FORM 10-Q/A

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

(Mark one)

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

For the quarterly period ended June 30, 1999

         OR

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

For the transition period from               to

Commission file number   0-27462

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

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

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

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

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

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

                           Class                   Outstanding at July 31, 1999
                           -----                   ----------------------------
         Class A Common Stock, $.01 par value             14,258,671
         Class B Common Stock, $.01 par value             24,334,443






                                       1
<PAGE>

<TABLE>
<CAPTION>


                                      INDEX



                                                                                                          Page No.
Part I     Financial Information

           Item 1.    Financial Statements
<S>                                                                                                   <C>

                      Consolidated Balance Sheets -
                           June 30, 1999 (as restated) and December 31, 1998                             3 - 4

                      Consolidated Statements of Operations -
                           For the three months ended June 30, 1999 (as restated) and 1998                   5

                      Consolidated Statements of Operations -
                           For the six months ended June 30, 1999 (as restated) and 1998                     6

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

                      Consolidated Statements of Comprehensive Loss
                           For the six months ended June 30, 1999 (as restated) and 1998                     8

                      Notes to Consolidated Condensed Financial Statements                              9 - 13

           Item 2.    Management's Discussion and Analysis of Financial
                           Condition and Results of Operations                                         14 - 19


Part II    Other Information

           Item 1.    Legal Proceedings                                                                21 - 22

           Item 2.    Changes in Securities and Use of Proceeds                                             22

           Item 3.    Defaults Upon Senior Securities                                                       22

           Item 4.    Submission of Matters to a Vote of Security Holders                                   23

           Item 5.    Other Information                                                                     23

           Item 6.    Exhibits and Reports on Form 8-K                                                      23


                      Signatures                                                                            24

</TABLE>

                                       2
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Part I   Financial Information
Item 1.  Financial Statements
<TABLE>
<CAPTION>

                         RISCORP, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets
                                 (in thousands)


                                                                                             June 30           December 31
                                                                                              1999                1998
                                                                                          ------------         -----------
                                                                                           (Unaudited)
<S>                                                                                     <C>                 <C>
Assets

Investments:
   Fixed maturities available for sale, at fair value
      (amortized cost $58,301 in 1999 and $6,666 in 1998)                               $        58,262     $         6,716
   Fixed maturities  available for sale, at fair value
      (amortized cost $8,639 in 1999 and $9,047 in 1998)-restricted                               8,723               9,264
                                                                                         --------------       -------------
      Total investments                                                                          66,985              15,980


Cash and cash equivalents                                                                         8,831               6,864
Cash and cash equivalents-restricted                                                             14,995              14,842
Prepaid expenses                                                                                  4,810               5,171
Deferred income taxes                                                                             3,358               3,141
Accounts receivable--other                                                                        2,300               7,674
Income taxes recoverable                                                                             --              17,277
Property and equipment, net                                                                         261                 337
Receivable from Zenith                                                                               81              49,933
Other assets                                                                                        582               2,174
                                                                                         --------------       -------------

      Total assets                                                                       $      102,203       $     123,393
                                                                                         ==============       =============

</TABLE>
















See accompanying notes to consolidated financial statements.



                                       3
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<TABLE>
<CAPTION>




                         RISCORP, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets
                                 (in thousands)


                                                                                         June 30, 1999        December 31
                                                                                            Restated             1998
                                                                                          ------------       -----------
                                                                                          (Unaudited)
<S>                                                                                     <C>                 <C>
Liabilities and Shareholders' Equity

Liabilities - accrued expenses and other liabilities                                     $      12,866      $       27,827
                                                                                         -------------      --------------

Shareholders' equity:
   Class A Common Stock, $.01 par value, 100,000,000
       shares authorized; 14,371,253 shares issued                                                 143                 143
   Class B Common Stock, $.01 par value, 100,000,000
       shares authorized; 24,334,443 shares issued and outstanding                                 243                 243
   Preferred Stock, $.01 par value, 10,000,000 shares
       authorized; none issued and outstanding                                                      --                  --
   Additional paid-in capital                                                                  140,688             140,688
   Retained deficit                                                                            (51,766)            (45,680)
   Treasury Class A Common Stock - at cost, 112,582 shares                                          (1)                 (1)
   Accumulated Other Comprehensive Income:
      Net unrealized gains on investments                                                           30                 173
                                                                                         -------------      --------------
          Total shareholders' equity                                                            89,337              95,566
                                                                                         -------------      --------------
          Total liabilities and shareholders' equity                                    $      102,203      $      123,393
                                                                                        ==============      ==============

</TABLE>





















See accompanying notes to consolidated financial statements.



