<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998

                                       OR

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
       
                 FOR THE TRANSITION PERIOD FROM ______ TO _____


                     AMERICAN BANKERS INSURANCE GROUP, INC.
                             11222 QUAIL ROOST DRIVE
                              MIAMI, FLORIDA 33157
                                 (305) 253-2244

Commission File Number:                                                   0-9633

State of Incorporation:                                                  Florida

I.R.S. Employer Identification Number:                                59-1985922

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 report), and (2) has been subject to such
filing requirements for the past 90 days. YES  X   NO
                                             ----    -----

Common Stock - Par Value $1.00
43,070,782 Shares Outstanding on November 3, 1998


                                       1
<PAGE>   2
                     AMERICAN BANKERS INSURANCE GROUP, INC.

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

                     OF THE SECURITIES EXCHANGE ACT OF 1934

                        QUARTER ENDED SEPTEMBER 30, 1998





































<PAGE>   3




                                                                       Form 10-Q

Company or group of companies for which report is filed:



                     AMERICAN BANKERS INSURANCE GROUP, INC.

This quarterly report, filed pursuant to Rule 13A-13 of the General Rules and
Regulations under the Securities Exchange Act of 1934, consists of the following
information as specified in Form 10-Q.

PART I - FINANCIAL INFORMATION
------------------------------

       ITEM 1 - Financial Statements

             1. Consolidated Balance Sheets at September 30, 1998 and 
                December 31, 1997.

             2. Consolidated Statements of Income for the three months ended
                September 30, 1998 and 1997.

             3. Consolidated Statements of Comprehensive Income for the three
                months ended September 30, 1998 and 1997.

             4. Consolidated Statements of Income for the nine months ended
                September 30, 1998 and 1997.

             5. Consolidated Statements of Comprehensive Income for the nine
                months ended September 30, 1998 and 1997.

             6. Consolidated Statements of Cash Flows for the nine months ended
                September 30, 1998 and 1997.

             7. Notes to Consolidated Financial Statements.

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

PART II - OTHER INFORMATION

       ITEM 1 - Legal Proceedings

       ITEM 4 - Submission of Matters to a Vote of Security Holders

       ITEM 6 - Exhibits and Reports

       a.    Exhibits.

             The following exhibits are included herein:

             (2.1) Stock Purchase Agreement by and among American Bankers
                   Insurance Group, Inc., David K. Johnston and Sherry L. Scott
                   dated as of July 31, 1998.

             (27)  Financial Data Schedule

       b.    Report on Form 8-K.
             None





                                       2


<PAGE>   4

                                    SIGNATURE

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

                                                          AMERICAN BANKERS
                                                        INSURANCE GROUP, INC.

November 16, 1998
     Date
                                                          /s/ Robert Hill
                                                    ----------------------------
                                                              Robert Hill
                                                    Principal Accounting Officer



































                                       3
<PAGE>   5














                                     PART I

                              FINANCIAL INFORMATION



































                                       4
<PAGE>   6


                     AMERICAN BANKERS INSURANCE GROUP, INC.
                          CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
                                 (in thousands)



<TABLE>
<CAPTION>

                                                                                1998                1997
                                                                             -----------        -----------
                                                                             (unaudited)
<S>                                                                           <C>               <C>        
Assets

Investments
      Held-to-maturity securities, at amortized cost                          $   771,107       $   836,608
      Available-for-sale securities, at fair value                              1,094,408           973,790
      Equity securities, at approximate market value                              134,320           141,274
      Mortgage loans on real estate                                                 6,850             9,322
      Policy loans                                                                  9,782             9,315
      Short-term and other investments                                            218,418           184,923
                                                                             ------------       -----------
      Total investments                                                         2,234,885         2,155,232
                                                                             ------------       -----------

Cash                                                                               23,734            23,265
Accounts receivable, net of allowance for doubtful
  accounts of $4,935 in 1998 and $5,619 in 1997                                   133,794           144,330
Reinsurance receivable                                                            295,833           270,692
Accrued investment income                                                          27,722            25,228
Deferred policy acquisition costs                                                 449,560           458,289
Prepaid reinsurance premiums                                                      620,803           565,162
Other assets                                                                      158,251           140,253
                                                                             ------------       -----------
      Total assets                                                            $ 3,944,582       $ 3,782,451
                                                                             ============       ===========

Liabilities and Stockholders' Equity

Policy liabilities                                                            $   325,959       $   311,181
Unearned premiums                                                               1,487,424         1,436,034
Claim liabilities                                                                 579,680           555,797
                                                                             ------------       -----------
                                                                                2,393,063         2,303,012

Other policyholders' funds                                                          7,146             4,786
Notes payable                                                                     344,705           242,592
Deferred income taxes                                                              34,888            51,666
Accrued commissions and other expenses                                            144,776           150,147
Other liabilities                                                                 206,985           216,379
                                                                             ------------       -----------
      Total liabilities                                                         3,131,563         2,968,582
                                                                             ------------       -----------
Commitments and Contingencies (Note 5)

