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, 1997.

( )   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: 1-12369

                        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           Common Stock
Section 12(g) of the Act:                   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 3,450,000 shares of the Issuer's Common Stock
held by non-affiliates, as of March 20, 1998 was $17.25.

The  number  of  shares  Common  Stock of the  Registrant,  without  par  value,
outstanding as of March 20, 1998 was 10,453,332.




<PAGE>



SYMONS INTERNATIONAL GROUP INC.
ANNUAL REPORT ON FORM 10-K
December 31, 1997

PART I                                                                    PAGE

Item 1.   Business                                                          3

Forward Looking Statements - Safe Harbor Provisions                         31

Item 2.   Properties                                                        37

Item 3.   Legal Proceedings                                                 38

Item 4.   Submission of Matters to a Vote of Security Holders               38

PART II

Item 5.   Market for Registrant's Common Equity and Related
          Shareholder Matters                                               38

Item 6.   Selected Consolidated Financial Data                              38

Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                               38

Item 8.   Financial Statements and Supplementary Data                       39

Item 9.   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure                            39

PART III

Item 10.  Directors and Executive Officers of the Registrant                39

Item 11.  Executive Compensation                                            39

Item 12.  Security Ownership of Certain Beneficial
          Owners and Management                                             39

Item 13.  Certain Relationships and Related Transactions                    39

PART IV

Item 14.  Exhibits, Financial Statement Schedules, and
          Reports on Form 8-K                                               39

SIGNATURES                                                                  48



<PAGE>



                                    BUSINESS

Overview

         Symons  International  Group,  Inc., a specialty  property and casualty
insurer,  underwrites  and  markets  nonstandard  private  passenger  automobile
insurance  and crop  insurance.  Through its  Subsidiaries,  the Company  writes
business in the United States exclusively through independent agencies and seeks
to distinguish  itself by offering high quality,  technology  based services for
its agents and  policyholders.  The  Company  had  consolidated  Gross  Premiums
Written of  approximately  $461 million for the twelve months ended December 31,
1997.  Based on the  Company's  Gross  Premiums  Written  in 1997,  the  Company
believes  that it is the tenth largest  underwriter  of  nonstandard  automobile
insurance in the United States. Based on premium information compiled in 1996 by
the NCIS,  the Company  believes that IGF is the fourth  largest  underwriter of
MPCI in the United States.

         The following table sets forth the premiums written by line of business
for the periods indicated:

<TABLE>


(in thousands)                              Years Ended December 31,
                                    ---------------------------------------
<CAPTION>
                                         1995       1996         1997
                                         ----       ----         ----
<S>                                   <C>        <C>          <C>

Nonstandard Automobile: (1)
Gross Premiums Written                 $49,005   $187,176     $323,915
Net Premiums Written                    37,302    186,579      256,745
Crop Hail:
Gross Premiums Written                 $16,966    $27,957      $38,349
Net Premiums Written                    11,608     23,013       20,796
MPCI: (2)
Gross Premiums Written                 $53,408    $82,102      $88,052
Net Premiums Written                       ---        ---          ---
Commercial: (3)
Gross Premiums Written                  $5,255     $8,264      $10,284
Net Premiums Written                     4,537        ---          ---
Total: (4)
Gross Premiums Written                $124,634   $305,499     $460,600
                                       =======    =======      =======
Net Premiums Written                   $53,447   $209,592     $277,541
                                        ======    =======      =======
</TABLE>


(1)      Does not reflect Net Premiums  Written for Superior for the year ended
         December 31, 1995 and for the four months ended April 30, 1996. For the
         year ended December 31, 1995,  Superior and its  subsidiaries had Gross
         Premiums  Written of $94.8  million and Net  Premiums  Written of $94.1
         million.  For the four months  ended April 30,  1996,  Superior and its
         subsidiaries  had  Gross  Premiums  Written  of $44.0  million  and Net
         Premiums Written of $43.6 million.

(2)      For a discussion  of the  accounting  treatment of MPCI  Premiums,  see
         "Management's  Discussion  and  Analysis  of  Financial  Condition  and
         Results of Operations of the Company."

(3)      All commercial premiums written were written by Pafco and 100% ceded to
         Granite Re.

(4)      For additional  financial segment information  concerning the Company's
         nonstandard automobile and crop insurance operations, see "Management's
         Discussion   and  Analysis  of  Financial   Condition  and  Results  of
         Operations of the Company."



                                       -3-

<PAGE>



Nonstandard Automobile Insurance

Industry Background

         The Company,  through its Subsidiaries,  Pafco and Superior, is engaged
in the writing of insurance coverage on automobile physical damage and liability
policies  for  "nonstandard  risks." The  Company  believes  that the  voluntary
nonstandard  market  has  accounted  for  approximately  15%  of  total  private
passenger  automobile  insurance premiums written in recent years.  According to
statistical  information derived from insurer annual statements compiled by A.M.
Best,  the  nonstandard  automobile  market  accounted for $19 billion in annual
premium volume for 1997.

Strategy

         The Company has multiple  strategies  with  respect to its  nonstandard
automobile insurance operations, including:

         o        The  Company   seeks  to  achieve   profitability   through  a
                  combination  of internal  growth and the  acquisition of other
                  insurers  and  blocks  of  business.   The  Company  regularly
                  evaluates acquisition opportunities.

         o        The  Company  will seek to expand the  multi-tiered  marketing
                  approach  currently  employed  in  certain  states in order to
                  offer to its  independent  agency  network a broader  range of
                  products with different premium and commission structures.

         o        The Company is committed to the use of integrated technologies
                  which permit it to rate,  issue,  bill and service policies in
                  an efficient and cost effective manner.

         o        The Company  competes  primarily on the basis of  underwriting
                  criteria and service to agents and insureds and generally does
                  not match price decreases implemented by competitors which are
                  directed towards obtaining market share.

         o        The  Company  encourages  agencies  to place a large  share of
                  their  profitable  business with its subsidiaries by offering,
                  in  addition to fixed  commissions,  a  contingent  commission
                  based on a combination of volume and profitability.

         o        The Company  responds to claims in a manner designed to reduce
                  the costs of claims  settlements  by  reducing  the  number of
                  pending  claims and uses  computer  databases to verify repair
                  and vehicle replacement costs and to increase  subrogation and
                  salvage recoveries.

Products

         The Company offers both liability and physical  damage  coverage in the
insurance  marketplace,  with policies  having terms of three to twelve  months,
with the  majority of policies  having a term of six  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 and in the range of $10,000 to $20,000
for property damage. Of the approximately 300,218 combined policies of Pafco and
Superior in force on December 31, 1997, fewer than  approximately 10% had policy
limits in excess of these basic  limits of coverage.  Of the 72,626  policies of
Pafco in force on December 31, 1997,  approximately  81.9% had policy periods of
six months or less. Of the  approximately  227,592 policies of Superior in force
as of December 31, 1997,  approximately  62.5% had policy  periods of six months
and approximately 37.5% had policy periods of twelve months.

         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 risks which do not qualify for either the Superior  Choice or the
Superior Standard. Pafco offers a product similar to the Superior product.


                                       -4-

<PAGE>



Marketing

         The Company's nonstandard automobile insurance business is concentrated
in the states of  Florida,  California,  Virginia,  Indiana and Georgia and also
writes nonstandard  automobile  insurance in 14 additional states, with plans to
continue to expand  selectively into additional  states. The Company will select
states for  expansion  based on a number of criteria,  including the size of the
nonstandard  automobile insurance market,  state-wide loss results,  competition
and the  regulatory  climate.  The  following  table sets  forth the  geographic
distribution of Gross Premiums Written for the Company for the periods indicated
including  Gross Premiums  Written for Superior prior to its  acquisition by the
Company on April 30, 1996.


                                       -5-

<PAGE>



Symons International Group, Inc. and Superior Insurance Company (Combined)
Year Ended December 31,
(in thousands)

<TABLE>

<CAPTION>

State                1995                    1996                  1997
-----                ----                    ----                  ----
<S>               <C>                     <C>                   <C>
Arkansas            $1,796                  $2,004                $1,539
California          15,350                  25,131                59,819
Colorado             9,257                  10,262                 9,865
Florida             54,535                  97,659               141,907
Georgia              5,927                   7,398                11,858
Illinois             2,483                   2,994                 3,541
Indiana             13,842                  16,599                17,227
Iowa                 3,832                   5,818                 7,079
Kentucky             7,840                  11,065                 9,538
Mississippi          2,721                   2,250                 2,830
Missouri             8,513                  13,423                 9,705
Nebraska             3,660                   5,390                 6,613
Nevada                 ---                     ---                 4,273
Ohio                 3,164                   3,643                 3,731
Oklahoma               317                   2,559                 3,418
Oregon                 ---                     ---                 2,302
Tennessee              332                     (2)                   ---
Texas                3,464                  10,122                 7,192
Virginia             5,035                  14,733                21,446
Washington           1,693                     106                    32
                     -----                     ---                    --
Total             $143,761                $231,154              $323,915
                   =======                 =======               =======
</TABLE>


         The  Company  markets  its  nonstandard  products  exclusively  through
approximately  6,000  independent  agencies and focuses its marketing efforts in
rural areas and the peripheral  areas of  metropolitan  centers.  As part of its
strategy, management is continuing its efforts to establish the Company as a low
cost provider of nonstandard automobile insurance while maintaining a commitment
to provide  quality  service to both agents and  insureds.  This  element of the
Company's  strategy is being  accomplished  primarily  through the automation of
certain  marketing,  underwriting  and  administrative  functions.  In  order to
maintain and enhance its  relationship  with its agency base, the Company has 27
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 is currently  completing its development of
computer software that will provide on-line communication with its agency force.
In addition,  to deliver 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. The agent has 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  all  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.

                                       -6-

<PAGE>




         The Company  compensates  its agents by paying a commission  based on a
percentage of premiums produced. The Company also offers its agents a contingent
commission based on volume and profitability,  thereby encouraging the agents to
enhance the placement of profitable business with the Company.

         The Company  believes that the  combination  of Pafco with Superior and
its  two  Florida-domiciled   insurance  subsidiaries  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 is
currently  offering  multi-tiered  products  in its major  states.  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  underwrites its nonstandard  automobile  business with the
goal of achieving  adequate  pricing.  The Company seeks to classify  risks into
narrowly defined segments through the utilization of all available  underwriting
criteria.  The  Company  maintains  an  extensive,  proprietary  database  which
contains  statistical records with respect to its insureds on driving and repair
experience  by  location,  class of driver  and type of  automobile.  Management
believes this  database  gives the Company the ability to be more precise in the
underwriting  and  pricing of its  products.  Further,  the  Company  uses motor
vehicle  accident  reporting  agencies to verify  accident  history  information
included in applications.

         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,  Kentucky and Missouri, allow filing and
use of rates, while others,  such as Florida,  Arkansas and California,  require
approval of the insurance department prior to the use of the rates.

         The Company has integrated its automated  underwriting process with the
functions  performed by its agency force. For example,  the Company has a rating
software  package  for use by agents in some  states.  In many  instances,  this
software package, combined with agent access to the automated retrieval of motor
vehicle reports, ensures accurate underwriting and pricing at the point of sale.
The Company  believes the automated  rating and  underwriting  system provides a
significant  competitive  advantage because it (i) improves efficiencies for the
agent  and the  Company,  thereby  reenforcing  the  agents'  commitment  to the
Company, (ii) makes more accurate and consistent underwriting decisions possible
and  (iii)  can  be  changed  easily  to  reflect  new  rates  and  underwriting
guidelines.

         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%. The following table
sets forth Loss and LAE  Ratios,  Expense  Ratios  and  Combined  Ratios for the
periods  indicated  for the  nonstandard  automobile  insurance  business of the
Company.  The ratios exclude the effects of Superior prior to the acquisition by
the Company on April 30, 1996.  The Ratios shown in the table below are computed
based upon GAAP.


                                       -7-

<PAGE>


<TABLE>


                                                     Years Ended December 31,
                                                   ----------------------------
<CAPTION>

                                                     1995        1996      1997
                                                     ----        ----      ----
<S>                                                <C>          <C>      <C>

Loss and LAE Ratio                                  73.8%       73.7%     78.0%

Underwriting Expense Ratio, net of billing fees     32.3%       23.2%     22.7%
                                                    -----       -----     -----

Combined Ratio                                     106.1%       96.9%    100.7%
                                                   ======       =====    ======
</TABLE>


         In  an  effort  to  maintain  and  improve  underwriting  profits,  the
territorial  managers  regularly  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  Anaheim,  California  locations.   Management  believes  that  the
employment of salaried claims  personnel,  as opposed to independent  adjusters,
results in reduced  ultimate  loss  payments,  lower LAE and  improved  customer
service.  The Company generally retains independent  appraisers and adjusters on
an as needed basis 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 therefore can meet
their obligations to the Company under the terms of the Reinsurance treaties.