                                       4
<PAGE>

<TABLE>
<CAPTION>



                         RISCORP, INC. AND SUBSIDIARIES

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


                                                                                                  Three Months
                                                                                                 Ended June 30
                                                                                       -----------------------------------
                                                                                            1999                1998
                                                                                          Restated
                                                                                       ---------------     ---------------
                                                                                        (Unaudited)         (Unaudited)
<S>                                                                                     <C>                 <C>
   Revenue:
      Net investment income                                                             $      1,235        $      2,252
      Net realized gains                                                                         150               2,805
      Other income                                                                               124                  93
                                                                                        ------------        ------------
          Total revenue                                                                        1,509               5,150
                                                                                        ------------        ------------
   Expenses:
       Commissions, underwriting, and administrative expenses                                  3,197              11,352
       Interest expense (income)                                                                (219)                  8
       Depreciation and amortization                                                              36                  31
                                                                                        ------------        ------------
          Total expenses                                                                       3,014              11,391
                                                                                        ------------        ------------

   Loss from operations                                                                       (1,505)             (6,241)
   Loss on sale of net assets to Zenith                                                       (6,638)                ---
                                                                                        ------------        ------------

   Loss before income taxes                                                                   (8,143)             (6,241)
   Income tax benefit                                                                         (2,896)                ---
                                                                                        ------------        ------------

   Net loss                                                                             $     (5,247)       $     (6,241)
                                                                                        ============        ============


   Per share data:
      Net loss per common share - basic                                                 $      (0.14)       $      (0.17)
                                                                                        ============        ============

     Net loss per common share - diluted                                                $      (0.14)       $      (0.17)
                                                                                        ============        ============

   Weighted average common shares outstanding                                             37,491,031          36,916,725
                                                                                          ==========          ==========

   Weighted average common and common share
            equivalents outstanding                                                       37,491,031          36,916,725
                                                                                          ==========          ==========
</TABLE>








See accompanying notes to consolidated financial statements.




                                       5
<PAGE>

<TABLE>
<CAPTION>



                         RISCORP, INC. AND SUBSIDIARIES

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


                                                                                                   Six Months
                                                                                                 Ended June 30
                                                                                       -----------------------------------
                                                                                            1999                1998
                                                                                          Restated
                                                                                       ---------------     ---------------
                                                                                        (Unaudited)         (Unaudited)
<S>                                                                                     <C>                <C>
   Revenue:
      Net investment income                                                             $      3,034       $       5,558
      Net realized gains                                                                         150               4,266
      Other income                                                                               124                  93
      Premiums earned                                                                             --              25,819
      Fee income                                                                                  --               5,723
                                                                                        ------------       -------------
          Total revenue                                                                        3,308              41,459
                                                                                        ------------       -------------

   Expenses:
       Commissions, underwriting, and administrative expenses                                  4,354              26,868
       Interest expense                                                                        1,222                 477
       Depreciation and amortization                                                              76               3,100
       Losses and loss adjustment expenses                                                        --              24,016
       Unallocated loss adjustment expenses                                                       --               2,561
                                                                                        ------------       -------------
          Total expenses                                                                       5,652              57,022
                                                                                        ------------       -------------

   Loss from operations                                                                       (2,344)            (15,563)
   Loss on sale of net assets to Zenith                                                       (6,638)                 --
                                                                                        ------------       -------------

   Loss before income taxes                                                                   (8,982)            (15,563)
   Income tax benefit                                                                         (2,896)                 --
                                                                                        ------------       -------------

   Net loss                                                                             $     (6,086)      $     (15,563)
                                                                                        ============       =============


   Per share data:
      Net loss per common share - basic                                                 $      (0.16)      $       (0.42)
                                                                                        ============       =============

     Net loss per common share - diluted                                               $      (0.16)      $       (0.42)
                                                                                        ============       =============


   Weighted average common shares outstanding                                             37,419,156          36,892,420
                                                                                          ==========          ==========

   Weighted average common and common share
            equivalents outstanding                                                       37,419,156          36,892,420
                                                                                          ==========          ==========



</TABLE>

See accompanying notes to consolidated financial statements.