Stockholders' Equity
Preferred stock: $3.125 Series B Cumulative Convertible Preferred Stock 
  Authorized 10,000 shares.
  Issued and Outstanding 1,983 shares in 1998 and 2,300 shares in 1997.       $    99,160       $   115,000
Common stock of $1 par value.  Authorized 100,000 shares.
  Issued and Outstanding 43,083 shares in 1998 and 41,806 shares in 1997.          43,083            41,806
Additional paid-in capital                                                        244,164           212,010
Accumulated Other Comprehensive Income                                              9,784            12,096
Retained earnings                                                                 434,229           449,444
Less:
  Treasury stock, at cost - 271 shares in 1998 and 271 shares in 1997              (8,110)           (8,110)
  Unamortized restricted stock                                                     (9,291)           (6,252)
  Collateralization of loan to Leveraged Employee
    Stock Ownership Plan                                                                0            (2,125)
                                                                             ------------       -----------
      Total stockholders' equity                                                  813,019           813,869
                                                                             ------------       -----------

      Total liabilities and stockholders' equity                              $ 3,944,582       $ 3,782,451
                                                                             ============       ===========
</TABLE>


          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                       5

<PAGE>   7



                     AMERICAN BANKERS INSURANCE GROUP, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
               FOR THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                  (in thousands except per common share data)
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                  1998           1997
                                                                ---------       ---------
<S>                                                             <C>             <C>      
Gross collected premiums                                        $ 695,434       $ 716,429
                                                                =========       =========

Premiums and other revenues:
      Net premiums earned                                       $ 374,250       $ 364,884
      Net investment income                                        38,087          33,872
      Realized investment gains                                     6,191           4,065
      Other income                                                  7,717           5,341
                                                                ---------       ---------
        Total premiums and other revenues                         426,245         408,162
                                                                ---------       ---------

Benefits and expenses:
      Net benefits, claims, losses and settlement expenses        127,661         136,354
      Commissions                                                 174,907         153,472
      Operating expense                                            97,074          72,629
      Interest expense                                              5,674           4,072
                                                                ---------       ---------
        Total benefits and expenses                               405,316         366,527
                                                                ---------       ---------

Income before taxes                                                20,929          41,635
                                                                ---------       ---------

Income tax expense (benefit):
      Current                                                      13,640           6,912
      Deferred                                                     (8,997)          4,884
                                                                ---------       ---------
                                                                    4,643          11,796
                                                                ---------       ---------

Net Income                                                      $  16,286       $  29,839
                                                                =========       =========



PER COMMON SHARE AND COMMON EQUIVALENT SHARE DATA
  Basic:
      Net Income                                                $    0.34       $    0.67
                                                                =========       =========

      Weighted average number of shares outstanding                42,829          41,654
                                                                =========       =========

  Diluted:
      Net Income                                                $     N/A       $    0.63
                                                                =========       =========

      Weighted average number of shares outstanding                46,986          47,144
                                                                =========       =========

Dividends per common share                                      $    0.11       $    0.11
                                                                =========       =========

</TABLE>

 
 
 
 
 
 
 
 
          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                        6
 
 
<PAGE>   8


 
                     AMERICAN BANKERS INSURANCE GROUP, INC.
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
               FOR THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                 (in thousands)
                                  (unaudited)
 
<TABLE>
<CAPTION>
 
                                                             1998        1997
                                                           --------    --------
<S>                                                        <C>         <C>     
Net Income                                                 $ 16,286    $ 29,839
                                                           --------    --------

Other comprehensive income, net of tax:

   Foreign currency translation adjustments                  (1,525)       (876)

   Unrealized gains on securities:
      Unrealized holding (losses) gains arising during 
        period                                               (1,968)     12,739
      Less: reclassification adjustment for gains included
        in net income                                        (5,394)          0
                                                           --------    --------
   Subtotal unrealized (losses) gains on securities          (7,362)     12,739

   Minimum pension liability adjustment                           0           0
                                                           --------    --------

Other comprehensive (loss) income                            (8,887)     11,863
                                                           --------    --------

Comprehensive income                                       $  7,399    $ 41,702
                                                           ========    ========

</TABLE>




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                        7
 
 
 
<PAGE>   9

                     AMERICAN BANKERS INSURANCE GROUP, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
               FOR NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                 (in thousands)
                                  (unaudited)


<TABLE>
<CAPTION>
                                                                   1998              1997
                                                                -----------       -----------
 
<S>                                                             <C>               <C>        
Gross collected premiums                                        $ 2,090,244       $ 2,020,160
                                                                ===========       ===========

Premiums and other revenues:
      Net premiums earned                                       $ 1,093,957       $ 1,093,670
      Net investment income                                         109,792            99,320
      Realized investment gains                                      15,205             9,099
      Other income                                                   21,471            16,994
                                                                -----------       -----------
        Total premiums and other revenues                         1,240,425         1,219,083
                                                                -----------       -----------

Benefits and expenses:
      Net benefits, claims, losses and settlement expenses          376,848           409,282
      Commissions                                                   487,632           453,971
      Operating expense                                             268,590           224,619
      Merger termination fee                                        100,000                 0
      Interest expense                                               15,333            12,091
                                                                -----------       -----------
        Total benefits and expenses                               1,248,403         1,099,963
                                                                -----------       -----------

(Loss) Income before taxes                                           (7,978)          119,120
                                                                -----------       -----------

Income tax (benefit) expense:
      Current                                                         3,257            30,490
      Deferred                                                      (15,010)            3,754
                                                                -----------       -----------
                                                                    (11,753)           34,244
                                                                -----------       -----------

Net Income                                                      $     3,775       $    84,876
                                                                ===========       ===========



PER COMMON SHARE AND COMMON EQUIVALENT SHARE DATA
  Primary:
      Net (Loss) Income                                         $     (0.03)      $      1.92
                                                                ===========       ===========

