FORM 10-K
                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(MARK ONE)
( X )    Annual Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the year ended December 31, 1999.

(   )    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:    0-29042

                        SYMONS INTERNATIONAL GROUP, INC.
             (Exact name of registrant as specified in its charter)

         INDIANA                                                      35-1707115
         (State or other jurisdiction of    (I.R.S. Employer Identification No.)
         Incorporation or organization)

         4720 Kingsway Drive, Indianapolis Indiana                        46205
         (Address of Principal Executive Offices)                     (Zip Code)

         Registrant's telephone number, including area code:  (317) 259-6300

         Securities registered pursuant to Section 12(b) of the Act:      None

         Securities registered pursuant to Section 12(g) of the Act:Common Stock
                                                               without par value
                                                                (Title of Class)

         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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)

         The aggregate  market value of the 3,149,608 shares of the Registrant's
common stock held by non-affiliates, as of April 3, 2000 was $3,641,734.

         The number of shares of common  stock of the  Registrant,  without  par
value, outstanding as of April 3, 2000 was 10,385,399.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant's Annual Report to Shareholders for the year
ended December 31, 1999 are incorporated by reference in Parts II and IV hereof.
Portions of the  Registrant's  Proxy Statement are  incorporated by reference in
Part III hereof.


<PAGE>


SYMONS INTERNATIONAL GROUP INC.
ANNUAL REPORT ON FORM 10-K
December 31, 1999


PART I

                                                                           PAGE

Item 1.      Business                                                        3

Item 2.      Properties                                                     33

Item 3.      Legal Proceedings                                              34

Item 4.      Submission of Matters to a Vote of Security Holders            35


PART II

Item 5.      Market for Registrant's Common Equity and Related Shareholder
             Matters                                                        36

Item 6.      Selected Consolidated Financial Data                           36

Item 7.      Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                      36

Item 7A.     Quantitative and Qualitative Disclosures About Market Risk     36

Item 8.      Financial Statements and Supplementary Data                    36

Item 9.      Changes in and Disagreements with Accountants on Accounting
             and Financial Disclosure                                       36


PART III

Item 10.     Directors and Executive Officers of the Registrant             36

Item 11.     Executive Compensation                                         36

Item 12.     Security Ownership of Certain Beneficial Owners and Management 36

Item 13.     Certain Relationships and Related Transactions                 37


PART IV

Item 14.     Exhibits, Financial Statement Schedules, and Reports
             on Form 8-K                                                    37


SIGNATURES                                                                  45


<PAGE>


PART I

ITEM 1 - BUSINESS

Overview of Business Segments

     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

         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. Nonstandard 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 risk.
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.

Products

         The Company offers both liability and physical  damage  coverage in the
insurance  marketplace,  with policies  having terms of three to twelve  months.
Most nonstandard  automobile insurance  policyholders choose the basic limits of
liability  coverage  which,  though  varying from state to state,  generally are
$25,000 per person and $50,000 per accident  for bodily  injury to others and in
the range of $10,000 to $20,000 for damage to other parties' cars or property.

         The Company offers several different policies which are directed toward
different  classes of risk within the  nonstandard  market.  The Superior Choice
policy  covers  insureds  whose prior  driving  record,  insurability  and other
relevant  characteristics  indicate a lower risk profile than other risks in the
nonstandard  marketplace.  The  Superior  Standard  policy is intended for risks
which do not qualify for Superior Choice but which  nevertheless  present a more
favorable risk profile than many other nonstandard risks. The Superior Specialty
policies  cover risk which do not qualify for either the Superior  Choice or the
Superior Standard policies.

Marketing

         The Company's nonstandard automobile insurance business is concentrated
in the states of Florida, California, Virginia, Indiana and Georgia. The Company
also writes nonstandard  automobile  insurance in fifteen additional states. The
Company  selects  states  for  expansion  or  withdrawal  based on a  number  of
criteria,  including the size of the nonstandard  automobile  insurance  market,
state-wide loss results,  competition,  capitalization  of its companies and the
regulatory climate.  The following table sets forth the geographic  distribution
of gross premiums written for the Company for the periods indicated.


<PAGE>

<TABLE>
<CAPTION>

         Symons International Group, Inc.
         Year Ended December 31,
         (in thousands)


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

          Arizona                                           $  ---        $6,228    $10,912

          Arkansas                                           1,539         1,383        804

          California                                        59,819        48,181     29,993

          Colorado                                           9,865         8,115      8,238

          Florida                                          141,907       107,746     67,459

          Georgia                                           11,858        21,575     22,945

          Illinois                                           3,541         2,908      1,795

          Indiana                                           17,227        18,735     23,599

          Iowa                                               7,079         6,951      4,028

          Kentucky                                           9,538         8,108      5,768

          Mississippi                                        2,830         5,931      3,515

          Missouri                                           9,705         8,669      4,555

          Nebraska                                           6,613         6,803      3,846

          Nevada                                             4,273         8,849      6,954

          Ohio                                               3,731         2,106      2,096

          Oklahoma                                           3,418         3,803      1,921

          Oregon                                             2,302         6,390     12,394

          Tennessee                                            ---         1,443      6,840

          Texas                                              7,192         7,520      2,641

          Virginia                                          21,446        22,288     15,470

          Washington                                            32             5         --
                                                          --------     ---------    -------

          Total                                           $323,915      $303,737   $235,773
                                                           =======       =======   ========
</TABLE>

         The  Company  markets  its  nonstandard  products  exclusively  through
approximately  7,000 independent  agencies.  The Company has several territorial
managers,  each of whom resides in a specific marketing region and has access to
the  technology  and  software  necessary  to  provide  marketing,   rating  and
administrative support to the agencies in his or her region.

         The Company  attempts to foster strong service  relationships  with its
agencies  and   customers.   The  Company  has  automated   certain   marketing,
underwriting and administrative  functions and has allowed on-line communication
with its agency force.  In addition to delivering  prompt service while ensuring
consistent  underwriting,  the Company  offers rating  software to its agents in
some states which permits them to evaluate risks in their offices.

         Most of the  Company's  agents  have  the  authority  to sell  and bind
insurance  coverages in accordance with  procedures  established by the Company,
which is a common practice in the nonstandard automobile insurance business. The
Company reviews all coverages bound by the agents promptly and generally accepts
coverages  which  fall  within  its  stated  underwriting   criteria.   In  most
jurisdictions,  the  Company  has the right  within a  specified  time period to
cancel any policy even if the risk falls within its underwriting  criteria.  The
Company  compensates its agents by paying a commission  based on a percentage of
premiums produced.

         The Company believes that having five individual  companies licensed in
various  states  allows the Company the  flexibility  to engage in  multi-tiered
marketing  efforts  in  which  specialized  automobile  insurance  products  are
directed toward specific  segments of the market.  Since certain state insurance
laws prohibit a single  insurer from offering  similar  products with  different
commission  structures or, in some cases premium rates,  it is necessary to have
multiple  licenses in certain  states in order to obtain the  benefits of market
segmentation.  The Company intends to continue the expansion of the marketing of
its multi-tiered  products into other states and to obtain multiple licenses for
its  subsidiaries  in these states to permit  maximum  flexibility  in designing
commission structures.

Underwriting

         The Company utilizes many factors in determining its rates. Some of the
characteristics  used are  type,  age and  location  of the  vehicle,  number of
vehicles per policyholder,  number and type of convictions or accidents,  limits
of  liability,  deductibles,  and,  where  allowed by law,  age, sex and marital
status of the insured.  The rate  approval  process  varies from state to state;
some states, such as Indiana,  Colorado,  Florida,  Kentucky and Missouri, allow
filing  and  immediate  use  of  rates,  while  others,  such  as  Arkansas  and
California,  require approval by the state's  insurance  department prior to the
use of the rates.

         Underwriting  results of insurance companies are frequently measured by
their combined  ratios.  However,  investment  income,  federal income taxes and
other  non-underwriting  income or expense  are not  reflected  in the  combined
ratio. The profitability of property and casualty insurance companies depends on
income  from  underwriting,  investment  and  service  operations.  Underwriting
results are generally  considered  profitable  when the combined  ratio is under
100%  and  unprofitable   when  the  combined  ratio  is  over  100%.  Refer  to
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" for a further discussion on the combined ratio.

         In  an  effort  to  maintain  and  improve  underwriting  profits,  the
territorial  managers  monitor loss ratios of the agencies in their  regions and
meet  periodically  with the agencies in order to address any adverse  trends in
loss ratios.

Claims

         The Company's  nonstandard  automobile claims department handles claims
on a regional basis from its Indianapolis,  Indiana;  Atlanta,  Georgia;  Tampa,
Florida and Orange, California locations.

         The Company retains independent appraisers and adjusters for estimation
of physical  damage claims and limited  elements of  investigation.  The Company
uses the  Audapoint,  Audatex  and  Certified  Collateral  Corporation  computer
programs to verify, through a central database, the cost to repair a vehicle and
to eliminate duplicate or "overlap" costs from body shops. Autotrak,  which is a
national  database of  vehicles,  allows the Company to locate  vehicles  nearly
identical  in model,  color and mileage to the vehicle  damaged in an  accident,
thereby  reducing  the  frequency  of  disagreements  with  claimants  as to the
replacement value of damaged vehicles.

         Claims settlement authority levels are established for each adjuster or
manager based on the employee's  ability and level of experience.  Upon receipt,
each  claim  is  reviewed  and  assigned  to an  adjuster  based on the type and
severity of the claim.  All  claim-related  litigation  is  monitored  by a home
office  supervisor  or  litigation  manager.  The claims  policy of the  Company
emphasizes  prompt  and  fair  settlement  of  meritorious  claims,  appropriate
reserving for claims and controlling claims adjustment expenses.

Reinsurance

         The Company  follows the  customary  industry  practice of reinsuring a
portion of its risks and paying for that protection based upon premiums received
on all policies subject to such  reinsurance.  Insurance is ceded principally to
reduce  the  Company's  exposure  on  large  individual  risks  and  to  provide
protection  against  large  losses,   including  catastrophic  losses.  Although
reinsurance  does not  legally  discharge  the ceding  insurer  from its primary
obligation to pay the full amount of losses  incurred under policies  reinsured,
it does render the reinsurer liable to the insurer to the extent provided by the
terms of the reinsurance treaty. As part of its internal procedures, the Company
evaluates the financial condition of each prospective  reinsurer before it cedes
business  to that  carrier.  Based on the  Company's  review of its  reinsurers'
financial  health and  reputation  in the  insurance  marketplace,  the  Company
believes  its  reinsurers  are  financially  sound and that they can meet  their
obligations to the Company under the terms of the reinsurance treaties.

         In  1999,  Pafco  and  Superior  maintained  casualty  excess  of  loss
reinsurance on their nonstandard  automobile insurance business covering 100% of
losses on an individual  occurrence  basis in excess of $200,000 up to a maximum
of $5,000,000.

         Amounts recoverable from reinsurers relating to nonstandard  automobile
operations as of December 31, 1999 follows:

<TABLE>
<CAPTION>
                                                                 Reinsurance
                                                             Recoverables as of
Reinsurers                             A.M. Best Rating     December 31, 1999(1)

<S>                                         <C>                  <C>
Constitution Reinsurance Corporation (2)     A+                  1,492
Lloyds of London                             Not Rated             818
Trans Atlantic Reinsurance Corporation (2)   A++                 1,062
</TABLE>

(1)     Only  recoverables  greater  than  $200,000  are shown.  Total
        nonstandard automobile reinsurance recoverables as of December
        31, 1999 were approximately $4,752,00.

(2)     An A.M.  Best  Rating of "A++" is the  highest  of 15  ratings.
        An A.M.  Best  Rating  "A+" is the  second  highest of 15 ratings

         On  April  29,  1996,  Pafco  also  entered  into  a 100%  quota  share
reinsurance  agreement with Granite  Reinsurance Company Ltd. ("Granite Re"), an
affiliate of the Company,  whereby all of Pafco's commercial  business from 1996
and thereafter was ceded effective January 1, 1996. This agreement was in effect
during 1999.

         Effective  January 1, 2000,  Pafco,  Superior  and IGF entered  into an
automobile  quota share agreement with National Union Fire Insurance  Company of
Pittsburgh (A.M. Best rated A++). The amount of cession is 40% for Pafco and 20%
for Superior and 0% for IGF for all new business,  renewal business and in force
unearned  premium  reserves.  This  treaty is  subject  to the  approval  of the
applicable  departments  of insurance.  If the  departments  of insurance do not
approve of this arrangement, the Company may need to adjust its premium writings
to comply with the required writings to statutory surplus ratios.

         Neither Pafco nor Superior has any facultative reinsurance with respect
to its nonstandard automobile insurance business.

Competition

         The Company  competes  with both large  national  and smaller  regional
companies in each state in which it operates.  The Company's competitors include
other companies  which,  like the Company,  serve the agency market,  as well as
companies  which sell insurance  directly to customers.  Direct writers may have
certain  competitive  advantages over agency writers,  including  increased name
recognition,  increased loyalty of their customer base and, potentially, reduced
acquisition  costs. The Company's primary  competitors are Progressive  Casualty
Insurance  Company,  Guaranty National Insurance  Company,  Integon  Corporation
Group,  Deerbrook  Insurance Company (a member of the Allstate  Insurance Group)
and the companies of the American Financial Group. Generally,  these competitors
are  larger  and  have  greater  financial  resources  than  the  Company.   The
nonstandard  automobile  insurance  business  is  price  sensitive  and  certain
competitors of the Company have, from time to time, decreased their prices in an
apparent  attempt  to gain  market  share.  The most  recent two years have seen
severe price competition for nonstandard automobile insurance.


<PAGE>


Recent Developments

         After  experiencing  continued  operating  losses  in  its  nonstandard
automobile  operations  throughout  1999, the Company  decided to, in the latter
part of 1999,  implement  significant  changes in its auto  operations to effect
improvement  in its operating  results.  Effective  January 10, 2000 the Company
engaged Gene Yerant as the President of its nonstandard  automobile  operations.
Mr.  Yerant's  focus in his  position  with the  Company  is to return  the auto
operations to  profitability  by improving  efficiency and  effectiveness in all
aspects of the operation. Since his engagement, Mr. Yerant has effected a number
of management changes designed to improve operations,  including the hiring of a
new  Information  Officer,  a  new  Vice  President  of  Marketing  and  Product
Management  for the auto  operations  and certain other key claims and operating
positions.

Crop Insurance

General

         The two principal  components of the Company's crop insurance  business
are multiple-peril crop insurance (MPCI) and private named peril, 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  causes
widespread  crop losses  and, in severe  case,  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.

Industry Background

         MPCI was  initiated  by the  federal  government  in the  1930s to help
protect farmers  against loss of their crops as a result of drought,  floods and
other natural disasters.  In addition to MPCI, farmers whose crops are lost as a
result of natural  disasters have, in the past,  occasionally  been supported by
the federal government in the form of ad hoc relief bills providing low interest
agricultural  loans and direct payments.  Prior to 1980, MPCI was available only
on major crops in major producing  areas. In 1980,  Congress  expanded the scope
and coverage of the MPCI program. In addition,  the delivery system for MPCI was
expanded to permit private  insurance  companies and licensed agents and brokers
to sell MPCI policies. Further, the Federal Crop Insurance Corporation (FCIC), a
United States  Department of Agriculture  (USDA)  department,  was authorized to
reimburse  participating  companies  for their  administrative  expenses  and to
provide  federal  reinsurance  for a portion of the risk assumed by such private
companies.

