share (fully diluted)

The pro forma results are not necessarily indicative of what actually would have
occurred  if  these  transactions  had been in  effect  for the  entire  periods
presented.  In  addition,  they are not  intended to be a  projection  of future
results.


<PAGE>


9.   Unpaid Losses and Loss Adjustment Expenses (in thousands):

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

<TABLE>
<CAPTION>
                                                                              1999       1998        1997
                                                                               ----       ----        ----

<S>                                                                        <C>           <C>         <C>
Balance at January 1                                                       $200,972      $136,772    $101,719
Less reinsurance recoverables                                                74,370        51,104      29,459
                                                                             ------        ------      ------
                                                                            126,602        85,668      72,260
                                                                            -------        ------      ------
                        NET BALANCE AT JANUARY 1

Incurred related to:
Current year                                                                234,737       257,470     201,118
Prior years                                                                  30,461        12,996      10,967
                                                                             ------        ------      ------
                                                                            265,198       270,466     212,085
                                                                            -------       -------     -------
                             TOTAL INCURRED

Paid related to:
Current year                                                                140,128       167,171     138,111
Prior years                                                                  98,274        62,361      60,566
                                                                             ------        ------      ------
                                                                            238,402       229,532     198,677
                                                                            -------       -------     -------
                               TOTAL PAID

    NET BALANCE AT DECEMBER 31                                              153,398       126,602      85,668
Plus reinsurance recoverables                                                61,550        74,370      51,104
                                                                             ------        ------      ------
                                                                           $214,948      $200,972    $136,772
                                                                           ========      ========    ========
</TABLE>
                         BALANCE AT DECEMBER 31

Reserve  estimates  are  regularly  adjusted in  subsequent  reporting  periods,
consistent  with  sound  insurance  reserving   practices,   as  new  facts  and
circumstances  emerge which  indicate a  modification  of the prior  estimate is
necessary.  The adjustment,  referred to as "reserve development," is inevitable
given  the  complexities  of  the  reserving  process  and  is  recorded  in the
statements  of  earnings  in the  period  the need for the  adjustments  becomes
apparent.  The  foregoing   reconciliation   indicates  that  deficient  reserve
developments of $30,461, $12,996 and $10,967 in the December 31, 1999, 1998, and
1997 loss and loss adjustment  expense  reserves,  respectively,  emerged in the
following  year.  The 1997  and  1998  deficient  reserve  development  occurred
primarily  due to  volatility  in the  historical  trends  for  the  nonstandard
automobile  business as a result of significant growth during 1996 and 1997. The
deficient reserve  development  during 1999 resulted from a higher than expected
frequency  and severity on  nonstandard  automobile  claims and from higher than
expected losses on 1998 AgPI policies (see Note 18).

The  anticipated  effect of inflation is implicitly  considered  when estimating
liabilities for losses and loss adjustment  expenses.  While  anticipated  price
increases due to inflation  are  considered  in  estimating  the ultimate  claim
costs,  the  increase in average  severities  of claims is caused by a number of
factors that vary with the  individual  type of policy  written.  Future average
severities are projected  based on historical  trends  adjusted for  implemented
changes in  underwriting  standards,  policy  provisions,  and general  economic
trends.  Those anticipated  trends are monitored based on 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,  a liability has been  established to
cover additional  exposure on both known and unasserted  claims.  The effects of
changes in settlement costs,  inflation,  growth and other factors have all been
considered in  establishing  the current year reserve for unpaid losses and loss
adjustment expenses.


<PAGE>


10.   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.  Intercompany  tax  payments  are  remitted at such times as
estimated  taxes would be required to be made to the  Internal  Revenue  Service
("IRS"). Refunds received from the IRS are distributed in a timely manner to the
appropriate subsidiaries.

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>
<S>                                                                           <C>           <C>         <C>
                                                                              1999          1998        1997
                                                                              ----          ----        ----

Computed income taxes (benefit) at statutory rate                           $(25,002)    $(2,815)    $11,880
Alternative minimum taxes                                                      1,000          --          --
Dividends received deduction                                                     (92)       (130)        (78)
                                                                                 793         621         229
                     Goodwill and acquisition costs

Other                                                                          1,212         286         (50)
                                                                               -----         ---         ----
                                                                            $(22,089)    $(2,038)    $11,981
                                                                            =========    ========    =======
Valuation allowance                                                           23,134          --          --
                                                                              ------          --          --
Income Tax Expense (Benefit)                                                  $1,045     $(2,038)    $11,981
                                                                              ======     ========    =======
</TABLE>

The net  deferred  tax asset at December  31, 1999 and 1998 is  comprised of the
following (in thousands):
<TABLE>
<CAPTION>

                                                                                      1999       1998

Deferred tax assets:
<S>                                                                                 <C>         <C>
    Unpaid losses and loss adjustment expenses                                      $4,112      $3,353
    Unearned premiums and prepaid insurance                                          5,568       5,972
    Allowance for doubtful accounts                                                  1,022       1,118
    Unrealized losses on investments                                                 2,637          --
    Net operating loss carryforwards                                                15,163         233
    Other                                                                              303       1,468
                                                                                       ---       -----
                                                                                   $28,805     $12,144

                                  DEFERRED TAX ASSET

Defered tax liabilities:
Defered policy acquisition costs                                                    (4,872)     (5,716)
Unrealized gains on investments                                                         --        (680)
Other                                                                                 (799)       (602)
                                                                                      -----       -----
DEFERRED TAX LIABILITY                                                              (5,671)     (6,998)
----------------------                                                              -------     -------
                                                                                    23,134       5,146
        VALUATION ALLOWANCE                                                        (23,134)         --
                                                                                   --------         --
NET DEFERRED TAX ASSET                                                           $        --    $5,146
----------------------                                                           ===========    ======
</TABLE>

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

As of December 31, 1999,  the Company has unused net operating  loss  carryovers
available as follows (in thousands):

           Years ending not later than December 31:                Amount

                  2000                                               $541
                  2002                                                126
                  2019                                             42,658
                                                                   ------
                   TOTAL                                          $43,325
                   -----                                          =======

Federal  income tax filings  attributed to the Company have been examined by the
IRS through  1996.  Beginning in April 2000,  the IRS began  examining the 1997,
1998,  and 1999  federal  corporate  income tax  filings for the Company and its
subsidiaries.

11.   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, 1999 and thereafter, excluding renewal options (in thousands):

Year Ending December 31:
2000                                                                  $4,316
2001                                                                   2,529
2002                                                                   2,270
2003                                                                   1,411
2004 and Thereafter                                                    2,586

Rental expense  charged to operations in 1999, 1998 and 1997 amounted to $3,607,
$2,939  and  $1,176,  respectively,  including  amounts  paid  under  short-term
cancelable leases.

12.   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.  In addition,  the Company  assumes  reinsurance on
certain  risks.  The  Company  remains   contingently  liable  with  respect  to
reinsurance,  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.

Approximately  72.4% of amounts recoverable from reinsurers are with the FCIC, a
branch of the federal government.  Another 17.3% 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.  An additional 3.7% of uncollateralized  recoverable amounts are
with  companies  which  maintain  an A.M.  Best  rating of at least A+.  Company
management believes amounts recoverable from reinsurers are collectible.