      Weighted average number of shares outstanding                  42,491            41,389
                                                                ===========       ===========

  Diluted:
      Net Income                                                $       N/A       $      1.81
                                                                ===========       ===========

      Weighted average number of shares outstanding                  46,959            46,704
                                                                ===========       ===========

Dividends per common share                                      $      0.33       $      0.32
                                                                ===========       ===========
</TABLE>


 
 
 
 
 
 
 
 
 
 
 
 
          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                        8
 
<PAGE>   10
 
 
 
 
                     AMERICAN BANKERS INSURANCE GROUP, INC.
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
               FOR NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                 (in thousands)
                                  (unaudited)
 
 
<TABLE>
<CAPTION>
 
                                                           1998            1997
                                                        ---------       --------- 
<S>                                                     <C>             <C>      
Net Income                                              $   3,775       $  84,876
                                                        ---------       --------- 
 
Other comprehensive income, net of tax:
 
   Foreign currency translation adjustments                (2,698)         (4,298)
 
   Unrealized gains on securities:
      Unrealized holding gains arising during period       10,322          12,246
      Less: reclassification adjustment for gains 
        included in net income                             (9,936)              0
                                                        ---------       --------- 
   Subtotal unrealized gains on securities                    386          12,246
 
   Minimum pension liability adjustment                         0               0
                                                        ---------       --------- 
 
Other comprehensive (loss) income                          (2,312)          7,948
                                                        ---------       --------- 
 
Comprehensive income                                    $   1,463       $  92,824
                                                        =========       ========= 
</TABLE>
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
 
                                        9
 
<PAGE>   11
                     AMERICAN BANKERS INSURANCE GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                 (in thousands)
                                   (unaudited)



<TABLE>
<CAPTION>
                                                                                          1998              1997
                                                                                      -----------       -----------
<S>                                                                                   <C>               <C>        
Operating activities:
Net income                                                                            $     3,775       $    84,876
Adjustments to reconcile net income to net cash provided
 by operating activities:
      Change in policy liabilities, unearned premiums, claim
            liabilities, reinsurance receivable and prepaid reinsurance premiums           19,756            70,467
      Change in other assets and other liabilities                                        (35,489)           31,646
      Decrease (increase) in accounts receivable                                           10,536            (8,063)
      Increase in accrued investment income                                                (2,494)           (2,139)
      Decrease in accrued commissions and expenses                                         (5,371)          (10,893)
      Increase in policyholders' funds                                                      2,360             1,301
      Increase in policy loans                                                               (467)             (717)
      Amortization of deferred policy acquisition costs                                   413,013           400,417
      Amortization of cost of insurance acquired                                              922             1,137
      Policy acquisition costs deferred                                                  (404,284)         (454,580)
      Provision for amortization and depreciation                                           8,094            10,391
      Provision for deferred income taxes                                                 (15,010)            3,754
      Net gain on sale of investments                                                     (15,205)           (9,099)
      Compensation and tax effect on stock option shares                                    8,499             1,632
      Net cash flow from purchases and sales of trading securities                              0             8,880
                                                                                      -----------       -----------
      Net cash (used in) provided by operating activities                                 (11,365)          129,010
                                                                                      -----------       -----------

Investing activities:
Purchase of investments
      Held-to-maturity securities                                                         (30,022)          (86,623)
      Available-for-sale securities                                                      (720,049)       (1,143,756)
Proceeds from sale of investments
      Available-for-sale securities                                                       507,776         1,006,881
      Mortgage loans                                                                        2,476               540
      Real Estate                                                                              12                25
Proceeds from maturities of investments
      Held-to-maturity securities                                                          93,651            87,218
      Available-for-sale securities                                                       112,799            49,105
Increase in short-term investments                                                        (39,082)          (55,377)
Transactions related to capital assets
      Capital expenditures                                                                 (6,939)          (13,287)
      Sales of capital assets                                                                  70                58
                                                                                      -----------       -----------
      Net cash used in investing activities                                               (79,308)         (155,216)
                                                                                      -----------       -----------

Financing activities:
Proceeds from issuance of debt                                                            116,981            25,183
Repayment of debt                                                                          (9,020)           (4,600)
Dividends paid to shareholders                                                            (18,979)          (18,353)
Proceeds from issuance of stock                                                             2,329             3,582
                                                                                      -----------       -----------
      Net cash provided by financing activities                                            91,311             5,812
                                                                                      -----------       -----------

Net increase (decrease) in cash                                                               638           (20,394)
Cash at beginning of period                                                                23,265            30,434
Rate change effect on cash flow                                                              (169)               84
                                                                                      -----------       -----------
Cash at end of period                                                                 $    23,734       $    10,124
                                                                                      ===========       ===========

Supplemental disclosures of cash flow information

  Cash paid during the period for:
    Interest                                                                          $    14,252       $     9,596
    Income taxes                                                                      $     6,690       $    35,350


</TABLE>

          See accompanying notes to consolidated financial statements.



                                       10



<PAGE>   12


                     AMERICAN BANKERS INSURANCE GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)

(1)  FINANCIAL STATEMENTS

The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the period ended
September 30, 1998 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1998. These statements should be read
in conjunction with the financial statements and notes thereto included in the
Company's Annual Report Form 10-K for the year ended December 31, 1997. Certain
items have been reclassed to conform with 1998 presentation.

