2




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


                                    FORM 10-K


[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                    ACT OF 1934
                    For the fiscal year ended December 31, 2001
                                       OR
[  ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                EXCHANGE ACT OF 1934

       For the transition period from ___________ to ___________.

                         Commission file number: 0-14950
                              Argonaut Group, Inc.
             (Exact name of Registrant as specified in its charter)

                  Delaware                               95-4057601
     (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                    Identification Number)

         10101 Reunion Place, Suite 800
         San Antonio, Texas                                    78216
     (Address of principal executive offices)                (Zip code)

                                 (210) 321-8400
               (Registrant's telephone number including area code)

                Securities registered pursuant to section
                           12(g) of the Act:

                   Common Stock, par value of $0.10 per share
                              (Title of securities)

     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  the  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]

As of March 25, 2002, the registrant had 21,557,238 shares of Common Stock
outstanding, and the aggregate market value of the voting stock held by
nonaffiliates was approximately $409.8 million.

                       DOCUMENTS INCORPORATED BY REFERENCE

Part I and II: Excerpts from Argonaut Group, Inc.'s Annual Report to
Shareholders for the Year Ended December 31, 2001 Part III: Excerpts from
Argonaut Group, Inc.'s Proxy Statement for the Annual Meeting of Shareholders to
be held on April 30, 2002


                                       1
<PAGE>

                               Argonaut Group, Inc
                           Annual Report on Form 10-K
                      For the Year Ended December 31, 2001


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>


<S>            <C>                                                          <C>
                                     PART 1

                                                                            Page

Item     1.     Business...............................................        3
Item     2.     Properties.............................................       13
Item     3.     Legal Proceedings......................................       13
Item     4.     Submission of Matters to a Vote of Security Holders....       14

                                     PART II

Item     5.     Market for Registrant's Common Equity and Related
                    Stockholder Matters................................       14
Item     6.     Selected Financial Data................................       15
Item     7.     Management's Discussion and Analysis of Results of Operations
                    and Financial Condition............................       15
Item    7A.     Quantitative and Qualitative Disclosures about Market Risk.   15
Item     8.     Financial Statements and Supplementary Data............       15
Item     9.     Changes in and Disagreements with Accountants on Accounting
                    and Financial Disclosure...........................       15


                                    PART III

Item    10.     Directors and Executive Officers of the Registrant.....       16
Item    11.     Executive Compensation.................................       17
Item    12.     Security Ownership of Certain Beneficial Owners and
                    Management.........................................       17
Item    13.     Certain Relationships and Related Transactions.........       17


                                     PART IV

Item    14.     Exhibits, Financial Statement Schedules and Reports
                 on Form 8-K...........................................      17
</TABLE>




                                       2
<PAGE>

                                       3
                                     PART I.

Item 1.  Business

Introduction

Argonaut Group, Inc. ("Argonaut Group" or "the Company") is a national provider
of specialty insurance products focused on high quality customer service for
specific niches of property-casualty insurance. Argonaut Group was incorporated
in Delaware in 1986. Argonaut Group's executive offices are located at 10101
Reunion Place, Suite 800, San Antonio, Texas 78216, telephone (210) 321-8400.

Argonaut Insurance Company is directly owned by Argonaut Group and is the parent
of the Company's other property and casualty insurance companies. It was
established in California in 1948. Workers' compensation is the primary line of
insurance written by Argonaut Insurance Company and the following subsidiaries:
Argonaut-Midwest Insurance Company, Argonaut-Northwest Insurance Company,
Argonaut-Southwest Insurance Company, and Georgia Insurance Company. Argonaut
Insurance Company and the above subsidiaries have entered into a pooling
agreement whereby all premiums, losses, and associated underwriting expense are
allocated between the members of the pool. Argonaut Great Central Insurance
Company ("Argonaut Great Central") was established in Illinois in 1948 and
purchased by Argonaut Insurance in 1971. AGI Properties, Inc. ("AGI
Properties"), a non-insurance company, owns and leases certain real properties.
AGI Properties was incorporated in California in 1970. Argonaut Insurance
Company is AGI Properties' immediate parent. Trident Insurance Services
("Trident"), a managing general underwriter incorporated in Texas, was
established in 2000 and acquired by the Company in 2001. Argonaut Group is
Trident's immediate parent.

Recent Developments

On August 23, 2001, pursuant to an Agreement and Plan of Merger and Assignment
and Assumption Agreement dated May 7, 2001 and August 15, 2001 respectively,
Argonaut Group acquired all of the outstanding capital stock of Front Royal,
Inc. ("Front Royal"). Front Royal is a holding company for specialty insurance
underwriters with particular expertise in excess and surplus lines and workers'
compensation for certain targeted types of businesses. Its principal
subsidiaries are the Colony Insurance Group ("Colony") and the Rockwood
Insurance Group ("Rockwood"). Colony is comprised of Colony Insurance Company,
Preferred National Insurance Company and Front Royal Insurance Company. Rockwood
is comprised of Rockwood Casualty Insurance Company and Somerset Casualty
Company. Additional information related to the Company's acquisition of Front
Royal is included under the caption "Note 17 - Acquisition" in the Notes to the
Consolidated Financial Statements in the Company's Annual Report to Shareholders
for the Year Ended December 31, 2001, which is incorporated herein by reference.
See Exhibit Index.