         Effective  January  1,  1997,  Pafco  and  Superior  ceded  20%  of its
nonstandard  automobile business written during the first three quarters of 1997
and 25% during the fourth quarter in accordance  with a quota share  Reinsurance
agreement.  90% of the cession was with Vesta Fire Insurance  Company (rated "A"
by A,M.  Best) and 10% was with  Granite  Re.  Effective  January 1,  1998,  the
cession rate was changed to a minimum of 10% and includes the same reinsurers.


                                       -8-

<PAGE>



         In  1997,  Pafco  and  Superior  maintained  casualty  excess  of  loss
reinsurance on its 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, 1997 follows:

<TABLE>

                                                              Reinsurance
                                                           Recoverables as of
                                          A.M. Best       December 31, 1997 (1)
Reinsurers                                  Rating            (in thousands)

<CAPTION>
<S>                                     <C>                       <C>


Everest Reinsurance Company                 A (2)                  1,880

Federal Government                          A+ (3)                 1,248

Granite Reinsurance                     Not Rated (4)             14,647

Sentinel Reinsurance Company, Ltd.                                   345

Vesta Fire Insurance Company                  A                   12,939

</TABLE>

(1)  Only  recoverable  greater  than  $200,000  are  shown.  Total  nonstandard
automobile reinsurance  receoverables as of December 31, 1997 were approximately
$31,932,000.
(2) An A.M. Best Rating of "A" is the third  highest of 15 ratings.  (3) An A.M.
Best Rating of "A+" is the second highest of 15 ratings.
(4) Granite Re is an affiliate of the Company.

         On April 29,  1996,  Pafco  retroactively  ceded all of its  commercial
business  relating to 1995 and  previous  years to Granite Re, with an effective
date of January 1, 1996.  Approximately  $3,519,000  and  $2,380,000 of loss and
loss adjustment  expense reserves and unearned premium  reserves,  respectively,
were ceded and no gain or loss recognized. Effective January 1, 1998, Granite Re
ceded  the 1995 and  prior  commercial  business  back to  Pafco.  Approximately
$1,803,000 in loss and loss adjustment expense reserves were ceded back to Pafco
and no gain or loss was recognized.

         On  April  29,  1996,  Pafco  also  entered  into  a 100%  quota  share
reinsurance  agreement  with  Granite  Re,  whereby  all of  Pafco's  commercial
business from 1996 and thereafter was ceded effective January 1, 1996.

         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.  Although  the  Company's  pricing is
inevitably influenced to some degree by that of its competitors, management

                                       -9-

<PAGE>



of the Company  believes that it is generally not in the Company's best interest
to match  such  price  decreases,  choosing  instead  to compete on the basis of
underwriting criteria and superior service to its agents and insureds.

Crop Insurance

  Industry Background

         The two principal  components of the Company's crop insurance  business
are 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 cause  widespread  crop losses and, in severe cases,
force  farmers out of  business.  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.

         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 and the FCIC was  authorized  to reimburse  participating
companies for their  administrative  expenses and to provide federal Reinsurance
for the majority of the risk assumed by such private companies.

         Although  expansion of the federal crop  insurance  program in 1980 was
expected to make crop  insurance  the  farmer's  primary risk  management  tool,
participation  in the MPCI program was only 32% of eligible  acreage in the 1993
crop  year.  Due in part to low  participation  in the  MPCI  program,  Congress
provided an average of $1.5  billion per year in ad hoc disaster  payments  over
the six years prior to 1994.  In view of the  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,  considered  major reform of its crop  insurance and
disaster  assistance  policies.  The 1994  Reform  Act was  enacted  in order to
increase  participation  in the MPCI program and  eliminate  the need for ad hoc
federal disaster relief payments to farmers.

         The 1994 Reform Act required  farmers for the first time to purchase at
least 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) 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 offices which has been  eliminated  for the 1998 crop
year.

         The Federal  Agriculture  Improvement and Reform Act of 1996 ("the 1996
Reform Act"),  signed into law by President  Clinton in April 1996,  limited the
role of the USDA  offices in the  delivery of MPCI  coverage  beginning  in July
1996,  which was the commencement of the 1997 crop year, and also eliminated the
linkage between CAT Coverage and  qualification for certain federal farm program
benefits.  This  limitation  should provide the Company with the  opportunity to
realize  increased  revenues  from the  distribution  and  servicing of its MPCI
product.  In  accordance  with the 1996 Reform Act,  the USDA  announced in July
1996,  the following 14 states in which CAT Coverage will no longer be available
through  USDA  offices  but  rather  will be solely  available  through  private
companies:  Arizona,  Colorado,  Illinois,  Indiana,  Iowa,  Kansas,  Minnesota,
Montana,  Nebraska, North Carolina,  North Dakota, South Dakota,  Washington and
Wyoming.  Through June 1996, the FCIC  transferred to the Company  approximately
8,900 insureds for CAT Coverage who previously purchased such coverage from USDA
field offices. The Company believes that any future potential negative impact of
the delinkage  mandated by the 1996 Reform Act will be mitigated by, among other
factors,  the likelihood  that farmers will continue to purchase MPCI to provide
basic protection  against natural disasters since ad hoc federal disaster relief
programs have been reduced or eliminated. In addition, the Company believes that

                                      -10-

<PAGE>



(i) lending  institutions  will likely  continue to require  this  coverage as a
condition  to crop  lending  and (ii) many of the  farmers  who entered the MPCI
program  as a  result  of the  1994  Reform  Act  have  come to  appreciate  the
reasonable price of the protection afforded by CAT Coverage and will remain with
the program regardless of delinkage.  There can, however,  be no assurance as to
the  ultimate  effect  which the 1996  Reform  Act may have on the  business  or
operations of the Company.

         On June 9, 1997, the Secretary of  Agriculture  announced that the USDA
would no longer provide CAT Coverage through USDA offices in any state effective
for the 1998 crop  year.  This is to be  implemented  by a  transferring  of CAT
policies to the various  members of the crop insurance  industry.  At this time,
the Company has been preliminarily  informed that it will receive  approximately
17,000 policies that were formerly  written by USDA offices,  although there can
be no assurance that the Company will receive this number of policies.  Based on
historical,  per- policy averages, the Company has preliminarily  estimated that
it will receive an additional  approximate $2 to $3 million in premium from such
transferred policies,  however,  there can be no assurance that this number will
be realized.

  Strategy

         The Company has multiple strategies for its crop insurance  operations,
including the following:

         o        The Company seeks to enhance  underwriting  profits and reduce
                  the  volatility  of  its  crop  insurance   business   through
                  geographic  diversification and the appropriate  allocation of
                  risks among the federal  reinsurance  pools and the  effective
                  use  of  federal  and  third-party   catastrophic  Reinsurance
                  arrangements.

         o        The  Company  also  limits  the  risks  associated  with  crop
                  insurance through  selective  underwriting of crop risks based
                  on its historical loss experience data base.

         o        The Company  continues to develop and  maintain a  proprietary
                  knowledge-based  underwriting system which utilizes a database
                  of Company-specific underwriting rules.

         o        The Company has further  strengthened  its independent  agency
                  network by using technology to provide fast, efficient service
                  to  its  agencies  and  providing  application   documentation
                  designed for simplicity and convenience.

         o        Unlike  many  of  its   competitors,   the   Company   employs
                  approximately 89 full-time claims adjusters,  most of whom are
                  agronomy-trained,  to reduce the cost of losses experienced by
                  IGF.

         o        The Company stops selling its crop hail policies after certain
                  selected  dates to prevent  farmers from  adversely  selecting
                  against  IGF  when a storm  is  forecast  or hail  damage  has
                  already occurred.

         o        The Company  continues  to explore  growth  opportunities  and
                  product   diversification  through  new  specialty  coverages,
                  including Crop Revenue Coverage (CRC) and specific named peril
                  crop  insurance.  Further,  IGF is in the  initial  stages  of
                  opening new markets and attracting new customers by developing
                  timber,   crop   completion   and   agricultural    production
                  interruption coverages.

         o        The  Company   continues  to  explore  new   opportunities  in
                  administrative  efficiencies  and  product  underwriting  made
                  possible by advances in  Precision  Farming  software,  Global
                  Positioning System (GPS) software and Geographical Information
                  System (GIS)  technology,  all of which continue to be adopted
                  by insureds in their farming practices.

  Products

         MPCI is a federally subsidized program which is designed to provide
participating farmers who suffer insured

                                      -11-

<PAGE>



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 of 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 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% (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 1994
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 $50 per
policy instead of any premium.  CAT Coverage  insures 50% of historic crop yield
at 60% 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 ("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 and which the Company  believes  will continue to appeal to farmers who
desire, or whose lenders encourage or require, revenue protection.

         The number of MPCI Buy-up 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.

         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,  or pays a
portion of the aggregate loss, in respect of the business it writes.

         The Company's share of profit or loss on the MPCI business it writes is
determined under 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 following  discussion  provides more
detail about the implementation of this profit sharing formula.

         The Company recently began offering a new product in its crop insurance
business  called Crop Revenue  Coverage  ("CRC").  In contrast to standard  MPCI
coverage,  which  features  a  yield  guarantee  or  coverage  for  the  loss of
production,  CRC  provides  the  insured  with a  guaranteed  revenue  stream by
combining both yield and price  variability  protection.  CRC protects 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.  CRC was approved by the FCIC as a pilot  program for revenue  insurance
coverage  plans  for the 1996  Crop  Year and has  been  available  for corn and
soybeans  in all  counties  in  Iowa  and  Nebraska  since  1996.  CRC  policies
represented  approximately  30% of the combined corn policies  written by IGF in
Iowa and Nebraska since 1996. Since July 1996, CRC was made available for winter
wheat in the entire states of Kansas,  Michigan,  Nebraska,  South Dakota, Texas
and Washington and in parts of Montana. In May 1997, the FCIC announced that CRC
will be expanded to include wheat in twenty-five  additional states.  Currently,
CRC represents approximately 7% of all of the Company's wheat policies.

                                      -12-

<PAGE>



         Revenue insurance coverage plans such as CRC are the result of the 1994
Reform Act, which  directed the FCIC to develop a pilot crop  insurance  program
providing  coverage  against loss of gross  income as a result of reduced  yield
and/or price.  CRC was developed by a private  insurance  company other than the
Company  under the  auspices of this pilot  program,  which  authorizes  private
companies to design  alternative  revenue  coverage plans and to submit them for
review,  approval  and  endorsement  by the FCIC.  As a result,  although CRC is
administered  and  reinsured by the FCIC and risks are  allocated to the federal
reinsurance  pools,  CRC remains  partially  influenced  by the private  sector,
particularly with respect to changes in its rating structure.

         CRC  plans  to use  the  policy  terms  and  conditions  of the  Actual
Production  History  ("APH") plan of MPCI as the basic  provisions for coverage.
The APH provides the yield  component by utilizing the insured's  historic yield
records.  The CRC revenue  guarantee  is the  producer's  approved APH times the
coverage level,  times the higher of the spring futures price or harvest futures
price (in each case,  for  post-harvest  delivery)  of the insured crop for each
unit of farmland. The coverage levels and exclusions in a CRC policy are similar
to those in a standard MPCI policy. For the 1997 Crop Year, the Company received
from the FCIC an expense  reimbursement  payment equal to 25% of Gross  Premiums
Written  in  respect  of each CRC  policy it  writes.  The MPCI  Buy-up  Expense
Reimbursement Payment is currently  administratively  established by FCIC in the
absence of a  applicable  legislation.  This expense  reimbursement  payment was
reduced from 27% in 1996 to 23.25% in 1998.

         CRC protects  revenues by extending crop insurance  protection based on
APH to include  price as well as yield  variability.  Unlike MPCI,  in which the
crop price  component  of the  coverage  is set by the FCIC prior to the growing
season and generally does not reflect actual crop prices, CRC uses the commodity
futures market as the basis for its pricing  component.  Pricing occurs twice in
the CRC plan.  The spring  futures price is used to establish the initial policy
revenue  guarantee  and  premium,  and  the  harvest  futures  price  is used to
establish the crop value to count against the revenue guarantee and to recompute
the revenue guarantee (and resulting  indemnity payments) when the harvest price
is higher than the spring price.

         In  addition  to  MPCI,  the  Company  offers  stand  alone  crop  hail
insurance, which insures growing crops against damage resulting from hail storms
and  which  involves  no  federal  participation,  as  well  as its  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  50% of IGF's hail policies are written in
combination  with  MPCI.  Although  both  crop hail and MPCI  provide  insurance
against hail damage,  under crop hail coverages farmers can 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.

         In addition  to crop hail  insurance,  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 onions 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 and to
offer these polices  primarily to large producers through certain select agents.
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 is currently in the initial stages of opening new
markets and attracting new customers by developing  timber,  crop completion and
agricultural production interruption coverages.