(2)  ADOPTION OF NEW FASB STATEMENT

The Company adopted FASB Statement 130, "Reporting Comprehensive Income."
Components of comprehensive income for the Company include items such as foreign
currency translation and unrealized gains (losses) of available-for-sale
securities.

(3)  COMPREHENSIVE INCOME

Related tax effects allocated to each component of other comprehensive income
for the nine months ended September 30,1998 (000's omitted)
<TABLE>
<CAPTION>

                                                                    Tax
                                                    Before-Tax    (Expense)     Net-of-Tax
                                                      Amount     or Benefit       Amount
                                                    ----------   ----------     ----------

<S>                                                 <C>           <C>            <C>      
Foreign currency translation adjustments            $   (4,652)   $   1,954      $ (2,698)
                                                    ----------    ---------      --------
Unrealized gains on securities:

   Unrealized holding gains arising during period       15,650       (5,328)       10,322
   Less: reclassification adjustment for gains
     realized in net income                             15,286       (5,350)        9,936
                                                    ----------    ---------      --------
   Net unrealized gains                                    364           22           386
                                                    ----------    ---------      --------
Minimum pension liability adjustment                         0            0             0
                                                    ----------    ---------      --------
Other comprehensive (loss) income                   $   (4,288)   $   1,976      $ (2,312)
                                                    ==========    =========      ========
</TABLE>


















                                       11

<PAGE>   13


Accumulated Other Comprehensive Income Balances

<TABLE>
<CAPTION>
                                                                               Accumulated
                                           Foreign          Unrealized           Other
                                          Currency           Gains on        Comprehensive
                                            Items           Securities          Income
                                     ------------------  ----------------  ----------------

<S>                                  <C>                 <C>               <C>              
Beginning balance                    $          (14,141) $         26,237  $         12,096
Current-period change                            (2,698)              386            (2,312)
                                     ------------------  ----------------  ----------------
Ending balance                       $          (16,839) $         26,623  $          9,784
                                     ==================  ================  ================
</TABLE>


The provisions of FASB Statement 130 were adopted as of January 1, 1998.

(4)   REINSURANCE

The Company accounts for reinsurance contracts under FASB Statement 113. The
Company recognizes the income on reinsurance contracts principally on a pro-rata
basis over the life of the policies covered under the reinsurance agreements.
Reinsurance Recoverables on Unpaid Losses are included as an asset in the
Balance Sheet under the caption "Reinsurance Receivable." Ceded Unearned
Premiums are included as an asset in the Balance Sheet under the caption
"Prepaid Reinsurance Premiums."

The effect of reinsurance on premiums earned is as follows for the nine months
and three months ended September 30, 1998 and 1997:


<TABLE>
<CAPTION>
                                                                 (in thousands)
                                                                Nine Months Ended

                                                September 30, 1998             September 30, 1997
                                                ------------------             ------------------
<S>                                              <C>                             <C>            
Direct premiums                                  $      1,928,789                $     1,841,110
Reinsurance assumed                                        84,466                        125,564
Reinsurance ceded                                        (919,298)                      (873,004)
                                                 ----------------                ---------------
Net premiums earned                              $      1,093,957                $     1,093,670
                                                 ================                ===============
</TABLE>


<TABLE>
<CAPTION>

                                                                (in thousands)
                                                              Three Months Ended

                                                September 30, 1998            September 30, 1997
                                                ------------------            ------------------
<S>                                              <C>                            <C>            
Direct premiums                                  $       645,504                $       619,697
Reinsurance assumed                                       23,823                         34,767
Reinsurance ceded                                       (295,077)                      (289,580)
                                                 ---------------                ---------------
Net premiums earned                              $       374,250                $       364,884
                                                 ===============                ===============
</TABLE>



                                       12
<PAGE>   14
(5)   COMMITMENTS AND CONTINGENCIES

For a comprehensive description of the Company's litigation, see Item III of the
Company's 1997 Form 10-K.

Alabama and Related Litigation:

Certain of ABIG's subsidiaries, including the Company, are presently parties to
a number of individual consumer and class action lawsuits pending in Alabama
involving premium, rate, marketing, sales practices, disclosure, and policy
coverage issues. While a number of similar suits have been filed in other
jurisdictions, the insurance and finance industries have been targeted in
Alabama by plaintiffs' lawyers who enjoy a favorable judicial climate. The
Company typically has been named as a co-defendant with one or several retailer
or finance companies who have sold the Company's product to a consumer. Other
insurers are also joined as co-defendants in some of the suits. Although the
Alabama lawsuits and similar suits pending in Mississippi and other
jurisdictions generally involve relatively small amounts of actual or
compensatory damages, they typically assert claims requesting substantial
punitive awards or purport to represent a large class of policyholders.

On November 12, 1998, the Company and three of its accounts entered into a
settlement of all claims in class action litigation consolidated by the Panel on
Multi-District Litigation in the United States District Court for the Middle
District of Alabama, contingent upon approval of the fairness of the settlement
by the District Court and other important conditions. This series of class
actions involved the largest collective class exposure to the Company. Under the
terms of the settlement, without admitting any liability, the Company and its
relevant subsidiaries will contribute approximately $15 million in distributions
to the classes and subclasses, and has agreed to be bound by an injunction
limiting the percentage of authorized non-filing insurance premium to be charged
consumer finance and retailer accounts during 6 year and 18 month periods,
respectively. The Company will also likely incur approximately $2 million in
expenses associated with implementing the settlement. Since this settlement was
reached prior to the issuance of the Company's third quarter financial
statements, the settlement and associated expenses have been accrued in the
third quarter results.