                                       6
<PAGE>

<TABLE>
<CAPTION>




                         RISCORP, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                 (in thousands)


                                                                                                    Six Months
                                                                                                   Ended June 30
                                                                                          --------------------------------
                                                                                               1999             1998
                                                                                          ---------------   --------------
                                                                                            (Unaudited)       (Unaudited)

<S>                                                                                        <C>               <C>
Net cash provided by (used in) operating activities                                        $    2,231        $  (15,838)
                                                                                           ----------        ----------

Cash flows from investing activities:
     Purchase of fixed maturities available for sale                                         (327,752)          (24,210)
     Purchase of fixed maturities held to maturity                                                 --            (5,569)
     Proceeds from sale of fixed maturities available for sale                                276,489            28,049
     Proceeds from maturities of fixed maturities available for sale                               --             6,029
     Proceeds from maturities of fixed maturities held to maturity                                 --             5,700
     Cash received from Zenith for sale of net assets                                          51,153            35,000
     Purchase of property and equipment                                                            --              (777)
     Cash assets transferred to Zenith                                                             --           (29,308)
     Investments to be transferred to Zenith                                                       --           (13,200)
                                                                                           ----------        ----------
       Net cash (used in) provided by investing activities                                       (110)            1,714
                                                                                           ----------        ----------

Cash flows from financing activities:
     Principal repayments of notes payable                                                         --              (245)
     Decrease in deposit balances payable                                                          --            (1,599)
     Transfer of cash and cash equivalents to restricted                                         (154)             (413)
                                                                                           ----------        ----------
       Net cash used in financing activities                                                     (154)           (2,257)
                                                                                           ----------        ----------

Net increase (decrease) in cash and cash equivalents                                            1,967           (16,381)

Cash and cash equivalents, beginning of period                                                  6,864            16,858
                                                                                           ----------        ----------
Cash and cash equivalents, end of period                                                   $    8,831        $      477
                                                                                           ==========        ==========

Supplemental disclosures of cash flow information:

     Cash paid during the period for:
           Interest                                                                       $     1,124        $      479
                                                                                          ===========        ==========
           Income taxes                                                                   $        82        $    3,435
                                                                                          ===========        ==========

</TABLE>






See accompanying notes to consolidated financial statements.




                                       7
<PAGE>


<TABLE>
<CAPTION>


                         RISCORP, INC. AND SUBSIDIARIES

                  Consolidated Statements of Comprehensive Loss
                                 (in thousands)


                                                                                  Six Months Ended June 30
                                                                            --------------------------------------
                                                                                   1999                1998
                                                                                 Restated
                                                                            -------------------  -----------------
                                                                               (Unaudited)          (Unaudited)

<S>                                                                          <C>                   <C>
Net loss                                                                     $     (6,086)         $  (15,563)
                                                                             ------------          ----------

Other comprehensive loss, before income taxes:
  Unrealized losses on securities available for sale:
    Unrealized holding losses arising during the period                              (220)             (4,063)
Income tax benefit related to items of other
  comprehensive loss                                                                  (77)             (1,422)
                                                                             ------------          ----------
Other comprehensive loss, net of income taxes                                        (143)             (2,641)
                                                                             ------------          ----------

Total comprehensive loss                                                     $     (6,229)         $  (18,204)
                                                                             ============          ==========

</TABLE>



























See accompanying notes to consolidated financial statements.




                                       8
<PAGE>





                         RISCORP, INC. AND SUBSIDIARIES

              Notes to Consolidated Condensed Financial Statements
                                   (Unaudited)