  Gross Premiums

         For 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 bushel 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

                                      -13-

<PAGE>



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, its "MPCI Premium").

         As  previously  noted,  farmers  pay an  administrative  fee of $50 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 formula. 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 GAAP, the Company's Gross Premiums  Written for MPCI consist only
of its MPCI Premiums and do not include MPCI Imputed Premiums.

  Reinsurance Pools

         Under the MPCI  program,  the Company must allocate its MPCI Premium or
MPCI Imputed  Premium in respect of a farm to one of three  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.  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%;  and for  those
allocated to the "Assigned  Risk Pool," the Company  retains 20% of the risk and
the FCIC  assumes 80%.  The MPCI  Retention is 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 three
pools,  subject to a minimum aggregate retention of 35% of its MPCI Premiums and
MPCI Imputed  Premiums  written.  The Company uses a  sophisticated  methodology
derived from a comprehensive  historical data base 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 farms 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. Farms 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 Premium and MPCI Imputed Premium on which the Company retains risk after
allocating  farms to the foregoing pools (its "MPCI  Retention").  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 three
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  Retention,  the Company  shares in the gross amount of such
profit  according  to a schedule  set by the FCIC for each year.  The profit and
loss sharing  percentages are different for risks allocated to each of the three
Reinsurance  pools  and  private  insurers  will  receive  or pay  the  greatest
percentage of profit

                                      -14-

<PAGE>



or loss for risks allocated to the Commercial Pool.

         The  percentage   split  between  private   insurers  and  the  federal
government  of any profit or loss that emerges from an MPCI  Retention is set by
the FCIC and  generally is adjusted from year to year.  For 1995,  1996 and 1997
crop years,  the FCIC  increased the maximum  potential  profit share of private
insurers for risks allocated to the Commercial Pool above the maximum  potential
profit share set for 1994,  without  increasing the maximum  potential  share of
loss for risks  allocated  to that  pool for 1995.  This  change  increased  the
potential  profitability  of risks  allocated to the Commercial  Pool by private
insurers.

         The following table presents MPCI Premiums,  MPCI Imputed  Premiums and
underwriting gains or losses of IGF for the periods indicated:

<TABLE>


(in thousands)                               Year Ended December 31,
                                   ---------------------------------------------
<CAPTION>

                                          1995            1996           1997
                                          ----            ----           ----

<S>                                     <C>             <C>            <C>
MPCI premiums                           $53,408         $82,102        $88,052

MPCI imputed premiums                   $19,552         $38,944        $33,294



Gross underwriting gain                 $10,870         $15,801        $30,325

Net private third party reinsurance
expense and other                        (1,217)         (3,524)        (3,736)
                                        -------         -------        -------

Net underwriting gain                    $9,653         $12,277        $26,589
                                          =====          ======         ======
</TABLE>

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
1995, 1996 and 1997, the maximum Buy-up Expense Reimbursement Payment was set at
31%, 31%, and 29%, respectively, of the MPCI Premium. Historically, the FCIC has
paid the maximum MPCI Buy-up Expense  Reimbursement Payment rate allowable under
law,  although  no  assurance  can be given that this  practice  will  continue.
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.  For  the  1998  crop  year,  the  Buy-up  Expense
Reimbursement payment has been set at 27%.

         Farmers  are  required  to pay a  fixed  administrative  fee of $50 per
policy (maximum of $100 per county) in order to obtain CAT Coverage. This fee is
retained  by the  Company  to  defray  the  cost of  administration  and  policy
acquisition.  The  Company  also  receives  from  the  FCIC a  separate  CAT LAE
Reimbursement  Payment equal to approximately  13.0% of MPCI Imputed Premiums in
respect  of each CAT  Coverage  policy it writes  and a small  MPCI  Excess  LAE
Reimbursement  Payment. In general, fees and payments received by the Company in
respect of CAT Coverage are  significantly  lower than those received for Buy-up
Coverage.



                                      -15-

<PAGE>



         In addition to premium  revenues,  the Company  received the  following
fees and commissions from its crop insurance segment for the periods indicated:

<TABLE>


(in thousands)                                     Year Ended December 31,
                                           ------------------------------------
<CAPTION>

                                             1995           1996          1997
                                             ----           ----          ----
<S>                                        <C>            <C>          <C>

CAT Coverage Fees (1)                       $1,298         $1,181        $1,191

Buy-up Expense Reimbursement Payments       16,366         24,971        24,788

CAT LAE Reimbursement Payments and MPCI
Excess LAE Reimbursement Payments            3,427          5,753         4,565
                                             -----          -----         -----

Total                                      $21,091        $31,905       $30,544
                                            ======         ======        ======
</TABLE>


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

Third-Party Reinsurance In Effect for 1997

         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 has in effect quota share  Reinsurance of 40% of business,  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
Retention up to 125% of MPCI Retention. The Company also has an additional layer
of MPCI  stop loss  Reinsurance  which  covers  95% 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 Retention up to 160% of MPCI Retention.

         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 therefor 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.



                                      -16-

<PAGE>



Year Ended December 31, 1997 (1)
(in thousands, except footnotes)

<TABLE>
<CAPTION>

                                                    A.M. Best        Ceded
Reinsurers                                           Rating         Premiums

<S>                                                 <C>              <C>
Folksam International Insurance Co. Ltd. (2)            A-             $746

Frankona Ruckversicherungs AG (3)                       A              $415

Granite Re (4)                                      Not Rated          $176

Insurance Corporation of Hannover                       A-             $268

Liberty Mutual Insurance Co. (UK) Ltd.                  A              $433

Monde Re (5)                                        Not Rated        $4,213

Munich Re (6)                                           A+           $3,004

National Grange                                         A-             $736

Partner Reinsurance Company Ltd.                        A            $1,112

R & V Versicherung AG                                Not Rated       $1,286

Reinsurance Australia Corporation, Ltd. (REAC) (5)   Not Rated       $4,956

Scandinavian Reinsurance Company Ltd.                    A+              --

--------
</TABLE>
(1) For the twelve months ended December 31, 1997, total ceded premiums were
    $17,345.

(2) An A.M. Best rating of "A-" is the fourth highest of 15 ratings.

(3) An A.M. Best rating of "A" is the third highest of 15 ratings.

(4) Granite Re is an affiliate of the Company.

(5) Monde Re is owned by REAC.

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

         As of December  31, 1997,  IGF's  Reinsurance  recoverables  aggregated
approximately $268,766 excluding recoverables from the FCIC.

  Marketing; Distribution Network

         IGF markets its  products  to the owners and  operators  of farms in 42
states through  approximately  2,400 agents  associated with  approximately  925
independent insurance agencies, with its primary geographic concentration in the
states of Iowa, Texas, Illinois, Kansas and Minnesota. The Company has, however,
diversified  outside  of the  Midwest  and  Texas in order  to  reduce  the risk
associated  with  geographic  concentration.  IGF is  licensed  in 23 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 1997. Through its agencies,  IGF targets
farmers  with an  acreage  base of at  least  1,000  acres.  Such  larger  farms
typically  have a lower risk exposure  since they tend to utilize better farming
practices and to have noncontiguous acreage,  thereby making it less likely that
the entire farm will be affected by a particular  occurrence.  Many farmers with
large farms tend to buy or rent acreage which is  increasingly  distant from the
central farm location.  Accordingly, the likelihood of a major storm (wind, rain
or hail) or a freeze affecting all of a particular farmer's acreage decreases.

                                      -17-

<PAGE>



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

<TABLE>

                                           (in thousands)
               -------------------------------------------------------------------------------

<CAPTION>
                              Year Ended                           Year Ended
                           December 31, 1996                    December 31, 1997
               -----------------------------------     --------------------------------------

State            Crop Hail       MPCI        Total     Crop Hail       MPCI       Total
-----            ---------       ----        -----     ---------       ----       -----

<S>                <C>         <C>         <C>           <C>         <C>        <C>
Alabama                $97      $2,951       $3,048         $144      $1,707      $1,851

Arkansas               314       1,784        2,098          652       2,270       2,922

California           1,164       1,992        3,156        1,062       4,418       5,480

Colorado             1,651       3,334        4,985        1,309       3,183       4,492

Florida                ---       1,738        1,738           19       1,809       1,828

Illinois               526      11,228       11,754          655      12,221      12,876

Indiana                115       3,870        3,985           92       4,540       4,632

Iowa                 6,590      15,205       21,795        7,628      12,949      20,577

Kansas                 662       5,249        5,911          832       6,278       7,110

Louisiana               28       1,674        1,702           41         856         897

Minnesota            2,300       2,244        4,544        4,405       3,469       7,874

Mississippi            482       2,222        2,704          509       2,711       3,220

Missouri               556       2,427        2,983          383       1,711       2,094

Montana              5,632       1,554        7,186        2,879       1,854       4,733

Nebraska             1,567       3,206        4,773        1,597       3,160       4,757

North Dakota         2,294       2,796        5,090          787       3,014       3,801

Oklahoma               403       1,436        1,839          451       1,127       1,578

South Dakota         1,457       1,106        2,563          932       1,541       2,473

Texas                1,262      12,361       13,623        3,211       1,593       4,804

Wisconsin              370       2,187        2,557          407       1,479       1,886

All Other              487       1,538        2,025       10,354      16,162      26,516
                       ---       -----        -----       ------      ------      ------

Total              $27,957     $82,102     $110,059      $38,349     $88,052    $126,401
                   =======     =======     ========      =======     =======    ========

</TABLE>


                                      -18-

<PAGE>



         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,  APlus, 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.  The Company  believes  that IGF is the only crop insurer which has
created a single application for MPCI, crop hail and named peril coverage.

         IGF generally  compensates its agents based on a percentage of premiums
produced and, in the case of CAT Coverage and crop hail insurance,  a percentage
of  underwriting  gain  realized  with  respect  to  business   produced.   This
compensation  structure  is designed  to  encourage  agents to place  profitable
business  with IGF (which tends to be insurance  coverages for larger farms with
respect  to  which  the  risk  of  loss  is  spread  over   larger,   frequently
noncontiguous insured areas).

  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,  (ii)  recruiting  agencies  within those
marketing  territories which service larger farms and other more desirable risks
and (iii) ensuring that policies are  underwritten  in accordance  with the FCIC
rules.

         With  respect  to  its  hail  coverage,   IGF  seeks  to  minimize  its
underwriting losses by maintaining an adequate geographic spread of risk by rate
group.  In  addition,  IGF  establishes  sales  closing  dates  after which hail
policies will not be sold. These dates are dependent on planting schedules, vary
by  geographic  location  and  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 of growth is minimal.  The cut-off dates prevent  farmers from  adversely
selecting  against IGF by waiting to  purchase  hail  coverage  until a storm is
forecast or damage has occurred.  For its hail coverage, IGF also sets limits by
policy ($400,000 each) and by township ($2.0 million per township).  The Company
also uses a daily report  entitled  "Severe Weather Digest" which shows the time
and geographic  location of all  extraordinary  weather events to check incoming
policy applications against possible previous damage.

  Claims/Loss Adjustments

         In contrast to most of its competitors who retain independent adjusters
on a  part-time  basis  for  loss  adjusting  services,  IGF  employs  full-time
professional  claims adjusters,  most of whom are agronomy  trained,  as well as
part-time  adjusters.  Management  believes that the  professionalism of the IGF
full-time  claims staff coupled with their exclusive  commitment to IGF helps to
ensure  that claims are handled in a manner  designed to reduce  overpayment  of
losses  experienced by IGF. The adjusters are located throughout IGF's marketing
territories.  In order to  promote a rapid  claims  response,  the  Company  has
available several small four wheel drive vehicles for use by its adjusters.  The
adjusters  report  to a field  service  representative  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 an IGF service  office claims
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, 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,  IGF's adjusters use Global  Positioning  System Units,  which are hand
held devices using navigation satellites to determine the precise location where
a claimed loss has occurred.  IGF has a team of catastrophic  claims specialists
who are  available  on 48 hours  notice to  travel to any of IGF's six  regional
service offices to assist in heavy claim work load

                                      -19-

<PAGE>



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,  policy  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 1997 crop  year,  the  number of  insurance  companies
having  agreements  with the FCIC to sell and service MPCI policies has declined
from fifty to  thirty-six.  The Company  believes that IGF is the fourth largest
MPCI crop insurer in the United States based on premium information  compiled in
1996 by the FCIC and NCIS.  The Company's  primary  competitors  are Rain & Hail
Insurance  Service,  Inc.  (affiliated  with  Cigna  Insurance  Company),  Rural
Community  Insurance  Services,  Inc.  (which is owned by Norwest  Corporation),
American Growers  Insurance Company  (Redland),  Crop Growers  Insurance,  Inc.,
Great  American  Insurance  Company,  Blakely Crop Hail (an affiliate of Farmers
Alliance Mutual  Insurance  Company) and North Central Crop Insurance,  Inc. The
Company  believes that in order 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 further consolidates.