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

On March 2, 1998,  the Company  announced  that it had signed an agreement  with
Continental  Casualty  Company  ("CNA") to assume its  multi-peril and crop hail
operations.  CNA wrote  approximately  $80 million of multi-peril  and crop hail
insurance  business  in 1997.  The  Company  reinsures  a small  portion  of the
Company's total crop book of business (approximately 22% MPCI and 15% crop hail)
with CNA.  Starting in the year 2000,  assuming no event of change in control as
defined in the  agreement,  the Company can  purchase the  reinsurance  from CNA
through a call  provision  or CNA can require  the  Company to buy the  premiums
reinsured  with CNA.  Regardless  of the method of takeout of CNA,  CNA must not
compete in MPCI or crop hail for a period of time.  There was no purchase price.
The  formula  for the buyout in the year 2000 is based on a multiple  of average
pre-tax  earnings  that CNA  received  from  reinsuring  the  Company's  book of
business.


<PAGE>


Reinsurance  activity for 1999, 1998 and 1997,  which includes  reinsurance with
related parties, is summarized as follows (in thousands):
<TABLE>
<CAPTION>

                         1999                               Direct       Assumed         Ceded          Net
                         ----                               ------       -------         -----          ---

<S>                                                       <C>            <C>         <C>           <C>
Premiums Written                                          $385,655       $88,032     $(216,124)    $257,563
Premiums Earned                                            406,243        88,776      (229,685)     263,334
Incurred losses and loss adjustment expenses               395,843        98,882      (229,685)     265,198
Commission expenses (income)                                60,309        16,370       (73,088)       3,591

                         1998

Premiums Written                                          $425,526      $127,664     $(220,982)    $332,208
Premiums Earned                                            426,817       125,045      (226,938)     324,923
Incurred losses and loss adjustment expenses               402,093       127,970      (259,597)     270,466
Commission expenses (income)                                65,652        28,900       (85,081)       9,471

                         1997

Premiums Written                                          $430,002       $30,598     $(183,059)    $277,541
Premiums Earned                                            400,081        33,209      (161,476)     271,814
Incurred losses and loss adjustment expenses               290,712        35,034      (113,296)     212,450
Commission expenses (income)                                59,951         7,461       (77,898)     (10,486)

</TABLE>

Amounts   recoverable  from  reinsurers  relating  to  unpaid  losses  and  loss
adjustment  expenses were $61,550 and $74,370, as of December 31, 1999 and 1998,
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.

13.   Related Parties:

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

The following balances were outstanding at December 31 (in thousands):
<TABLE>
<CAPTION>

                                                                                          1999         1998

Investments in and advances to related parties:

<S>                                                                                        <C>         <C>
Nonredeemable, nonvoting preferred stock of Granite                                        $702        $702
Due from directors and officers                                                             265       1,443
Other receivables from related parties                                                      495       1,400
                                                                                            ---       -----
    Total Receivables                                                                    $1,462      $3,545
                                                                                         ------      ======

                                                                                          1999         1998

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

</TABLE>


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

                                                                                    1999       1998       1997
                                                                                    ----       ----       ----
Reinsurance under various treaties, net:

<S>                                                                                <C>      <C>        <C>
Ceded premiums earned                                                              $9,082   $21,439    $13,537
Ceded losses and loss adjustment expenses incurred                                  7,710    14,069     11,876
Ceded commissions                                                                   1,169     4,048      3,523
Consulting fees charged by various related parties                                  3,652     3,134      1,150
</TABLE>

In February 1998,  Superior Group Management loaned Granite Re $3,199 payable in
February  2002 with interest due  semiannually  at 6.8% to be used as collateral
for  reinsurance  transactions.  At  December  31,  1999 and 1998,  the  amounts
outstanding on this loan were nil and $1,302, respectively. The amounts due from
officers and directors is composed  substantially of interest bearing loans with
definitive principal repayment schedules.  The Company paid $3,112,  $2,832, and
$1,034, in 1999, 1998 and 1997, respectively,  for consulting and other services
relative to the conversion to the Company's new nonstandard automobile operating
system.  The Company has capitalized  these costs as part of its new nonstandard
automobile  operating  system.  Approximately  90% of  these  payments  are  for
services provided by consultants and vendors unrelated to the Company.  Stargate
Solutions ("Stargate") manages the work of the unrelated consultants and vendors
and,  as  compensation  for such work,  has  retained  approximately  10% of the
payments referred to above in return for management  services  provided.  During
1998,  Stargate was owned beneficially by certain directors of the Company and a
relative of those directors. Also included in consulting fees to related parties
is $520 and $270 in 1999 and 1998, respectively,  for payments to Onex, Inc., an
officer of whom was on the Company's Board of Directors,  for employment related
matters.

14.   Regulatory Matters:

Pafco  and  IGF,  domiciled  in  Indiana,   prepare  their  statutory  financial
statements in accordance  with accounting  practices  prescribed or permitted by
the  Indiana  Department  of  Insurance  (IDOI).  Statutory  requirements  place
limitations  on the amount of funds which can be  remitted  to the Company  from
Pafco  and  IGF.  The  Indiana  statute  allows  10% of  surplus  as  regard  to
policyholders  or  100%  of net  income,  whichever  is  greater,  to be paid as
dividends only from earned surplus. The Superior entities, domiciled in Florida,
prepare their  statutory  financial  statements in  accordance  with  accounting
practices prescribed or permitted by the Florida Department of Insurance (FDOI).
In the consent  order  approving  the  Acquisition  of  Superior,  the FDOI (the
"Acquisition  Consent Order") has prohibited  Superior from paying any dividends
for four years without the prior written approval of the FDOI which  prohibition
was in effect through the 1999 calendar year.  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.

IGF received written approval through December 31, 1999 from the IDOI to reflect
its  business  transacted  with  the  FCIC  as  a  100%  cession  with  any  net
underwriting  results recognized in ceding commissions for statutory  accounting
purposes,  which differs from prescribed statutory accounting  practices.  As of
December 31, 1999, that permitted transaction had no effect on statutory surplus
or net income.  The  underwriting  profit results of the FCIC  business,  net of
reinsurance of $18,206,  $18,405 and $31,595, are netted with policy acquisition
and general and  administrative  expenses for the years ended December 31, 1999,
1998 and 1997,  respectively,  in the  accompanying  Consolidated  Statements of
Earnings.

The NAIC is  considering  the  adoption of a  recommended  statutory  accounting
standard  for crop  insurers,  the impact of which is  uncertain  since  several
methodologies are currently being examined.  Although the IDOI has permitted the
Company to continue for its statutory financial  statements through December 31,
1999 its practice of recording  its MPCI business as 100% ceded to the FCIC with
net  underwriting  results  recognized  in  ceding  commissions,  the  IDOI  has
indicated  that in the  future it will  require  the  Company  to adopt the MPCI
accounting practices  recommended by the NAIC or any similar practice adopted by
the  IDOI.  Since  such a  standard  would  be  adopted  industry-wide  for crop
insurers,  the  Company  would  also be  required  to conform  its  future  GAAP
financial  statements to reflect the new MPCI statutory  accounting  methodology
and to restate all historical GAAP financial  statements  consistently with this
methodology  for  comparability.  The Company  cannot  predict  what  accounting
methodology  will  eventually  be  implemented,  but believe the Company will be
required to adopt such  methodology.  The Company  anticipates that any such new
crop accounting methodology will not affect GAAP net earnings.