While none of the Company's remaining cases are necessarily significant in terms
of financial risk to the Company, the judicial climate in Alabama and
Mississippi is such that the outcome of these cases is extremely unpredictable.
Moreover, class action lawsuits to which the Company is a party do not lend
themselves to potential damage calculation. There are still a number of cases
pending, and it is expected that more suits alleging essentially the same causes
of action are likely to continue to be filed during 1998. The Company denies any
wrongdoing in any of these suits and believes that it has not engaged in any
conduct that would warrant an award of punitive damages or that the class
allegations have merit. The Company has been advised by legal counsel that it
has meritorious defenses to all claims being asserted against it. The Company
believes, based on information currently available, that any liabilities that
could result are not expected to have a material effect on the Company's
financial position.

Merger-related Litigation:

In late January and early February 1998, Cendant Corporation ("Cendant")
commenced litigation (the "Cendant Florida Litigation") in the United States
District Court for the Southern District of Florida, Miami Division, against the
Company, members of the Company's Board, American International Group, Inc.
("AIG") and a wholly owned subsidiary of AIG, challenging the validity of
certain provisions in the merger agreement the Company originally entered into
with AIG on December 21, 1997, which agreement was amended in January 1998 and
again at the end of February 1998 ("AIG Merger Agreement"), with respect to
acquisition proposals by third parties. Cendant's complaint in the Cendant
Florida Litigation also challenged the terms of the stock option agreement
between the Company and AIG. Pursuant to the terms of a settlement agreement
providing for the termination of the AIG Merger Agreement and the payment to AIG
by the Company of $100 million and by Cendant of $10 million (the "Settlement
Agreement"), Cendant has taken the necessary actions to cause the dismissal of
all claims asserted in the Cendant Florida Litigation against all defendants,
including the Company and members of the Company's Board. Also pursuant to the
terms of the Settlement Agreement, AIG has taken the necessary actions to cause
the dismissal of claims against Cendant alleging violations of the federal
securities laws in connection with Cendant's bid to acquire the Company.

In late January and early February 1998, five putative class actions on behalf
of American Bankers' shareholders were filed in United States District Court for
the Southern District of Florida alleging causes of action arising out of the
proposed merger with AIG including claims that certain members of the Company's
Board breached their fiduciary duties and that the Company violated certain
provisions of the federal securities laws in connection with the proposed merger
with AIG. The Company and its directors believe that the claims asserted in
these actions are totally without merit and intend to vigorously contest them.
The District Court judge ordered that these cases be consolidated and that the
plaintiffs file a consolidated complaint. That consolidated complaint was filed
and the Company and directors filed an answer. The parties are presently engaged
in various pretrial matters.



                                       13
<PAGE>   15






Other:

The Company, in the normal course, is subject to regulatory reviews and market
conduct examinations from each of the states in which it conducts business.
During 1998, a multi-state market conduct review was initiated under the
auspices of the NAIC. That review is the subject of continuing discussions and
negotiations between the company and the states. Assuming certain conditions
outside the control of the Company are met, it is possible that a consent
agreement incorporating a market compliance plan would be reached during the
fourth quarter of 1998.

The Company is involved with a number of cases in the ordinary course of
business relating to insurance matters, or more infrequently, certain corporate
matters. Generally, the Company's liability is limited to specific amounts
relating to insurance or policy coverage for which provision has been made in
the financial statements. Other cases involve general corporate matters which
generally do not represent significant contingencies for the Company.



































                                       14
<PAGE>   16


(6)   SEGMENT INFORMATION

        Gross collected premiums, net premiums earned and (loss) income before
        federal income taxes are summarized as follows:
<TABLE>
<CAPTION>
                                                         (in thousands)
                                                        Nine Months Ended
                                                           September 30,
                                                           -------------

                                                      1998              1997
                                                   -----------       -----------

<S>                                                <C>               <C>        
GROSS COLLECTED PREMIUMS:

Life                                               $   701,892       $   633,215
Property and Casualty                                1,388,352         1,386,945
                                                   -----------       -----------
     Total                                         $ 2,090,244       $ 2,020,160
                                                   ===========       ===========

NET PREMIUMS EARNED:

Life                                               $   324,948       $   323,560
Property and Casualty                                  769,009           770,110
                                                   -----------       -----------
     Total                                         $ 1,093,957       $ 1,093,670
                                                   ===========       ===========

INCOME BEFORE INCOME TAXES:

Life                                               $    51,014       $    46,610
Property and Casualty                                   74,322            89,269
Other                                                 (117,981)           (4,668)
                                                   -----------       -----------
                                                         7,355           131,211
Interest Expense                                        15,333            12,091
                                                   -----------       -----------

      Total (Loss) Income before Income Taxes      $    (7,978)      $   119,120
                                                   ===========       ===========
</TABLE>


(7)   ACCOUNTING FOR INVESTMENTS

The Company accounts for its investments according to the Financial Accounting
Standards Board's Statement 115-Accounting for Certain Investments in Debt and
Equity Securities.

This Statement addresses the accounting and reporting for investments in equity
securities that have readily determinable fair values and for all investments in
debt securities. Those investments are to be classified in three categories and
accounted for as follows:

HELD-TO-MATURITY - Securities for which the enterprise has the positive intent
and ability to hold to maturity. These securities are carried at amortized cost.