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  an  insurer  predicts  its  exposure  to be in
connection  with  incurred  losses.  LAE Reserves are  estimates of the ultimate
liability  associated  with  the  expense  of  settling  all  claims,  including
investigation  and  litigation  costs  resulting  from such  claims.  The actual
liability  of an insurer  for its Losses and LAE  Reserves  at any point in time
will be greater or less than these estimates.

         The Company  maintains  reserves for the eventual payment of Losses and
LAE 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  paid  Loss  and LAE 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 LAE  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  reserves  are  reviewed by  independent  actuaries on a
semi-annual  basis.  The  Company's  recorded  Loss Reserves are certified by an
independent actuary for each calendar year.


                                      -20-

<PAGE>




         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.

         During 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 IBNR which  reflected the strength of the case reserves.
Pafco had historically carried case reserves which generally did not reflect the
level of future  payments but yet a higher IBNR  reserve.  This change in claims
management  philosophy  during 1997  coupled  with the growth in premium  volume
produced  sufficient  volatility  in prior year loss  patterns  to  warrant  the
Company to re-estimate  its 1996 reserve for losses and loss expenses and record
an  additional  reserve  during  1997.  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.



                                      -21-

<PAGE>



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

<TABLE>
<CAPTION>

                                  1987    1988    1989   1990    1991    1992    1993    1994  1995(A)   1996    1997
                                  ----    ----    ----   ----    ----    ----    ----    ----  -------   ----    ----

<S>                             <C>    <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>
Gross reserves for unpaid
losses and LAE                                                                         $25,248 $71,748 $79,551 $101,185

Deduct reinsurance
recoverable                                                                             10,927   9,921   8,124   16,378

Reserve for unpaid losses and
LAE, net of reinsurance         $4,687 $10,747 $13,518 $15,923 $15,682 $17,055 $14,822  14,321 61,827   71,427   84,807

Paid cumulative as of:

One Year Later                   2,708   5,947   7,754   7,695   7,519  10,868   8,875   7,455 42,183   59,410

Two Years Later                  4,448   7,207  10,530  10,479  12,358  15,121  11,114  10,375 53,350       --

Three Years Later                4,570   7,635  11,875  12,389  13,937  16,855  13,024  12,040     --       --

Four Years Later                 4,310   7,824  12,733  13,094  14,572  17,744  13,886      --     --       --

Five Years Later                 4,331   8,009  12,998  13,331  14,841  18,195      --      --     --       --

Six Years Later                  4,447   8,135  13,095  13,507  14,992      --      --      --     --       --

Seven Years Later                4,448   8,154  13,202  13,486      --      --      --      --     --       --

Eight Years Later                4,447   8,173  13,216      --      --      --      --      --     --       --

Nine Years Later                 4,447   8,174      --      --      --      --      --      --     --       --

Ten Years Later                  4,447      --      --      --      --      --      --      --     --       --


Liabilities re-estimated as of:

One Year Later                   5,352   8,474  13,984  13,888  14,453  17,442  14,788  13,365 59,626   82,011

Two Years Later                  4,726   8,647  13,083  13,343  14,949  18,103  13,815  12,696 60,600       --

Three Years Later                4,841   8,166  13,057  13,445  15,139  18,300  14,051  13,080     --       --

Four Years Later                 4,474   8,108  13,152  13,514  15,218  18,313  14,290      --     --       --

Five Years Later                 4,412   8,179  13,170  13,589  15,198  18,419      --      --     --       --

Six Years Later                  4,471   8,165  13,246  13,612  15,114      --      --      --     --       --

Seven Years Later                4,448   8,196  13,260  13,529      --      --      --      --     --       --

Eight Years Later                4,462   8,198  13,248      --      --      --      --      --     --       --

Nine Years Later                 4,447   8,199      --      --      --      --      --      --     --       --

Ten Years Later                  4,447      --      --      --      --      --      --      --     --       --

Net cumulative (deficiency)
or redundancy                      240   2,548     270   2,394     568 (1,364)     532   1,241  1,227 (10,584)

Expressed as a percentage of
unpaid losses and LAE             5.1%   23.7%    2.0%   15.0%    3.6%  (8.0%)    3.6%    8.7%   2.0%  (14.8%)

</TABLE>

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

                                      -22-

<PAGE>



Investments

         Insurance  company  investments  must comply with  applicable  laws and
regulations which prescribe the kind,  quality and concentration of investments.
In general,  these laws and regulations  permit  investments,  within  specified
limits and subject to certain  qualifications,  in federal,  state and municipal
obligations,  corporate  bonds,  preferred  and common  securities,  real estate
mortgages and real estate. The Company's  investment  policies are determined by
the  Company's  Board of  Directors  and are  reviewed on a regular  basis.  The
Company's  investment  strategy  is to  maximize  the  after-tax  yield  of  the
portfolio  while  emphasizing  the stability and  preservation  of the Company's
capital base.  Further,  the portfolio is invested in types of securities and in
an aggregate duration which reflect the nature of the Company's  liabilities and
expected  liquidity  needs,  and the Company's  fixed maturity and common equity
investments are substantially all in public companies. The Company's investments
in real estate and mortgage  loans  represent  1.2% of the  Company's  aggregate
investments. The investment portfolios of the Company are managed by third-party
professional  administrators,  in  accordance  with  pre-established  investment
policy guidelines  established by the Company. The investment  portfolios of the
Company at December 31, 1997, consisted of the following:

<TABLE>

(in thousands)

<CAPTION>

                                                           Cost or
                                                          Amortized    Market
Type of Investment                                           Cost      Value

<S>                                                       <C>        <C>
Fixed maturities:

United States Treasury securities and obligations
of United States government corporations and agencies      $83,661    $84,523

Foreign Governments                                            537        548

Obligations of states and political subdivisions             1,000      1,000

Corporate securities                                        82,628     83,314
                                                            ------     ------

Total Fixed Maturities                                     167,826    169,385

Equity Securities:

   Common stocks                                            34,220     35,542

Short-term investments                                       8,871      8,871

Real estate                                                    450        450

Mortgage loans                                               2,220      2,220

Other loans                                                     50         50
                                                                --         --

Total Investments                                         $213,637   $216,518
                                                          ========   ========

---------------
</TABLE>



                                      -23-

<PAGE>



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

<TABLE>


(in thousands)                               1996                      1997
                                     ----------------------   ---------------------
<CAPTION>

                                      Market  Percent Total    Market  Percent Total
Time To Maturity                      Value   Market Value     Value   Market Value

<S>                                 <C>          <C>         <C>          <C>

1 year or less                        $6,423       5.0%        $1,880       1.1%

More than 1 year through 5 years      71,086      55.7%        57,782      34.1%

More than 5 years through 10 years    43,404      34.0%        30,793      18.2%

More than 10 years                     6,768       5.3%         8,390       5.0%
                                       -----       ----         -----       ----

                                     127,681     100.0%        98,845      58.4%

Mortgage-backed securities               ---       0.0%        70,540      41.6%
                                         ---       ----        ------      -----

Total                               $127,681     100.0%      $169,385     100.0%
                                     =======     ======       =======     ======
</TABLE>

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

<TABLE>

(in thousands)                                 1996                      1997
                                      ---------------------     ---------------------
<CAPTION>
                                      Market  Percent Total     Market  Percent Total
Rating (1)                            Value   Market Value      Value   Market Value
------ ---                            -----   ------ -----      -----   ------ -----
<S>                                 <C>          <C>         <C>          <C>

Aaa or AAA                           $50,444      39.5%      $112,366      66.3%

Aa or AA                               2,976       2.3%         2,410       1.4%

A                                     50,365      39.4%        18,271      10.8%

Baa or BBB                            11,671       9.1%        19,065      11.3%

Ba or BB                               2,840       2.3%        16,519       9.8%

Other below investment grade           2,091       1.6%           ---        ---

Not rated (2)                          7,294       5.8%           754       0.4%
                                       -----       ----           ---       ----

Total                               $127,681     100.0%      $169,385     100.0%
                                     =======     ======       =======     ======
</TABLE>


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

(2) These securities were not rated by the rating agencies.  However, these
    securities are designated as Category 1 securities by the NAIC, which
    is the equivalent rating of "A" or better.

                                      -24-

<PAGE>



         The investment results of the Company for the periods indicated are set
forth below:

<TABLE>


(in thousands)                                    Years Ended December 31,
                                            -----------------------------------
<CAPTION>

                                               1995          1996         1997
                                               ----          ----         ----
<S>                                          <C>          <C>          <C>

Net investment income (1)                     $1,173        $6,733      $11,447

Average investment portfolio (2)             $22,653      $153,565     $189,473

Pre-tax return on average investment
portfolio                                       5.2%           5.9%        6.0%

Net realized gains (losses)                   $(344)       $(1,015)      $9,444

---------------
</TABLE>

(1) Includes dividend income received in respect of holdings of common stock.

(2) Average investment portfolio represents the average (based on amortized
    cost) of the beginning and ending investment  portfolio.  For 1996, the
    average  investment  portfolio  was  adjusted  for  the  effect  of the
    Acquisition.

Ratings

         A.M.  Best has  currently  assigned a "B+"  rating to  Superior  and a
"B-" rating to Pafco.

         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 "B-" ratings are A.M. Best's sixth and eighth highest rating
classifications,  respectively,  out of 15 ratings.  A "B+" rating is awarded to
insurers which, in A.M. Best's  opinion,  "have  demonstrated  very good overall
performance when compared to the standards established by the A.M. Best Company"
and "have a good ability to meet their obligations to policyholders  over a long
period of time." A "B-"  rating is awarded to  insurers  which,  in A.M.  Best's
opinion,  "have demonstrated  adequate overall  performance when compared to the
standards established by the A.M. Best Company" and "have an adequate ability to
meet  their  obligations  to  policyholders,  but their  financial  strength  is
vulnerable to unfavorable changes in underwriting or economic conditions." There
can be no assurance that such ratings or changes  therein will not in the future
adversely affect the Company's competitive position.

                                      -25-

<PAGE>



Recent Acquisitions

         On  January  31,  1996,  Goran,  the  Company,  Fortis,  Inc.  and  its
wholly-owned subsidiary,  Interfinancial,  Inc., a holding company for Superior,
entered into a Stock  Purchase  Agreement (the  "Superior  Purchase  Agreement")
pursuant to which the Company agreed to purchase  Superior from  Interfinancial,
Inc. for a purchase price of approximately  $66.6 million.  Simultaneously  with
the  execution of the  Superior  Purchase  Agreement,  Goran,  the Company,  GGS
Holdings  and the GS Funds,  a Delaware  limited  partnership,  entered  into an
agreement  (the "GGS  Agreement")  to  capitalize  GGS Holdings and to cause GGS
Holdings to issue its capital stock to the Company and to the GS Funds, so as to
give the  Company  a 52%  ownership  interest  and the GS Funds a 48%  ownership
interest (the  "Formation  Transaction").  Pursuant to the GGS Agreement (a) the
Company  contributed  to GGS  Holdings (i) all the  outstanding  common stock of
Pafco,  with a book value of $16.9 million,  (ii) its right to acquire  Superior
pursuant to the Superior  Purchase  Agreement  and (iii)  certain  fixed assets,
including  office  furniture  and  equipment,  having a value  of  approximately
$350,000 and (b) the GS Funds contributed to GGS Holdings $21.2 million in cash.
The Formation  Transaction and the Acquisition were completed on April 30, 1996.
On August 12,  1997,  the Company  acquired  the  remaining  48% interest in GGS
Holdings  that had been owned by the GS funds for $61 million  with a portion of
the proceeds from the sale of the Preferred Securities.

         On August 12, 1997, the Company issued $135 million in Trust Originated
Preferred Securities ("Preferred  Securities").  These Preferred Securities were
offered through a wholly-owned trust subsidiary of the Company and are backed by
Senior  Subordinated  Notes to the  Trust  from  the  Company.  These  Preferred
Securities were offered under Rule 144A of the SEC ("Offering") and, pursuant to
the Registration Rights Agreement executed at closing,  the Company filed a Form
S-4  Registration  Statement  with the SEC on  September  16, 1997 to effect the
Exchange  Offer.  The S-4  Registration  Statement  was  declared  effective  on
September  30, 1997 and the Exchange  Offer  successfully  closed on October 31,
1997. The proceeds of the Preferred  Securities Offering were used to repurchase
the remaining  minority  interest in GGSH for $61 million,  repay the balance of
the term  debt of $44.9  million  and the  Company  expects  to  contribute  the
balance,  after  expenses,  of  approximately  $24  million  to the  nonstandard
automobile  insurers of which $10.5 million was contributed in 1997. Expenses of
the issue  aggregated  $5.1 million and will be  amortized  over the term of the
Preferred  Securities (30 years). In the third quarter the Company wrote off the
remaining  unamortized  costs of the term  debt of  approximately  $1.1  million
pre-tax or  approximately  $0.07 per share  (basic),  which was  recorded  as an
extraordinary item.