         Due to a combination of low participation rates in the MPCI program and
large  federal  payments on both crop  insurance  (with an average loss ratio of
147%) and ad hoc disaster payments since 1980, Congress has, since 1990, enacted
major reform of its crop insurance and disaster assistance policies.

         The 1994 Reform Act required  farmers for the first time to purchase at
least  catastrophic  (CAT) coverage (i.e.,  the minimum  available level of MPCI
providing  coverage for 50% of farmers'  historic  yield at 60% of the price per
unit for such  crop set by the  FCIC  dropping  to 55% of the  price in 1999) in
order to be eligible for other federally sponsored farm benefits, including, but
not limited to, low interest loans and crop price supports.  The 1994 Reform Act
also  authorized  the  marketing  and selling of CAT  coverage by the local USDA
field  offices  which has  since  been  eliminated  by the  Federal  Agriculture
Improvement  and Reform Act of 1996  ("the 1996 Fair  Act").  The 1996 Fair Act,
signed into law by President  Clinton in April 1996, also eliminated the linkage
between  CAT  coverage  and  qualification  for  certain  federal  farm  program
benefits.

         In June  1998,  President  Clinton  signed the  Agricultural  Research,
Extension and Education  Reform Act of 1998 into law ("Ag Research Act"). The Ag
Research Act contained a number of changes in the crop  insurance  program,  the
largest  of  which  was  the   conversion   of  funding  for  the  MPCI  Expense
Reimbursement   subsidy  that  had  previously  been  50%  permanent  (mandatory
spending)  under the federal budget and 50%  discretionary  (dependent on annual
Congressional appropriations) to 100% permanent/mandatory funding.

         Other  changes  impacted by the Ag Research Act included a reduction in
the  rate of MPCI  Expense  Reimbursement  from  the  general  27.0% in the 1998
reinsurance year to 24.5% in 1999 and thereafter.  The reinsurance terms through
2001 under the Standard  Reinsurance  Agreement  (SRA)  offered by the FCIC were
also  frozen for  subsequent  reinsurance  years.  Two other  changes  were made
related  to the  CAT  level  of  insurance  under  the  MPCI  program.  The  law
significantly changed the administrative fee structure attached to such policies
(farmers pay no premium, only administrative fees for CAT). The previous $50 per
crop per county (with $200/county, $600 overall limit) was changed to the higher
of $50 or 10% of the imputed  premium for such  policies plus $10.  Further,  no
part of the fees would be retained by the  participating  reinsured  company any
longer  (previously up to $100 per county could be retained).  Starting in 1999,
all fees would be  remitted  directly  to the  federal  government  rather  than
partially retained by the Company. The 10% imputed premium charges; however, was
eliminated  before it was  implemented and the law reverted to essentially a $60
fee per policy  without  limits per county.  In  addition,  the Ag Research  Act
lowered the CAT Loss Adjustment  Expense (LAE)  Reimbursement from approximately
14.1% of imputed  premium  in 1998 to 11.0% of  premium  in 1999 and  succeeding
years.

         In October 1998,  President Clinton signed the Fiscal Year 1999 Omnibus
Consolidated  and  Emergency  Supplemental  Appropriations  Act into  law.  This
provided a total of $2.375  billion in  disaster  assistance  to help  producers
weather 1998 and multi-year  disasters.  Any producer  receiving a payment under
that program who did not have crop  insurance in 1998 will be required to secure
coverage  (CAT or MPCI  Buy-up  coverages  above 50%) for the 1999 and 2000 crop
years.  In  addition,  on  December  12,  1998,  President  Clinton and the USDA
announced  that $400 million of the $2.375  billion would be set aside as a 1999
crop year crop  insurance  premium  incentive to  encourage  producers to secure
additional  coverage on their 1999 crop.  This was set at 30% of the farmer-paid
portion of the crop insurance premium. Furthermore, on January 8, 1999, the FCIC
announced that it would accept  additional  applications for insurance or accept
changes in insurance  coverage from producers for their 1999 crops (2000 crop of
citrus) in cases where sales  closing  dates had already  passed.  It would also
extend upcoming spring application periods across the country to allow producers
additional time to take advantage of the premium  incentive.  Additional options
for allowing the reinsured  companies to manage the risk  associated  with these
actions were also provided.

         In  October  1999,  Congress  once  again  provided  additional  ad hoc
disaster  monies ($1.386  billion) to farmers for losses  suffered in 1999. This
same  legislation  (Public Law No. 106-78) provided $400 million to continue the
extra   premium   incentive   provided  by  the  1998   Emergency   Supplemental
Appropriations Act. However, due to the very positive farmer response nationwide
to the  1999  30%  extra  incentive;  the 2000  extra  incentive  was set at 25%
initially to avoid over-subscription. In addition, the State of Pennsylvania has
added its own subsidy in addition  to the federal  subsidy for  farmer-residents
buying crop insurance as an added incentive to manage their risks.

         Finally,  proposals for further  changes in the crop insurance  program
are currently  being debated in Congress.  The main thrust of these proposals is
to  permanently  change  the law to build in  premium  subsidies  equal to or in
excess of the net subsidy afforded by the existing law plus the 30% supplemental
subsidy  provided in the 1999 crop year.  Crop reform bills have passed both the
U.S.  House  of  Representatives  and  the  U.S.  Senate  and are  currently  in
conference.   The  House  bill  does  contain  proposed  further  reductions  in
administrative income for reinsured companies, the Senate bill does not.

         Thus,  while the 1998  Research Act provided  permanent  administrative
funding at the  expense  of reduced  administrative  rates and fee  income,  the
additional  premium  incentives  provided  in 1999 and 2000  have  afforded  the
Company the opportunity to offset the decreased income that would otherwise have
resulted. This is due to the fact that the increased premium incentives resulted
in more  producers  buying  higher  levels  of  coverage  (higher  premiums  are
associated with higher levels of coverage and thus higher  administrative income
that is a function of premium) and the additional  disaster monies increased the
insureds'  capabilities  to pay  their  premiums  in an  otherwise  economically
struggling  farm  sector.  The Company also  continues  to build on  initiatives
outside the federal  program  that create  fee-based  income and to reduce costs
where  possible  as a means to offset  prior  reimbursement  reductions  and any
additional ones that may occur.  While the Company  believes its effort can more
than offset  administrative  income  reductions,  there is no assurance that the
Company will be successful or that further reductions in federal  reimbursements
will not continue to occur.

Products

         MPCI is a  federally  subsidized  program  which is designed to provide
participating  farmers  who suffer  insured  crop  damage  with funds  needed to
continue  operating  and plant  crops for the next  growing  season.  All of the
material terms of the MPCI program and the  participation  of private  insurers,
such as the Company,  in the program are set by the FCIC under  applicable  law.
MPCI  provides  coverage for insured  crops  against  substantially  all natural
adverse  weather  perils.  Purchasing an MPCI policy  permits a farmer to insure
against  the risk that his crop yield for any  growing  season will be less than
50% to 75%,  and in some areas 85%,  (as  selected  by the farmer at the time of
policy  application  or renewal) of his historic crop yield.  If a farmer's crop
yield for the year is greater than the yield coverage he selected, no payment is
made to the farmer under the MPCI program. However, if a farmer's crop yield for
the year is less than the yield coverage selected, MPCI entitles the farmer to a
payment equal to the yield shortfall  multiplied by 60% to 100% of the price for
such  crop (as  selected  by the  farmer at the time of  policy  application  or
renewal) for that season as set by the FCIC.

         In order to encourage  farmers to  participate  in the MPCI program and
thereby reduce  dependence on traditional  disaster  relief  measures,  the 1996
Reform Act  established  CAT coverage as a new minimum  level of MPCI  coverage,
which farmers may purchase upon payment of a fixed administrative fee of $60 per
policy instead of any premium.  As of 1999, CAT coverage insures 50% of historic
crop  yield at 55% of the  FCIC-set  crop price for the  applicable  commodities
standard unit of measure, i.e., bushel, pound, etc. CAT coverage can be obtained
from private insurers such as the Company.

         In addition to CAT Coverage, MPCI policies that provide a greater level
of protection  than the CAT coverage  level are also offered and are referred to
as "Buy-up Coverage".  Most farmers purchasing MPCI have historically  purchased
at Buy-up  Coverage  levels,  with the most  frequently  sold  policy  providing
coverage for 65% of historic  crop yield at 100% of the FCIC-set  crop price per
bushel. Buy-up Coverages require payment of a premium in an amount determined by
a formula set by the FCIC.  Buy-up  Coverage can only be purchased  from private
insurers.  The Company focuses its marketing  efforts on Buy-up  Coverages which
have higher premiums.

         The Company,  like other  private  insurers  participating  in the MPCI
program,  generates  revenues  from the 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 in which it
receives from the  government a portion of the aggregate  profit.  However,  the
Company may pay a portion of the  aggregate  loss, in respect of the business it
writes, if the losses are significant.

         The Company's share of profit or loss on the MPCI business it writes is
determined by a complex profit sharing  formula  established by the FCIC.  Under
this formula,  the primary  factors that  determine the Company's MPCI profit or
loss share are (i) the gross  premiums  the  Company  is  credited  with  having
written, (ii) the amount of such credited premiums retained by the Company after
ceding  premiums  to  certain  federal  reinsurance  pools  and  (iii)  the loss
experience of the Company's insureds.

         The  Company  also  offers  several  types of revenue  coverage  in the
federal program,  the most popular of which is Crop Revenue Coverage ("CRC"). In
contrast to standard MPCI coverage, which features a yield guarantee or coverage
for the  loss of  production,  revenue  coverage  provides  the  insured  with a
guaranteed  revenue  stream  by  combining  both  yield  and  price  variability
protection.  Such policies protect against a grower's loss of revenue  resulting
from  fluctuating  crop prices and/or low yields by providing  coverage when any
combination  of crop yield and price  results  in revenue  that is less than the
revenue  guarantee  provided  by the policy.  For 1999  revenue  based  policies
represented approximately 20% of all of the Company's MPCI policies.

         In  addition to MPCI  (including  CRC and  several  other lower  volume
revenue  plans),  the  Company  offers  stand alone crop hail  insurance,  which
insures  growing  crops  against  damage  resulting  from  hailstorms  and which
involves no federal participation. The stand alone crop hail line of reinsurance
has a  proprietary  HAILPLUS(R)  product  which  combines  the  application  and
underwriting process for MPCI and hail coverages.  The HAILPLUS(R) 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 IGF's hail
policies are written in combination with MPCI.  Although both crop hail and MPCI
provide insurance against hail damage, the private crop hail coverages allow the
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 MPCI policies than it otherwise would.

         The Company also sells a small volume of insurance  against crop damage
from other specific named perils. These products cover specific crops, including
hybrid seed corn, cranberries, cotton, sugar cane, sugar beets, citrus, tomatoes
and timber and are  generally  written on terms that are specific to the kind of
crops and farming practices 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's  experienced  product  development team will
develop  the  underwriting  criteria  and  actuarial  rates for the named  peril
coverages.  As with the Company's other crop insurance products, loss adjustment
procedures for named peril policies are handled by full-time professional claims
adjusters  who have  specific  agronomy  training  with  respect to the crop and
farming practice involved in the coverage.

         IGF has launched a pilot program in Iowa and Illinois for the 2000 crop
year  entitled  IGF  Agronomics.  Under  this new  program  farmer-clients  work
hand-in-hand with IGF employed professional  agronomists.  The agronomist's role
is to continually  educate producers in ways to lower costs and increase yields.
Producers  receive  information  on  new  pesticides,  hybrids,  varieties,  and
genetically   modified  products;   nutrient   recommendations;   soil  testing;
management zone setup; equipment calibration  assistance;  and ongoing education
seminars to apprise producers on the latest advancements in agriculture.

         Through IGF  Agronomics,  the producer has the opportunity to receive a
nutrient warranty based on his/her goals and the Company's  recommendations.  In
many instances,  the input savings  created under the recommended  programs will
more than pay for the cost of the  services.  The services  include  helping the
producer  compile a professional  presentation of his/her farming skills,  which
could lead to direct  tie-ins with end users of  specialized  crops.  Using this
service,  the Company will become more familiar with producers' wants and needs,
resulting in the offering of more tailored insurance products. To the extent the
particular clients are also insureds of the Company,  the Company also decreases
its risk of loss  under the  underlying  insurance  policies  due to the  better
management practices employed under the agronomic services provided.

         Other   services   include   soil  mapping  and  soil   testing,   with
interpretation and decision support.  The Company works directly with the grower
to determine what information and tests are most  beneficial,  and then performs
them  on a grid or  management-zone  basis.  The  Company  will  not  only  give
producers the  information  and maps from these tests, it will help them analyze
the  data  and  make  recommendations  based on  prudent  economics  which  give
producers the  opportunity to reach their greatest net return per acre. The goal
is to convert the  information to knowledge,  which brings  producers  increased
profitability  while it brings the Company fee income and better insurance risks
to the extent the agronomy client is also an insured.

         The Company's crop subsidiary continues to offer Geo AgPLUS mapping and
other  services  and it has  expanded  the variety of means by which to generate
information  for use by  farmer-clients.  Geo  AgPLUS  now  uses  not  only  use
GPS-derived boundaries, but also use digital aerial photos, satellite imagery or
other background data, such as scanned Farm Service Agency (a U.S. Department of
Agriculture  agency) maps.  The Geo AgPLUS system can convert  producers'  yield
monitor data into accurate field  maps--saving  many hours of time and cost from
manually  operating an ATV to measure field  boundaries.  All methods of mapping
can be used to  create  accurate  and  concise  maps of  producers'  operations,
providing a familiar  visual to look at and use in better  managing  the farming
operation. Geo AgPLUS provides:

o        GPS field boundaries.
o        Remotely digitized boundaries.
o        Yield monitor generated boundaries.
o        Background data for roads, streams, sections, etc.
o        Customized maps to meet customers' needs.

Gross Premiums

         Each year the FCIC  sets the  formulas  for  determining  premiums  for
different  levels of Buy-up  Coverage.  Premiums  are based on the type of crop,
acreage  planted,  farm  location,  price per commodity  unit of measure for the
insured  crop as set by the FCIC for that year and other  factors.  The  federal
government  will  generally  subsidize a portion of the total premium set by the
FCIC and require farmers to pay the remainder. Cash premiums are received by the
Company  from  farmers  only  after  the end of a  growing  season  and are then
promptly  remitted  to  the  federal  government.  Although  applicable  federal
subsidies   change  from  year  to  year,   such  subsidies  will  range  up  to
approximately  40% of the Buy-up Coverage premium  depending on the crop insured
and the level of Buy-up Coverage  purchased,  if any. Federal premium  subsidies
are  recorded on the  Company's  behalf by the  government.  For purposes of the
profit  sharing  formula,  the Company is credited with having  written the full
amount of premiums paid by farmers for Buy-up Coverages,  plus the amount of any
related  federal  premium  subsidies  (such  total  amount,  is the "MPCI  Gross
Premium").