AVAILABLE-FOR-SALE - Securities not classified as trading or held-to-maturity.
These securities are carried at market value with the unrealized holding gain or
loss reported as a separate component of equity, net of the income tax effect.

TRADING SECURITIES - Securities that are bought and held principally for the
purpose of selling them in the near term. These securities are carried at market
value with the unrealized holding gain or loss included in earnings.


                                       15

<PAGE>   17
The detail of Cost and Statement Value for the Fixed Maturities and Equity
Securities held at September 30, 1998 is as follows:

                                                           (in thousands)

                                                    Amortized          Statement
                                                       Cost              Value
                                                    ----------        ----------
FIXED MATURITIES
Held-to-Maturity Securities                         $  771,107        $  771,107
Available-for-Sale Securities                        1,065,654         1,094,408
Trading Securities                                          --                --
                                                    ----------        ----------
  Total Fixed Maturities                            $1,836,761        $1,865,515
                                                    ----------        ----------

Net unrealized gain                                                   $   28,754
                                                                      ----------


                                                                         Market
                                                         Cost            Value
                                                       --------         --------
EQUITY SECURITIES
Held-to-Maturity Securities                            $     --         $     --
Available-for-Sale Securities                           123,406          134,320
Trading Securities                                           --               --
                                                       --------         --------
  Total Equity Securities                              $123,406         $134,320
                                                       --------         --------

Net unrealized gain                                                     $ 10,914
                                                                        --------

An analysis of the realized gains and losses of the Company for the nine months
ended September 30, 1998, is as follows:

<TABLE>
<CAPTION>
                                                                           (in thousands)

                                                                     Three Months    Nine Months
                                                                        Ended          Ended

<S>                                                                    <C>            <C>     
Gross realized gains from sales of Available-for-Sale Securities       $  7,885       $ 19,847
Gross realized losses from sales of Available-for-Sale Securities        (1,930)        (4,815)
                                                                       --------       --------
Net realized gain from investment activity                                5,955         15,032
Net realized gain from other investment activity                            236            173
                                                                       --------       --------
Total realized gain                                                    $  6,191       $ 15,205
                                                                       --------       --------

</TABLE>


The Company uses the specific identification method to determine cost for
computing the realized gains and losses.
















                                       16
<PAGE>   18



(8) Earnings per Share
 
The Company adopted FASB Statement 128 "Earnings per Share" for the period
ending December 31, 1997. This Statement replaces the presentation of primary
and fully diluted EPS with a presentation of basic and diluted EPS. All prior
year data has been restated to conform with the provisions of this Statement and
to reflect the two-for-one stock split effective September 1997. The following
is the required reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.

<TABLE>
<CAPTION>
 
                                                     THREE MONTHS ENDED         NINE MONTHS ENDED
                                                         SEPTEMBER 30             SEPTEMBER 30
                                                     --------------------      --------------------
                                                      1998         1997         1998         1997
                                                     -------      -------      -------      -------
<S>                                                  <C>          <C>          <C>          <C>    
BASIC EPS:
Net Income                                           $16,286      $29,839      $ 3,775      $84,876
Less convertible preferred stock dividends             1,549        1,797        4,900        5,391
                                                     -------      -------      -------      -------

 Income (Loss) available to common stockholders      $14,737      $28,042      $(1,125)     $79,485
                                                     =======      =======      =======      =======

Weighted average shares outstanding                   42,829       41,654       42,491       41,389
                                                     =======      =======      =======      =======

Net Income (Loss) - per share                        $  0.34      $  0.67      $ (0.03)     $  1.92
                                                     =======      =======      =======      =======

DILUTED EPS:
Income (Loss) available to common stockholders       $14,737      $28,042      $(1,125)     $79,485
Convertible preferred stock dividends                  1,549        1,797        4,900        5,391
Convertible debentures interest                            0           59           15          173
                                                     -------      -------      -------      -------
Income available to common stockholders plus
 assumed conversions                                 $16,286      $29,898      $ 3,790      $85,049
                                                     =======      =======      =======      =======

Weighted average shares outstanding-Basic EPS         42,829       41,654       42,491       41,389

Common stock options                                     195          596          506          421
Convertible Preferred Stock                            3,962        4,594        3,962        4,594
Convertible debentures                                     0          300            0          300
                                                     -------      -------      -------      -------

Weighted average shares outstanding-Diluted EPS       46,986       47,144       46,959       46,704
                                                     =======      =======      =======      =======

Net Income - per share                               $   N/A      $  0.63          N/A      $  1.81
                                                     =======      =======      =======      =======

</TABLE>


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                       17

<PAGE>   19


(9)   SUBSEQUENT EVENTS

On October 13, 1998, the Company and Cendant entered into an agreement
terminating the Cendant Merger Agreement. In connection with the termination,
Cendant and the Company have released each other from any claims relating to
Cendant's proposed acquisition of the Company and Cendant has made a $400
million cash payment to the Company. As a result of the termination Cendant has
terminated the Cendant offer.

On October 28, 1998, the Company completed its acquisition of MS Diversified
Corporation and its subsidiaries (MSD). The merger agreement for this
acquisition was signed on May 18, 1998. The Company paid approximately $54.6
million in cash for MSD.


