Net income  (loss) of the  insurance  subsidiaries,  as determined in accordance
with statutory accounting practices (SAP), was $(20.5) million,  $(21.5) million
and $7.7 million, for 1999, 1998 and 1997, respectively.  Consolidated statutory
capital and surplus was  approximately  $50 million and $105 million at December
31, 1999 and 1998, respectively.

As of December  31,  1999,  the  risk-based  capital of IGF was in excess of the
company  action  level.  Superior's  risk-based  capital  ratio  was at  199% or
$151,000 below the company action level and Pafco's  risk-based ratio was at 72%
or $10.5 million below the company  action level using the NAIC  guidelines.  To
address IDOI concerns  relating to Pafco, on February 17, 2000,  Pafco agreed to
an order under which the IDOI may monitor more closely the ongoing operations of
Pafco. Among other matters, Pafco must:

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

o    Reduce its monthly auto premium writings,  or obtain  additional  statutory
     capital or surplus,  such that the year 2000 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. Further restrictions in
     premium  writings  would result in lower premium  volume.  Management  fees
     payable to  Superior  Group are based on gross  written  premium  therefore
     lower premium volume would result in reduced management fees paid by Pafco.

o                 Provide a summary of affiliate transactions to the IDOI.

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

Pafco's inability or failure to comply with any of the above could result in the
IDOI requiring  further  reductions in Pafco's  permitted premium writings or in
the IDOI instituting  future  proceedings  against Pafco. No report has yet been
issued by the IDOI on its  previously  disclosed  target  examination  of Pafco,
covering loss reserves, pricing and reinsurance.

Pafco has also agreed with the Iowa Department of Insurance (IADOI) to (i) limit
its policy counts on automobile business in Iowa and (ii) provide the IADOI with
policy count  information  on a monthly basis until June 30, 2000 and thereafter
on a quarterly basis.

In addition Pafco has agreed to provide monthly  financial  information to other
departments of insurance in states in which it writes business.

As  previously  disclosed,  with  regard  to IGF and as a result  of the  losses
experienced  by IGF in the crop  insurance  operations,  IGF has agreed with the
IDOI to provide monthly financial  statements and consult monthly with the IDOI,
and to obtain prior approval for affiliated party transactions. IGF currently is
not in compliance with its agreement to provide monthly financial  statements to
IDOI;  however IGF is working  with the IDOI to provide  this  information  on a
timely basis.

IGF has agreed with the IADOI that it will not write any  nonstandard  business,
other than that which it is  currently  writing  until such time as IGF has: (i)
increased surplus;  (ii) a net written premium to surplus ratios less than three
to one; and (iii) surplus reasonable to its risk.

The  FDOI has  initiated  examinations  covering  Superior.  The  scope of these
examinations has covered or will cover market conduct,  data processing systems,
Year 2000 readiness and financial  examinations as of June 30, 1999 and December
31, 1999.  Although no report has been issued or other action taken by the FDOI,
Superior expects to maintain ongoing  discussions with the FDOI to address these
and other issues, including reserve levels and financial review and reporting.

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

In 1998, the NAIC adopted the  Codification of Statutory  Accounting  Principles
guidance,  which will replace the current  Accounting  Practices and  Procedures
manual as the NAIC's primary guidance on statutory  accounting.  The NAIC is now
considering amendments to the Codification guidance that would also be effective
upon implementation. The NAIC has recommended an effective date of July 1, 2001.
The Codification provides guidance for areas where statutory accounting has been
silent and changes current statutory accounting in some areas.

It is not known  whether the IDOI or the FDOI will adopt the  Codification,  and
whether the Departments  will make any changes to the guidance.  The Company has
not estimated the potential  effect of the  Codification  guidance if adopted by
the  departments  of insurance.  However,  the actual  effect of adoption  could
differ  as  changes  are  made  to  the  Codification  guidance,  prior  to  its
recommended effective date of July 1, 2001.

15.   Commitments and Contingencies:

On February 23, 2000, a complaint  for a class  action  alleging  violations  of
Sections  10(b)  and  20(a) of the  Securities  Exchange  Act of 1934 was  filed
against the  Company,  certain  officers,  and certain  directors  in the United
States  District  Court for the  Southern  District  of Indiana.  The  complaint
alleges,  among other things,  that the defendants rendered false and misleading
statements  and/or  omissions   concerning   financial  condition  and  business
prospects of the Company,  as well as the financial benefits that would inure to
the Company and its  shareholders.  The Company intends to vigorously defend the
claims brought against it.

The California Department of Insurance (CDOI) has advised the Company that it is
reviewing a possible  assessment  which could  total $3 million.  This  possible
assessment  relates to the charging of brokers fees charged to  policyholders by
independent  agents who placed  business with  Superior.  The CDOI has indicated
that such broker fees charged by the independent  agent to the policyholder were
improper and has requested  reimbursement to the policyholders by Superior.  The
Company did not receive any of these  broker fees.  As the  ultimate  outcome of
this potential  assessment is not deemed  probable,  the Company has not accrued
any amount in its consolidated financial statements. Although the assessment has
not been  formally  made by the CDOI at this time,  the Company will  vigorously
defend any potential assessment and believes it will prevail.

         In 1998,  IGF sold a total of 157  policies for  agricultural  business
interruption insurance called AgPI that were intended to protect businesses that
depend upon a steady flow of crop (or crops) to stay in  business.  This product
was sold to a variety of businesses involved in agribusiness, including farmers,
as well as grain elevator operators, produce shippers, custom harvesters, cotton
gins,  agriculture chemical dealers and other processing businesses whose income
is heavily dependent on a stable supply of raw product (i.e.,  cotton), or whose
product  sales are  negatively  affected if crop  yields  fall  (i.e.,  chemical
dealers). Most of the policies were sold to California policyholders. The policy
form  required that the county in which crops reside must suffer a minimum level
of crop loss before a loss  recovery by a  policyholder  is possible.  After the
county loss test was met, then the  policyholder  must  demonstrate an insurable
economic loss on an individual basis under the policy.

The Company recognized approximately $7.6 million in written premium in 1998, of
which $6 million was earned in 1998 and $1.6 million earned in the first quarter
of 1999.  Adverse  weather  conditions and resultant crop damage in parts of the
country  where the  policies  were sold,  led the Company to begin  establishing
reserves for its possible exposure.  However, the lack of National  Agricultural
Statistical  Service ("NASS") and policyholder loss data adversely  affected the
Company's  ability to establish  the amount of their  exposure.  At December 31,
1998,  the  Company set its  reserves  at an amount  equal to 100% of the earned
premium.  County loss data, as well as policyholder loss data,  gradually became
known  starting in late April 1999. As of May 28, 1999,  the Company  recognized
that it was experiencing  unexpected  adverse loss development on these policies
and increased its incurred losses related to 1998 policies to $15 million.  When
the Company  published second quarter results,  NASS data was complete,  and the
Company had received  policyholder  data on nearly all policies to determine its
exposure.  The  Company's  estimated  gross  ultimate  incurred  loss  and  loss
adjustment expense ("LAE") related to these policies was $25 million (gross loss
before  reinsurance  recoveries).  As the Company  continued to investigate  and
reevaluate these claims, it increased its estimated ultimate gross incurred loss
and loss adjustment expense related to these policies to $34.5 million.