         As  previously  noted,  farmers  pay an  administrative  fee of $60 per
policy but are not required to pay any premium for CAT  coverage.  However,  for
purposes of the profit sharing formula,  the Company is credited with an imputed
premium (its "MPCI Imputed  Premium") for all CAT Coverages it sells. The amount
of such MPCI  Imputed  Premium  credited is  determined  by a formula set by the
FCIC. In general, such MPCI Imputed Premium will be less than 50% of the premium
that would be payable for a Buy-up  Coverage policy that insured 65% of historic
crop yield at 100% of the FCIC-set  crop price per standard  unit of measure for
the commodity  (historically  the most  frequently  sold Buy-up  Coverage).  For
income statement purposes under general accepted  accounting  principles (GAAP),
the Company's  Gross  Premiums  Written for MPCI consist only of its MPCI Buy-up
Premiums and do not include MPCI Imputed CAT Premiums.

Reinsurance Pools

         Under the MPCI  program,  the  Company  must  allocate  its MPCI  Gross
Premium or MPCI Imputed CAT Premium in respect of a farm to one of seven federal
reinsurance pools, at its discretion.  These pools provide private insurers with
different  levels of reinsurance  protection  from the FCIC on the business they
have written. The seven pools have three fundamental  designations;  Commercial,
Developmental  and Assigned Risk. For insured farms allocated to the "Commercial
Pool," the Company,  at its election,  generally retains 50% to 100% of the risk
and  the  FCIC  assumes  0% - 50%  of  the  risk;  for  those  allocated  to the
"Developmental Pool," the Company generally retains 35% of the risk and the FCIC
assumes 65% of the risk;  and for those  allocated to the "Assigned  Risk Pool,"
the  Company  retains  20% of the  risk and the FCIC  assumes  80% of the  risk.
Beginning with the 1998 crop year,  separate  Developmental and Commercial Funds
were provided for CAT and Revenue (i.e.,  CRC) policies  apart from  non-revenue
Buy-up  Coverage.  Thus the seven  risk  funds are  Assigned  Risk (all types of
policies pooled  together);  CAT  Developmental;  Revenue  Developmental;  Other
Developmental;  CAT Commercial;  Revenue Commercial; Other Commercial. There are
limitations  on the amount of premium  that can be placed in the  Assigned  Risk
Fund on a state  basis  based  on  historical  loss  ratios  (i.e.  75% of Texas
business but only 15% of Iowa business) and policy  designations must be made by
certain date  deadlines.  Furthermore,  these  reinsurance  pools are based on a
fund-by-state  basis.  Finally,  on the risk  retained by the Company,  the FCIC
provides  increasing  levels of stop loss protection as the loss ratio increases
on a  fund-by-state  basis such that the FCIC pays 100% of losses  that exceed a
500% loss ratio.  Thus,  a loss in the "Other  Commercial"  fund in the State of
Texas is first potentially offset by a gain in the other six risk funds in which
Texas  policies  were placed  before the Texas  experience  is then blended with
experience  from the  other  states.  The MPCI  Retained  Premium,  which is the
premium  left  after all  cessions  are made to FCIC  under the SRA  within  the
various risk funds, is then further  protected by private  third-party stop loss
treaties.

         Although the Company in general must agree to insure any eligible farm,
it is not  restricted  in its  decision  to  allocate a risk to any of the seven
pools,  subject  to a  minimum  aggregate  retention  of 35% of its  MPCI  gross
premiums and MPCI Imputed CAT  Premiums  written.  The Company uses a historical
database to allocate MPCI risks to the federal reinsurance pools in an effort to
enhance the underwriting  profits  realized from this business.  The Company has
crop yield  history  information  with respect to over  100,000  policies in the
United States. Generally,  farms or crops which, based on historical experience,
location and other factors,  appear to have a favorable net loss ratio and to be
less  likely to suffer an  insured  loss,  are  placed in the  Commercial  Pool.
Policies or crops which  appear to be more likely to suffer a loss are placed in
the  Developmental  Pool or Assigned  Risk Pool.  The  Company has  historically
allocated the bulk of its insured risks to the Commercial Pool.

         The Company's  share of profit or loss depends on the aggregate  amount
of MPCI Gross Premium and MPCI Imputed CAT Premium on which the Company  retains
risk after  allocating  policies  to the  foregoing  pools  (its "MPCI  Retained
Premium"). As previously described, the Company purchases reinsurance from third
parties other than the FCIC to further reduce its MPCI loss exposure.

Loss Experience of Insureds

         Under the MPCI  program  the Company  pays losses to farmers  through a
federally  funded escrow account as they are incurred during the growing season.
The Company  requests  funding of the escrow account when a claim is settled and
the escrow  account is funded by the federal  government  within three  business
days.  After a  growing  season  ends,  the  aggregate  loss  experience  of the
Company's  insureds  in each  state  for  risks  allocated  to each of the seven
reinsurance  pools is  determined.  If, for all risks  allocated to a particular
pool in a particular  state, the Company's share of losses incurred is less than
its aggregate MPCI Retained  Premium,  the Company shares in the gross amount of
such profit  according  to a schedule set by the FCIC's SRA. The profit and loss
sharing  percentages  are  different  for risks  allocated  to each of the seven
reinsurance pools.  Private insurers will receive or pay the greatest percentage
of profit or loss for risks  allocated to the Commercial  Pool. The  reinsurance
terms contained in the SRA that were last negotiated in 1998 have been frozen in
statute for 1999 and subsequent  years (7 U.S.C.  1506 note added by Sec. 536 of
the 1998 Ag Research Act). There, of course,  can be no assurance by the Company
that Congress and the  President  will not change the law. FCIC has extended the
1998 SRA through the 2001 crop/reinsurance year (July 1, 2000 to June 30, 2001).

MPCI Fees and Reimbursement Payments

         The Company  receives  Buy-up Expense  Reimbursement  Payments from the
FCIC for writing and  administering  Buy-up  Coverage  policies.  These payments
provide funds to  compensate  the Company for its  expenses,  including  agents'
commissions and the costs of administering  policies and adjusting  claims.  For
1999,  the  Buy-up  Expense  Reimbursement  was set at 24.5%  of the MPCI  Gross
Premium  (including CRC which has been  reimbursed at  approximately  86% of the
rate for regular MPCI).  For 1999 and succeeding  years,  the 24.5% rate on MPCI
and 21.1% on CRC has been  frozen by statute  (7 U.S.C.  1506 note added by Sec.
536 of the 1998 Ag Research Act).  Although the 1994 Reform Act directs the FCIC
to  alter  program  procedures  and  administrative  requirements  so  that  the
administrative and operating costs of private insurance companies  participating
in the MPCI  program  will be  reduced  in an  amount  that  corresponds  to the
reduction in the expense  reimbursement rate, there can be no assurance that the
Company's actual costs will not exceed the expense reimbursement rate.

         Farmers  are  required  to pay a  fixed  administrative  fee of $60 per
policy in order to obtain CAT  Coverage.  Starting in 1999,  the fee was sent to
the FCIC,  and the Company  did not retain any portion of this fee.  The Company
also  receives from the FCIC a separate CAT LAE  Reimbursement  Payment equal to
approximately  11.0% of MPCI Imputed CAT Premiums of each CAT Coverage policy it
writes.


<PAGE>



         In addition to premium  revenues,  the Company  received the  following
federally  funded fees and commissions  from its crop insurance  segment for the
periods indicated:
<TABLE>
<CAPTION>

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

<S>                                                    <C>       <C>        <C>
CAT Coverage Fees (1)                                  $ 1,191   $ 2,346       $--
Buy-up Expense Reimbursement Payments                   24,788    37,982    38,580
CAT LAE  Reimbursement  Payments and MPCI Excess LAE
    Reimbursement Payments                               4,565     6,520     4,273
                                                       -------   -------   -------
Total                                                  $30,544   $46,848   $42,853
                                                       =======   =======   =======
</TABLE>

1)            See "Management's  Discussion and Analysis of Financial  Condition
              and Results of  Operations  " for a discussion  of the  accounting
              treatment accorded to the crop insurance business.

Third-Party Reinsurance

         In order to reduce the Company's potential loss exposure under the MPCI
program,  the  Company  purchases  stop  loss  reinsurance  from  other  private
reinsurers in addition to reinsurance obtained from the FCIC. In addition, since
the FCIC and state  regulatory  authorities  require IGF to limit its  aggregate
writings  of MPCI  Premiums  and MPCI  Imputed  Premiums to no more than 900% of
capital,  and retain a net loss exposure of not in excess of 50% of capital, IGF
may also obtain  reinsurance  from private  reinsurers  in order to permit it to
increase its premium writings.  Such private reinsurance would not eliminate the
Company's  potential  liability  in the event a  reinsurer  was unable to pay or
losses  exceeded the limits of the stop loss coverage.  For crop hail insurance,
the Company had in effect quota share  reinsurance of 68.5% of business for 1999
, although the reinsurer is only liable to  participate in losses of the Company
up to a 150% pure loss ratio.  The Company  also has stop loss  treaties for its
crop hail business which reinsure net losses in excess of an 80% pure loss ratio
to 130% at 95% coverage with IGF retaining the remaining 5%. With respect to its
MPCI business,  the Company has stop loss treaties which reinsure  93.75% of the
underwriting  losses  experienced  by the Company to the extent  that  aggregate
losses of its insureds  nationwide  are in excess of 100% of the Company's  MPCI
Retained  Premium up to 125% of MPCI  Retained  Premium.  The  Company  also has
additional  layers  of MPCI  stop  loss  reinsurance  which  covers  100% of the
underwriting  losses  experienced  by the Company to the extent  that  aggregate
losses  of its  insureds  nationwide  are in  excess  of 125%  of MPCI  Retained
Premiums up to 185% of MPCI Retained Premium.  The Company maintains a 50% quota
share reinsurance treaty and a stop loss treaty covering 95% of losses in excess
of 100% up to 250% for its named peril products.  For 2000, the Company plans to
maintain its crop hail and named peril quota share portion.


<PAGE>



         Based on a review of the reinsurers' financial health and reputation in
the insurance marketplace, the Company believes that the reinsurers for its crop
insurance   business  are  financially  sound  and  that  they  can  meet  their
obligations to the Company under the terms of the reinsurance treaties. Reserves
for uncollectible  reinsurance are provided as deemed  necessary.  The following
table provides  information with respect to ceded premiums in excess of $250,000
on crop hail and named perils and for any affiliates.
<TABLE>
<CAPTION>

Year Ended December 31, 1999 (1)
(in thousands, except footnotes)

                                                                          A.M. Best   Ceded
Reinsurers                                                               Rating      Premiums

<S>                                                                      <C>            <C>
Continental Casualty Insurance Co. (CNA)(2)                              A            9,308

Muchener Ruckversicherungs-Gesellschaft                                  Not Rated   15,740

Granite Re                                                               Not Rated    5,452

Monde Re (3)                                                             Not Rated    1,719

Partner Reinsurance Company Ltd.                                         Not Rated      653

R & V Versicherung AG                                                    Not Rated      664

Reinsurance Australia Corporation, Ltd. (REAC) (3)                       Not Rated    1,719

Insurance Corp of Hannover (2)                                           A            6,544

Scandinavian Reinsurance Company Ltd.                                    Not Rated      683
</TABLE>

1)       For the twelve months ended December 31, 1999, total ceded premiums
         were $214,463,976.
2)       An A.M. Best rating of "A" is the third highest of 15 ratings.
3)       Monde Re is owned by REAC.

         As of December  31, 1999,  IGF's  reinsurance  recoverables  aggregated
approximately  $2,196,000 excluding  recoverables from the FCIC and recoverables
from affiliates on nonstandard automobile business.

Marketing; Distribution Network

         IGF markets its  products  to the owners and  operators  of farms in 46
states through  approximately  5,499 agents associated with approximately  2,850
independent insurance agencies, with its primary geographic concentration in the
states of Texas, North Dakota, Iowa, Minnesota, Illinois, California,  Nebraska,
Mississippi, Arkansas and South Dakota. IGF is licensed in 31 states and markets
its  products  in  additional  states  through  a  fronting   agreement  with  a
third-party  insurance company.  IGF has a stable agency base and it experienced
negligible turnover in its agencies in 1999.


<PAGE>


         The following table presents MPCI and crop hail premiums written by IGF
by state for the periods indicated.
<TABLE>
<CAPTION>

(in thousands)           Year End December 31, 1998                  Year Ended December 31, 1999
State            Crop Hail  MPCI/CAT(1)   Other      Total   Crop Hail  MPCI/CAT(1)   Other      Total


<S>              <C>        <C>             <C>   <C>        <C>        <C>        <C>        <C>
Alabama          $     83   $  2,714        $--   $  2,797   $    132   $  4,245   $     67   $  4,444

Arkansas            1,460     11,141       --       12,601      1,823      9,737         20     11,580

California            661      9,754      7,797     18,212        776      9,207        325     10,308

Colorado            1,626      3,024          7      4,657      1,199      3,844         24      5,067

Idaho               2,266      1,332        188      3,786      1,343      1,824        580      3,747

Illinois            2,409     20,407        151     22,967      2,323     21,295        215     23,833

Indiana               244      7,031       --        7,275        263     10,163        101     10,527

Iowa                9,724     16,554       --       26,278      7,161     16,693        124     23,978

Kansas              1,904      4,703         57      6,664      1,005      4,029       --        5,034

Kentucky            1,722        672       --        2,394      1,074      2,829          4      3,907

Louisiana              36      5,486         35      5,557         23      6,033         80      6,136

Michigan               68      3,107         20      3,195         46      2,479         44      2,569

Minnesota           4,222     16,017        497     20,736      4,425     16,919        371     21,715

Mississippi           445     10,382       --       10,827        407      9,078         26      9,511

Missouri            1,228      5,822       --        7,050        806      5,368         14      6,188

Montana             4,280      5,338       --        9,618      3,572      4,421         18      8,011

Nebraska            5,752      6,635       --       12,387      2,060      6,541          5      8,606

North Carolina      4,770      1,807       --        6,577        926      2,152       --        3,078

North Dakota       10,131     20,423        254     30,808      4,169     21,913        311     26,393

Oklahoma              857      2,232       --        3,089        391      2,842        116      3,349

South Dakota        5,320      6,017       --       11,337      5,556      4,523          7     10,086

Texas               9,492     35,212        306     45,010      8,646     37,464        419     46,529

Wisconsin             269      3,219        288      3,776        279      4,383        635      5,297

All Other           7,229      8,323          3     15,555      5,242     11,472        406     17,120
                 --------   --------   --------   --------   --------   --------   --------   --------

Total            $ 76,198   $207,352   $  9,603   $293,153   $ 53,647   $219,454   $  3,912   $277,013
                 ========   ========   ========   ========   ========   ========   ========   ========
</TABLE>

(1) CAT imputed  premiums has been  included in the totals above.  However,  for
financial reporting requirements,  these premiums are not included. For 1999 and
1998, CAT imputed premiums total $39,727 and $50,127.