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

         The Company  shall not, and shall not permit any  subsidiary,  to incur
directly or indirectly,  any indebtedness unless, on the date of such incurrence
(and after giving effect thereto),  the Consolidated  Coverage Ratio exceeds 2.5
to 1. The  Coverage  Ratio  is the  aggregate  of net  earnings,  plus  interest
expense,  income  taxes,  depreciation,  and  amortization  divided by  interest
expense for the same period.

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.

                                      -26-

<PAGE>




         Pafco,  IGF and Superior and its insurance  subsidiaries are subject to
triennial  examinations  by state insurance  regulators.  All of these Companies
have been examined  through  December 31, 1996 and each of the final reports are
pending. The Company does not expect any material findings from the examinations
of its insurance subsidiaries.

  Insurance Holding Company Regulation

         The  Company  also is  subject  to  laws  governing  insurance  holding
companies in Florida and Indiana, where the insurers 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
and Superior  (the  "Insurers"),  including  the amount of  dividends  and other
distributions  and the terms of surplus  note 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,  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, upon application, has determined otherwise.

         Indiana law defines as  "extraordinary"  any  dividend or  distribution
which,  together with all other  dividends  and  distributions  to  shareholders
within the preceding twelve months, exceeds the greater of: (i) 10% of statutory
surplus as regards policyholders as of the end of the preceding year or (ii) the
prior year's net income. Dividends which are not "extraordinary" may be paid ten
days  after  the  Indiana  Department  receives  notice  of  their  declaration.
"Extraordinary"  dividends  and  distributions  may  not be paid  without  prior
approval of the Indiana  Commissioner or until the Indiana Commissioner has been
given thirty days prior notice and has not disapproved  within that period.  The
Indiana Department must receive notice of all dividends, whether "extraordinary"
or not, within five business days after they are declared.  Notwithstanding  the
foregoing  limit, a domestic  insurer may not declare or pay a dividend of funds
other than earned surplus without the prior approval of the Indiana  Department.
"Earned  surplus" is defined as the amount of unassigned  funds set forth in the
insurer's most recent annual statement,  less surplus attributable to unrealized
capital gains or reevaluation of assets.  As of December 31, 1997, IGF and Pafco
had earned surplus of $27,952,000 and $(4,713,000),  respectively.  Further,  no
Indiana  domiciled  insurer  may  make  payments  in the  form of  dividends  or
otherwise to  shareholders  as such unless it possesses  assets in the amount of
such payment in excess of the sum of its liabilities and the aggregate amount of
the par value of all shares of its capital stock; provided,  that in no instance
shall  such  dividend  reduce  the total of (i) gross  paid-in  and  contributed
surplus,  plus (ii) special surplus funds,  plus (iii) unassigned  funds,  minus
(iv)  treasury  stock at cost,  below an  amount  equal to 50% of the  aggregate
amount of the par value of all shares of the insurer's capital stock.

         Under  Florida  law, a domestic  insurer  may not pay any  dividend  or
distribute cash or other property to its stockholders except out of that part of
its available and  accumulated  surplus funds which is derived from realized net
operating  profits on its  business and net realized  capital  gains.  A Florida
domestic insurer may not make dividend payments or distributions to stockholders
without prior approval of the Florida Department if the dividend or distribution
would  exceed  the  larger of (i) the  lesser of (a) 10% of  surplus  or (b) net
income, not including realized capital gains, plus a two-year carryforward, (ii)
10% of surplus with dividends payable  constrained to unassigned funds minus 25%
of unrealized capital gains or (iii) the lesser of (a) 10% of surplus or (b) net
investment  income  plus  a  three-year   carryforward  with  dividends  payable
constrained  to  unassigned  funds  minus  25%  of  unrealized   capital  gains.
Alternatively,  a Florida  domestic  insurer may pay a dividend or  distribution
without the prior written approval of the Florida  Department if the dividend is
equal to or less than the greater of (i) 10% of the insurer's surplus as regards
policyholders  derived from realized net  operating  profits on its business and
net realized  capital gains or (ii) the insurer's  entire net operating  profits
and realized net capital gains derived during the immediately preceding calendar
year; (2) the insurer will have policyholder  surplus equal to or exceeding 115%
of the minimum

                                      -27-

<PAGE>



required  statutory surplus after the dividend or distribution,  (3) the insurer
files a notice of the dividend or distribution  with the department at least ten
business days prior to the dividend  payment or distribution  and (4) the notice
includes a certification by an officer of the insurer  attesting that, after the
payment of the dividend or distribution,  the insurer will have at least 115% of
required  statutory  surplus as to  policyholders.  Except as provided  above, a
Florida  domiciled  insurer may only pay a dividend or make a  distribution  (i)
subject to prior  approval by the Florida  Department  or (ii) thirty days after
the Florida  Department has received notice of such dividend or distribution and
has not  disapproved  it within such time.  In the consent  order  approving the
Acquisition,  the Florida  Department  has  prohibited  Superior from paying any
dividends  (whether  extraordinary  or not)  for  four  years  from  the date of
acquisition without the prior written approval of the Florida Department.

         Under these laws, the maximum aggregate amounts of dividends  permitted
to be paid to the  Company  in 1998 by IGF and Pafco  without  prior  regulatory
approval are  $13,404,000  and $0,  respectively,  none of which have been paid.
Although the Company believes that amounts required for it to meet its financial
and operating  obligations will be available,  there can be no assurance in this
regard.  See  "Management's  Discussion and Analysis of Financial  Condition and
Results of  Operations  of the  Company --  Liquidity  and  Capital  Resources."
Further,  there can be no assurance that, if requested,  the Indiana  Department
will approve any request for  extraordinary  dividends from Pafco or IGF or that
the Florida  Department  will allow any dividends to be paid by Superior  during
the four year period described above.

         The  maximum  dividends  permitted  by  state  law are not  necessarily
indicative   of  an  insurer's   actual   ability  to  pay  dividends  or  other
distributions to a parent company, which also may be constrained by business and
regulatory  considerations,  such as the impact of dividends  on surplus,  which
could affect an insurer's competitive position,  the amount of premiums that can
be written and the ability to pay future  dividends.  Further,  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.

         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 GGS  Management.  The management  agreement
between the Company and Pafco has been assigned to GGS  Management,  Inc.  ("GGS
Management")  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 has been entered into between GGS Management and Superior. Employees of
the Company relating to the nonstandard  automobile  insurance  business and all
Superior employees became employees of GGS Management  effective April 30, 1996.
In the consent  order  approving the  Acquisition,  the Florida  Department  has
reserved,  for three years, the right to reevaluate the  reasonableness  of fees
provided for in the Superior  management  agreement at the end of each  calendar
year and to require Superior to make adjustments in the management fees based on
the  Florida  Department's   consideration  of  the  performance  and  operating
percentages of Superior and other pertinent data. 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.

  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.


                                      -28-

<PAGE>



         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.  The most recent significant  changes to the MPCI
program  came as a result of the  passage by Congress of the 1994 Reform Act and
the 1996 Reform Act.

         Certain  provisions  of the 1994 Reform Act,  when  implemented  by the
FCIC, may increase  competition  among private insurers in the pricing of Buy-up
Coverage.  The 1994  Reform Act  authorizes  the FCIC to  implement  regulations
permitting  insurance  companies  to pass on to  farmers  in the form of reduced
premiums certain cost efficiencies  related to any excess expense  reimbursement
over the insurer's actual cost to administer the program,  which could result in
increased  price  competition.  To date,  the FCIC has not  enacted  regulations
implementing these provisions but is currently  collecting  information from the
private sector regarding how to implement these provisions.

         The 1994 Reform Act required  farmers for the first time to purchase at
least CAT Coverage 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 for the first time the marketing
and selling of CAT Coverage by the local USDA offices. Partly as a result of the
increase in the size of the MPCI market  resulting from the 1994 Reform Act, the
Company's MPCI Premium  increased to $53.4 million in 1995 from $44.3 million in
1994.  However,  the 1996 Reform Act,  signed into law by  President  Clinton in
April 1996,  eliminated the linkage between CAT Coverage and  qualification  for
certain  federal  farm  program  benefits  and also limited the role of the USDA
offices in the delivery of MPCI  coverage.  In  accordance  with the 1996 Reform
Act, the USDA  announced in July 1996 the following 14 states where CAT Coverage
will no longer be  available  through  USDA  offices but rather  would solely be
available through private agencies: Arizona, Colorado,  Illinois, Indiana, Iowa,
Kansas,  Minnesota,  Montana,  Nebraska,  North  Carolina,  North Dakota,  South
Dakota,  Washington  and  Wyoming.  The  limitation  of the  USDA's  role in the
delivery  system for MPCI should  provide the Company  with the  opportunity  to
realize  increased  revenues  from the  distribution  and  servicing of its MPCI
product.  The Company has not experienced  any material  negative impact in 1996
from the  delinkage  mandated by the 1996 Reform Act. In addition,  through June
30, 1996, the FCIC transferred to the Company  approximately  8,900 insureds for
CAT Coverage who previously purchased such coverage from USDA field offices. The
Company  believes  that any future  potential  negative  impact of the delinkage
mandated by the 1996 Reform Act will be mitigated by, among other  factors,  the
likelihood  that  farmers  will  continue  to  purchase  MPCI to  provide  basic
protection  against  natural  disasters  since ad hoc  federal  disaster  relief
programs have been reduced or eliminated. In addition, the Company believes that
(i) lending  institutions  will likely  continue to require  this  coverage as a
condition  to crop  lending  and (ii) many of the  farmers  who entered the MPCI
program  as a  result  of the  1994  Reform  Act  have  come to  appreciate  the
reasonable price of the protection afforded by CAT Coverage and will remain with
the program regardless of delinkage.  There can, however,  be no assurance as to
the  ultimate  effect  which the 1996  Reform  Act may have on the  business  or
operations of the Company.

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.

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

                                      -29-

<PAGE>



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  1997,  Pafco had  unusual  values for three IRIS  tests.  These
included  two-year overall  operating ratio where Pafco's ratio was 107 compared
to the IRIS  upper  limit of 100,  change in  surplus  where  Pafco's  ratio was
(26.7%)  compared  to the  IRIS  lower  limit  of  (10%)  and one  year  reserve
development  to surplus  where Pafco's ratio was 31.2 compared to the IRIS upper
limit of 20.  Pafco failed  these tests due to the  additional  reserves of $7.5
million booked in 1997 on accident years 1996 and prior due to deficient reserve
development.  Pafco does not expect such results to continue.  However, reserves
are  subjective  and based on estimates  and there is no guarantee  such results
will not continue.

         During 1997 IGF had unusual values for three IRIS tests.  IGF continued
to have unusual values in the  liabilities to liquid assets and agents  balances
to surplus  tests.  IGF generally has an unusual value in these tests due to the
reinsurance  program  mandated  by the  FCIC  for the  distribution  of the MPCI
program  and the fact that  agents'  balances  at  December  31 are  usually not
settled until late February.  IGF's  investment  yield exceeded the upper end of
the IRIS range due to the fact the  calculation  is based on a simple average of
beginning and ending investment balances.

         During 1997,  the IRIS ratios for Superior  were within the  acceptable
range.

  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 (as defined by the NAIC)  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 (as defined by the
NAIC) 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 (as defined by the NAIC) 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, 1997, the
RBC ratios of the Insurers were in excess of the Company Action Level, the first
trigger level that would require regulatory action.


                                      -30-

<PAGE>



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.

Employees

         At  December  31,  1997  the  Company  and  its  subsidiaries  employed
approximately  947 full and  part-time  employees.  The  Company  believes  that
relations with its employees are excellent.

FORWARD LOOKING STATEMENTS - SAFE HARBOR PROVISIONS

         The statements contained in this Annual Report which are not historical
facts,  including but not limited to,  statements  concerning  (i) the impact of
federal and state laws and  regulations,  including but not limited to, the 1994
Reform  Act and 1996  Reform  Act,  on the  Company's  business  and  results of
operations, (ii) the competitive advantage afforded to IGF by approaches adopted
by  management  in the areas of  information,  technology,  claims  handling and
underwriting,  (iii)  the  sufficiency  of the  Company's  cash flow to meet the
operating  expenses,  debt service  obligations and capital needs of the Company
and its  subsidiaries,  and (iv) the impact of  declining  MPCI  Buy-up  Expense
Reimbursements  on the  Company's  results of  operations,  are  forward-looking
statements  within the meanings of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended. From
time to time the  Company may also issue other  statements  either  orally or in
writing,  which are  forward  looking  within  the  meaning  of these  statutory
provisions.  Forward  looking  statements are typically  identified by the words
"believe",  "expect",  "anticipate",  "intend",  "estimate",  "plan" and similar
expressions.  These  statements  involve a number  of risks  and  uncertainties,
certain of which are beyond the Company's  control.  Actual results could differ
materially from the forward  looking  statements in this Form 10-K or from other
forward  looking  statements  made by the Company.  In addition to the risks and
uncertainties  of  ordinary  business  operations,  some of the facts that could
cause actual results to differ materially from the anticipated  results or other
expectations expressed in the Company's forward-looking statements are the risks
and uncertainties  (i) discussed  herein,  (ii) contained in the Company's other
filings with the Securities and Exchange  Commission and public  statements from
time to time, and (iii) set forth below.