IGF is a party to a number of pending legal  proceedings  relating to AgPI.  IGF
remains a defendant in six lawsuits  pending in California state court (King and
Fresno  counties)  having  settled four other suits  including  two  declaratory
judgment  actions  that  were  brought  by  IGF in  Federal  District  Court  in
California.  In addition,  IGF has settled 13 arbitration  proceedings involving
policyholders of the AgPI and has no outstanding  arbitrations  relating to this
product.  The  first  of these  proceedings  was  commenced  in July  1999.  All
discovery  in the  remaining  proceedings  has been  stayed  pending a June 2000
hearing  on IGF's  appeal  of an order  denying a  dismissal  of the cases and a
remanding  of  these  disputes  to  arbitration  as  called  for in  the  policy
provisions.  The  policyholders  involved in the open  proceedings have asserted
that IGF is liable to them for the face amount of their  policies,  an aggregate
of approximately  $14.7 million,  plus an unspecified amount of punitive damages
and  attorney's  fees.  As of December  31,  1999,  IGF had paid an aggregate of
approximately  $7  million  to  the   policyholders   involved  in  these  legal
proceedings.  The Company  increased  its reserves by $9.5 million in the fourth
quarter  of 1999 and  reserved a total of $34.5  million in 1999 of which  $22.3
million was paid through December 31, 1999.

Less than $0.1 million of 1999 gross written AgPI premiums have been written and
assumed by the Company in 1999;  in  addition  the policy  language  was revised
materially.  Based on the information presently available,  the Company believes
that it has recognized, through loss and LAE payments and reserves, its ultimate
loss  exposure  related to the AgPI  product.  The Company  feels its  financial
reserves for the lawsuits and arbitrations are sufficient to cover the resulting
liability,  if any, that may arise from these matters.  However, there can be no
assurance that the Company's ultimate liability for AgPI related claims will not
be materially greater than the $34.5 million in gross losses already recorded in
the consolidated  financial statements related to this product and will not have
a material  adverse  effect on the Company's  results of operations or financial
condition.  Of the $34.5 million AgPI losses reserved  approximately $21 million
has been paid to date.

During  the  first  quarter  of  1999,  the  Company  entered  into  reinsurance
arrangements covering a portion of the AgPI business.  Under those arrangements,
during the first  quarter  the  Company  recorded  $4.7  million of ceded  gross
premium and a $9.4 million  reinsurance  recovery,  deferring  the resulting net
gain of $4.7 million. The $4.7 million deferred gain was recognized as income in
the  second  quarter.  The  Company  subsequently  negotiated  a  change  to the
reinsurance in the fourth quarter which resulted in  approximately  $4.2 million
additional  gain being  recorded as of  December  31,  1999.  The Company is not
entitled to any further recoveries under these reinsurance arrangements.

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

At  December  31,  1998,  the  Company  provided an  allowance  of $3.2  million
associated  with  discrepancies  identified in connection with the processing of
premiums  from the  assumption  of the CNA  business  and the  related  premiums
receivable  balance.  In 1999, the Company  resolved the discrepancy and reduced
the allowance to $0.

Two  assertions  have been made in  Florida  alleging  that  service  charges or
finance  charges are in violation of Florida law. The  plaintiffs are attempting
to obtain class certification in these actions. The Company believes that it has
substantially  complied  with the  premium  financing  statute  and  intends  to
vigorously defend any potential loss.

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

16.      Supplemental Cash Flow Information:

Cash paid for interest and income taxes are summarized as follows:
<TABLE>
<CAPTION>

      (in thousands)                                                         1999       1998         1997
                                                                             ----       ----         ----

<S>                                                                          <C>        <C>        <C>
      Cash paid for interest                                                 $515       $260       $3,467
      Cash  paid/(received)  for federal income taxes,  net of refunds   (17,910)      5,351       11,670
      refunds
</TABLE>

17.      Disclosures About Fair Values of Financial Instruments:

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

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

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

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

d)       Preferred Securities:  The December 31, 1999 estimated market value
         of the Preferred Securities was $67,500  based on quoted market prices.


<PAGE>



18.   Segment Information:

The  Company  has  two  reportable  segments  based  on  products:   nonstandard
automobile  insurance and crop  insurance.  The nonstandard  automobile  segment
offers personal nonstandard  automobile insurance coverages through a network of
independent  general  agencies.  The crop  segment  writes  MPCI  and crop  hail
insurance  through  independent  agencies with its primary  concentration in the
Midwest. The accounting policies of the segments are the same as those described
in "Nature of Operations  and  Significant  Accounting  Policies."  There are no
significant  intersegment  transactions.  The Company evaluates  performance and
allocates  resources  to the  segments  based on profit or loss from  operations
before income taxes.

The following is a summary of the Company's segment data and a reconciliation of
the segment data to the Consolidated  Financial  Statements.  The "Corporate and
Other"  includes  operations  not directly  related to the  reportable  business
segments and unallocated  corporate items (i.e.,  corporate  investment  income,
interest expense on corporate debt and unallocated  overhead expenses).  Segment
assets are those assets in the Company's operations in each segment.  "Corporate
and Other" assets are principally cash,  short-term  investments,  related-party
assets, intangible assets, and property and equipment.
<TABLE>
<CAPTION>

                                              Nonstandard
                                                 Auto                      Segment     Corporate     Consolidated
                                                              Crop         Totals       & Other        Totals

(in thousands)
Year Ended December 31, 1999

<S>                                              <C>         <C>         <C>                          <C>
Premiums earned                                  $249,094    $14,240     $263,334            --       $263,334
Fee income                                         15,185        456       15,641            --         15,641
Net investment income                              12,339        293       12,632           (97)        12,535
Net realized capital gain                           (281)         21         (260)          (43)          (303)
                                                    -----         --         -----          ----          -----
Total Revenue                                     276,337     15,010      291,347          (140)       291,207
                                                  -------     ------      -------          -----       -------
Loss and loss adjustment expenses                 230,973     34,225      265,198           ---        265,198
Operating expenses                                 91,859        215       92,074         2,063         94,137
Amortization of intangibles                            --        493          493         2,194          2,687
Interest expense                                       --        620          620            --            620
Total expenses                                    322,832     35,553      358,385         4,257        362,642
                                                  -------     ------      -------         -----        -------
Earnings   (loss)  before  income  taxes,
    minority  interest and  extraordinary
    item                                        $(46,495)   $(20,543)    $(67,038)      $(4,397)      $(71,435)
                                                =========   =========    =========      ========      =========
Segment assets                                   $229,640   $145,622     $375,262      $124,549       $499,811
                                                 ========   ========     ========      ========       ========
</TABLE>


<PAGE>

<TABLE>
<CAPTION>


Year Ended December 31, 1998
<S>                                              <C>         <C>         <C>               <C>        <C>
Premiums earned                                  $264,022    $60,901     $324,923            --       $324,923
Fee income                                         16,431      3,772       20,203            --         20,203
Net investment income                              11,958        275       12,233           140         12,373
Net realized capital gain                           4,124        217        4,341            --          4,341
                                                    -----        ---        -----            --          -----
Total revenue                                    $296,535     65,165      361,700           140        361,840
                                                 --------     ------      -------           ---        -------