         The Company seeks to maintain and develop its agency  relationships  by
providing  agencies  with faster,  more  efficient  service as well as marketing
support.  IGF  owns an IBM  AS400  along  with  all  peripheral  and  networking
equipment and has developed its own proprietary software package, AgentPlus(TM),
which allows  agencies to quote and examine  various levels of coverage on their
own personal computers.  The Company's regional managers are responsible for the
Company's field operations within an assigned  geographic  territory,  including
maintaining and enhancing relationships with agencies in those territories.  IGF
also  uses  application  documentation  which is  designed  for  simplicity  and
convenience called HailPlus(TM).

         IGF generally  compensates its agents based on a percentage of premiums
produced.  The Company utilizes a percentage of underwriting  gain realized with
respect to business produced in specific cases.  This compensation  structure is
designed to encourage agents to place profitable business with IGF.

Underwriting Management

         Because of the highly regulated nature of the MPCI program and the fact
that rates are  established  by the FCIC,  the  primary  underwriting  functions
performed  by the  Company's  personnel  with  respect to MPCI  coverage are (i)
selecting  of  marketing  territories  for MPCI based on the type of crops being
grown in the area, typical weather patterns and loss experience of both agencies
and farmers  within a  particular  area;  and (ii)  ensuring  that  policies are
underwritten in accordance with the FCIC rules.

         With respect to its crop hail  coverage,  the Company seeks to minimize
its underwriting  losses by maintaining an adequate geographic spread of risk by
rate group. In addition, the Company establishes sales closing dates after which
hail policies will not be sold. These dates are dependent on planting schedules,
vary by geographic  location and generally range from May 15 in Texas to July 15
in North Dakota.  Prior to these dates,  crops are either seeds in the ground or
young growth newly emerged from the ground and hail damage to crops in either of
these  stages is minimal.  The cut-off  dates  prevent  farmers  from  adversely
selecting against the Company by waiting to purchase hail coverage until a storm
is forecast or damage has occurred. For its crop hail coverage, the Company also
sets  limits by  policy  ($400,000  each)  and by  township  ($2.0  million  per
township).

Claims/Loss Adjustments

         In contrast to most of its competitors who retain independent contracts
or per diem  adjusters on a part-time  basis for loss  adjusting  services,  the
Company  employs  full-time  professional  claims  adjusters,  most of whom  are
agronomy trained,  as well as a supplemental staff of part-time  adjusters.  The
adjusters  are located  throughout  the  Company's  marketing  territories.  The
adjusters  report to a field  service  manager in their  territory  who  manages
adjusters' assignments, assures that all preliminary estimates for loss reserves
are  accurately  reported  and  assists in loss  adjustment.  Within 72 hours of
reported  damage,  a loss  notice is  reviewed by the  Company's  field  service
manager  and a  preliminary  loss  reserve is  determined  which is based on the
representative's and/or adjuster's knowledge of the area or the particular storm
which caused the loss. Generally,  within approximately two weeks, crop hail and
MPCI claims are  examined  and  reviewed on site by an adjuster  and the insured
signs a proof of loss form containing a final release. As part of the adjustment
process,  the  Company's  adjusters may use global  positioning  system units to
determine the precise  location  where a claimed loss has occurred.  The Company
has a team of  catastrophic  claims  specialists  who are  available on 48 hours
notice to travel to any of the  Company's  seven  regional  service  offices  to
assist in heavy claim work load situations.

Competition

         The crop insurance industry is highly competitive. The Company competes
against other private  companies for MPCI,  crop hail and named peril  coverage.
Many of the Company's competitors have substantially greater financial and other
resources  than the Company and there can be no assurance  that the Company will
be able to compete  effectively  against  such  competitors  in the future.  The
Company competes on the basis of the commissions paid to agents,  the speed with
which  claims  are paid,  the  quality  and  extent  of  services  offered,  the
reputation  and  experience  of its agency  network  and, in the case of private
insurance,  product rates.  Because the FCIC  establishes  the rates that may be
offered for MPCI  policies,  the Company  believes  that  quality of service and
level of  commissions  offered to agents are the  principal  factors on which it
competes in the area of MPCI. The Company  believes that the crop hail and other
named peril crop insurance industry is extremely  rate-sensitive and the ability
to offer  competitive  rate  structures  to agents is a  critical  factor in the
agent's  ability to write crop hail and other named peril  premiums.  Because of
the varying  state laws  regarding  the ability of agents to write crop hail and
other named peril premiums prior to completion of rate and form filings (and, in
some cases, state approval of such filings),  a company may not be able to write
its expected premium volume if its rates are not competitive.

         The crop insurance industry has become increasingly consolidated.  From
the 1985 crop year to the 1999 crop  year,  the  number of  insurance  companies
having  agreements  with the FCIC to sell and service MPCI policies has declined
from a number in excess of fifty to seventeen.  The Company  believes that it is
the fifth  largest  MPCI crop  insurer  in the  United  States  based on premium
information  compiled in 1999 by the FCIC. The Company's primary competitors are
Rain & Hail LLC (affiliated with ACE USA), Rural Community  Insurance  Services,
Inc. (owned by Wells Fargo/Norwest  Corporation),  Acceptance  Insurance Company
(Redland/American  Agrisurance),  Fireman's  Fund  Agribusiness  (formerly  Crop
Growers),  Great  American  Insurance  Company  (part of the American  Financial
Group),  Blakely Crop Hail (owned by Farmers Alliance Mutual Insurance  Company)
and North  Central  Crop  Insurance,  Inc.  (owned by  Farmers  Alliance  Mutual
Insurance Company).

Recent Developments

         The crop  division,  with  stable  gross  premium  volumes  overall and
increased reinsurance protection,  experienced a near break-even year except for
additional reserve adjustments required with respect to an agricultural business
interruption product that was offered in 1998 (the "Discontinued Product") which
is no longer being written.  Although  additional  reinsurance  negotiated  both
early in 1999 and again at year end 1999,  mitigated some of the losses from the
Discontinued  Product,  IGF's net  results  were  dominated  by losses  from the
Discontinued Product of approximately $18.1 million recognized in 1999 net after
reinsurance.

Reserves for Losses and Loss Adjustment Expenses

         Loss reserves are estimates, established at a given point in time based
on facts  then  known,  of what  the  Company  projects  its  exposure  to be in
connection with incurred losses.  Loss adjustment expense reserves are estimates
of the ultimate  liability  associated  with the expense of settling all claims,
including investigation and litigation costs. The Company's actual liability for
losses and loss adjustment  expense at any point in time will be greater or less
than these estimates.

         The Company  maintains  reserves for the eventual payment of losses and
loss  adjustment  expenses with respect to both reported and unreported  claims.
Nonstandard  automobile  reserves  for  reported  claims  are  established  on a
case-by-case  basis. The reserving process takes into account the type of claim,
policy provisions relating to the type of loss, and historical payments made for
similar  claims.   Reported  crop  insurance  claims  are  reserved  based  upon
preliminary  notice to the Company and  investigation  of the loss in the field.
The  ultimate  settlement  of a crop loss is based upon  either the value or the
yield of the crop.

         Loss and loss  adjustment  expense  reserves  for claims that have been
incurred  but not  reported  are  estimated  based on many  variables  including
historical and statistical information,  inflation, legal developments, economic
conditions,  trends in claim severity and frequency and other factors that could
affect the adequacy of loss reserves.

         The Company's  recorded reserves for losses and loss adjustment expense
reserves at the end of 1999 are  certified  by the  Company's  chief  actuary in
compliance with insurance regulatory requirements.

         The following loss reserve  development  table  illustrates  the change
over time of reserves  established  for loss and loss  expenses as of the end of
the  various  calendar  years  for the  nonstandard  automobile  segment  of the
Company.  The table includes the loss reserves  acquired from the acquisition of
Superior in 1996 and the related loss reserve development thereafter.  The first
section shows the reserves as originally reported at the end of the stated year.
The second section,  reading down,  shows the cumulative  amounts paid as of the
end of  successive  years  with  respect  to the  reserve  liability.  The third
section,  reading down, shows the re-estimates of the original  recorded reserve
as of the end of each  successive  year  which  is a result  of sound  insurance
reserving  practices of addressing  new emerging facts and  circumstances  which
indicate  that a  modification  of the prior  estimate  is  necessary.  The last
section  compares  the latest  re-estimated  reserve to the  reserve  originally
established,  and indicates  whether or not the original reserve was adequate or
inadequate to cover the estimated costs of unsettled claims.

         The loss reserve development table is cumulative and, therefore, ending
balances  should not be added since the amount at the end of each  calendar year
includes activity for both the current and prior years.

         The reserve  for losses and loss  expenses  is an  accumulation  of the
estimated amounts necessary to settle all outstanding  claims as of the date for
which the reserve is stated.  The reserve and payment data shown below have been
reduced for estimated  subrogation and salvage recoveries.  The Company does not
discount its reserves for unpaid losses and loss expenses. No attempt is made to
isolate  explicitly  the  impact of  inflation  from the  multitude  of  factors
influencing the reserve estimates though inflation is implicitly included in the
estimates.  The Company regularly updates its reserve forecasts by type of claim
as new facts become known and events occur which affect unsettled claims.

         Since the  beginning of 1997,  the  Company,  as part of its efforts to
reduce  costs and  combine  the  operations  of the two  nonstandard  automobile
insurance  companies,  emphasized a unified claim settlement practice as well as
reserving philosophy for Superior and Pafco.  Superior had historically provided
strengthened  case  reserves and a level of incurred  but not reported  ("IBNR")
that reflected the strength of the case reserves. Pafco had historically carried
relatively  lower case reserves with higher IBNR reserve.  This change in claims
management  philosophy  since 1997,  combined with the growth in premium  volume
produced  sufficient  volatility  in prior year loss  patterns  to  warrant  the
Company to  re-estimate  its reserve for losses and loss  expenses and record an
additional  reserve  during  1997,  1998,  and 1999.  The  effects of changes in
settlement patterns,  costs,  inflation,  growth and other factors have all been
considered in  establishing  the current year reserve for unpaid losses and loss
expenses.


<PAGE>


Symons International Group, Inc.
Nonstandard Automobile Insurance Only
For The Years Ended December 31, (in thousands)

<TABLE>
<CAPTION>
                        1989     1990     1991      1992      1993      1994    1995(A)     1996       1997        1998        1999

<S>                 <C>       <C>       <C>       <C>        <C>       <C>        <C>
Gross reserves for
unpaid losses and   $ 27,403  $ 25,248  $ 71,748  $ 79,551   $101,185  $121,661   141,260
LAE
Deduct reinsurance    12,581    10,927     9,921     8,124     16,378     6,515     3,167
recoverable
Reserve for unpaid
losses and LAE,     $ 13,518  $ 15,923  $ 15,682  $ 17,055   $ 14,822    14,321    61,827     71,427     84,807    114,829   138,093
net of reinsurance
Paid cumulative as
of:
One Year Later         7,754     7,695     7,519    10,868      8,875     7,455    42,183     59,410     62,962     85,389       --
Two Years Later       10,530    10,479    12,358    15,121     11,114    10,375    53,350     79,319     89,285       --         --
Three Years Later     11,875    12,389    13,937    16,855     13,024    12,040    58,993     86,298       --         --         --
Four Years Later      12,733    13,094    14,572    17,744     13,886    12,822    61,650       --         --         --         --
Five Years Later      12,998    13,331    14,841    18,195     14,229    13,133      --         --         --         --         --
Six Years Later       13,095    13,507    14,992    18,408     14,330      --        --         --         --         --         --
Seven Years Later     13,202    13,486    15,099    18,405       --        --        --         --         --         --         --
Eight Years Later     13,216    13,567    15,095      --         --        --        --         --         --         --         --
Nine Years Later      13,249    13,566      --        --         --        --        --         --         --         --         --
Ten Years Later       13,249      --        --        --         --        --        --         --         --         --         --
Liabilities
re-estimated as of:
One Year Later        13,984    13,888    14,453    17,442     14,788    13,365    59,626     82,011     97,905    131,256       --
Two Years Later       13,083    13,343    14,949    18,103     13,815    12,696    60,600     91,743    104,821       --         --
Three Years Later     13,057    13,445    15,139    18,300     14,051    13,080    63,752     91,641       --         --         --
Four Years Later      13,152    13,514    15,218    18,313     14,290    13,485    63,249       --         --         --         --
Five Years Later      13,170    13,589    15,198    18,419     14,499    13,441      --         --         --         --         --
Six Years Later       13,246    13,612    15,114    18,533     14,523      --        --         --         --         --         --
Seven Years Later     13,260    13,529    15,157    18,484       --        --        --         --         --         --         --
Eight Years Later     13,248    13,573    15,145      --         --        --        --         --         --         --         --
Nine Years Later      13,251    13,574      --        --         --        --        --         --         --         --         --
Ten Years Later       13,259      --        --        --         --        --        --         --         --         --         --
Net cumulative
(deficiency) or          259     2,349       537    (1,429)       299       880    (1,422)   (20,214)   (20,014)   (16,427)      --
redundancy
Expressed as a
percentage of
unpaid losses and        1.9%     14.8%      3.4%     (8.4%)      2.0%      6.1%     (2.3%)    (28.3%)    (23.6%)    (14.3%)     --
LAE

Revaluation of gross losses and LAE as of year-end 1999:

    Cumulative Gross Paid as of Year-end 1999                   26,949    24,390     71,484     94,108     107,074      87,873
    Gross liabilities re-estimated as of year-end               27,287    24,953     73,522     99,890     123,060     136,131
    1999

    Gross cumulative (deficiency) or redundancy                    116       295    (1,774)   (20,339)    (21,875)    (14,470)



(A)  Includes  Superior  loss and loss expense  reserves of $44,423  acquired on
April 29, 1996 and subsequent development thereon.