Uncertain Pricing and Profitability

         One  of  the  distinguishing  features  of the  property  and  casualty
industry is that its products generally are priced,  before its costs are known,
because premium rates usually are determined before losses are reported. 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

                                      -31-

<PAGE>



the absence of a base of experience with such products' performance.

         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.  Severe  weather  conditions  could also
adversely  affect the Company's  business  through  higher losses and LAE. These
factors,  together  with  competitive  pricing and other  considerations,  could
result in fluctuations in the Company's underwriting results and net income.

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 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 1980, and some of these modifications have been significant. No
assurance  can be given that future  changes will not  significantly  affect the
MPCI program and the Company's crop insurance business.

         The 1994 Reform Act also reduced the expense reimbursement rate payable
to the Company for its costs of servicing  MPCI  policies  that exceed the basic
CAT Coverage level (such  policies,  "Buy-up  Coverage") for the 1997,  1998 and
1999  crop  years to 29%,  28% and  27.5%,  respectively,  of the  MPCI  Premium
serviced,  a decrease from the 31% level established for the 1994, 1995 and 1996
crop years.  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. The FCIC has appointed several
committees   comprised   of  members   of  the   insurance   industry   to  make
recommendations  concerning  this  matter.  The 1994 Reform Act also directs the
FCIC to

                                      -32-

<PAGE>



establish  adequate  premiums  for all MPCI  coverages at such rates as the FCIC
determines  are  actuarially  sufficient to attain a targeted loss ratio.  Since
1980,  the average MPCI loss ratio has exceeded this target ratio.  There can be
no  assurance  that the FCIC  will not  increase  rates to  farmers  in order to
achieve  the  targeted  loss  ratio  in a manner  that  could  adversely  affect
participation by farmers in the MPCI program above the CAT Coverage level.

         The 1996 Reform Act,  signed  into law by  President  Clinton in April,
1996,  provides  that,  MPCI  coverage is not  required for federal farm program
benefits  if  producers  sign a  written  waiver  that  waives  eligibility  for
emergency  crop  loss  assistance.  The  1996  Reform  Act also  provides  that,
effective for the 1997 crop year, the Secretary of  Agriculture  may continue to
offer  CAT  Coverage  through  USDA  offices  if the  Secretary  of  Agriculture
determines that the number of approved insurance  providers operating in a state
is insufficient to adequately provide  catastrophic risk protection  coverage to
producers.  There can be no assurance  as to the ultimate  effect which the 1996
Reform Act may have on the business or operations of the Company.

         Total MPCI  Premium  for each  farmer  depends  upon the kinds of crops
grown,  acreage planted and other factors determined by the FCIC. Each year, the
FCIC sets, by crop, the maximum per unit commodity  price ("Price  Election") to
be used in computing MPCI  Premiums.  Any reduction of the Price Election by the
FCIC will  reduce the MPCI  Premium  charged per policy,  and  accordingly  will
adversely impact MPCI 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  and,  with  respect to CAT  Coverage,  USDA field  service
offices in certain  areas.  In addition the crop  insurance  industry has become
increasingly  consolidated.  From the 1985 crop year to the 1996 crop year,  the
number of insurance companies that have entered into agreements with the FCIC to
sell and service MPCI policies has declined from 50 to 16. 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.


                                      -33-

<PAGE>



Importance of Ratings

         A.M. Best has currently  assigned  Superior a B+ (Very Good) rating and
Pafco a B-  (Adequate)  rating.  Subsequent  to the  Acquisition,  the rating of
Superior  was reduced  from A- to B+ as a result of the leverage of GGS Holdings
resulting from  indebtedness  in connection with the  Acquisition.  A "B+" and a
"B-" rating are A.M.  Best's sixth and eighth  highest  rating  classifications,
respectively,  out of 15 ratings. A "B+" rating is awarded to insurers which, in
A.M. Best's  opinion,  "have  demonstrated  very good overall  performance  when
compared to the standards established by the A.M. Best Company" and "have a good
ability to meet their obligations to policyholders  over long period of time". A
"B-"  rating is  awarded  to  insurers  which,  in A.M.  Best's  opinion,  "have
demonstrated  adequate  overall  performance  when  compared  to  the  standards
established by the A.M. Best Company" and "generally have an adequate ability to
meet  their  obligations  to  policyholders,  but their  financial  strength  is
vulnerable to unfavorable  changes in underwriting or economic  conditions." IGF
recently  received  an "NA-2"  rating (a  "rating  not  assigned"  category  for
companies that do not meet A.M. Best's minimum size requirement) from A.M. Best.
IGF intends to seek a revised rating in 1998, although there can be no assurance
that a revised  rating will be  obtained or as to the level of any such  rating.
A.M. Best bases its ratings on factors that concern policyholders and agents and
not upon factors  concerning  investor  protection.  Such ratings are subject to
change and are not  recommendations to buy, sell or hold securities.  One factor
in an insurer's ability to compete effectively is its A.M. Best rating. The A.M.
Best  ratings for the  Company's  rated  Insurers are lower than for many of the
Company's  competitors.  There can be no  assurance  that such ratings or future
changes therein will not affect the Company's competitive position.

Geographic Concentration

         The Company's nonstandard automobile insurance business is concentrated
in  the  states  of  Florida,   California,   Indiana,  Missouri  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 Iowa,  Texas,  Illinois,  Kansas and
Minnesota and the Company will be significantly  affected by weather conditions,
natural perils and other factors affecting the crop insurance  business in those
states.

Future Growth and Continued Operations Dependent on Access to Capital

         Property and casualty  insurance is a capital intensive  business.  The
Company  must  maintain  minimum  levels of surplus in the  Insurers in order to
continue to write  business,  meet the other related  standards  established  by
insurance  regulatory  authorities  and  insurance  rating  bureaus  and satisfy
financial ratio covenants in loan agreements.

         Historically,  the Company has achieved  premium  growth as a result of
both  acquisitions  and  internal  growth.  It  intends  to  continue  to pursue
acquisition and new internal growth  opportunities.  Among the factors which may
restrict  the  Company's  future  growth is the  availability  of capital.  Such
capital  will likely have to be obtained  through  debt or equity  financing  or
retained  earnings.  There  can be no  assurance  that the  Company's  insurance
subsidiaries will have access to sufficient capital to support future growth and
also  satisfy  the  capital  requirements  of rating  agencies,  regulators  and
creditors.  In addition,  the Company will require additional capital to finance
future acquisitions.

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

                                      -34-

<PAGE>



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.

Comprehensive State Regulation

         The  Company's  insurance  subsidiaries  are  subject to  comprehensive
regulation  by  government  agencies  in the states in which they  operate.  The
nature and extent of that regulation vary from  jurisdiction to jurisdiction but
typically  involve prior approval of the  acquisition of control of an insurance
company or of any  company  controlling  an  insurance  company,  regulation  of
certain  transactions  entered  into by an  insurance  company  with  any of its
affiliates,  limitations  on dividends,  approval or filing of premium rates and
policy forms for many lines of insurance, solvency standards, minimum amounts of
capital and surplus which must be  maintained,  limitations on types and amounts
of  investments,  restrictions  on the size of risks  which may be  insured by a
single company,  limitation of the right to cancel or non-renew  policies in ome
lines,   regulation   of  the  right  to  withdraw  from  markets  or  agencies,
requirements  to  participate  in residual  markets,  licensing  of insurers and
agents, deposits of securities for the benefit of policyholders,  reporting with
respect to financial condition,  and other matters. In addition, state insurance
department  examiners perform periodic financial and market conduct examinations
of insurance companies. Such regulation is generally intended for the protection
of policyholders  rather than security  holders.  No assurance can be given that
future legislative or regulatory changes will not adversely affect the Company.

Holding Company Structure; Dividend And Other Restrictions; Management Fees

         Holding Company Structure.  The Company is a holding company whose
principal asset is the capital stock of the subsidiaries.  The Company relies
primarily on dividends and other payments from its subsidiaries, including

                                      -35-

<PAGE>



the its insurance subsidiaries,  to meet its obligations to creditors and to pay
corporate  expenses.  The  Insurers  are  domiciled in the states of Indiana and
Florida  and each of these  states  limits the  payment of  dividends  and other
distributions by insurance companies.

         Dividend and Other Restrictions. Indiana law defines as "extraordinary"
any  dividend or  distribution  which,  together  with all other  dividends  and
distributions to shareholders  within the preceding  twelve months,  exceeds the
greater of: (i) 10% of statutory surplus as regards  policyholders as of the end
of the preceding year, or (ii) the prior year's net income.  Dividends which are
not  "extraordinary"  may be paid ten  days  after  the  Indiana  Department  of
Insurance   ("Indiana   Department")   receives  notice  of  their  declaration.
"Extraordinary"  dividends and  distributions  may not be paid without the prior
approval of the Indiana  Commissioner of Insurance (the "Indiana  Commissioner")
or until the Indiana  Commissioner  has been given thirty days' prior notice and
has not  disapproved  within that period.  The Indiana  Department  must receive
notice of all dividends,  whether  "extraordinary"  or not, within five business
days after they are declared.  Notwithstanding  the foregoing  limit, a domestic
insurer  may not  declare or pay a dividend  from any source of funds other than
"Earned Surplus" without the prior approval of the Indiana  Department.  "Earned
Surplus" is defined as the amount of unassigned funds set forth in the insurer's
most recent annual statement,  less surplus  attributable to unrealized  capital
gain or re-evaluation of assets.  Further, no Indiana domiciled insurer may make
payments in the form of dividends or  otherwise  to its  shareholders  unless it
possesses  assets  in the  amount of such  payments  in excess of the sum of its
liabilities  and the aggregate  amount of the par value of all shares of capital
stock; provided, that in no instance shall such dividend reduce the total of (I)
gross paid-in and contributed  surplus,  plus (ii) special  surplus funds,  plus
(iii) unassigned funds, minus (iv) treasury stock at cost, below an amount equal
to 50% of the  aggregate  amount of the par value of all shares of the insurer's
capital stock.

         Under  Florida  law, a domestic  insurer  may not pay any  dividend  or
distribute cash or other property to its stockholders except out of that part of
its available and  accumulated  surplus funds which is derived from realized net
operating  profits on its  business and net realized  capital  gains.  A Florida
domestic  insurer may make dividend  payments or  distributions  to stockholders
without  prior  approval  of  the  Florida  Department  of  Insurance  ("Florida
Department") if the dividend or distribution  does not exceed the larger of: (i)
the lesser of (a) 10% of surplus or (b) net  investment  income,  not  including
realized  capital gains,  plus a 2-year  carryforward,  (ii) 10% of surplus with
dividends  payable  constrained  to  unassigned  funds  minus 25% of  unrealized
capital  gains,  or (iii) the lesser of (a) 10% of surplus or (b) net investment
income  plus  a  3-year  carryforward  with  dividends  payable  constrained  to
unassigned funds minus 25% of unrealized capital gains. Alternatively, a Florida
domestic  insurer may pay a dividend or  distribution  without the prior written
approval of the Florida  Department if (1) the dividend is equal to or less than
the greater of (i) 10% of the insurer's surplus as regards policyholders derived
from net operating  profits on its business and net realized  capital gains,  or
(ii) the insurer's entire net operating profits  (including  unrealized gains or
losses) and realized net capital gains derived during the immediately  preceding
calendar  year;  (2) the  insurer  will have  policyholder  surplus  equal to or
exceeding 115% of the minimum required  statutory  surplus after the dividend or
distribution;  (3) the insurer  files a notice of the  dividend or  distribution
with the Florida  Department  at least ten  business  days prior to the dividend
payment or  distribution;  and (4) the notice  includes  a  certification  by an
officer of the insurer  attesting  that,  after the  payment of the  dividend or
distribution,  the insurer will have at least 115% of required statutory surplus
as to  policyholders.  Except as provided above, a Florida domiciled insurer may
only pay a dividend or make a distribution  (i) subject to prior approval by the
Florida  Department,  or (ii)  thirty  days  after the  Florida  Department  has
received  notice of such dividend or  distribution  and has not  disapproved  it
within such time. In the consent order approving the  Acquisition  (the "Consent
Order"),  the  Florida  Department  has  prohibited  Superior  from  paying  any
dividends (whether extraordinary or not) for four years from date of acquisition
without the prior written approval of the Florida Department.