(1)    Basis of Presentation

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

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


(2)    Sale to Zenith Insurance Company

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

       On July 7, 1999,  the Company and Zenith  settled,  with certain  limited
       exceptions,  the  claims  arising  out of the sale.  The  Asset  Purchase
       Agreement  contemplated a post-closing purchase price adjustment based on
       the  difference  between the book value of the assets  purchased  and the
       book  value  of the  liabilities  assumed  as of  the  closing  date.  In
       connection with the  determination of the final purchase price, a dispute
       arose between the parties  regarding,  among other things, the book value
       of the assets and  liabilities  of the business,  Zenith's  assumption of
       certain  operating   liabilities  of  the  business,   and  each  party's
       indemnification obligations under the Asset Purchase Agreement. The terms
       of the settlement  included,  among other things, (i) the disbursement of
       the $12.8  million in cash that has been held in escrow  pursuant  to the
       terms of the Asset Purchase Agreement, with $6 million to be disbursed to
       Zenith and the balance to be disbursed to RISCORP;  (ii) RISCORP's  right
       to seek  correction  of alleged  errors  made by the  neutral  auditor in
       connection  with its  determination  of certain  reinsurance  recoverable
       adjustments   contained  in  the  Final  Business  Balance  Sheet;  (iii)
       RISCORP's  right  to  retain  any  proceeds  received  from  the  Florida
       Department of Labor (the  "Florida  DOL") in  connection  with  RISCORP's
       request  for  a  refund  of  $5.3  million   related  to  deductions  for

                                       9
<PAGE>

       commissions  with  respect to gross  premiums;  (iv)  RISCORP's  right to
       retain a portion of any additional  refunds received from the Florida DOL
       related to deductions  for premiums  ceded to others;  and (v) the mutual
       release of all other claims and causes of action that each party may have
       against the other through the date of the Settlement Agreement, except as
       expressly  set forth  therein.  The parties have also agreed  that,  with
       certain limited  exceptions,  any future claim or controversy between the
       parties  is to be  submitted  to  binding  arbitration  pursuant  to  the
       procedures  set  forth  in  the  Settlement  Agreement.  As  part  of the
       settlement, the lawsuit filed by Zenith against the Company in the United
       States District of New York, and the lawsuit filed by the Company against
       Zenith in the United  States  District  Court for the Middle  District of
       Florida, Tampa Division, have been dismissed with prejudice.

       At June 30, 1999,  the Company  recorded an  additional  net loss of $6.6
       million  on the sale to Zenith due to the final  terms of the  Settlement
       Agreement.

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

(3)    Issuance of Additional Shares of Stock

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

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


(4)    Commitments and Contingencies

       On or about January 11, 1999,  Zenith filed a lawsuit against RISCORP and
       certain of its subsidiaries in federal court in New York setting forth 14
       separate causes of action arising out of the Asset Purchase Agreement and
       certain ancillary  agreements.  The complaint sought an unspecified total
       amount of damages,  but the amount of compensatory  damages sought was in
       excess of $30 million,  together with an  unspecified  amount of punitive
       damages and attorneys'  fees. As more fully  disclosed in Note 2, on July
       7, 1999,  the Company and Zenith  settled those claims and, in connection
       therewith, this lawsuit has been dismissed with prejudice by Zenith.

       On August  20,  1997,  the  Occupational  Safety  Association  of Alabama
       Workers' Compensation Fund (the "Fund"), an Alabama self-insured workers'
       compensation  fund,  filed a breach of contract and fraud action  against
       the Company and others.  The Fund entered into a Loss Portfolio  Transfer
       and Assumption  Reinsurance Agreement dated August 26, 1996 and effective
       September 1, 1996 with RISCORP National Insurance Company ("RNIC"). Under
       the terms of the agreement,  RNIC assumed 100 percent of the  outstanding
       loss  reserves  (including  incurred  but  not  reported  losses)  as  of



                                       10
<PAGE>

       September  1,  1996.  Co-defendant  Peter  D.  Norman  ("Norman")  was  a
       principal  and  officer  of IAA prior to its  acquisition  by  RISCORP in
       September  1996.  The  complaint  alleges  that  Norman and IAA  breached
       certain  fiduciary duties owed to the Fund in connection with the subject
       agreement and transfer.  The complaint  alleges that RISCORP has breached
       certain  provisions  of the  agreement and owes the Fund monies under the
       terms of the agreement.  The Fund claims, per a Loss Portfolio Evaluation
       dated February 26, 1998, that the Fund overpaid RNIC by $6 million in the
       subject  transaction.  The  court  has  granted  RNIC's  Motion to Compel
       Arbitration per the terms and provisions of the agreement. On December 1,
       1998,  the  trial  court  issued  an  order   prohibiting   the  American
       Arbitration  Association from administering the arbitration  between RNIC
       and the Fund, and RNIC has appealed the trial court's ruling. The Alabama
       Supreme  Court has stayed the  current  arbitration.  Despite the Alabama
       Supreme  Court's stay, the dispute  between the Fund and RNIC is expected
       to be resolved through arbitration. The other defendants,  including IAA,
       have appealed to the Supreme Court of Alabama the trial court's denial of
       their motions to compel  arbitration.  RNIC intends to vigorously  defend
       the Fund's claim.