<PAGE>


Symons International Group, Inc.
Crop Insurance Only
For The Years Ended December 31, (in thousands)
                        1989        1990       1991       1992      1993      1994        1995      1996     1997     1998     1999

Gross reserves for

unpaid losses and       $ 25,653   $ 3,354   $30,574  $ 17,537   $ 17,748   $ 66,921   $ 62,459
LAE
Deduct reinsurance        25,333     3,166    29,861    16,727     16,894     56,502     47,991
recoverable
Reserve for unpaid
losses and LAE,               99       222       309       316        320        188        713      810      854    10,419   14,468
net of reinsurance
Paid cumulative as
of:
One Year Later               416       726       263       463        765        473      1,148    1,184    1,311    12,427     --
Two Years Later              416       726       263       463        772        473      1,148    1,197    1,335      --       --
Three Years Later            416       726       263       463        772        473      1,148    1,197     --        --       --
Four Years Later             416       726       263       463        772        473      1,148     --       --        --       --
Five Years Later             416       726       263       463        772        473       --       --       --        --       --
Six Years Later              416       726       263       463        772       --         --       --       --        --       --
Seven Years Later            416       726       263       463       --         --         --       --       --        --       --
Eight Years Later            416       726       263      --         --         --         --       --       --        --       --
Nine Years Later             416       726      --        --         --         --         --       --       --        --       --
Ten Years Later              416      --        --        --         --         --         --       --       --        --       --
Liabilities
re-estimated as of:
One Year Later               416       726       263       463        765        473      1,148    1,184    1,311    24,587     --
Two Years Later              416       726       263       463        772        473      1,148    1,197    1,335      --       --
Three Years Later            416       726       263       463        772        473      1,148    1,197     --        --       --
Four Years Later             416       726       263       463        772        473      1,148     --       --        --       --
Five Years Later             416       726       263       463        772        473       --       --       --        --       --
Six Years Later              416       726       263       463        772       --         --       --       --        --       --
Seven Years Later            416       726       263       463       --         --         --       --       --        --       --
Eight Years Later            416       726       263      --         --         --         --       --       --        --       --
Nine Years Later             416       726      --        --         --         --         --       --       --        --       --
Ten Years Later              416      --        --        --         --         --         --       --       --        --       --
Net cumulative
(deficiency) or             (317)     (504)       46      (147)      (452)      (285)      (435)    (387)    (481)  (14,168)    --
redundancy
Expressed as a
percentage of
unpaid losses and         (320.2%)  (227.0%)    14.9%    (46.5%)   (141.3%)   (151.6%)    (61.0%)  (47.8%)  (56.3%)  (136.0%)   --
LAE

Revaluation of gross losses and LAE as of year-end

1999:

    Cumulative Gross Paid as of Year-end 1999                         27,849       5,547     29,459     21,612     15,916    79,420
    Gross liabilities re-estimated as of year-end                     27,849       5,547     29,459     21,612     15,917    91,581
    1999

    Gross cumulative (deficiency) or redundancy                      (2,196)     (2,193)      1,115    (4,075)      1,831   (24,660)

</TABLE>



<PAGE>


Activity in the  liability  for unpaid  loss and loss  adjustment  expenses  for
nonstandard automobile insurance is summarized below:
<TABLE>
<CAPTION>

Reconciliation of Nonstandard Auto Reserves (1)
                                     1999     1998    1997

<S>                                <C>      <C>      <C>
Balance at January 1, 1999         $121,661 $101,185 $ 79,551
    Less Reinsurance Recoverables     6,832   16,378    8,124
                                   -------- -------- --------
    Net Balance at January 1, 1999 $114,829 $ 84,807 $ 71,427

Incurred related to

  Current Year                     $214,606 $204,818 $185,316
  Prior Years                        16,427   13,098   10,584
                                   -------- -------- --------
  Total Incurred                   $231,033 $217,916 $195,900

Paid Related to

    Current Year                   $122,380 $124,932 $123,410
    Prior Years                      85,389   62,962   59,410
                                   -------- -------- --------
    Total Paid                     $207,769 $187,894 $182,820

Net Balance at December 31, 1999   $138,093 $114,829 $ 84,807
Plus Reinsurance Balance              3,167    6,832   16,378
                                   -------- -------- --------
Balance at December 31, 1999       $141,260 $121,661 $101,185

</TABLE>

(1) The 1999 incurred in the above Reserve  Reconciliation  Table is $60 greater
than the  nonstandard  auto  segment  incurred  per Note 18 of the  Consolidated
Financial Statement that includes favorable development on prior year commercial
reserves  for  policies  written by Pafco in 1995 and prior.  The  reserves  for
commercial business are excluded from the nonstandard auto reserve developments.


<PAGE>


Activity in the liability for unpaid loss and loss adjustment  expenses for crop
insurance is summarized below:

Reconciliation of Crop Reserves (1)
                                    1999    1998   1997

Balance at January 1, 1999         $66,918 $17,748 $17,537
    Less Reinsurance Recoverables   56,501  16,894  16,727
                                   ------- ------- -------
    Net Balance at January 1, 1999 $10,417 $   854 $   810

Incurred related to

  Current Year                     $20,131 $52,093 $16,176
  Prior Years                       14,095     457     374
                                   ------- ------- -------
  Total Incurred                   $34,226 $52,550 $16,550

Paid Related to

    Current Year                   $17,748 $41,676 $15,322
    Prior Years                     12,427   1,311   1,184
                                   ------- ------- -------
    Total Paid                     $30,175 $42,987 $16,506

Net Balance at December 31, 1999   $14,468 $10,417 $   854
Plus Reinsurance Balance            47,991  56,501  16,894
                                   ------- ------- -------
Balance at December 31, 1999       $62,459 $66,918 $17,748


(1) The 1999  incurred in the above Reserve  Reconciliation  Table is $1 greater
than  the  crop  segment  incurred  per  Note 18 of the  Consolidated  Financial
Statements that includes favorable  development on prior commercial reserves for
policies written by IGF prior to 1989. The reserves for commercial  business are
excluded from the crop insurance reserve developments.


<PAGE>



Ratings

     A.M. Best has currently assigned a "B-" rating to Superior, a "C" rating to
Pafco and an "NA-3" rating to IGF.

         A.M.  Best's  ratings  are  based  upon  a  comprehensive  review  of a
company's  financial  performance,   which  is  supplemented  by  certain  data,
including  responses  to A.M.  Best's  questionnaires,  phone  calls  and  other
correspondence between A.M. Best analysts and company management, quarterly NAIC
filings,  state insurance department  examination reports, loss reserve reports,
annual  reports,  company  business  plans and other  reports  filed  with state
insurance  departments.  A.M. Best undertakes a quantitative  evaluation,  based
upon profitability,  leverage and liquidity, and a qualitative evaluation, based
upon the  composition  of a company's  book of  business or spread of risk,  the
amount,   appropriateness   and   soundness   of   reinsurance,   the   quality,
diversification  and estimated  market value of its assets,  the adequacy of its
loss reserves and policyholders'  surplus,  the soundness of a company's capital
structure,  the extent of a company's  market  presence and the  experience  and
competence of its  management.  A.M.  Best's  ratings  represent an  independent
opinion of a company's financial strength and ability to meet its obligations to
policyholders.  A.M.  Best's  ratings are not a measure of  protection  afforded
investors.  "B-" and "C" ratings are A.M.  Best's  eighth and  eleventh  highest
rating classifications,  respectively,  out of fifteen ratings. A "B-" rating is
awarded to insurers  which, in A.M.  Best's  opinion,  "have,  on balance,  fair
financial  strength,  operating  performance and market profile when compared to
the standards established by the A.M. Best Company" and "have an ability to meet
their current  obligations to  policyholders,  but their  financial  strength is
vulnerable to adverse changes in underwriting  and economic  conditions".  A "C"
rating is awarded to insurers which, in A. M. Best's opinion, "have, on balance,
weak financial strength,  operating performance and market profile when compared
to the standards  established  by the A.M. Best Company" and "have an ability to
meet their current obligations to policyholders, but their financial strength is
very vulnerable to adverse changes in underwriting and economic conditions".  An
"NA-3" is a "rating procedure inapplicable" category.

         The current  ratings  represent  downgrades in the previously  assigned
ratings.  There can be no assurance  that the current  ratings or future changes
therein will adversely affect the Company's competitive position.

Regulation

General

         The  Company's  insurance  businesses  are  subject  to  comprehensive,
detailed regulation  throughout the United States, under statutes which delegate
regulatory,   supervisory   and   administrative   powers  to  state   insurance
commissioners.  The primary  purpose of such  regulations and supervision is the
protection of  policyholders  and claimants  rather than  stockholders  or other
investors.  Depending on whether the insurance company is domiciled in the state
and whether it is an admitted or non-admitted insurer, such authority may extend
to such things as (i) periodic reporting of the insurer's  financial  condition;
(ii) periodic financial  examination;  (iii) approval of rates and policy forms;
(iv) loss reserve adequacy; (v) insurer solvency; (vi) the licensing of insurers
and their  agents;  (vii)  restrictions  on the payment of  dividends  and other
distributions;  (viii)  approval  of changes in  control;  and (ix) the type and
amount of permitted investments.

         The losses,  adverse trends and uncertainties  discussed in this report
have been and  continue  to be matters of concern to the  domiciliary  and other
insurance  regulators  of the  Company's  operating  subsidiaries.  See  "Recent
Regulatory  Developments  and Risk Based Capital  Requirements"  below and "RISK
FACTORS."


<PAGE>


Recent Regulatory Developments

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

o    Refrain from doing any of the  following  without the Indiana  Department'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
     Indiana  Department,  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 Indiana  Department  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  Insurance  Group,  Inc.  ("Superior
     Group") are based 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 Indiana Department.

o    Continue to comply with prior Indiana  Department  agreements and orders to
     correct  business  practices,   under  which  Pafco  must  provide  monthly
     financial  statements  to the  Indiana  Department,  obtain  prior  Indiana
     Department  approval of reinsurance  arrangements  and of affiliated  party
     transactions,  submit business plans to the Indiana Department that address
     levels of surplus and net  premiums  written,  and consult with the Indiana
     Department  on a monthly  basis.  Pafco's  failure to provide  the  monthly
     financial  information could result in the Indiana  Department  requiring a
     50% reduction in Pafco's monthly written premiums.

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

         Pafco has also  agreed with the Iowa  Department  of  Insurance  ("Iowa
Department") to (i) limit policy counts on automobile  business in Iowa and (ii)
provide the Iowa  Department  with policy count  information  on a monthly basis
until June 30, 1999 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 Pafco operates.

         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 Indiana  Department  to provide  monthly  financial  statements  and consult
monthly with the Indiana Department, and to obtain prior approval for affiliated
party  transactions.  IGF is currently not in compliance with the requirement to
provide monthly  financial  statements;  however IGF is working with the Indiana
Department to provide this information on a timely basis.

         IGF has  agreed  with the Iowa  Department  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
ratio of less than three times to one; and (iii) surplus reasonable to its risk.

         Superior is required to submit  monthly  financial  information  to the
Florida  Department,  including a demonstration that it has not exceeded a ratio
of net  written  premiums to surplus of four to one.  Superior  must also file a
risk-based capital plan with the Florida Department by May 15, 2000.

Insurance Holding Company Regulation

         The  Company  also is  subject  to  laws  governing  insurance  holding
companies in Florida and Indiana,  where its insurance company  subsidiaries are
domiciled.  These  laws,  among  other  things,  (i) require the Company to file
periodic  information with state regulatory  authorities  including  information
concerning its capital  structure,  ownership,  financial  condition and general
business operations; (ii) regulate certain transactions between the Company, its
affiliates and IGF, Pafco,  Superior,  Superior  American and Superior  Guaranty
(the "Insurers"),  including the amount of dividends and other distributions and
the terms of surplus notes;  and (iii) restrict the ability of any one person to
acquire  certain  levels  of  the  Company's  voting  securities  without  prior
regulatory approval.

         Any purchaser of 10% or more of the outstanding  shares of common stock
of the  Company  would be  presumed  to have  acquired  control of Pafco and IGF
unless the Indiana  Commissioner  of  Insurance  ("Indiana  Commissioner")  upon
application,  has determined otherwise. In addition, any purchaser of 5% or more
of the  outstanding  shares of common  stock of the Company  will be presumed to
have acquired  control of Superior unless the Florida  Commissioner of Insurance
("Florida Commissioner"), upon application, has determined otherwise.

         Dividend payments by the Company's  insurance  subsidiaries are subject
to restrictions  and limitations  under  applicable law, and under those laws an
insurance  subsidiary may not pay dividends to the Company  without prior notice
to, or  approval  by,  the  subsidiary's  domiciliary  insurance  regulator.  In
addition,  in the 1996 consent  order  approving the  Company's  acquisition  of
Superior,  the Florida Department  prohibited Superior from paying any dividends
for four years from the date of  acquisition  without the prior  approval of the
Florida  Department,  and as a result of regulatory actions taken by the Indiana
Department  with  respect  to Pafco  and  IGF,  those  subsidiaries  may not pay
dividends to the Company  without prior approval by the Indiana  Department (see
"Recent Regulatory  Developments" above).  Further,  payment of dividends may be
constrained by business and regulatory considerations,  and state insurance laws
and  regulations  require that the  statutory  surplus of an  insurance  company
following any dividend or distribution by such company be reasonable in relation
to  its  outstanding   liabilities   and  adequate  for  its  financial   needs.
Accordingly,  there  can be no  assurance  that the  Indiana  Department  or the
Florida Department would permit any of the Company's  insurance  subsidiaries to
pay dividends at this time (see "RISK FACTORS").

         While the non-insurance  company  subsidiaries are not subject directly
to the dividend and other  distribution  limitations,  insurance holding company
regulations  govern the amount  which a  subsidiary  within the holding  company
system may charge any of the Insurers for services  (e.g.,  management  fees and
commissions).  These  regulations may affect the amount of management fees which
may be paid by Pafco and Superior to Superior Group  (formerly,  GGS Management,
Inc.).  The management  agreement  between the Company and Pafco was assigned to
Superior  Group and provides for an annual  management fee equal to 15% of gross
premiums.  A similar management  agreement with a management fee of 17% of gross
premiums was entered into between  Superior and Superior Group.  There can be no
assurance that either the Indiana  Department or the Florida Department will not
in the future require a reduction in these management fees.

         In addition,  neither Pafco nor IGF may engage in any transaction  with
an affiliate,  including the Company,  without the prior approval of the Indiana
Department (see "Recent Regulatory Developments" above).

Underwriting and Marketing Restrictions

         During the past  several  years,  various  regulatory  and  legislative
bodies  have  adopted  or  proposed  new laws or  regulations  to deal  with the
cyclical  nature of the insurance  industry,  catastrophic  events and insurance
capacity  and  pricing.  These  regulations  include (i) the creation of "market
assistance plans" under which insurers are induced to provide certain coverages;
(ii)  restrictions  on the ability of insurers  to rescind or  otherwise  cancel
certain policies in mid-term;  (iii) advance notice  requirements or limitations
imposed for certain policy non-renewals;  and (iv) limitations upon or decreases
in rates permitted to be charged.


<PAGE>



Insurance Regulatory Information System

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

         During  1999,  Pafco had values  outside of the  acceptable  ranges for
three IRIS tests.  These  included the two-year  overall  operating  ratio,  the
change in surplus ratio and the two-year reserve development ratio. Pafco failed
the first two tests due  primarily to a high loss ratio.  Pafco failed the third
test due to adverse  development on accident year 1996 due to higher than normal
severity as a result of a disruption in claims management in early 1997.

         During 1999,  Superior had values outside of the acceptable  ranges for
three IRIS tests.  These  included the two-year  overall  operating  ratio,  the
change in surplus ratio and estimated current reserve deficiency to ratio.

         During 1999, IGF had values  outside of the  acceptable  ranges for the
following eight IRIS tests:  gross premiums to surplus,  change in net writings,
surplus aid to surplus,  two year overall  operating  ratio,  investment  yield,
liabilities to liquid assets,  agent's balances to surplus, and one year reserve
development to surplus.

         IGF  failed the gross  premiums  to  surplus  and the one year  reserve
development to surplus ratio due to IGF's surplus being below its projections in
1999 as a result of the booking of additional loss reserves for the Discontinued
Product.  IGF  failed  the  change  in net  writings  and the two  year  overall
operating  ratio due to IGF's auto business in 1999.  IGF failed the  investment
test due to its need to  borrow on its line of credit at the end of each year in
order to pay MPCI premiums owed to the FCIC. IGF generally fails the liabilities
to liquid assets and the agent's  balance to surplus ratios due to the nature of
its business whereby such amounts are settled in full subsequent to year end.