Loss and loss adjustment expenses                 217,916     52,550      270,466            --        270,466
Operating Expenses                                 73,346     21,906       95,252         1,624         96,876
Amortization of intangibles                            --        339          339         2,040          2,379
Interest expense                                       --        163          163            --            163
                                                       --        ---          ---            --            ---
Total expenses                                    291,262     74,958      366,220         3,664        369,884
                                                  -------     ------      -------         -----        -------
Earnings   (loss)  before  income  taxes,
    minority  interest and  extraordinary
    item                                           $5,273    $(9,793)     $(4,520)      $(3,524)       $(8,044)
                                                   ======    ========     ========      ========       ========

Segment assets                                   $376,831   $143,434     $520,265       $49,172       $569,437
                                                 ========   ========     ========       =======       ========

Year Ended December 31, 1997

Premiums earned                                  $251,020    $20,794     $271,814            --       $271,814
Fee income                                         15,515      2,276       17,791            30         17,821
Net investment income                              10,969        191       11,160           287         11,447
Net realized capital gain                           9,462        (18)       9,444            --          9,444
                                                    -----        ----       -----            --          -----
Total revenue                                    $286,966    $23,243     $310,209          $317       $310,526
                                                 --------    -------     --------          ----       --------

Loss and loss adjustment expenses                 195,900     16,550      212,450            --        212,450
Operating Expenses                                 72,463    (14,404)      58,059         1,719         59,778
Amortization of intangibles                            --          2            2         1,195          1,197
Interest expense                                       --        233          233         2,925          3,158
                                                       --        ---          ---         -----          -----
Total expenses                                    268,363      2,381      270,744         5,839        276,583
                                                  -------      -----      -------         -----        -------

Earnings   (loss)  before  income  taxes,
    minority  interest and  extraordinary
    item                                          $18,603    $20,862      $39.465       $(5,522)      $(33,943)
                                                  =======    =======      =======      ========      =========
Extraordinary item, net of tax                      (713)         --         (713)           --           (713)
                                                    =====         ==        =====            ==          =====
Segment assets                                   $363,864   $119,660     $483,524       $46,351       $529,875
                                                 ========   ========     ========       =======       ========


</TABLE>



<PAGE>


19.   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  nonemployee  directors  of the Company and
Goran.  Options have been granted at an exercise  price equal to the fair market
value of the  Company's  stock at date of grant.  All of the  outstanding  stock
options vest and become  exercisable in three equal  installments  on the first,
second and third  anniversaries  of the date of grant.  On October 14, 1998, all
SIG  options  were  repriced to $6.3125 per share.  In  November  1999,  certain
officers  and non  employee  directors  of the  Company  surrendered  a total of
1,153,600 stock options.

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

                                                       1999                       1998                      1997
                                                      Weighted                   Weighted                  Weighted
                                                       Average                    Average                   Average
                                                      Exercise                   Exercise                  Exercise
                                          Shares        Price     Shares           Price     Shares          Price
                                          ------        -----                      -----                     -----
<S>                                       <C>            <C>         <C>            <C>          <C>           <C>
Outstanding  at the  beginning of the     1,457,833      $6.3125     1,000,000      $6.3125      830,000       $12.50
 year

Granted                                          --      $6.3125       478,000       6.3125      185,267        15.35
Exercised                                   (1,667)      $6.3125       (4,332)       6.3125      (1,667)        12.50
Forfeited/Surrendered                   (1,243,133)      $6.3125      (15,835)       6.3125     (13,600)        12.50
                                        -----------      -------      --------       ------     --------        -----
Outstanding at the end of the year          213,033      $6.3125     1,457,833      $6.3125    1,000,000       $13.03
                                            =======      =======     =========      =======    =========       ======
Options exercisable at year end             120,366      $6.3125       760,289      $6.3125      521,578       $12.50
Available for future grant                1,286,967                     42,167                        --

</TABLE>

The weighted  average  remaining life of the SIG options as of December 31, 1999
is 7.9 years.

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


<PAGE>


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

                                                      1999                       1998                      1997
                                                    Weighted                   Weighted                  Weighted
                                                     Average                   Average                    Average
                                                    Exercise                   Exercise                  Exercise
                                         Shares       Price     Shares(1)       Price      Shares(1)       Price
                                         ------       -----                     -----                      -----
Outstanding  at the  beginning of the
<S>                                        <C>          <C>          <C>           <C>          <C>          <C>
 year                                      94,732       $51.75       95,282        $51.75       27,777       $51.75
Granted                                        --           --           --            --       68,855           --
Forfeited                                 (2,500)       $51.75        (550)         51.75      (1,350)        51.75
                                          -------       ------        -----         -----      -------        -----
Outstanding at the end of the year         92,232       $51.75       94,732        $51.75       95,282       $51.75
                                           ======       ======       ======        ======       ======       ======
Options exercisable at year end            42,448                    24,601                      5,555
Available for future grant                 18,879                    16,379                     15,829

(1) Prior years outstanding share options have been restated to properly reflect
outstanding options as at those respective dates.
</TABLE>
<TABLE>
<CAPTION>
                                                                    Options                        Options
                                                                      Outstanding                    Exercisable
                                                        Weighted      weighted                       Weighted
                                                        Average       Average                        Average
                                        Number      Remaining Life    Exercise Price     Number      Exercise Price
                                                              -----
Range of Exercise Prices             Outstanding       (in years)                      Exercisable

<S>                                         <C>                  <C>          <C>            <C>             <C>
44.17 - $53.45                              64,561               6.8          $46.13         39,668          $47.35
$58.79-$71.14                               27,671               6.8           64.87          2,777          $58.79
                                            ------               ---           -----          -----          ------
                                            92,232                                           42,445
                                            ======                                           ======
</TABLE>

The Company applies  Accounting  Principles Board Opinion No. 25, "Accounting of
Stock Issued to Employees"  and related  interpretation  in  accounting  for its
stock option plans.  Accordingly,  no compensation  cost has been recognized for
such plans.  Had compensation  cost been determined,  based on the fair value at
the grant dates for options granted under both the SIG Stock Option Plan and the
GGSH Stock Option Plan during 1999, 1998 and  1997consistent  with the method of
SFAS No. 123, "Accounting for Stock-Based Compensation," the Company's pro forma
net earnings and pro forma  earnings per share for the years ended  December 31,
1999, 1998 and 1997 would have been as follows:
<TABLE>
<CAPTION>

(Dollars  in  thousands,  except per    1999 As       1999        1998 As        1998        1997 As     1997 Pro
share amounts)                         Reported     Pro forma    Reported     Pro forma     Reported       Forma
                                       --------     ---------    --------     ---------     --------       -----

<S>                                     <C>          <C>          <C>           <C>            <C>          <C>
Net earnings (loss)                     $(80,816)    $(82,513)    $(14,417)     $(16,352)      $16,305      $14,927
Basic earnings (loss) per share           $(7.78)      $(7.95)     $ (1.39)       $(1.57)        $1.56        $1.43

Fully  diluted  earnings  (loss) per
share                                     $(7.78)      $(7.95)      $(1.39)       $(1.57)        $1.52        $1.38

</TABLE>


<PAGE>


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

                                                      SIG             SIG
                                                   1998 Grants    1997 Grants


Risk-free interest rates
 Dividend yields                                             5.4%       6.4%
 Volatility factors                                           .41       .39
 Weighted average expected life                         3.2 Years      3.3 Years
 Weighted average fair value per share                      $5.73      $5.54