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

       On August 26, 1998,  the district  court issued an order  dismissing  the
       entire suit against all  defendants  on one of the grounds  identified in
       the various  motions to dismiss  filed by the  defendants.  The  district
       court  indicated  that all other grounds and motions to dismiss that were
       pending at that time were mooted by the dismissal. On September 13, 1998,
       the  plaintiffs  filed a Notice of  Appeal.  On  February  9,  1999,  the
       district court issued,  sua sponte, an Order of  Reconsideration in which
       the court indicated its desire to vacate the dismissal of the RICO claims
       and pendant state claims based on a recent  decision of the United States
       Supreme  Court.  On  March  17,  1999,   plaintiffs-appellants  filed  an
       unopposed  motion to remand the action to the district court,  citing the
       Order of Reconsideration.  On June 9, 1999, the Eleventh Circuit remanded
       the case to the  district  court.  Management  will  resume its  vigorous
       defense of the case once district court proceedings recommence.

       On July 9, 1999, a shareholder class action lawsuit was filed against the
       Company, two of its executive officers, and two former executive officers
       in the United States  District Court for the Middle  District of Florida.
       The  plaintiff  in  this  action  purports  to  represent  the  class  of
       shareholders  who  purchased  shares of  RISCORP's  Class A Common  Stock
       between November 19, 1997 and July 20, 1998. The complaint alleges, among
       other  things,  that the  financial  statements  included in the periodic
       reports  filed by RISCORP with the  Securities  and  Exchange  Commission
       during  the class  period  contain  false and  misleading  statements  of
       material fact and omissions,  in violation of Sections 10(b) and 20(a) of


                                       11
<PAGE>

       the  Securities  Exchange  Act  of  1934,  as  amended,  and  Rule  10b-5
       promulgated  thereunder.  These  allegations  principally  relate  to the
       difference  between the net book value of the Company as reflected on its
       published  financial  statements during the class period and the net book
       value of the assets  transferred  to Zenith as  determined by the neutral
       auditors  and  neutral  actuaries  pursuant  to the  terms  of the  Asset
       Purchase  Agreement between the parties.  The complaint seeks unspecified
       compensatory  damages.  RISCORP  believes  that these  claims are without
       merit and intends to vigorously defend this suit.

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

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


(5)    Reclassifications

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


(6)    Restatement

       In April 2000, following a review of the contractual terms of the sale of
       business referred to in Note 1(c), the Company  determined that the "loss
       on sale of net assets to Zenith"  recorded in the second  quarter of 1999
       should be increased from  $4,760,000 to $6,638,000.  The increase in loss
       is attributable to the resolution of disputed ownership rights concerning
       certain securities held in trust at June 30, 1999.  Consequently,  all of
       the  information  presented in the June 30, 1999  consolidated  financial
       statements  and  related  notes has been  restated to give effect to that
       determination.

       The effects of the restatement on the June 30, 1999 consolidated  balance
       sheet and  consolidated  statement of operations for the three months and
       six months ended June 30, 1999 are as follows (in  thousands,  except per
       share data):

                                            Reported           As Restated
                                         ---------------     ---------------
Balance Sheet:
    Liabilities                             $   10,989          $    12,866
    Shareholders' equity                        91,214               89,337

Statement of Operations for the three
   months ended June 30, 1999:
    Loss on sale of net assets to Zenith        (4,760)              (6,638)
    Net loss                                    (3,369)              (5,247)

    Basic loss - per share                      (0.09)               (0.14)
    Diluted loss - per share                    (0.09)               (0.14)




                                       12
<PAGE>





                                            Reported           As Restated
                                         ---------------     ---------------

Statement of Operations for the six
   months ended June 30, 1999:
    Loss on sale of net assets to Zenith   $    (4,760)       $      (6,638)
    Net loss                                    (4,208)              (6,086)

    Basic loss - per share                      (0.11)               (0.16)
    Diluted loss - per share                    (0.11)               (0.16)




                                       13
<PAGE>




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

Forward-Looking Statements

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

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

Recent Developments

       Asset Purchase Agreement with Zenith

       See Part 1, Item 1, Notes to Consolidated  Financial  Statements,  Note 2
       for further discussion of the Zenith transaction.