Risk-Based Capital Requirements

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

         The RBC model law provides for four levels of  regulatory  action.  The
extent of regulatory  intervention  and action increases as the level of surplus
to RBC falls.  The first  level,  the  Company  Action  Level (as defined by the
NAIC),  requires  an  insurer  to  submit a plan of  corrective  actions  to the
regulator if surplus falls below 200% of the RBC amount.  The Regulatory  Action
Level  requires an insurer to submit a plan  containing  corrective  actions and
requires the relevant insurance  commissioner to perform an examination or other
analysis  and issue a  corrective  order if surplus  falls below 150% of the RBC
amount. The Authorized  Control Level gives the relevant insurance  commissioner
the  option  either to take the  aforementioned  actions or to  rehabilitate  or
liquidate the insurer if surplus falls below 100% of the RBC amount.  The fourth
action  level  is the  Mandatory  Control  Level  which  requires  the  relevant
insurance commissioner to rehabilitate or liquidate the insurer if surplus falls
below 70% of the RBC amount. Based on the foregoing formulae, as of December 31,
1999, the RBC ratio of IGF was in excess of the Company Action Level, Superior's
ratio was at 199% of the RBC amount, or $151,000 below the Company Action Level,
and Pafco's ratio was 72% of the RBC amount,  or $10.5 million below the Company
Action Level.

Guaranty Funds; Residual Markets

         The Insurers  also may be required  under the solvency or guaranty laws
of most  states in which  they do  business  to pay  assessments  (up to certain
prescribed  limits) to fund  policyholder  losses or liabilities of insolvent or
rehabilitated insurance companies. These assessments may be deferred or forgiven
under most guaranty laws if they would threaten an insurer's  financial strength
and, in certain  instances,  may be offset against  future  premium taxes.  Some
state laws and  regulations  further  require  participation  by the Insurers in
pools or funds to provide some types of insurance coverages which they would not
ordinarily  accept.  The Company  recognizes its  obligations  for guaranty fund
assessments  when it receives  notice that an amount is payable to the fund. The
ultimate amount of these assessments may differ from that which has already been
assessed.

         It is not possible to predict the future  impact of changing  state and
federal  regulation  on the Company's  operations  and there can be no assurance
that laws and  regulations  enacted in the future  will not be more  restrictive
than existing laws.

Federal Regulation

         The Company's MPCI program is federally  regulated and supported by the
federal   government  by  means  of  premium   subsidies  to  farmers,   expense
reimbursement and federal reinsurance pools for private insurers.  Consequently,
the MPCI  program is subject  to  oversight  by the  legislative  and  executive
branches  of the  federal  government,  including  the  FCIC.  The MPCI  program
regulations generally require compliance with federal guidelines with respect to
underwriting,  rating and claims  administration.  The  Company is  required  to
perform continuous  internal audit procedures and is subject to audit by several
federal  government  agencies.  No material  compliance issues were noted during
IGF's most recent FCIC compliance review.

         The MPCI program has historically been subject to change by the federal
government at least annually  since its  establishment  in 1980,  some, of which
changes have been significant. See Industry Background for further discussion of
federal regulations impacting crop insurance.

Employees

         At April, 2000 the Company and its subsidiaries employed  approximately
895 full and part-time  employees.  The Company believes that relations with its
employees are excellent.

RISK FACTORS

         The following factors,  in addition to the other information  contained
in this report should be considered in evaluating the Company and its prospects.

          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.

Significant Losses Have Been Reported and May Continue

         The  Company  reported  net  losses of $80.8  million in 1999 and $14.4
million in 1998. The losses were due to reduced earnings in both segments of the
Company's  operations.  In 1999,  the  Company's  crop  insurance  business  was
adversely  affected by the increased claim  settlements  and reserves  resulting
from  the  Discontinued  Product.  In  1998,  the crop  insurance  business  was
adversely  affected by catastrophic  crop hail losses and other  weather-related
events.  Results for 1999 and 1998 for the nonstandard  automobile business were
adversely affected by continuing higher loss ratios and lower premium volumes as
a result of problems that the Company encountered in making timely rate filings,
problems with new policy administration systems and competitive  pressures.  The
Company  also   significantly   increased  loss  reserves  for  the  nonstandard
automobile  business in 1999 and 1998 due to adverse loss development.  Although
the  Company  has taken a number of  actions to address  the  factors  that have
contributed to these operating losses,  there can be no assurance that operating
losses will not continue.

Recent and Further Regulatory Actions May Affect the Company's Future Operations

         The  Company's   insurance   company   subsidiaries,   their   business
operations,  and their transactions with affiliates,  including the Company, are
subject to extensive  regulation  and oversight by the Indiana  Department,  the
Florida  Department  and the  insurance  regulators of other states in which the
insurance company subsidiaries write business.  Moreover,  the insurance company
subsidiaries' losses, adverse trends and uncertainties  discussed in this report
have been and  continue  to be matters of concern to the  domiciliary  and other
insurance  regulators of the Company's  insurance company  subsidiaries and have
resulted in enhanced scrutiny and regulatory actions by several regulators.  See
"Regulation   -  Recent   Regulatory   Developments   and   Risk-Based   Capital
Requirements" . The primary purpose of insurance regulation is the protection of
policyholders  rather  than  stockholders.  Failure to resolve  issues  with the
Indiana  Department  and the  Florida  Department,  and  with  other  regulators
(including  the RBC levels of Pafco and IGF),  in a manner  satisfactory  to the
Company could impair the Company's ability to execute its business strategies or
result in future regulatory actions or proceedings that otherwise materially and
adversely affect the Company's operations.

Current A.M. Best Ratings May Adversely  Affect the Company's  Ability to Retain
and Expand its Business

         A.M. Best Company,  which rates insurance companies based on factors of
concerns to policyholders, recently lowered its ratings of Superior from "B+" to
"B-" and its rating of Pafco from "B-" to "C" and changed its rating of IGF from
"NA-2" to "NA-3".  One factor in an insurer's ability to compete  effectively is
its A.M.  Best  rating.  There can be no  assurance  that the current  rating or
future ratings will not adversely affect the Company's  competitive position. It
is not likely that the ratings will be improved unless the Company  improves its
future operating performance.

The Company is Subject to a Number of Pending Legal Proceedings

         As discussed  elsewhere  in this  report,  the Company is involved in a
number  of  pending  legal  proceedings  (see  Part I - Item  3).  Most of these
proceedings remain in the early stages.  Although the Company believes that many
of the  allegations  of  wrongdoing  are without merit and intends to vigorously
defend  the claims  brought  against  it,  there can be no  assurance  that such
proceedings  will  not  have  a  materially  adverse  effect  on  the  Company's
operations.

The Terms of the Trust Preferred Securities May Restrict The Company's Ability
to Act

         The Company has issued  through a wholly  owned trust  subsidiary  $135
million  aggregate  principal  amount in Trust Originated  Preferred  Securities
("Preferred Securities").  The Preferred Securities have a term of 30 years with
annual  interest  payments of 9.5% paid  semi-annually.  The  obligations of the
Preferred  Securities  are  funded  from the  Company's  nonstandard  automobile
management company and dividend capacity from the crop insurance  business.  The
Company  has  elected to defer the  semi-annual  interest  payment  that was due
February  2000 and may  continue to defer such  payments for up to five years as
permitted by the indenture for the Preferred  Securities.  Although  there is no
present  default under the indenture  which would  accelerate the payment of the
Preferred  Securities,  the indenture  contains a number of convenants which may
restrict the Company's  ability to act in the future.  These  covenants  include
restrictions on the Company's  ability to: incur or guarantee debt; make payment
to affiliates;  repurchase its common stock;  pay dividends on common stock; and
make certain  investments  other than investment grade fixed income  securities.
There can be no assurance  that  compliance  with these  restrictions  and other
provisions  of the indenture  for the  Preferred  Securities  will not adversely
affect the Company's ability to improve its operating results.

Problems with Policy Administration Systems Have Been Identified

         As  previously  reported,  three out of the five policy  administration
systems utilized by the nonstandard auto segment during 1999 were implemented in
the  1998 and 1999  time  frames  and did not  have  fully  automated  financial
reporting functionality.  The other two policy administration systems being used
are systems that were used with mature financial reporting capabilities.

         Implementation  of the  three  new  systems  without  mature  financial
reporting   capabilities  resulted  in  the  usage  of  an  accounts  receivable
estimation methodology. Accounts receivable as of September 30, 1999, related to
policies administered by new systems based on estimates. As of December 31, 1999
accounts  receivable systems reports that were not reliant on the faulty systems
were  put in place  and were  used for all  non-standard  auto  reporting  as of
December 31, 1999. As a result, receivables are no longer being estimated.

         Two of the three new policy administration systems mentioned above were
implemented   in  December  1998  and  August  1999.   After  the  systems  were
implemented,  system problems were  identified  which resulted in additional bad
debt expense being recorded. The additional bad debt expense was due to problems
in billing  policies  contained  within the two systems.  Of the $4.5 million of
estimated premium receivables  administered by the two systems,  the Company has
estimated $2.9 million of that amount to be uncollectible  primarily as a result
of policy billing and cancellation problems. As previously reported, that amount
was written off in the third quarter of 1999.  The Company  finished  converting
policies  from the two systems  back to a mature  policy  administration  system
which the Company had used before  prior to December  31,  1999.  The Company no
longer has the cancellation or billing problems that were previously reported.

         The  third  new  policy  administration  system  has  also  experienced
reporting  problems.  Approximately  75% of all  of  the  Company's  nonstandard
automobile  policies  are on this  policy  administration  system As  previously
reported,  these reporting  problems appear to be due to programming  changes in
the manner in which data was extracted from the policy administration system for
reporting purposes.  During the fourth quarter compensating controls were put in
place to help ensure that data extracted for reporting  purposes is accurate and
the  effects  of  programming  changes  are being  monitored.  The effect of the
identified problems was recorded in the third quarter 1999.

Weaknesses in Internal Control Systems

         The  Company's   systems  of  internal  control  contained  within  key
processes  and  information  technology  systems are  continuing to be evaluated
through  an ongoing  review.  The  Company's  systems of  internal  control  are
intended  to insure  reliable  financial  reporting  as well as provide  for the
safeguarding of the Company's  assets.  The following  specific  weaknesses were
previously reported:  general ledger options integration with operating systems,
financial reporting controls, the relationship of actuarial analysis with claims
processing  and specific  technical  documentation.  Technological  inadequacies
arising  during the migration of systems  continue to be addressed on an ongoing
basis.  An action  plan has been  created to insure that  attention  is given to
identified areas. The four part action plan includes: 1) specific human resource
initiatives   designed  to  increase  financial  accounting  staffing  and  core
competency and the hiring of experienced financial management;  2) imposition of
task force  direction  headed by senior  management  designed to  integrate  and
automate the information  technology and financial  reporting  applications;  3)
increased emphasis on internal audit functional  responsibilities  including the
development of  comprehensive  internal  audit programs  designed to monitor and
report on compliance with  established  control  systems;  and 4) ongoing use of
external  consulting  resources  in  the  oversight  of  system   documentation,
development   of   financial    reporting    procedures,    re-engineering    of
interdepartmental  integration  processes and the implementation and enhancement
of existing policies and procedures.

         The  areas  previously  reported  concerning  year 2000  compliance  of
certain  operating  systems in the  nonstandard  operations  and general  ledger
systems integration are no longer a problem.

The Company Needs to Improve its Ability to Produce  Financial  Information on a
Timely Basis

         Many of the Company's problems with its policy  administration  systems
and the weaknesses in internal controls  previously reported have been resolved.
The problems  discussed in that report  resulted in the Company  being unable to
prepare certain otherwise routine monthly and quarterly financial statements and
information on a timely basis. Such statements and information are necessary for
the Company's  internal use, for filings with regulators and for compliance with
the Company's periodic reporting obligations.

Uncertain Pricing and Profitability

         One  of  the  distinguishing  features  of the  property  and  casualty
industry is that its  products  are priced  before  losses are  reported and its
costs are known.  Premium rate levels are related in part to the availability of
insurance  coverage,  which  varies  according  to the level of  surplus  in the
industry.

         Increases in surplus have generally been accompanied by increased price
competition  among property and casualty  insurers.  The nonstandard  automobile
insurance  business in recent years has  experienced  very  competitive  pricing
conditions and there can be no assurance as to the Company's  ability to achieve
adequate  pricing.  Changes  in case law,  the  passage of new  statutes  or the
adoption  of  new  regulations  relating  to  the  interpretation  of  insurance
contracts can retroactively and dramatically  affect the liabilities  associated
with known risks after an  insurance  contract is in place.  New  products  also
present special issues in establishing appropriate premium levels in the absence
of a base of experience with such products' performance. The level of claims can
not be accurately  determined for periods after the sale of policies,  therefore
reserves are  estimated and these  estimates are used to set price,  if they are
low then resulting rates could be inadequate.

         The number of competitors  and the similarity of products  offered,  as
well as  regulatory  constraints,  limit the  ability of property  and  casualty
insurers to increase prices in response to declines in profitability.  In states
which require prior approval of rates,  it may be more difficult for the Company
to achieve premium rates which are commensurate with the Company's  underwriting
experience  with respect to risks  located in those  states.  In  addition,  the
Company does not control  rates on its MPCI  business,  which are instead set by
the FCIC.  Accordingly,  there can be no  assurance  that  these  rates  will be
sufficient to produce an underwriting profit.

         The reported  profits and losses of a property  and casualty  insurance
company are also determined,  in part, by the  establishment of, and adjustments
to, reserves reflecting  estimates made by management as to the amount of losses
and loss  adjustment  expenses  ("LAE") that will  ultimately be incurred in the
settlement of claims.  The ultimate  liability of the insurer for all losses and
LAE  reserved  at any given  time  will  likely be  greater  or less than  these
estimates, and material differences in the estimates may have a material adverse
effect on the  insurer's  financial  position or results of operations in future
periods.

Nature of Nonstandard Automobile Insurance Business

         The  nonstandard  automobile  insurance  business  is  affected by many
factors  which  can cause  fluctuation  in the  results  of  operations  of this
business. Many of these factors are not subject to the control of the Company.

         The size of the nonstandard  market can be  significantly  affected by,
among other factors,  the  underwriting  capacity and  underwriting  criteria of
standard automobile insurance carriers. In addition, an economic downturn in the
states in which the Company writes  business could result in fewer new car sales
and  less  demand  for  automobile  insurance.   These  factors,  together  with
competitive  pricing and other  considerations,  could result in fluctuations in
the Company's underwriting results and net income.


<PAGE>



Nature of Crop Insurance Business

         The Company's  operating  results from its crop  insurance  program can
vary  substantially  from  period  to period  as a result  of  various  factors,
including timing and severity of losses from storms,  drought,  floods,  freezes
and other natural perils and crop production cycles.  Therefore, the results for
any  quarter or year are not  necessarily  indicative  of results for any future
period.  The underwriting  results of the crop insurance business are recognized
throughout  the year  with a  reconciliation  for the  current  crop year in the
fourth quarter.