20.   Quarterly Financial Information (unaudited):

Quarterly financial information is as follows:
<TABLE>
<CAPTION>

(in thousands)                                                    First      Second      Third      Fourth             Total
                                                                  -----      ------      -----      ------             -----
                           1999

<S>                                                            <C>         <C>         <C>         <C>              <C>
Gross written premiums                                         $152,022    $173,869    $67,686     $80,110          $473,687
Net premiums written                                             75,299      75,786     55,254      51,224           257,563
Net premiums earned                                              64,337      72,911     66,554      59,532           263,334
Total revenues                                                   70,706      79,690     72,228      68,583           291,207
Net earnings (loss)                                             (1,022)     (9,764)   (19,093)    (50,937)          (80,816)
Net earnings (loss) per share - basic                            (0.10)      (0.94)     (1.84)      (4.90)            (7.78)
Net earnings (loss) per share - fully diluted                    (0.10)      (0.94)     (1.84)      (4.90)            (7.78)

                           1998

Gross premiums written                                         $178,396    $173,094    $97,353    $104,347          $553,190
Net premiums written                                             99,561     104,714     70,694      57,239           332,208
Net premiums earned                                              68,485      98,958     93,912      63,568           324,923
Total revenues                                                   79,898     108,008    101,986      71,948           361,840
Net earnings                                                      4,924       5,668   (13,326)    (11,683)          (14,417)
Net earnings (loss) per share - basic                              0.47        0.55     (1.28)      (1.13)            (1.39)
Net earnings (loss) per share - fully diluted                      0.46        0.53     (1.28)      (1.13)            (1.39)
</TABLE>

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

In the fourth  quarter of 1999, the Company  provided for  additional  AgPI loss
reserves of $5.3 million, net of reinsurance.

During the fourth quarters of 1999 and 1998, the Company  increased  reserves on
its  nonstandard  automobile  business by $6.9 million and $3.0 million for both
current and prior accident years.


<PAGE>


In the fourth quarter of 1998, the Company  provided a $3.2 million  reserve for
potential  processing  errors in the crop business assumed from CNA. The Company
also increased its reserves on AgPI exposures by approximately $1.8 million.  As
is customary in the crop insurance industry,  insurance company  participants in
the FCIC program  receive more  precise  financial  results from the FCIC in the
fourth quarter based upon business written on spring-planted crops. On the basis
of FCIC-supplied  financial  results,  IGF recorded,  in the fourth quarter,  an
additional underwriting gain (loss), net of reinsurance, on its FCIC business of
$791, $(3,506) and $6,979 during 1999, 1998 and 1997, respectively.

21.   Subsequent Events

On March 23, 2000,  the FDOI  notified the Company that  Superior is required to
not exceed a written  premiums  to  surplus  ratio of 4 to 1 as  computed  on an
annualized  basis and to file on a monthly  basis a schedule  that  verifies its
compliance with the net writing limitation of 4 to 1.

On February 29, 2000, the Company contributed $2.0 million in capital to Pafco.

22.   Management's Plans

The Company reported net losses of $80.8 million and $14.4 million for the years
1999 and 1998 respectively.  While the stockholders  equity at December 31, 1999
is a deficit of  approximately  $25.0  million,  the  Company  has a thirty year
mandatorily  redeemable  preferred  stock  outstanding  of  $135  million  at an
interest  rate of 9.5%.  This Trust  Preferred is not due for  redemption  until
2027. The insurance  subsidiaries  have statutory  surplus of approximately  $50
million upon which the Company conducts its insurance operations. The management
has initiated  substantial changes in operational  procedures and business in an
effort to return the Company to  profitable  levels and to improve its financial
condition.  The nonstandard auto insurance segment hired a new President,  a new
Chief Information  Officer, and pricing and claims management since the yearend.
The Company  has and is  continuing  to raise its rates in a market  environment
where  increasing  rates and withdrawal from the market by other companies shows
positive trends for an improving profitability of the nonstandard auto division.
The crop insurance company has experienced a substantial increase in gross sales
in its major product lines and strong demand for its new innovative products.

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


<PAGE>



-------------------------------------------------------------------------------
MANAGEMENT RESPONSIBILITY
-------------------------------------------------------------------------------

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

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

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

/s/ Douglas H. Symons
Chief Executive Officer

April __, 2000


<PAGE>


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

We  have  audited  the  accompanying   consolidated   balance  sheet  of  Symons
International  Group,  Inc. and  subsidiaries  (the  Company) as of December 31,
1999, and the related  consolidated  statements of earnings  (loss),  changes in
stockholders'  equity  (deficit)  and cash flows for the year then ended.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit. The consolidated  balance sheet of Symons  International  Group, Inc.
and subsidiaries as of December 31, 1998 and the related consolidated statements
of earnings (loss), changes in stockholders' equity and cash flows for the years
ended  December 31, 1998 and 1997,  were audited by other  auditors whose report
dated April 13, 1999, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with generally accepted auditing standards.
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  audit  provides  a
reasonable basis for our opinion.

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

/s/ _____________________
---------------------

BDO SEIDMAN, LLP

Grand Rapids, Michigan
March 14, 2000, except for Note 22,
 which is as of March 23, 2000

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

In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated  statements of earnings,  changes in stockholders'  equity and cash
flows present  fairly,  in all material  respects,  the  consolidated  financial
position of Symons  International  Group, Inc. and subsidiaries (the Company) at
December 31, 1998 and 1997,  and the results of their  operations and their cash
flows for each of the three  years in the  period  ended  December  31,  1998 in
conformity with generally accepted  accounting  principles in the United States.
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 of these  statements in accordance  with
generally accepted auditing standards in the United States which require that we
plan and  perform the audit to obtain  reasonable  assurance  about  whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for the opinion expressed above.

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




<PAGE>


Stockholder Information

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

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

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

Annual Meeting of Stockholders
 May 31, 2000

10:00 a.m.
Corporate Offices
4720 Kingsway Drive

Indianapolis, Indiana  46205

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, 1999,  filed with the  Securities  and Exchange
Commission,  may be obtained, without charge, upon request to the individual and
address noted under Shareholder Inquiries.


<PAGE>


Market and Dividend Information

Symons  International  Group,  Inc.'s  common  stock  trades on the NASDAQ Stock
Market's National Market under the symbol SIGC.

<TABLE>
<CAPTION>
                                     NASDAQ

                                                                                 1999               1998


Quarter Ended                                                                High      Low       High      Low

<S>   <C>                                                                     <C>       <C>      <C>      <C>
March 31                                                                      9.625     4.125    20.375   16.125

June 30                                                                       6.375     4.000    20.500   16.375

September 30                                                                  8.438     4.250    19.875   16.000

December 31                                                                   5.625     1.156    15.750    5.375
</TABLE>

On March 22,  2000,  the  Company  received  notice  from Nasdaq - Amex that the
Listing  Qualifications  Panel  has  determined  that  the  Company  was  not in
compliance with certain listing qualifications.  On or before June 30, 2000, the
Company  must make a filing with the SEC and Nasdaq - Amex  evidencing  complete
compliance  with the  required  qualifications  including  net  tangible  assets
excluding Preferred Securities, of at least $15,000,000,  market value of public
float of at least  $5,000,000 for a period of ten consecutive  days  immediately
thereafter,  and a minimum $1.00 per share bid price  requirement.  In the event
that the Company  fails to comply  with any of the terms of these  requirements,
the Company's securities will be delisted from The Nasdaq National Market. There
can be no  assurance  that  the  Company  will  be  able  to  comply  with  such
requirements.  In that event, the Company expects that its common stock may then
be traded on the OTC Bulletin Board.