       Legal Developments

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

Overview

       General

       As  discussed  more  fully  in  Note  2  to  the  consolidated  financial
       statements,  RISCORP and certain of its subsidiaries  sold  substantially
       all of their  assets and  transferred  certain  liabilities  to Zenith on
       April 1, 1998.  In  connection  with the sale to Zenith,  RISCORP  ceased
       substantially  all of  its  former  business  operations,  including  its
       insurance operations,  effective April 1, 1998.  Accordingly,  after such
       date, the Company's  operations consisted primarily of the administration
       of  the  day-to-day  activities  of  the  surviving  corporate  entities,
       compliance with the provisions of the Asset Purchase  Agreement,  and the
       investment,  protection,  and maximization of the remaining assets of the
       Company.  At the  present  time,  RISCORP  has no  plans  to  resume  any
       operating activities.



                                       14
<PAGE>

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

       Results of Operations

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

       Six Months Ended June 30, 1999

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

               At June 30,  1999,  the $15 million of  restricted  cash and cash
              equivalents   consisted  of  $12.8   million  held  in  escrow  in
              connection  with the sale to Zenith,  $1.9 million on deposit with
              various governmental  agencies, and $0.3 million pledged to secure
              a letter of credit.

               The $51 million  increase in  investments in the first six months
              of 1999 resulted from the collection and subsequent  investment of
              the proceeds from the sale to Zenith and of certain tax refunds.

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

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

               The $4.8 million of prepaid  expenses at June 30, 1999  consisted
              of $3.7 million of prepaid insurance coverages and $1.1 million of
              retainers paid to certain professionals and consultants.

                                       15
<PAGE>

<TABLE>
<CAPTION>
               A summary of the accrued  expenses and other  liabilities at June
              30, 1999 is as follows (in millions):

                           <S>                                                           <C>
                           Payable to Zenith                                             $   8.1  (1)
                           Income taxes payable                                              1.7
                           Other accruals and payables                                       1.2
                           Accrued legal, accounting, auditing,
                              and actuarial services                                         1.1
                           Trade accounts payable                                            0.5
                           Other                                                             0.3
                                                                                          ------

                           Total                                                          $ 12.9
                                                                                          ======
</TABLE>

                      (1) Based  on the  Settlement  Agreement,  as  more  fully
                          discussed  in  Note  2 to the  consolidated  financial
                          statements.


       The  Company's  operating  results for the six months ended June 30, 1999
       resulted in a net loss of $6.1 million.

       The $3 million of net investment income for the six months ended June 30,
       1999 consisted of $1.3 million of interest  income on the receivable from
       Zenith,  $0.2 million of interest  income on the $12.8 million balance in
       escrow, and $1.5 million of investment portfolio income.

       Operating  expenses  for the six months  ended June 30, 1999 totaled $5.7
       million and consisted of the following:

               The $4.4 million of commissions, underwriting, and administrative
              expenses  consisted of $0.6 million of management  expenses,  $0.7
              million of accounting and auditing expenses, $1.6 million of legal
              expenses,  $0.6 million of recurring  operating  expenses  such as
              rent, telephone, insurance, and similar costs, and $0.9 million of
              other expenses.

               The $1.2 million of interest expense consisted principally of the
              interest  paid in March 1999 on the  settlement  of a class action
              lawsuit.

               Depreciation  and amortization  expense was $76,000.  The Company
              transferred  all  assets  subject  to  amortization  to  Zenith in
              connection with the sale and retained $0.4 million of fixed assets
              (consisting  principally  of  computer  equipment)  that are being
              depreciated over three years.

       As of June 30, 1999, the Company  recorded an additional net loss of $6.6
       million  on the sale to Zenith due to the final  terms of the  Settlement
       Agreement,  as  discussed  more  fully  in  Note  2 to  the  consolidated
       financial statements.

       The weighted average common and common share equivalents  outstanding for
       the six  months  ended  June  30,  1999 was  37,419,156  as  compared  to
       36,892,420  for the six months ended June 30, 1998.  This  includes,  for
       each period  presented,  the vested  portion  only, as of the end of such
       period,  of shares  issued in April 1998 under a  Restricted  Stock Award
       Agreement between RISCORP and Phoenix Management Company, Ltd.