         The Company expects that for the  foreseeable  future a majority of its
crop insurance premiums will continue to be derived from MPCI business. The MPCI
program is federally  regulated and supported by the federal government by means
of premium subsidies to farmers,  expense  reimbursement and federal reinsurance
pools for private insurers. As such,  legislative or other changes affecting the
MPCI program could impact the Company's business prospects. The MPCI program has
historically   been  subject  to   modification  at  least  annually  since  its
establishment  in the private  sector in 1980,  and some of these  modifications
have been significant.  As noted earlier,  there are additional  program reforms
currently being contemplated by Congress that would become effective,  if passed
into law for 2001 crop year. No assurance can be given that future  changes will
not  significantly  affect the MPCI  program and the  Company's  crop  insurance
business.

         Total MPCI Gross  Premium  for each  farmer  depends  upon the kinds of
crops  grown,  acreage  planted,  commodity  prices,  insurance  rates and other
factors  determined by the FCIC.  Each year, the FCIC sets, by crop, the maximum
prices per  commodity  unit known as the price  election to be used in computing
MPCI Gross Premiums. Any reduction of the price election by the FCIC will reduce
the MPCI Gross Premium charged per policy, and accordingly will adversely impact
MPCI Gross Premium volume.

         The  Company's  crop  insurance  business  is also  affected  by market
conditions in the agricultural  industry which vary depending on such factors as
federal  legislation  and  administration  policies,  foreign  country  policies
relating  to  agricultural  products  and  producers,  demand  for  agricultural
products,  weather,  natural  disasters,  technologic  advances in  agricultural
practices,  international  agricultural  markets and general economic conditions
both in the United  States and abroad.  For  example,  the number of MPCI Buy-up
Coverage  policies written has  historically  tended to increase after a year in
which a major natural disaster adversely affecting crops occurs, and to decrease
following a year in which favorable weather conditions prevail.

Highly Competitive Businesses

         Both the nonstandard automobile insurance and crop insurance businesses
are  highly  competitive.   Many  of  the  Company's  competitors  in  both  the
nonstandard  automobile  insurance  and crop  insurance  business  segments have
substantially  greater financial and other resources than the Company, and there
can be no assurance that the Company will be able to compete effectively against
such competitors in the future.

         In its nonstandard  automobile business, the Company competes with both
large national writers and smaller regional companies. The Company's competitors
include other companies which,  like the Company,  serve the independent  agency
market, as well as companies which sell insurance directly to customers.  Direct
writers may have certain competitive  advantages over agency writers,  including
increased name  recognition,  loyalty of the customer base to the insurer rather
than an independent  agency and,  potentially,  reduced  acquisition  costs.  In
addition,  certain  competitors  of the Company have from time to time decreased
their  prices in an apparent  attempt to gain  market  share.  Also,  in certain
states,  state assigned risk plans may provide nonstandard  automobile insurance
products at a lower price than private insurers.

         In the crop insurance business, the Company competes against other crop
insurance  companies.  The  crop  insurance  industry  has  become  increasingly
consolidated.  From the 1985  crop  year to the 1999 crop  year,  the  number of
insurance  companies that have entered into agreements with the FCIC to sell and
service  MPCI  policies  has  declined  from a number in excess of 50 to 17. The
Company believes that to compete  successfully in the crop insurance business it
will have to market  and  service a volume  of  premiums  sufficiently  large to
enable the Company to continue to realize  operating  efficiencies in conducting
its business. No assurance can be given that the Company will be able to compete
successfully if this market consolidates further.

Geographic Concentration

         The Company's nonstandard automobile insurance business is concentrated
in  the  states  of  Florida,   California,   Georgia,   Indiana  and  Virginia;
consequently  the  Company  will be  significantly  affected  by  changes in the
regulatory  and business  climate in those states.  The Company's crop insurance
business is concentrated in the states of Texas, North Dakota, Iowa,  Minnesota,
Illinois, California,  Nebraska, Mississippi,  Arkansas and South Dakota and the
Company will be significantly affected by weather conditions, natural perils and
other factors affecting the crop insurance business in those states.

Uncertainty Associated with Estimating Reserves for Unpaid Losses and LAE

         The reserves for unpaid losses and LAE  established  by the Company are
estimates of amounts  needed to pay reported and  unreported  claims and related
LAE based on facts and  circumstances  then known.  These  reserves are based on
estimates of trends in claims severity, judicial theories of liability and other
factors.

         Although the nature of the  Company's  insurance  business is primarily
short-tail,  the establishment of adequate  reserves is an inherently  uncertain
process,  and there can be no  assurance  that the ultimate  liability  will not
materially exceed the Company's  reserves for losses and LAE and have a material
adverse effect on the Company's  results of operations and financial  condition.
Due to the  inherent  uncertainty  of  estimating  these  amounts,  it has  been
necessary,  and may over time continue to be necessary,  to revise  estimates of
the Company's reserves for losses and LAE. The historic  development of reserves
for losses and LAE may not necessarily  reflect future trends in the development
of  these  amounts.  Accordingly,  it may  not  be  appropriate  to  extrapolate
redundancies or deficiencies based on historical information.

Reliance Upon Reinsurance

         In order to reduce risk and to increase its underwriting  capacity, the
Company  purchases  reinsurance.  Reinsurance  does not  relieve  the Company of
liability  to its  insureds  for the risks  ceded to  reinsurers.  As such,  the
Company is subject to credit risk with respect to the risks ceded to reinsurers.
Although the Company places its reinsurance with reinsurers, including the FCIC,
which the Company  generally  believes to be financially  stable,  a significant
reinsurer's  insolvency  or  inability  to make  payments  under  the terms of a
reinsurance  treaty  could  have a  material  adverse  effect  on the  Company's
financial condition or results of operations.

         The amount and cost of reinsurance available to companies  specializing
in property and casualty  insurance  are subject,  in large part,  to prevailing
market conditions beyond the control of such companies. The Company's ability to
provide  insurance  at  competitive  premium  rates  and  coverage  limits  on a
continuing  basis  depends upon its ability to obtain  adequate  reinsurance  in
amounts and at rates that will not adversely affect its competitive position.

         Due to continuing market uncertainties  regarding reinsurance capacity,
no assurances  can be given as to the Company's  ability to maintain its current
reinsurance  facilities,  which generally are subject to annual renewal.  If the
Company  is  unable  to renew  such  facilities  upon  their  expiration  and is
unwilling to bear the associated increase in net exposures, the Company may need
to reduce the levels of its underwriting commitments.

Risks Associated with Investments

         The Company's  results of operations  depend in part on the performance
of its invested  assets.  Certain  risks are inherent in  connection  with fixed
maturity securities including loss upon default and price volatility in reaction
to changes in  interest  rates and general  market  factors.  Equity  securities
involve risks arising from the financial  performance of, or other  developments
affecting,  particular  issuers as well as price volatility arising from general
stock market conditions.

ITEM 2 - PROPERTIES

Headquarters

         The  headquarters  for the Company is located at 4720  Kingsway  Drive,
Indianapolis   Indiana.  The  building  is  an  80,000  square  foot  multilevel
structure;  approximately 50% of which is utilized by the Company. All corporate
administration,  accounting  and  management  functions  are  contained  at this
location.  The  remaining  space  is  leased  to  third  parties  at a price  of
approximately $10 per square foot. The Company owns 100% of the property with no
encumbrances.

Pafco

         Pafco is also located at 4720 Kingsway Drive, Indianapolis, Indiana. In
addition,  Pafco owns an  investment  property  located at 2105 North  Meridian,
Indianapolis, Indiana. The property is a 21,700 square foot, multilevel building
leased entirely to third parties. All underwriting,  claims,  administration and
accounting activities are contained at this location for Pafco.

Superior

         Superior's  operations  are conducted at leased  facilities in Atlanta,
Georgia;  Tampa,  Florida;  and  Orange,  California.  Under a lease  term which
extends  through  February 2003,  Superior leases office space at 280 Interstate
North Circle,  N. W., Suite 500,  Atlanta,  Georgia.  Superior  occupies  43,338
square feet at this  location.  Superior  also had an office  located at 3030 W.
Rocky Pointe Drive,  Suite 770, Tampa,  Florida consisting of 18,477 square feet
of space leased for a term extending through  February,  2000. That location has
been moved to 5483 West Waters Avenue,  Suite 1200, Tampa,  Florida and consists
of approximately 33,861 square feet of space leased for a term extending through
December 2007. In addition, Superior occupies an office at 1745 West Orangewood,
Orange,  California  consisting of 3,264 square feet leased for a term extending
through May 2001. All administration and accounting activities are housed at the
Atlanta  location.  Underwriting  and claims  activities  are split  between the
Atlanta and Tampa  locations.  The Tampa  location  underwrites  for Florida and
Tennessee  whereas  the  remaining  states  are  processed  in  Atlanta.  Claims
activities,  excluding  personal  injury  protection  (PIP),  are handled at the
Atlanta location.  All PIP claims are processed at the Tampa location.  Customer
service for Texas,  California,  and  Arizona  are handled in Tampa  whereas the
remaining states are handled in Atlanta.

IGF

         IGF owns a 57,799  square  foot office  building  located at 6000 Grand
Avenue,  Des  Moines,  Iowa  which  serves as its  corporate  headquarters.  The
building is fully occupied by IGF. All underwriting,  claims, administration and
entity accounting activities are directed out of this location.

         IGF owns two buildings with 12,592 and 3,000 square feet, respectively,
in  Henning,  Minnesota.  The 3,000  square  foot  building is leased to a third
party.

         IGF owns a 5,624 square foot building in Lubbock, Texas with 800 square
feet being leased to a third party.

         IGF leases office space in Mississippi, Illinois, Missouri, Washington,
Texas,  California,  North  Carolina and Montana.  This office space houses crop
service  offices which handle  underwriting  and other  servicing  functions for
selected states.

         The Company  considers all of its properties  suitable and adequate for
its current operations.


<PAGE>



ITEM 3 - LEGAL PROCEEDINGS

         Superior  Guaranty is a defendant in a case filed on November 26, 1996,
in the Circuit  Court for Lee County,  Florida  entitled  Raed Awad v.  Superior
Guaranty Insurance Company, et al., Case No. 96-9151 CA LG. The case purports to
be brought on behalf of a class  consisting  of  purchasers  of  insurance  from
Superior Guaranty.  Plaintiffs allege that the defendant charged premium finance
service charges in violation of Florida law. Superior Guaranty believes that the
allegations  of  wrongdoing  as alleged in the  complaint  are without merit and
intends to vigorously defend the claims brought against it.

         IGF is a party to a number of pending legal proceedings relating to the
Discontinued  Product.  See  Note  16  "Commitments  and  Contingencies"  in the
consolidated  financial  statements.  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 Discontinued Product 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 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.  The Company
believes that it has meritorious defenses to any claims in excess of the amounts
it has already paid and that the loss payments made and LAE reserves established
with  respect to the claims from the  Discontinued  Product as of  December  31,
1999, are adequate with regard to all of the policies sold.  However,  there can
be no assurance that the Company's  ultimate liability with respect to these and
any future legal  proceedings  involving  such policies will not have a material
adverse effect on the Company's results of operations or financial position.

         Superior Guaranty is a defendant in a case filed on October 8, 1999, in
the Circuit  Court for Manatee  County,  Florida  entitled  Patricia  Simmons v.
Superior Guaranty Insurance Company, Case No. 1999 CA-4635. The case purports to
be brought on behalf of a class  consisting  of  purchasers  of  insurance  from
Superior Guaranty.  The Plaintiff alleges that the defendant charged interest in
violation of Florida law.  Superior  Guaranty  believes that the  allegations of
wrongdoing  as  alleged  in the  complaint  are  without  merit and  intends  to
vigorously defend the claims brought against it.

         The Company is a defendant in a case filed on February 23, 2000, in the
United  States  District  Court for the  Southern  District of Indiana  entitled
Robert Winn, et al. v. Symons  International  Group,  Inc., et al., Cause No. IP
00-0310-C-B/S.  Other parties named as defendants are Goran,  three  individuals
who  were  or  are   officers  or   directors   of  the  Company  or  of  Goran,
PricewaterhouseCoopers,  LLP  and  Schwartz  Levitsky  Feldman,  LLP.  The  case
purports  to be brought on behalf of a class  consisting  of  purchasers  of the
Company's  stock or Goran's stock during the period  February 27, 1998,  through
and including  November 18, 1999.  Plaintiffs allege,  among other things,  that
defendants  misrepresented  the reliability of the Company's  reported financial
statements,  data processing and financial reporting systems,  internal controls
and loss reserves in violation of Section 10(b) of the  Securities  Exchange Act
of 1934 ("1934 Act") and SEC Rule 10b-5 promulgated  thereunder.  The individual
defendants are also alleged to be liable as "controlling  persons" under Section
20 of the  1934  Act.  Defendants'  response  to the  complaint  is not yet due.
However,  the Company  believes that the allegations of wrongdoing as alleged in
the  complaint  are without  merit and 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.  The
Company does not believe it will owe anything for this possible assessment. This
possible  assessment  relates  to  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 from Superior. The
Company did not receive any of such brokers fees.  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.

         The Company's  insurance  subsidiaries  are parties to other litigation
arising in the  ordinary  course of  business.  The  Company  believes  that the
ultimate resolution of these lawsuits will not have a material adverse effect on
its  financial  condition or results of  operations.  The  Company,  through its
claims reserves,  reserves for both the amount of estimated damages attributable
to these lawsuits and the estimated costs of litigation.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.


EXECUTIVE OFFICERS OF THE REGISTRANT

         Presented below is certain information regarding the executive officers
of the  Company  who are not also  directors.  Their  respective  ages and their
respective positions with the Company are listed as follows:

Name                           Age          Position

Gregg Albacete                 38      Chief Information Officer of the Company

Dennis G. Daggett              45      Chief Executive Officer of IGF Insurance
                                         Company

Mary E. DeLaat                 45      Vice President, Chief Accounting Officer
                                         of the Company

Bruce K. Dwyer                 50      Vice President, Chief Financial Officer
                                        and Treasurer of the Company

     Mr. Albacete has served as Chief  Information  Officer of the Company since
January,  2000.  Mr.  Albacete  served as Vice  President and Chief  Information
Officer of Leader  Insurance from December,  1987 to January,  2000. From March,
1982 to February,  1985 Mr.  Albacete worked for Transport  Insurance.  Prior to
that time, Mr. Albacete was a self-employed consultant.

         Mr.  Daggett,  Chief  Executive  Officer  of IGF,  served  as the Chief
Operating  Officer of IGF from 1994 to 1999, from 1996 to 1999 as its President.
He has served as a director of IGF since 1989.  From 1992 to 1996,  Mr.  Daggett
served as an Executive  Vice  President of IGF. Mr. Daggett also served as IGF's
Vice President of Marketing from 1988 to 1993. Prior to joining IGF, Mr. Daggett
was an initial employee of a crop insurance  managing  general agency,  McDonald
National Insurance Services,  Inc., from 1984 until 1988. From 1977 to 1983, Mr.
Daggett was employed as a crop insurance specialist with the FCIC.

     Ms.  DeLaat,  C. P. A.,  has  served as Vice  President,  Chief  Accounting
Officer of the Company since July,  1999.  Prior to that time, Ms. DeLaat served
as a General Auditor with American United Life from 1992 to 1999, Audit Director
of  Property/Casualty  Operations with Lincoln National Corporation from 1983 to
1992, and as a Senior Auditor with Ernst and Whinney 1980 to 1983.