As of March 20, 2000, the Company had approximately  1200 stockholders  based on
the  number of holders of record  and an  estimate  of the number of  individual
participants represented by securities position listings.

Symons  International  Group,  Inc. did not declare or pay cash dividends on its
common stock during the years ended December 31, 1999 and 1998. The Company does
not plan to pay cash  dividends on its common stock in order to retain  earnings
to support the growth of its business.


<PAGE>


Shareholder Inquiries

Inquiries should be directed to:
Douglas H. Symons
Chief Executive Officer

Symons International Group, Inc.
Tel:  (317) 259-6413
E-mail:  dsymons@sigins.com

Board of Directors

G. Gordon Symons
Chairman of the Board

Symons International Group, Inc.
Goran Capital Inc.

Alan G. Symons

President and Chief Executive Officer, Goran Capital Inc.

Douglas H. Symons

President and Chief Executive Officer, Symons International Group, Inc.
Vice President and Chief Operating Officer, Goran Capital Inc.

John K. McKeating

Retired former President and Owner of Vision 2120 Optometric Clinics

Robert C. Whiting
President, Prime Advisors, Ltd

Larry S. Wechter

Managing Director and Chief Executive Officer
Monument Advisers, Inc.

Gene Yerant
Executive Vice President

Symons International Group, Inc.
Chief  Operating  Officer and President
Superior Insurance Group, Inc.



<PAGE>


Executive Officers

Douglas H. Symons

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

Bruce K. Dwyer

Vice President, Chief Financial Officer
Symons International Group, Inc.

Gene Yerant
Executive Vice President

Symons International Group, Inc.
Chief Operating  Officer and President
Superior Insurance Group, Inc.

Dennis G. Daggett
Chief Executive Officer
IGF Insurance Company

Mary E. DeLaat

Vice President, Chief Accounting Officer
Symons International Group, Inc.

Gregg Albacete
Chief Information Officer
Symons International Group, Inc.

Company, Subsidiaries and Branch Offices

CORPORATE OFFICE

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

SUBSIDIARIES AND BRANCHES                      IGF Southwest
Pafco General Insurance Company                7914 Abbeville Avenue
4720 Kingsway Drive                            Lubbock, Texas  79424
Indianapolis, Indiana  46205                   Tel:  806-783-3010
Tel:  317-259-6300                             Fax:  806-783-3017
Fax:  317-259-6395
                                               IGF South
                                               101 Business Park Drive, Suite c
Superior Insurance Company                     Ridgeland, Mississippi  39157
280 Interstate North Circle, N.W., Suite 500   Tel:  601-957-9780
Atlanta, Georgia  30339                        Fax:  601-957-9793
Tel:  770-952-4885
Fax:  770-988-8583


<PAGE>



                                                 IGF West
Superior Insurance Company                       1700 Bullard Avenue, Suite 106
5483 W. Waters Avenue                            Fresno, California  93710
Suite 1200, Building P                           Tel:  559-432-0196
Tampa, Florida  33634                            Fax:  559-432-0294
Tel:  813-887-4878
Fax:  813-287-8362                               IGF North
                                                 116 South Main, Box 1090
Superior Insurance Company                       Stanley, North Dakota  58784
1745 West Orangewood Road, Suite 210             Tel:  701-628-3536
Orange, California  92826                        Fax:  701-628-3537
Tel:  714-978-6811
Fax:  714-978-0353                               IGF - NACU
                                                 Highway 210 West, Box 375
IGF Insurance Company                            Henning, Minnesota 56551
Corporate Office                                 Tel:  218-583-4800
6000 Grand Avenue                                Fax:  218-583-4852
Des Moines, Iowa  50312
Tel:  515-633-1000
Fax:  515-633-1010

IGF Mid East
3921 Pintail Drive

Springfield, Illinois  62707
Tel:  217-726-2450
Fax:  217-726-2451


<PAGE>










































BACK PAGE

SIG Logo

SYMONS INTERNATIONAL GROUP, INC.

4720 Kingsway Drive
Indianapolis, Indiana  46205

Tel:   317-259-6300
Fax:  317-259-6395
<PAGE>


                                  EXHIBIT INDEX

Reference to                                            Sequential
Regulation S-K                                          Page
Exhibit No.                                             Document Number


2.1          The Strategic Alliance Agreement by and between
             Continental Casualty Company and IGF Insurance Company,
             IGF Holdings, Inc. and Symons International Group, Inc.
             dated February 28, 1998 is incorporated by reference to Exhibit 2.1
             of the Registrant's 1997 Form 10-K.

2.2 The MPCI Quota Share Reinsurance Contract by and between
             Continental Casualty Company and IGF Insurance Company,
             IGF Holdings, Inc. and Symons International Group, Inc.
             dated February 28, 1998 is incorporated by reference to Exhibit 2.2
             of the Registrant's 1997 Form 10-K.

2.3 The MPCI Quota Share Reinsurance Agreement by and between
             Continental Casualty Company and IGF Insurance Company,
             IGF Holdings, Inc. and Symons International Group, Inc.
             dated February 28, 1998 is incorporated by reference to Exhibit 2.3
             of the Registrant's 1997 Form 10-K.

2.4 The Crop Hail Insurance Quota Share Contract by and between
             Continental Casualty Company and IGF Insurance Company,
             IGF Holdings, Inc. and Symons International Group, Inc.
             dated February 28, 1998 is incorporated by reference to Exhibit 2.4
             of the Registrant's 1997 Form 10-K.

2.5 The Crop Hail Insurance Quota Share Agreement by and between
             Continental Casualty Company and IGF Insurance Company, IGF
             Holdings, Inc. and Symons International Group, Inc.
             dated February 28, 1998 is incorporated by reference to Exhibit 2.5
             of the Registrant's 1997 Form 10-K.

2.6 The Crop Hail Insurance Services and Indemnity Agreement by
             and between Continental Casualty Company and IGF Insurance
             Company, IGF Holdings, Inc. and Symons International Group, Inc.
             dated February 28, 1998 is incorporated by reference to Exhibit 2.6
             of the Registrant's 1997 Form 10-K.



<PAGE>



2.7 The Multiple Peril Crop Insurance Service and Indemnity Agreement
             by and between Continental Casualty Company and IGF Insurance
             Company, IGF Holdings, Inc. and Symons International Group, Inc.
             dated February 28, 1998 is incorporated by reference to Exhibit 2.7
             of the Registrant's 1997 Form 10-K.

2.8      The Stock Purchase Agreement between IGF Holdings, Inc. and
             1911 CORP, dated July 7, 1998 is incorporated by reference to
             Exhibit 2.9 of the Registrant's 1998 Form 10-K.


3.1          The Registrant's  Restated  Articles of  Incorporation  are
             incorporated by reference to Exhibit 3.1 of the Registrant's
             Registration Statement on Form  S-1, Reg. No. 333-9129.