                                       3
<PAGE>
Business Segments and Products

Specialty Excess and Surplus Lines. Excess and Surplus Lines ("E&S") insurance
carriers provide insurance that is unavailable to businesses in the standard
market due to the unique characteristics of the consumers. This market is known
for developing new and creative types of coverages. Colony operates primarily on
an E&S basis and focuses on insureds that generally cannot purchase insurance
from standard lines insurers due to the perceived risks related to their
businesses. Colony provides commercial liability, commercial property, products
liability and environmental liability coverages to commercial enterprises,
including restaurants, artisan contractors, day-care centers and manufacturers,
and professional liability coverages for health care providers (other than
physicians) and other professionals. Colony is approved as a non-admitted
insurer in 47 states and the District of Columbia.

Specialty  Commercial.  Property  and casualty  coverages  targeting  specific
groups of insureds  comprise the  Company's specialty commercial segment.

Argonaut Great Central specializes in providing package insurance policies for
certain classes of insureds. Argonaut Great Central targets three broadly
defined markets: food and hospitality, retail services and organizations and
institutions, focusing on small to medium sized businesses. Argonaut Great
Central is licensed in 33 states and provides property, general liability,
commercial automobile, workers' compensation and umbrella insurance policies.

Rockwood concentrates on writing specialty workers' compensation insurance and
is licensed in 12 states. 71% of Rockwood's business is concentrated in
Pennsylvania, its state of domicile. Rockwood separates its business into two
categories: (1) workers' compensation for coal mines and other mining business
and (2) workers' compensation for small commercial accounts. In addition,
Rockwood provides supporting general liability, pollution liability, umbrella
liability, inland marine, commercial automobile and surety business.

Specialty Workers' Compensation. Workers' compensation is the primary line of
insurance written by Argonaut Insurance Company and its pooled subsidiaries.
Argonaut Insurance Company and its pooled subsidiaries also write complementary
lines of commercial insurance for a small number of their clients, primarily
consisting of general liability and commercial automobile, but generally target
companies whose workers' compensation needs will result in significant annual
premiums (generally between $250,000 and $5 million.) Argonaut Insurance Company
is currently diversifying its book of business to include program business,
targeting smaller employers. Argonaut Insurance Company is licensed in 50 states
and the District of Columbia.

                                       4
<PAGE>
In February 2002, the Company entered the captive market with the formation of a
new business unit, Captive Advisory Services, Inc. ("CAS"). CAS provides
independent and expert advice to insureds interested in utilizing a captive
insurance program. CAS will supplement workers' compensation products currently
offered by Argonaut Insurance Company and will coordinate the underwriting,
actuarial, tax and legal services required for the structuring of a captive
program.

Managing General Underwriters. Trident functions as the Company's managing
general underwriter. Trident is dedicated to servicing the insurance needs of
preferred governmental entities with populations less than 100,000 throughout
the United States. Trident offers a competitive program with a comprehensive
insurance package, including property, inland marine, crime, general liability,
public officials liability, law enforcement liability, automobile liability,
automobile physical damage and excess liability coverages. Trident currently
writes its products through Argonaut Insurance Company and Argonaut Great
Central.

Additional information relating to the Company's business segments is included
under the captions "Management's Discussion and Analysis of Results of
Operations and Financial Condition - Segment Results" and "Note 13 - Business
Segments" in the Notes to the Consolidated Financial Statements in the Company's
Annual Report to Shareholders for the Year Ended December 31, 2001, which is
incorporated herein by reference. See Exhibit Index.

Marketing

The Company's insurance subsidiaries utilize a nationwide network of agents and
insurance brokers to market and distribute their insurance products.
Approximately 60% of 2001 direct written premiums were produced in five states:
Pennsylvania, California, Florida, Texas and Illinois. The Company services its
policyholders and agents through local offices located strategically nationwide.

Specialty Excess and Surplus Lines. Colony markets its excess and surplus lines
products through approximately 170 wholesale agents through two separate
channels. The first channel is through binding agreements with the wholesale
agent. The wholesale agent is contracted to quote and issue a policy subject to
stringent parameters in a detailed manual. The second channel consists of
wholesale agents that request quotes for insurance policies on risks not
included in a binding agreement. The evaluation, underwriting and policy
issuance is completed by Colony. These channels account for 45% and 55% of
Colony's direct written premiums, respectively.