                                      18
<PAGE>   20

                     AMERICAN BANKERS INSURANCE GROUP, INC.
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS





RESULTS OF OPERATIONS

Gross collected premiums were $695.4 million for the three months ended
September 30, 1998 compared to $716.4 million for the same period of 1997. Gross
collected premiums were $2.1 billion for the nine months ended September 30,
1998 and $2.0 billion for the same period of 1997.

During the three months ended September 30, 1998, total premiums and other
revenues were $426.2 million, an increase of $18.0 million over total premiums
and other revenues of $408.2 million for the same period in 1997. Investment
income increased by $4.2 million and realized gains increased by $2.1 million
for the third quarter of 1998 as compared to the same period of 1997.

The benefits and claims ratio improved to 34% for the three months ended
September 30, 1998 compared to 37% for the same period of 1997. However, this
improvement was offset by an increase in the commission ratio from 42% for the
three months ended September 30, 1997, to 47% for the same period in 1998.

Net income for the third quarter of 1998 was $16.3 million. Included in the net
income is a litigation settlement of approximately $11.0 million, merger related
expenses of approximately $2.0 million and hurricane losses of $1.3 million, all
amounts net of tax. Excluding these expenses, the Company reported net income of
$30.6 million. This compares with net income of $29.8 million for the same
period in 1997. (See discussion in "Change of Control of the Company" below)

Net income for the nine months ended September 30, 1998 was $3.8 million. The
income includes a merger termination fee paid to American International Group
and other merger related expenses totaling $76.4 million, net of tax. 

FINANCIAL CONDITION

Stockholders' Equity decreased $.9 million from $813.9 million at December 31,
1997, to $813.0 million at September 30, 1998. The primary cause for the
decrease was a merger termination fee payment of $100 million offset by the
remaining income from operations.

LIQUIDITY AND CAPITAL RESOURCES

On September 30, 1998, $2.2 billion of securities, short-term investments and
cash comprised 57% of the Company's total assets. The securities were
principally readily marketable and did not include any significant concentration
in private placements.

In connection with the execution of the Cendant Merger Agreement, (as discussed
in the "Change of Control of the Company" below) the Company paid American
International Group, Inc. (AIG) a fee of $100 million for the termination of the
AIG Merger Agreement and certain other related agreements. The Company paid the
fee principally with funds provided by its credit facility. 

On October 13, 1998, the Company received a fee of $400 million from Cendant
Corporation for the termination of the Cendant Merger Agreement. (See discussion
in "Change of Control of the Company" below)

The Company does not hold significant investments in equity securities;
consequently, market changes in the equity securities markets do not
significantly affect the investment portfolio.





                                       19
<PAGE>   21

The Company expects to continue its policy of paying regular cash dividends;
however, future dividends are dependent on the Company's future earnings,
capital requirements and financial condition. In addition, the payment of
dividends is subject to the restrictions, and conditions described in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.

CHANGE OF CONTROL OF THE COMPANY

The Company entered into an Agreement and Plan of Merger, dated March 23, 1998,
by and among Cendant Corporation ("Cendant"), Season Acquisition Corporation
("Season") and the Company (the "Cendant Merger Agreement") pursuant to which
(i) the previously announced tender offer by Season is being conducted (the
"Offer") and (ii) upon consummation of the Offer, the merger of the Company with
and into Season will be consummated (the "Merger"). The execution of the Cendant
Merger Agreement followed the public announcement by Cendant on January 27, 1998
of its proposal to acquire the Company for $58 per share of Common Stock, to be
paid in cash and common stock of Cendant and the subsequent announcement by
Cendant on March 16, 1998, increasing the per share price for its proposal from
$58 to $67.

Cendant's proposal to acquire the Company followed an announcement by the
Company that it had entered into an agreement with American International Group,
Inc. ("AIG") for the acquisition by AIG of 100 percent of the outstanding stock
of the Company pursuant to the merger (the "AIG Merger") of the Company with and
into AIGF, Inc., a Florida corporation and a newly formed wholly-owned
subsidiary of AIG, in accordance with the terms of the Agreement and Plan of
Merger, dated as of December 21, 1997 among the Company, AIG and AIGF as amended
and restated as of January 7, 1998, amended by Amendment No. 1 thereto dated as
of January 28, 1998, and as further amended and restated as of February 28, 1998
(the "AIG Merger Agreement"). In connection with the AIG Merger Agreement, the
Company had granted AIG an option to purchase a number of newly issued shares of
Common Stock equal to approximately 19.9% of the outstanding number of shares of
Common Stock pursuant to the Stock Option Agreement dated as of December 21,
1997, as amended and restated as of February 28, 1998 (the "Stock Option
Agreement"). In addition, Messrs. Landon and Gaston who hold approximately 8.3%
of the outstanding Common Stock had entered into a voting agreement (the "Voting
Agreement") with AIG pursuant to which these stockholders agreed to vote their
shares of Common Stock in favor of adoption of the AIG Merger Agreement and
approval of the AIG Merger and to grant to AIG an irrevocable proxy with respect
to such shares of Common Stock, subject to certain conditions.