3.2          Registrant's Restated Code of Bylaws, as amended, is
             incorporated by reference to Exhibit 1 of the Registrant's
             1996 Form 10-K.

4.1(1)       The Senior Subordinated Indenture between Symons
             International Group, Inc. as issuer and Wilmington Trust Company
             as trustee for SIG Capital Trust I dated August 12, 1997 is
             incorporated by reference in the Registrant's Registration
             Statement on Form S-4, Reg. No. 333-35713.

4.1(2)       First  Supplemental  Senior  Subordinated  Indenture between Symons
             International  Group,  Inc. and Wilmington Trust Company Related to
             SIG  Capital  Trust I dated  January 15,  1998 is  incorporated  by
             reference to Exhibit 4.3(2) of the Registrant's 1997 Form 10-K.

10.1         The Management Agreement among Superior Insurance Company,
             Superior American Insurance Company, Superior Guaranty
             Insurance Company and GGS Management, Inc. dated April 30,
             1996 is incorporated by reference to Exhibit 10.5 of the
             Registrant's Registration Statement on Form S-1, Reg. No.
             333-9129.

10.2         The Management Agreement between Pafco General Insurance
             Company and Registrant dated May 1, 1987, as assigned to GGS
             Management, Inc. effective April 30, 1996, is incorporated by
             reference to Exhibit 10.6 of the Registrant's Registration
             Statement on Form S-1, Reg. No. 333-9129.

10.3         The Administration Agreement between IGF Insurance Company
             and Registrant dated February 26, 1990, as amended, is
             incorporated by reference to Exhibit 10.7 of the Registrant's
             Registration Statement on Form S-1, Reg. No. 333-9129.

10.4         The Agreement between IGF Insurance Company and Registrant

             dated November 1, 1990 is incorporated by reference to
             Exhibit 10.8 of the Registrant's Registration Statement on
             Form S-1, Reg. No. 333-9129.

10.5         The Registration Rights Agreement between Goran Capital Inc.
             and Registrant dated May 29, 1996 is incorporated by
             reference to Exhibit 10.13 of the Registrant's Registration
              Statement on Form S-1, Reg. No. 333-9129.

10.6         The Employment Agreement between GGS Management,
             Holdings, Inc. and Douglas H. Symons dated January 31, 1996
             is incorporated by reference to Exhibit 10.16(2) of the
             Registrant's Registration Statement on Form S-1, Reg. No.
             333-9129.

10.7         The Employment Agreement between IGF Insurance Company
             and Dennis G. Daggett effective February 1, 1996 is incorporated
             by reference to Exhibit 10.17(1) of the Registrant's
             Registration Statement on Form S-1, Reg. No. 333-9129.

10.8         The Employment Agreement between IGF Insurance Company and
             Thomas F. Gowdy effective February 1, 1996 is incorporated by
             reference to Exhibit 10.17(2) of the Registrant's Registration
             Statement on Form S-1, Reg. No. 333-9129.

10.9         The GGS Management Holdings, Inc. 1996 Stock Option Plan is
             incorporated by reference to Exhibit 10.21 of the Registrant's
             Registration Statement on Form S-1, Reg. No. 333-9129.

10.10        The Registrant's 1996 Stock Option Plan is incorporated by
             reference to Exhibit 10.22 of the Registrant's Registration
             Statement on Form S-1, Reg. No. 333-9129.

10.11        The Registrant's Retirement Savings Plan is incorporated by
             reference to Exhibit 10.24 of the Registrant's Registration
             Statement on Form S-1, Reg. No. 333-9129.

10.12        The Insurance Service Agreement between Mutual Service
             Casualty Company and IGF Insurance Company dated May 20, 1996
             is incorporated by reference to Exhibit 10.25 of the
             Registrant's Registration Statement on Form S-1, Reg. No.
             333-9129.

10.13(1)     The Automobile Third Party Liability and Physical Damage
             Quota Share Reinsurance Contract between Pafco General
             Insurance Company and Superior Insurance Company is
             incorporated by reference to Exhibit 10.27(1) of the
             Registrant's Registration Statement on Form S-1, Reg. No.
             333-9129.

10.13(2)     The Crop Hail Quota Share Reinsurance Contract and Crop
             Insurance Service Agreement between Pafco General Insurance
             Company and IGF Insurance Company is incorporated  by
             reference to Exhibit 10.27(2) of the Registrant's
             Registration Statement on Form S-1, Reg. No. 333-9129.

10.13(3)     The Automobile Third Party Liability and Physical Damage
             Quota Share Reinsurance Contract between IGF Insurance
             Company and Pafco General Insurance Company is incorporated
             by reference to Exhibit 10.27(3) of the Registrant's
             Registration Statement on Form S-1, Reg. No. 333-9129.


<PAGE>



10.13(4)     The Multiple Line Quota Share Reinsurance Contract between

             IGF Insurance Company and Pafco General Insurance Company is
             incorporated by reference to Exhibit 10.27(4) of the
             Registrant's Registration Statement on Form S-1, Reg. No.
             333-9129.

10.13(5)     The Standard Reinsurance Agreement between Federal Crop Insurance
             Corporation and IGF Insurance Company dated July 1, 1997.

10.13(6)     The Automobile  Variable Quota Share Reinsurance  Agreement between
             The Superior Group and IGF Insurance  Company dated October 1, 1998
             is   incorporated   by  reference   to  Exhibit   10.18(6)  of  the
             Registrant's 1999 Form 10-K.

10.13(7)     The Automobile  Variable Quota Share Reinsurance  Agreement between
             The Pafco Group and IGF Insurance  Company dated October 1, 1998 is
             incorporated by reference to Exhibit  10.18(7) of the  Registrant's
             1999 Form 10-K.

10.13(8)     The Automobile Variable Quota Share Reinsurance Agreement
             between The Pafco Group and Granite Reinsurance Company, Ltd.
             dated October 1, 1998 is incorporated by reference to
             Exhibit 10.18(8) of the Registrant's 1999 Form 10-K.

10.13(9)     Amendment No. 1 to the 1998 Standard Reinsurance Agreement
             dated July 29, 1998.

10.14(1)     The SIG Capital Trust I 91/2% Trust Preferred Securities
             Purchase Agreement dated August 7, 1997 is incorporated by
             reference in the Registrant's Registration Statement on
             Form S-4, Reg. No. 333-35713.

10.14(2)     The Registration Rights Agreement among Symons
             International Group, Inc., SIG Capital Trust I and Donaldson,
             Lufkin & Jenrette Securities Corporation, Goldman, Sachs & Co.,
             CIBC Wood Gundy Securities Corp. and Mesirow Financial, Inc.
             dated August 12, 1997 is incorporated by reference in the
             Registrant's Registration Statement on Form S-4,
             Reg. No. 333-35713.

10.14(3)     The Declaration of Trust of SIG Capital Trust 1 dated
             August 4, 1997 is incorporated by reference in the Registrant's
             Registration Statement on Form S-4, Reg. No. 333-35713.

10.14(4)     The Amended and Restated Declaration of Trust of SIG
             Capital Trust I dated August 12, 1997 is incorporated by reference
             in the Registrant's Registration Statement on Form S-4,
             Reg. No. 333-35713.

13           Annual Report to Security Holders

21           Schedule of Subsidiaries of the Registrant

27           Financial Data Schedule