         Although the Company  believes  that funds  required for it to meet its
financial and operating obligations will be available, there can be no assurance
in this regard.  Further,  there can be no assurance  that,  if  requested,  the
Indiana  Department  will approve any request for  extraordinary  dividends from
Pafco or IGF or that the Florida  Department will allow any dividends to be paid
by Superior during the four year period described above.

         The maximum dividends permitted by state law are not necessarily
indicative of an insurer's actual ability to

                                      -36-

<PAGE>



pay  dividends or other  distributions  to a parent  company,  which also may be
constrained  by business and  regulatory  considerations,  such as the impact of
dividends on surplus,  which could affect an insurer's competitive position, the
amount of premiums that can be written and the ability to pay future  dividends.
Further, 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.

         Management  Fees.  The  management  agreement  originally  entered into
between the  Company and Pafco was  assigned as of April 30, 1996 by the Company
to GGS  Management,  a wholly-owned  subsidiary of GGS Holdings.  This agreement
provides for an annual management fee equal to 15% of gross premiums written.  A
similar  managements  agreement  with a management  fee of 17% of gross premiums
written has been entered into between GGS Management and Superior.  Employees of
the Company relating to the nonstandard  automobile  insurance  business and all
Superior employees became employees of GGS Management  effective April 30, 1996.
In the Consent  Order  approving the  Acquisition,  the Florida  Department  has
reserved,   for  a  period  of  three  years,   the  right  to  re-evaluate  the
reasonableness of fees provided for in the Superior management  agreement at the
end of each calendar  year and to require  Superior to make  adjustments  in the
management  fees  based  on  the  Florida  Department's   consideration  of  the
performance  and operating  percentages  of Superior and other  pertinent  data.
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.

Legal Proceedings

         IGF  instituted  litigation  against  the FCIC on March 23, 1995 in the
United  States  District  Court for the  Southern  District of Iowa seeking $4.3
Million as reimbursement for certain  expenses.  IGF alleges the FCIC wrongfully
sought to hold IGF responsible for those expenses.  The FCIC  counterclaimed for
approximately $1.2 Million in claims payments for which the FCIC contends IGF is
responsible  for as successor  to the run-off  book of business.  On October 27,
1997,  IGF  reached an  agreement  with the FCIC to settle  the case,  with both
parties  dismissing  all claims  against one another  which were  subject to the
litigation. The FCIC has agreed to pay IGF a lump sum payment of $60,000.

ITEM 2 - PROPERTIES

         The headquarters for the Company, GGS Holdings and Pafco are 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.
The remaining space is leased to third-parties  at a price of approximately  $10
per square foot.

         Pafco also owns an investment  property located at 2105 North Meridian,
Indianapolis, Indiana. The property is a 21,700 square foot, multilevel building
leased out entirely to third parties.

         Superior's  operations  are conducted at leased  facilities  located 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
43,448 square feet at this  location and  subleases an  additional  3,303 square
feet to  third-party  tenants.  Superior  also has 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.  In  addition,
Superior  occupies  an  office  at  1745  West  Orangewood,  Orange,  California
consisting of 3,264 square feet under a lease extending through June 2000.

         IGF owns a 17,500  square  foot office  building  located at 2882 106th
Street,  Des  Moines,  Iowa  which  serves as its  corporate  headquarters.  The
building  is fully  occupied  by IGF but is  currently  for sale.  IGF also owns
certain  improved  commercial  property  which  is  adjacent  to  its  corporate
headquarters.

         IGF bought an office building in Des Moines, Iowa as its crop insurance
division home office.  The sale of the old building is expected to close on
April 1, 1998 for $1.35 million.

                                      -37-

<PAGE>



ITEM 3 - LEGAL PROCEEDINGS

The Company's  insurance  subsidiaries are parties to 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

No matters  were  submitted  during  1997 to a vote of  security  holders of the
Registrant, through the solicitation of proxies or otherwise.

SEPARATE ITEM, 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
David L. Bates        39            Vice President, General Counsel and
                                    Secretary of the Company

Gary P. Hutchcraft    36            Vice President, Chief Financial Officer and
                                    Treasurer of the Company

Mr. Bates,  J.D.,  C.P.A.,  has served as Vice  President,  General  Counsel and
Secretary  of the  Company  since  November,  1995 after  having been named Vice
President  and General  Counsel of Goran in April,  1995.  Mr. Bates served as a
member of the Fort Howard  Corporation  Legal  Department from  September,  1988
through March,  1995. Prior to that time, Mr. Bates served as a Tax Manager with
Deloitte & Touche.

Mr. Hutchcraft,  C.P.A.,  has served as Vice President,  Chief Financial Officer
and Treasurer of the Company and Goran since July, 1996. Prior to that time, Mr.
Hutchcraft served as an Assurance Manager with KPMG Peat Marwick, LLP from July,
1988 to July, 1996.

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

Information  regarding the trading market for the Company's  Common Shares,  the
range of selling prices for each quarterly period since the Offering on November
4, 1996, with respect to the Common Shares and the approximate number of holders
of Common Shares as of December 31, 1997 and other matters is included under the
caption "Market and Dividend  Information" on page 43 of the 1997 Annual Report,
included as Exhibit 13, which information is incorporated herein by reference.

The Company  currently  intends to retain  earnings for use in the operation and
expansion  of its  business  and  therefore  does  not  anticipate  paying  cash
dividends  on its  Common  Stock  in the  foreseeable  future.  The  payment  of
dividends is within the  discretion  of the Board of Directors  and will depend,
among other things, upon earnings, capital requirements, any financing agreement
covenants and the financial  condition of the Company.  In addition,  regulatory
restrictions and provisions of the Preferred  Securities limit  distributions to
shareholders.

ITEM 6 - SELECTED FINANCIAL DATA
The data included on page 4 of the 1997 Annual  Report,  included as Exhibit 13,
under "Selected Financial Data" is incorporated herein by reference.



                                      -38-

<PAGE>


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 1997 Annual Report on pages
5 through 16 included as Exhibit 13 is incorporated herein by reference.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The  consolidated  financial  statements in the 1997 Annual Report,  included as
Exhibit  13, and listed in Item 14 of this  Report  are  incorporated  herein by
reference from the 1997 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 1997  annual  meeting  of  common  stockholders  filed  with the  Commission
pursuant to Regulation 14A (the "1997 Proxy Statement").

ITEM 11 - EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference to the
Company's 1997 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 1997 Proxy Statement.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated herein by reference to the
Company's 1997 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 1997  Annual  Report  indicated  below are
incorporated into Item 8 of this Report by reference.

Description of Financial Statement Item          Location in 1997 Annual Report

 Report of Independent Accountants               Page 45

 Consolidated Balance Sheets, December 31,
 1997 and 1996                                   Page 17

 Consolidated  Statements of Earnings,
 Years Ended December 31, 1997, 1996 and 1995    Page 18


                                      -39-

<PAGE>



 Consolidated Statements of Changes In
 Shareholders' Equity, Years Ended
 December 31, 1997, 1996 and 1995                Page 19

 Consolidated Statements of Cash Flows,
 Years Ended December 31, 1997, 1996 and 1995    Page 20

 Notes to Consolidated Financial Statements,
 Years Ended DePage 21 through 43996 and 1995

2. Financial  Statement  Schedules.  The following financial statement schedules
are included beginning on Page 41.

    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.  None

                                      -40-

<PAGE>



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

Our report on the  consolidated  financial  statements  of Symons  International
Group,  Inc. and  Subsidiaries  has been  incorporated by reference in this Form
10-K  from  page  49 of  the  1997  Annual  Report  to  Shareholders  of  Symons
International  Group,  Inc. and  Subsidiaries.  In connection with our audits of
such financial statements,  we have also audited the related financial statement
schedules listed in the index on page 40 of this Form 10-K.

In our  opinion,  the  financial  statement  schedules  referred to above,  when
considered  in  relation  to the basic  financial  statements  taken as a whole,
present  fairly,  in all  material  respects,  the  information  required  to be
included therein.



COOPERS & LYBRAND L.L.P.
Indianapolis, Indiana
February 27, 1998

                                      -41-

<PAGE>



SYMONS INTERNATIONAL GROUP, INC. - CONSOLIDATED
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
As Of December 31, 1996 and 1997
(In Thousands)

<TABLE>

<CAPTION>

ASSETS                                                     1996         1997

<S>                                                       <C>          <C>
Assets:

  Investments In And Advances To Related Parties          $77,514     $173,348

  Cash and Cash Equivalents                                 6,160          299

  Federal Income Tax Receivable                               ---          223

  Property and Equipment                                        8           15

  Other                                                       168          646

  Intangible Assets                                            83       43,749
                                                               --       ------

Total Assets                                              $83,933     $218,280
                                                           ======      =======

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

  Payables to Affiliates                                      350          ---

  Federal Income Tax Payable                                   81          ---

  Accrued Distributions on Preferred Securities               ---        4,801

  Other                                                       992          116
                                                              ---          ---

Total Liabilities                                           1,423        4,917

Minority Interest:

   Equity in Consolidated Subsidiary                       21,610          ---

   Preferred Securities                                       ---      135,000

Stockholders' Equity:

  Common Stock, No Par, 1,000,000 Shares Authorized,
    10,450,000 Issued and Outstanding                      38,969       39,019

  Additional Paid-In Capital                                5,905        5,925

  Unrealized Gain On Investments (Net of Deferred
    Taxes of $625 in 1996 and $1,008 in 1997                  820        1,908

Retained Earnings                                          15,206       31,511
                                                           ------       ------

Total Stockholders' Equity                                 60,900       78,363
                                                           ------       ------

Total Liabilities and Stockholders' Equity                $83,933     $218,280
                                                           ======      =======
</TABLE>



                                      -42-

<PAGE>



SYMONS INTERNATIONAL GROUP, INC. - CONSOLIDATED
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
For The Years Ended December 31, 1995, 1996 and 1997
(In Thousands)

<TABLE>
<CAPTION>


                                                        1995     1996      1997

<S>                                                    <C>      <C>     <C>
Fee Income                                             $7,626   $5,353     $628

Net Investment Income                                   1,522       98    2,248

Net Realized Investment Losses                            (52)     ---      ---
                                                          ---      ---      ---

Total Revenue                                           9,096    5,451    2,876
                                                        -----    -----    -----

Expenses:

  Policy Acquisition and General and Administrative
    Expenses                                            7,891    4,269    2,576

  Interest Expense                                        621      613      ---
                                                          ---      ---      ---

Total Expenses                                          8,512    4,882    2,576
                                                        -----    -----    -----

Income Before Taxes and Minority Interest                 584      569      300

Provision for Income Taxes                                293      228      328
                                                          ---      ---      ---

Net Income (Loss) Before Minority Interest                291      341      (28)

Minority Interest:

  Equity in Consolidated  Subsidiary                    4,530   12,915   19,453

 Distributions on Preferred Securities, Net of Tax        ---      ---   (3,120)
                                                          ---      ---   ------

Net Income for the Period                              $4,821  $13,256  $16,305
                                                        =====   ======   ======
</TABLE>




                                      -43-

<PAGE>



SYMONS INTERNATIONAL GROUP, INC. - CONSOLIDATED
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
For The Years Ended December 31, 1995, 1996 and 1997
(In Thousands)

<TABLE>
<CAPTION>


                                                        1995     1996   1997
<S>                                                  <C>       <C>      <C>

Net Income                                             $4,821   $13,256 $16,305

Cash Flows From Operating Activities:

Adjustments to Reconcile Net Cash Provided
by (Used In) Operations:

  Equity In Net Income of Subsidiaries               (4,530)   (12,915) (19,453)

  Depreciation of Property and Equity                    37         52        5

  Net Realized Capital Loss                             (52)       ---      ---

  Amortization of Intangible Assets                      88          3      858

Net Changes in Operating Assets and Liabilities:

  Federal Income Taxes                                 (176)        81     (304)

  Other Assets                                          216       (145)    (478)

  Other Liabilities                                     518        163     (876)
                                                        ---        ---     ----

Net Cash Provided From (Used In) Operations             922        495   (3,943)
                                                        ---        ---   ------

Cash Flow Used In Investing Activities:

  Purchase of Minority Interest                         ---        ---  (61,000)

  Purchase of Property and Equipment                   (179)       ---      (12)
                                                       ----        ---      ---

Net Cash Used in Investing Activities:                 (179)       ---  (61,012)
                                                       ----        ---   ------

Cash Flows Provided by (Used In) Financing Activities

  Proceeds From Preferred Securities                    ---        ---  129,947

  Proceeds From Common Stock Offering                   ---     37,969     ---

  Repayment of Loans                                 (1,250)       ---     (350)

  Contributed Capital or Advances to Subsidiaries       ---    (20,475) (70,503)

  Loans From Related Parties                            507     (8,329)     ---

Payment of Dividend to Parent                           ---     (3,500)     ---
                                                        ---     ------      ---

Net Cash Provided By (Used In) Financing Activities    (743)     5,665   59,094
                                                       ----      -----   ------

Increase (Decrease) in Cash and Cash Equivalents        ---      6,160   (5,861)

Cash and Cash Equivalents - Beginning of Year           ---        ---    6,160
                                                        ---        ---    -----

Cash and Cash Equivalents - End of Year                $---     $6,160     $299
                                                        ===      =====      ===
</TABLE>



                                      -44-

<PAGE>



SYMONS INTERNATIONAL GROUP, INC. - CONSOLIDATED
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
For The Years Ended December 31, 1995, 1996 and 1997

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.