                                       16
<PAGE>
<TABLE>
<CAPTION>

       Three Months Ended June 30, 1999 and 1998

       The Company's  operating results for the three months ended June 30, 1999
       and  1998  resulted  in a net  loss of $5.2  million  and  $6.2  million,
       respectively.

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

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


                 <S>                                                      <C>                      <C>
                 Interest income on the Zenith sale
                    proceeds                                              $    0.1                 $    1.6
                 Interest income on the balance in escrow                      0.1                      0.1
                 Other investment income                                       1.0                      0.6
                                                                          --------                 --------

                 Total                                                    $    1.2                 $    2.3
                                                                          ========                 ========
</TABLE>
<TABLE>
<CAPTION>

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

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


                 <S>                                                      <C>                      <C>
                 Management expenses                                      $     0.3                $    0.4
                 Accounting and auditing expenses                               0.4                     0.3
                 Transition expenses incurred as a result
                    of the sale to Zenith                                       0.1                     0.3
                 Legal expenses                                                 1.3                     0.3
                 Recurring operating expenses
                    (rent, telephone, insurance, and
                    similar costs)                                              0.4                     1.0
                 Other expenses                                                 0.7                     0.8
                 Significant non-recurring expenses
                    discussed below                                              --                     8.3
                                                                          ---------                 -------
                 Total                                                    $     3.2                 $  11.4
                                                                          =========                 =======
</TABLE>

       Interest  expense  (income)  for the three months ended June 30, 1999 and
       1998 was $(0.2) million and $8,255, respectively.  The 1999 interest item
       is net of $0.3 million  reimbursed  to the Company by RISCORP's  majority
       shareholder   for  interest   previously  paid  by  the  Company  on  the
       shareholder's behalf.

       Operating  expenses  for the three  months  ended June 30, 1998  included
       three  significant  non-recurring  expenses that arose due to the sale to
       Zenith,  namely,  $3.2  million of  severance  payments to certain of the
       Company's former executives and employees,  $4.1 million for the issuance
       of RISCORP stock to Phoenix Management Company, Ltd. in accordance with a
       Restricted  Stock Award  Agreement,  and $1 million of adjustments to the
       Proposed Business Balance Sheet.

       As of June 30, 1999, the Company  recorded an additional net loss of $6.6
       million  on  the  sale  to  Zenith  due to the  terms  of the  Settlement
       Agreement,  as  discussed  more  fully  in  Note  2 to  the  consolidated
       financial statements.



                                       17
<PAGE>

       Depreciation  and  amortization  expense  was $36,000 and $31,000 for the
       three  months  ended June 30,  1999 and 1998,  respectively.  The Company
       transferred  all assets subject to  amortization  to Zenith in connection
       with the sale and  retained  $0.4  million  of fixed  assets  (consisting
       principally of computer  equipment) that is being  depreciated over three
       years.

       The weighted average common and common share equivalents  outstanding for
       the three  months  ended June 30,  1999 was  37,491,031  as  compared  to
       36,916,725 for the three months ended June 30, 1998.  This includes,  for
       each period  presented,  the vested  portion  only, as of the end of such
       period,  of shares  issued in April 1998 under a  Restricted  Stock Award
       Agreement between RISCORP and Phoenix Management Company, Ltd.

       Three Months Ended March 31, 1998

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

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

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

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

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

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




                                       18
<PAGE>





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

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


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

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

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

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

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

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

       Liquidity and Capital Resources

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

       Cash flows from  operations  for the six months  ended June 30,  1999 and
       1998 was $2.2 million and ($15.8) million,  respectively. The change from
       1998 to 1999 was due primarily to the sale to Zenith and the cessation of
       substantially all the Company's former business operations.

                                       19
<PAGE>

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

       As of June 30,  1999  and  1998,  RISCORP's  insurance  subsidiaries  had
       combined  statutory  capital  and  surplus of $129.8  million  and $151.9
       million,  respectively.  The  individual  capital  and surplus of each of
       RISCORP's insurance  subsidiaries  exceeded the minimum statutory capital
       and surplus required by their respective state of domicile.