     Mr. Dwyer, C.A., has served as Vice President,  Chief Financial Officer and
Treasurer of the Company and Goran since October,  1999, when he returned to the
Company  after  serving in a similar  position at Goran from 1981 to 1996.  From
1996 to 1999 Mr. Dwyer conducted his own consulting practice.
<PAGE>


PART II

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
 MATTERS

         Information  regarding  the  trading  market for the  Company's  common
stock,  the range of selling prices for each  quarterly  period since January 1,
1998, and the  approximate  number of holders of common stock as of December 31,
1999 and other  matters is  included  under the  caption  "Market  and  Dividend
Information" on page 55 of the 1999 Annual Report, included as Exhibit 13, which
information is incorporated herein by reference.

ITEM 6 - SELECTED FINANCIAL DATA

         The data  included  on page 5 of the 1999  Annual  Report,  included as
Exhibit 13, under "Selected Financial Data" is incorporated herein by reference.

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

         The  discussion  entitled   "Management   Discussion  and  Analysis  of
Financial  Condition  and  Results of  Operations"  included  in the 1999 Annual
Report on pages 6 through 22  included as Exhibit 13 is  incorporated  herein by
reference.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The discussion entitled  "Quantitative and Qualitative  Disclosures About Market
Risk" is included  in the 1999 Annual  report on pages 19 through 21 included as
Exhibit 13 is incorporated herein by reference.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The  consolidated  financial  statements  in the  1999  Annual  Report,
included as Exhibit  13, and listed in Item 14 of this  Report are  incorporated
herein by reference from the 1999 Annual Report.

ITEM 9- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.  None.

PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The  information  required  by this  Item  regarding  Directors  of the
Company is incorporated  herein by reference to the Company's  definitive  proxy
statement  for its 2000  annual  meeting of common  stockholders  filed with the
Commission pursuant to Regulation 14A (the "2000 Proxy Statement").

ITEM 11 - EXECUTIVE COMPENSATION

         The  information  required  by this  Item  is  incorporated  herein  by
reference to the Company's 2000 Proxy Statement.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  information  required  by this  Item  is  incorporated  herein  by
reference to the Company's 2000 Proxy Statement.


<PAGE>


ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  information  required  by this  Item  is  incorporated  herein  by
reference to the Company's 2000 Proxy Statement.

PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         The documents listed below are filed as a part of this Report except as
otherwise indicated:

1.       Financial Statements.  The following described consolidated financial
         statements found on the pages of the 1999 Annual Report indicated
         below are incorporated into Item 8 of this Report by reference.

              Description of Financial Statement Item Location in 1999
              Annual Report

                Report of Independent Accountants                        Page 53

                Consolidated Balance Sheets, December 31,
                  1999 and 1998                                          Page 23

                Consolidated Statements of Earnings, Years

                  Ended December 31, 1999, 1998 and 1997                 Page 24

                Consolidated Statements of Changes In
                  Shareholders' Equity, Years Ended

                  December 31, 1999, 1998 and 1997                       Page 25

                Consolidated Statements of Cash Flows,
                  Years Ended December 31, 1999, 1998 and 1997           Page 26

                Notes to Consolidated Financial Statements,
                  Years Ended December 31, 1999, 1998 and 1997         Page 22
                                                                      through 27

2.       Financial Statement Schedules.  The following financial statement
         schedules are included beginning on Page 39.

               Report of Independent Accountants

                 Schedule II - Condensed Financial Information of Registrant

                 Schedule IV - Reinsurance

                 Schedule V - Valuation and Qualifying Accounts

                 Schedule VI - Supplemental Information Concerning Property -
                 Casualty Insurance Operations

3.       Exhibits.  The Exhibits set forth on the Index to Exhibits are
         incorporated herein by reference.

4.       Reports on Form 8-K.  The following reports were filed during the
         fourth quarter of 1999:

              Report on Form 8-K  dated  October  22,  1999 and a Form 8-K dated
              November 1, 1999 was filed  reporting under Item 4 a change in the
              Company's accountants.

<PAGE>


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

The audit  referred to in our report dated March 14,  2000,  except for note 22,
which is as of March 23, 2000 relating to the consolidated  financial statements
of Symons International Group, Inc., which is incorporated in Item 8 of the Form
10-K by  reference  to the  annual  report to  stockholders  for the year  ended
December 31, 1999 included the audit of the financial statement schedules listed
in  the  accompanying   index.  These  financial  statement  schedules  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statement schedules based upon our audit.

In our  opinion  such  financial  statement  schedules  present  fairly,  in all
material respects, the information set forth therein.

BDO SEIDMAN, LLP

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












<PAGE>


SYMONS INTERNATIONAL GROUP, INC.- CONSOLIDATED
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES.

The  information  required  by this  schedule  is included in Note 3 of Notes to
Consolidated Financial Statement.

 SYMONS INTERNATIONAL GROUP, INC. - CONSOLIDATED
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
As Of December 31, 1998 and 1999
(In Thousands)
<TABLE>
<CAPTION>


ASSETS                                                         1998      1999
                                                           -------- ---------

Assets:
<S>                                                        <C>      <C>
    Investments In And Advances To Related Parties         $154,298 $  74,430
    Cash and Cash Equivalents                                 2,586     4,938
    Federal Income Tax Receivable                             3,844    (3,769)
    Property and Equipment                                       13        72
    Other                                                        99      (194)
    Intangible Assets                                        41,718    39,524
                                                           -------- ---------
Total Assets                                               $202,558   115,001
                                                           ======== =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
    Accrued Distributions on Preferred Securities             4,809     4,809
    Other                                                       754       172
                                                           -------- ---------
Total Liabilities                                             5,563     4,982
                                                           -------- ---------
Manditorily Redeemable

    Preferred Securities                                    135,000   135,000
                                                           -------- ---------
Stockholders' Equity:
    Common Stock, No Par, 100,000,000 shares Authorized,     38,136    38,136
       10,450,000 and 10,402,000 Issued and Outstanding
    Additional Paid-In Capital                                5,851     5,851
    Unrealized Gain (Loss) On Investments (Net of Deferred    1,261    (4,898)
       Taxes of $680 in 1998 and $(2,637) in 1999)
Retained Earnings                                            16,747   (64,070)
                                                           -------- ---------
Total Stockholders' Equity (Deficit)                         61,995   (24,981)
                                                           -------- ---------
Total Liabilities and Stockholders' Equity                 $202,558 $ 115,000
                                                           ======== =========

</TABLE>

<PAGE>


SYMONS INTERNATIONAL GROUP, INC.
SCHEDULE II - CONDENSED FINANCIAL  INFORMATION OF REGISTRANT For The Years Ended
December 31, 1997, 1998 and 1999 (In Thousands)

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

<S>                                                                         <C>           <C>          <C>
Fee Income                                                                  $628          $600         $600
Net Investment Income                                                      2,248         6,462        6,186
                                                                           -----         -----        -----
Total Revenue                                                              2,876         7,062        6,786
                                                                           -----         -----        -----
Expenses:
    Policy Acquisition and General and Administrative Expenses             2,576         3,663        4,256
    Interest Expense                                                         ---           ---           --
                                                                             ---           ---
Total Expenses                                                             2,576         3,663        4,256
                                                                           -----         -----        -----
Income Before Taxes and Minority Interest                                    300         3,399        2,530
Provisions for Income Taxes                                                  328         1,789        5,497
                                                                             ---         -----        -----
Net Income (Loss) Before Minority Interest                                   (28)        1,610       (2,967)

    Equity in Consolidated Subsidiaries                                   19,453        (7,616)     (69,513)
    Distribution on Preferred Securities, Net of Tax                      (3,120)       (8,411)      (8,336)
                                                                          -------       -------      -------
Net Income (Loss) for the Period                                         $16,305      $(14,417)    $(80,816)
                                                                         =======      =========    =========

</TABLE>


<PAGE>


SYMONS INTERNATIONAL GROUP, INC.
SCHEDULE II - CONDENSED FINANCIAL  INFORMATION OF REGISTRANT For The Years Ended
December 31, 1997, 1998 and 1999 (In Thousands)

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

<S>                                                                                       <C>              <C>             <C>
Net Income (Loss)                                                                         $  16,305        $(14,417)       $(80,816)
Cash Flows From Operating Activities:
Adjustments to Reconcile Net Cash Provided by (Used In) Operations:
    Equity In Net (Income) Loss of  Subsidiaries                                            (19,453)          7,616          69,513
    Depreciation of Property and Equity                                                           5               7               5
    Amortization of Intangible Assets                                                           858           2,040           2,194
Net Changes in Operating Assets and Liabilities:
    Federal Income Taxes                                                                       (304)         (3,621)          7,613
    Other Assets                                                                               (478)            538             293
    Other Liabilities                                                                          (876)            646            (582)
                                                                                          ---------        --------        --------
Net Cash Provided From (Used In) Operations                                                  (3,943)         (7,191)         (1,780)
                                                                                          ---------        --------        --------
Cash Flow Used In Investing Activities:
    Purchase of Minority Interest                                                           (61,000)           --              --
    Purchase of Property and Equipment                                                          (12)             (5)            (64)
                                                                                          ---------        --------        --------
Net Cash Used in Investing Activities:                                                      (61,012)             (5)            (64)
                                                                                          ---------        --------        --------
Cash Flows Provided by Financing Activities:
    Proceeds From Preferred Securities                                                      129,947            --              --
    Repayment of Loans                                                                         (350)           --              --
    Contributions of Capital or Dividends Received from Subsidiaries
                                                                                            (70,503)         10,786           4,196
    Loans From Related Parities                                                                --              --              --
    Other Investing Activities                                                                 --            (1,303)           --
                                                                                          ---------        --------        --------
Net Cash Provided By Financing Activities                                                    59,094           9,483           4,196
                                                                                          ---------        --------        --------
Increase (Decrease) in Cash and Cash Equivalents                                             (5,861)          2,287           2,352
Cash and Cash Equivalents - Beginning of Year                                                 6,160             299           2,586
                                                                                          ---------        --------        --------
Cash and Cash Equivalents - End of Year                                                   $     299        $  2,586        $  4,938
                                                                                          =========        ========        ========


</TABLE>

<PAGE>


SYMONS INTERNATIONAL GROUP, INC. - CONSOLIDATED
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
For The Years Ended December 31, 1997, 1998 and 1999

Basis of Presentation

The  condensed  financial  information  should be read in  conjunction  with the
consolidated  financial  statements  of Symons  International  Group,  Inc.  The
condensed  financial  information  includes the accounts and  activities  of the
Parent Company which acts as the holding company for the insurance subsidiaries.
<TABLE>
<CAPTION>

SYMONS INTERNATIONAL GROUP, INC. - CONSOLIDATED
SCHEDULE IV - REINSURANCE
For The Years Ended December 31, 1997, 1998 and 1999
(In Thousands)

Property and Liability Insurance                                          1997          1998         1999
                                                                          ----          ----         ----

<S>                                                                     <C>           <C>           <C>
Direct Amount                                                           $430,002      $425,526      $385,655
Assumed From Other Companies                                              30,598       126,805        88,032
Ceded to Other Companies                                                (183,059)     (220,123)     (216,124)
                                                                        ---------     ---------     ---------
Net Amounts                                                             $277,541      $332,208      $257,563
                                                                        ========      ========      ========
Percentage of Amount Assumed to Net                                         11.0%         38.2%         34.2%


</TABLE>

<PAGE>


SYMONS INTERNATIONAL GROUP, INC. - CONSOLIDATED
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
For The Years Ended December 31, 1997, 1998 and 1999
(In Thousands)

<TABLE>
<CAPTION>

                                                     1997                    1998                    1999
                                                Allowance for           Allowance for            Allowance for
                                              Doubtful Accounts       Doubtful Accounts        Doubtful Accounts

Additions:

<S>                                                         <C>                     <C>                      <C>
Balance at Beginning of Period                              $1,480                  $1,993                   $6,393

Charged to Costs and Expenses(1)                             9,519                  12,690                    8,775

Charged to Other Accounts                                      ---                     ---                      ---

Deductions from Reserves                                     9,006                   8,290                   12,249
                                                             -----                   -----                   ------

Balance at End of Period                                    $1,993                  $6,393                   $2,919
                                                             =====                   =====                    =====
</TABLE>

(1)      The Company  continually  monitors  the adequacy of its  allowance  for
         doubtful  accounts  and  believes  the  balance  of such  allowance  at
         December 31, 1997, 1998 and 1999 was adequate.


<PAGE>


SYMONS  INTERNATIONAL  GROUP,  INC. -  CONSOLIDATED
SCHEDULE VI -  SUPPLEMENTAL INFORMATION  CONCERNING
PROPERTY - CASUALTY INSURANCE  OPERATIONS For The Years
Ended December 31, 1997, 1998 and 1999 (In Thousands)
<TABLE>
<CAPTION>

          Deferred   Reserves   Discount,  Unearned    Earned      Net           Claims and       Amorti-zatiPaid       Premiums
          Policy     for        if any,    Premiums    Premiums    Invest-menAdjustment Expenses  of         Claims     Written
          AcquisitionUnpaid     deducted                           Income         Incurred        Deferred   and
          Costs      Claims     in                                               Related to:      Policy     Claim
                     and        Column C                                                          Acqui-sitioAdjust-
                     Claim                                                                        Costs      ment
                     Adjust-                                                                                 Expense
                     ment
                     Expense

Consolidated property - casualty entities                                    Current    Prior
                                                                             Years      Years

<S>       <C>        <C>                   <C>         <C>         <C>       <C>        <C>       <C>        <C>        <C>
1997      10,740     136,772    ---        114,635     271,814     11,447    201,118    10,967    59,215     198,677    460,600

1998      16,332     200,972    ---        110,664     324,923     12,373    257,470    12,996    48,066     229,695    553,190

1999      13,920     214,948    ---        90,007      263,334     12,535    234,737    30,461    46,126     238,402    473,687


</TABLE>

Note: All amounts in the above table are net of the effects of  reinsurance  and
related  commission  income,  except for net investment  income  regarding which
reinsurance is not applicable,  premiums written liabilities for losses and loss
adjustment expenses, and unearned premiums which are stated on a gross basis.


<PAGE>



SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereto duly authorized.

                                               SYMONS INTERNATIONAL GROUP, INC.


April 14, 2000                                      By:  /s/ Douglas H. Symons
                                                        Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the  following  persons on April 14, 2000, on behalf of
the Registrant in the capacities indicated:

(1) Principal Executive Officer:


/s/ Douglas H. Symons
Chief Executive Officer

(2) Principal Financial Officer:


/s/ Bruce K. Dwyer

Vice President and Chief Financial Officer,
Principal Accounting Officer


(3) The Board of Directors:


/s/ G. Gordon Symons                          /s/ Gene Yerant
Chairman of the Board                             Director


/s/ John K. McKeating                         /s/ Douglas H. Symons
Director                                          Director


/s/ Robert C. Whiting                        /s/ Alan G. Symons
Director                                         Director


/s/ Larry S. Wechter
Director