SYMONS INTERNATIONAL GROUP, INC. - CONSOLIDATED
SCHEDULE IV - REINSURANCE
For The Years Ended December 31, 1995, 1996 and 1997
(In Thousands)

<TABLE>
<CAPTION>


                                            1995          1996          1997

<S>                                       <C>           <C>          <C>
Direct Amount                             $123,381      $298,596      $430,002

Assumed From Other Companies                $1,253        $6,903       $30,598

Ceded to Other Companies                  ($71,187)     ($95,907)    ($183,059)

Net Amount                                 $53,447      $209,592      $277,541

Percentage of Amount Assumed to Net          2.3%          3.3%         11.0%

</TABLE>



                                      -45-

<PAGE>



SYMONS INTERNATIONAL GROUP, INC. - CONSOLIDATED
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
For The Years Ended December 31, 1995, 1996 and 1997
(In Thousands)

<TABLE>
<CAPTION>


                                    1995              1996               1997
                                 Allowance for     Allowance for      Allowance for
                               Doubtful Accounts  Doubtful Accounts  Doubtful Accounts

<S>                                 <C>               <C>                <C>
Additions:

Balance at Beginning of Period      $1,209              $927             $1,480

Reserves Acquired in the
  Superior Acquisition                 ---               500                ---

Charged to Costs and Expenses(1)     2,523             5,034              9,519

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

Deductions from Reserves             2,805 (2)         4,981              9,006
                                     -----             -----              -----

Balance at End of Period              $927            $1,480             $1,993
                                       ===             =====              =====
</TABLE>


(1) In 1993, the Company began to direct bill  policyholders  rather than agents
for  premiums.  During  late 1994 and into  1995,  the  Company  experienced  an
increase in premiums  written.  During 1995, the Company  further  evaluated the
collectibility of this business and incurred a bad debt expense of approximately
$2.5 million. The Company continually monitors the adequacy of its allowance for
doubtful  accounts and  believes  the balance of such  allowance at December 31,
1995, 1996 and 1997 was adequate.

(2) Uncollectible accounts written off, net of recoveries.

                                      -46-

<PAGE>



SYMONS  INTERNATIONAL  GROUP,  INC. -  CONSOLIDATED
SCHEDULE VI -  SUPPLEMENTAL INFORMATION  CONCERNING
PROPERTY - CASUALTY INSURANCE  OPERATIONS
For The Years Ended December 31, 1995, 1996 and 1997
(In Thousands)

<TABLE>


<CAPTION>
           Deferred    Reserves    Discount,   Unearned   Earned     Net      Claims and             Amorti-     Paid     Premiums
           Policy      for         if any,     Premiums   Premiums   Invest-  Adjustment             zation of   Claims   Written
           Acqui-      Unpaid      deducted                          ment     Expenses               Deferred    and
           sition      Claims      in                                Income   Incurred               Policy      Claim
           Costs       and         Column                                     Related to:            Acqui-      Adjust-
                       Claim       C                                                                 sition      ment
                       Adjust-                                                                       Costs       Expense
                       ment
                       Expense

                                                                              Current      Prior
                                                                              Years        Years

<S>        <C>         <C>         <C>         <C>        <C>        <C>      <C>          <C>       <C>         <C>      <C>
1995       2,379       59,421      ---         17,497     49,641     1,173    35,184       787       7,150       31,075   124,634

1996       12,800      101,719     ---         87,285     191,759    6,733    138,618      (1,509)   25,161      130,895  305,499

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

</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.

                                      -47-

<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.



March 23, 1998                                           By:  /s/ Alan G. 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 March 23, 1998, on behalf of
the registrant in the capacities indicated:

(1) Principal Executive Officer:


/s/ Alan G. Symons
Chief Executive Officer


(2) Principal Financial/Accounting Officer:


/s/ Gary P. Hutchcraft
Vice President and Chief Financial Officer

(3) The Board of Directors:

/s/ G. Gordon Symons                                  /s/ David R. Doyle
Chairman of the Board                                 Director


/s/ John K. McKeating                                /s/ James G. Torrance
Director                                             Director


/s/ Robert C. Whiting                                /s/ Douglas H. Symons
Director                                             Director


/s/ Jerome B. Gordon                                 /s/ Alan G. Symons
Director                                             Director


                                      -48-

<PAGE>


                                  EXHIBIT INDEX

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

1       Final Draft of the Underwriting Agreement, dated
        November 4, 1996, among Registrant, Goran Capital, Inc.,
        Advest, Inc. and Mesirow Financial, Inc is incorporated
        by reference to Exhibit 1 of the Registrant's 1996
        Form 10-K.

2.1     The Strategic  Alliance Agreement by and between
        Continental Casualty Company and IGF Insurance Company,
        IGF Holdings, Inc. and Symons International Group, Inc.
        dated February 28, 1998.

2.2     The MPCI Quota Share Reinsurance Contract by and
        between Continental Casualty Company and IGF Insurance
        Company, IGF Holdings, Inc. and Symons International
        Group, Inc. dated February 28, 1998.

2.3     The MPCI Quota Share Reinsurance Agreement by and
        between Continental Casualty Company and IGF Insurance
        Company, IGF Holdings, Inc. and Symons International
        Group, Inc. dated February 28, 1998.

2.4     The Crop Hail Insurance Quota Share Contract by and
        between Continental Casualty Company and IGF Insurance
        Company, iGF Holdings, Inc. and Symons International
        Group, Inc. dated February 28, 1998.

2.5     The Crop Hail Insurance Quota Share Agreement by and
        between Continental Casualty Company and IGF Insurance
        Company, IGF holdings, Inc. and Symons International
        Group, Inc. dated February 28, 1998.

2.6     The Crop Hail Insurance Services and Indemnity Agreement
        by and between Continental Casualty Company and IGF
        Insurance company, IGF Holdings, Inc. and Symons
        International Group, Inc. dated February 28, 1998.

2.7     The Multiple Peril Crop Insurance Service and
        Indemnity Agreement by and between Continental Casualty
        Company and IGF Insurance Company, IGF Holdings, Inc.
        and Symons International Group, Inc. Dated February 28, 1998.


<PAGE>


2.8     The Stock Purchase Agreement between Symons International
        Group, Inc. and GS Capital Partners II, L.P. dated
        July 23, 1998.

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

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

4.1     Article V - "Number, Terms and Voting Rights of Shares"
        of the Registrant's Restated Articles of Incorporation
        is Incorporated by reference to the Registrant's Restated
        Articles of Incorporation incorporated by reference
        hereunder as Exhibit 3.1.

4.2     Article I - "Shareholders" and Article VI -
        "Stock Certificates, Transfer of Shares, Stock Records"
        of the Registrant's Restated Code of Bylaws are
        incorporated by reference to the Registrant's Restated Code
        of Bylaws, as amended, filed hereunder as Exhibit 3.2.

4.3(1)  The Senior Subordinated Indenture between Symons
        International Group, Inc. as issuer and Wilmington Trust
        Company as trustee for SIG Capital Trust I dated
        August 12, 1997 is incorporated by reference in the
        Registrant's Registration Statement on Form S-4,
        Reg. No. 333-35713.

4.3(2)  First Supplemental Senior Subordinated Indenture between
        Symons International Group, Inc. and Wilmington Trust
        Company Related to SIG Capital Trust I dated January 15, 1998.

10.1    The Stock Purchase Agreement among Goran Capital  Inc.,
        Registrant, Fortis, Inc. and Interfinancial, Inc. dated
        January 31, 1996 is incorporated by reference to Exhibit 10.1
        of the Registrant's Registration Statement on Form S-1, Reg.
        No. 333-9129.

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


<PAGE>


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

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

10.5    The  Agreement  between  IGF  Insurance  Company and
        Registrant dated November 1, 1990 is  incorporated  by
        reference to Exhibit 10.8 of the Registrant's Registration
        Statement on Form S-1, Reg. No. 333-9129.

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

10.7(1) The Employment Agreement between GGS Management
        Holdings, Inc. and Alan G. Symons dated January 31, 1996 is
        incorporated by reference to Exhibit 10.16(1) of the
        Registrant's Registration Statement on Form S-1,  Reg. No.
        333-9129.

10.7(2) The Employment Agreement between GGS Management,
        Holdings, Inc. and Douglas H. Symons dated January 31, 1996
        is incorporated by reference to Exhibit 10.16(2) of the
        Registrant's Registration Statement on Form S-1, Reg. No.
        333-9129.

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

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

10.9    The Employment Agreement between Superior Insurance Company
        and Roger C. Sullivan, Jr. effective April 23, 1997.


<PAGE>


10.10   The Employment Agreement between Goran Capital Inc. and
        Gary P. Hutchcraft effective May 1, 1997.

10.11   The Employment Agreement between Goran Capital Inc. and
        David L. Bates effective April 1, 1997.

10.12   The Goran Capital Inc. Stock Option Plan is incorporated by
        reference to Exhibit 10.20 of the Registrant's Registration
        Statement on Form S-1, Reg. No. 333-9129.

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

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

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

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

10.17(1)The Automobile  Third Party  Liability and Physical
        Damage Quota Share Reinsurance Contract between Pafco
        General Insurance Company and Superior  Insurance
        Company is incorporated by reference to Exhibit 10.27(1)
        of the Registrant's  Registration  Statement on
        Form S-1, Reg. No. 333-9129.

10.17(2)The Crop Hail  Quota  Share  Reinsurance  Contract
        and Crop Insurance Service Agreement between  Pafco
        General Insurance Company and IGF Insurance
        Company is incorporated by reference to Exhibit 10.27(2)
        of the Registrant's Registration Statement on Form S-1,
        Reg. No. 333-9129.

10.17(3)The Automobile Third Party Liability and Physical Damage
        Quota Share Reinsurance Contract between IGF Insurance
        Company and Pafco General Insurance Company is incorporated
        by  reference to Exhibit 10.27(3) of the Registrant's
        Registration Statement on Form S-1, Reg. No. 333-9129.

10.17(4)The Multiple Line Quota Share  Reinsurance Contract between
        IGF Insurance Company and Pafco General  Insurance Company
        is incorporated by  reference  to Exhibit  10.27(4)
        of the Registrant's Registration Statement on Form S-1,
        Reg. No. 333-9129.

10.17(5)The Standard Revenue Agreement between Federal Crop Insurance
        Corporation and IGF Insurance Company is incorporated by
        reference to Exhibit 10.27(5) of the Registrant's
        Registration Statement on Form S-1, Reg. No. 333-9129.

10.18   The Commitment Letter,  effective October 24, 1996,
        between Fifth Third Bank of Central  Indiana and
        Registrant is incorporated by reference to Exhibit 10.28
        of the Registrant's Registration Statement on Form S-1,
        Reg. No. 333-9129.

10.19(1)The SIG Capital Trust I 9 1/2% Trust  Preferred Securities
        Purchase Agreement dated August 7, 1997 is incorporated by
        reference in the Registrant's Registration Statement on
        Form S-4, Reg. No. 333-35713.

10.19(2)The Registration Rights Agreement among Symons
        International Group, Inc., SIG Capital Trust I and
        Donaldson, Lufkin & Jenrette Securities Corporation,
        Goldman, Sachs & Co., CIBC Wood Gundy Securities Corp.
        and Mesirow Financial, Inc. dated August 12, 1997 is
        incorporated by reference in the Registrant's Registration
        Statement on Form S-4, Reg. No. 333-35713.

10.19(3)The Declaration of Trust of SIG Capital Trust 1 dated
        August 4, 1997 is incorporated by reference in the
        Registrant's Registration Statement on Form S-4,
        Reg. No. 333-35713.

10.19(4)The Amended and Restated  Declaration  of Trust of
        SIG Capital Trust I dated August 12, 1997 is incorporated
        by reference in the  Registrant's Registration Statement
        on Form S-4, Reg. No. 333-35713.

13      Annual Report to Security Holders

21      The Subsidiaries of the Registrant are incorporated by
        reference to Exhibit 21 of the Registrant's Registration
        Statement on Form S-1, Reg. No. 333-9129

23      Consent of Independent Public Accountants

27      Financial Data Schedule

99      Proxy Statement with respect to 1998 Annual Meeting
        of Shareholders of Registrant