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

       Year 2000

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

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

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

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

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





                                       20
<PAGE>




Part II    Other Information

Item 1.    Legal Proceedings

           On or about January 11, 1999,  Zenith filed a lawsuit against RISCORP
           and certain of its  subsidiaries in federal court in New York setting
           forth 14 separate  causes of action arising out of the Asset Purchase
           Agreement and certain ancillary  agreements.  The complaint sought an
           unspecified  total amount of damages,  but the amount of compensatory
           damages  sought  was in  excess  of $30  million,  together  with  an
           unspecified  amount of punitive  damages and attorneys' fees. As more
           fully disclosed in Note 2 of the consolidated  financial  statements,
           on July 7, 1999,  the Company and Zenith settled those claims and, in
           connection therewith,  this lawsuit has been dismissed with prejudice
           by Zenith.

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

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


                                       21
<PAGE>

           and  equitable  relief.  RIC and RPC  moved to  dismiss  the  amended
           complaint and have also filed certain  motions to dismiss the amended
           complaint filed by various other defendants.

           On August 26, 1998, the district court issued an order dismissing the
           entire suit against all  defendants on one of the grounds  identified
           in the  various  motions  to  dismiss  filed by the  defendants.  The
           district  court  indicated  that all other  grounds  and  motions  to
           dismiss that were pending at that time were mooted by the  dismissal.
           On September 13, 1998,  the plaintiffs  filed a Notice of Appeal.  On
           February 9, 1999, the district court issued,  sua sponte, an Order of
           Reconsideration in which the court indicated its desire to vacate the
           dismissal  of the RICO claims and  pendant  state  claims  based on a
           recent  decision of the United  States  Supreme  Court.  On March 17,
           1999,  plaintiffs-appellants  filed an unopposed motion to remand the
           action to the district court, citing the Order of Reconsideration. On
           June 9, 1999, the Eleventh  Circuit remanded the case to the district
           court.  Management will resume its vigorous  defense of the case once
           district court proceedings recommence.

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

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

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

Item 2.    Changes in Securities and Use of Proceeds

       None.

Item 3.    Defaults Upon Senior Securities

       None.




                                       22
<PAGE>

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

           On June  14,  1999,  the  Company  held its 1999  Annual  Meeting  of
           Shareholders.  The  shareholders  voted upon one  proposal,  to elect
           Frederick  M. Dawson,  Seddon  Goode,  Jr.,  George E. Greene III and
           Walter L. Revell to serve as directors of the Company  until the next
           annual meeting of shareholders and until their successors are elected
           and  qualified.  Pursuant  to  the  Company's  Amended  and  Restated
           Articles  of  Incorporation,  holders  of  Class B Common  Stock  are
           entitled  to 10 votes  per share  and the  holders  of Class A Common
           Stock are  entitled  to one vote per share on all matters to be voted
           on by the shareholders of the Company.  There were 24,334,443 Class B
           votes cast "for" each of the nominees for director, consisting of 100
           percent of the outstanding shares of Class B Common Stock. Holders of
           Class A Common  Stock voted their  shares as set forth below for each
           of the nominees:

<TABLE>
<CAPTION>
                                                                  FOR                               WITHHELD
                                                       Shares              Votes             Shares        Votes
          <S>                      <C>                 <C>               <C>                 <C>           <C>
           Frederick M. Dawson     Class A             7,964,703         7,964,703           79,398        79,398

           Seldon Goode, Jr.       Class A             7,960,788         7,960,788           83,313        83,313

           George E. Greene III    Class A             7,960,788         7,960,788           83,313        83,313

           Walter L. Revell        Class A             7,960,788         7,960,788           83,313        83,313

</TABLE>

Item 5.    Other Information

       None.

Item 6.    Exhibits and Reports on Form 8-K

           a)      Exhibits

                  10.1     Form of Director Indemnity Agreement

                  10.2     Settlement Agreement with Zenith Insurance Company

                  11       Statement Re Computation of Per Share Net Loss

                  27       Financial Data Schedules


           b)      Reports on Form 8-K

                   RISCORP  filed a report on Form 8-K on May 14,  1999 with
                   respect to the Shareholder Protection Rights Agreement
                   adopted by RISCORP.





                                       23
<PAGE>




                                   SIGNATURES


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

                  RISCORP, INC.
                  (Registrant)




                  By: /s/ Walter E. Riehemann
                    ---------------------------------

                  Walter E. Riehemann
                  Senior Vice President and Secretary

                  Date:  April 20, 2000





                  By: /s/ Edward W. Buttner
                    ---------------------------------

                  Edward W. Buttner IV, CPA
                  Principal Accounting Officer

                  Date:   April 20, 2000







                                       24
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