The AIG Merger Agreement, Stock Option Agreement and Voting Agreement have been
terminated. On March 18, 1998, the Company, AIG and Cendant entered into a
settlement agreement (the "Settlement Agreement") pursuant to which AIG agreed
to temporarily waive certain provisions of the AIG Merger Agreement, which
waiver permitted the Company to terminate the AIG Merger Agreement and enter
into the Cendant Merger Agreement. On March 23, 1998, in accordance with the
terms of the Settlement Agreement, the Company paid to AIG a termination fee of
$100 million principally from funds provided by its short-term credit facility
and Cendant paid $5 million, and agreed to pay an additional $5 million to AIG
in respect of AIG's expenses, and the Company and AIG entered into a termination
agreement which resulted in the termination of the AIG Merger Agreement, the
Stock Option Agreement and the Voting Agreement.

On October 13, 1998, the Company and Cendant entered into an agreement
terminating the Cendant Merger Agreement . In connection with the termination,
Cendant and the Company have released each other from any claims relating to
Cendant's proposed acquisition of the Company and Cendant has made a $400
million cash payment to the Company. As a result of the termination Cendant has
terminated the Cendant offer.





                                       20

<PAGE>   22
YEAR 2000

The Year 2000 project at ABIG was developed in early 1997 to position the
company to complete the renovation and upgrades of all mission critical
information systems by the end of 1998. The project involves the entire
enterprise and its major accounts and vendors. It has four phases, Awareness,
Assessment, Remediation, and Validation.

In early 1997, during the Awareness phase, a Corporate project team was created
with Executive Management sponsorship. In the Assessment phase, ABIG inventoried
all computer hardware and software. All specific systems that required
modification or replacement were assessed to determine the steps necessary to
remediate the Year 2000 issue. The Assessment phase was completed by the fourth
quarter of 1997.

The Remediation phase began in 1997. Remediation efforts on all core insurance
and accounting information processing systems has been completed. As ABIG
completes remediation, the systems and products are migrated to production.

The next phase, Validation testing, is in progress. In 1997, ABIG designed and
configured isolated testing labs for both mainframe and network client server
technologies. The technology infrastructure, such as operating systems, third
party software, wiring, network hardware and software were all upgraded to Year
2000 ready releases before being used for lab testing. The labs provide the
ability to test the systems using various future Year 2000 date/time scenarios.

Validation testing on all core insurance and accounting information processing
systems should be complete by the end of the first quarter in 1999. The testing
is a joint effort by the Information Systems Department and senior analysts from
each business area. Testing procedures have been documented using guidelines
developed by Internal Audit and are being coordinated by the Information Systems
Quality Assurance staff. Continuous reviews have been conducted throughout the
testing by senior analysts and will continue until all systems are tested. The
entire project reports to an Executive Steering Committee and is being monitored
and audited by the Internal Audit group.

In 1999, the Year 2000 compliance effort at ABIG will be limited to the
  following: 
         Completion of all systems validation testing in the Year
          2000 labs during the first quarter.
         Auditing and testing of our remote accounts.
         PC / Server upgrades and replacements.

Non information technology systems such as those pertaining to the operations of
the building have been evaluated using the same four phases described above.
Currently we are in the Validation testing phase. We expect that all non
information systems should be compliant by the first quarter of 1999.

In early 1997, ABIG completed a detailed impact analysis of all third party
software to determine Year 2000 compliance. Every vendor has been contacted and
plans were executed to upgrade to the vendor's Year 2000 ready release as soon
as the releases became available. There are only seven remaining product
upgrades. All are scheduled by the vendors to be released in December 1998. In
the first quarter of 1999, these products will be subject to the validation
testing described above.

ABIG surveyed its network of corporate clients and other third parties regarding
their Year 2000 readiness in our Assessment phase. All have responded to the
surveys. Our Validation phase includes plans to audit the readiness of the
corporate clients and to test electronic interface data in 1999.

Through September 30, 1998, the Company has expensed approximately $4.7 million
and estimates another $5 million to substantially complete the project.

While the Company is not presently aware of any significant exposure, there can
be no guarantee that the systems of ABIG's corporate clients and other third
parties will be converted in a timely manner, or that a failure to properly
convert by another company would not have a material adverse effect on the
Company. In the event the Company falls short of these projections, additional
internal resources will be focused on completing these projects or developing
contingency plans. The necessity of any contingency plan must be evaluated on a
case-by-case basis and will vary considerably in nature depending on the Year
2000 issue being addressed.

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 - SAFE HARBOR CAUTIONARY
STATEMENT

Except for the historical information contained herein, certain of the matters
discussed in this quarterly report are "forward-looking statements" as defined
in the Private Securities Litigation Reform Act of 1995, which involve certain
risks and uncertainties, including but not limited to, changes in general
economic conditions, interest rates, consumer confidence, competition,
environmental factors, and governmental regulations affecting the Company's
operations. See the Company's Annual Report Form on 10-K for the year ended
December 31, 1997, for a further discussion of these and other risks and
uncertainties applicable to the Company's business.








                                       21

<PAGE>   23









                                     PART II

                                OTHER INFORMATION










































                                       22
<PAGE>   24


ITEM 1 - LEGAL PROCEEDINGS

Commitments and Contingencies information which appears on page 13 elsewhere in
this report is incorporated by reference in this item. Additional information
regarding litigation can be found in the Company's 1997 Annual Report on Form
10-K.

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

None

ITEM 6(a) - EXHIBITS

(2.1) Stock Purchase Agreement by and among American Bankers Insurance Group,
Inc., David K. Johnston and Sherry L. Scott dated as of July 31, 1998.

(27)   Financial Data Schedule (for SEC use only)

ITEM 6(b) - REPORTS ON FORM 8-K

None













































                                       23