Specialty Commercial. Rockwood markets its workers' compensation products
through approximately 750 retail agents. Rockwood personnel individually
underwrite each policy. Argonaut Great Central also markets its products through
retail agents and the underwriting decision rests with Argonaut Great Central.

Specialty Workers' Compensation. Argonaut Insurance Company markets its large
workers' compensation products through brokers and its small workers'
compensation policies through wholesale agents.

                                       5
<PAGE>
Managing General Underwriters. Trident markets its policies through
approximately 300 retail agents and four exclusive marketing partners. The
ultimate underwriting decision rests with Trident.

Competition

The property-casualty insurance industry is characterized by a large number of
competing companies and modest market shares by industry participants. According
to A.M. Best Company ("A.M. Best"), a leading insurance industry rating and
analysis firm, as of December 31, 2000, there were approximately 2,500
property-casualty insurance companies operating in the United States. Argonaut
Group's principal insurance subsidiaries ranked among the 250 largest property
and casualty insurance company organizations in the United States, measured by
net premiums written (163rd), and policyholder' surplus (91st). With respect to
admitted assets, Argonaut Group's insurance subsidiaries ranked 90th relative to
its industry peers.

     The Company's  insurance  subsidiaries are rated by A.M. Best. A.M. Best is
generally  considered to be the leading insurance rating agency, and its ratings
are used by insurance buyers,  agents and brokers, and other insurance companies
as an  indicator of financial  strength  and  security,  and are not intended to
reflect the quality of the rated  company for  investment  purposes.  A.M.  Best
assigns ratings ranging from "A++  (Superior)" to "F (In  Liquidation)".  All of
the Company's insurance subsidiaries have an A.M. Best rating of "A (Excellent)"
with the exception of Argonaut Great Central,  which is rated "A-  (Excellent)".
A.M. Best reviews its ratings on a periodic basis,  and ratings of the Company's
insurance subsidiaries are therefore subject to change.

The Company's principal competitors cannot be easily classified. The Company's
principal lines of business are written by numerous other insurance companies.
Competition for any one account may come from very large national firms or
smaller regional companies. For the Company's workers' compensation lines,
additional competition comes from state workers' compensation funds.

Property and casualty insurance is a highly competitive business, particularly
with respect to E&S, commercial lines and workers' compensation insurance. Over
the past several years, competition has become more intense, due to the efforts
of many insurance companies to obtain, maintain and expand market shares by
offering relatively low premium rates. Competition has grown from established
companies and the entry of new competitors into the industry. These factors have
resulted in low revenue growth, deterioration in operating profits and, until
recently, falling prices for the property and casualty industry. However, the
industry has begun to show renewed focus on premium rate adequacy, and as a
result, the downward pressure on premium rates is abating as many competitors
implement rate increases.

To remain competitive, the Company's strategy includes, among other measures,
(1) using appropriate pricing, (2) maintaining underwriting discipline, (3)
selling to selected markets, (4) utilizing technological innovations for the
marketing and sale of insurance, (5) controlling expenses, (6) maintaining high
ratings from A.M. Best, (7) providing quality services to agents and
policyholders, and (8) acquiring suitable property and casualty books of
business.

                                       6
<PAGE>

Regulation

The insurance industry is highly regulated and supervised. The Company's
insurance subsidiaries are subject to the supervision and regulation of the
states in which they are domiciled. Such supervision and regulation is designed
to protect the Company's policyholders rather than the Company's shareholders.
Such supervision and regulation includes matters relating to authorized lines of
business, underwriting standards, financial condition standards, licensing of
insurers, investment standards, premium levels, policy provisions, the filing of
annual and other financial reports prepared on the basis of Statutory Accounting
Principles, the filing and form of actuarial reports, dividends, and a variety
of other financial and non-financial matters.

The Company's insurance subsidiaries are subject to the Risk-Based Capital
("RBC") under The Insurers Model Act. RBC is designed to measure the acceptable
amount of capital an insurer should have based on the inherent specific risks of
each insurer. The RBC calculation takes into account: (1) asset risk, (2) credit
risk, (3) underwriting risk, and (4) all other relevant risks. The RBC for The
Insurers Model Act provides for four levels of regulatory authority: (1) Company
Action Level Event, (2) Regulatory Action Level Event, (3) Authorized Control
Level Event, and (4) Mandatory Control Level Event. These four levels of
authority provide for increasing regulatory remedies for companies that fail to
comply with the RBC for Insurers Model Act. As of December 31, 2001 and 2000,
the Company's insurance subsidiaries' RBC exceeded the minimum required.

The Company's insurance subsidiaries are members of the statutorily created
insolvency guarantee associations in all states where they are authorized to
transact business. These associations were formed for the purpose of paying
claims of insolvent companies. The Company is assessed its pro rata share of
such claims based upon its premium writings, subject to a maximum annual
assessment per line of insurance. Such costs can generally be recovered through
surcharges on future premiums. The Company does not believe that assessments on
current insolvencies will have a material effect on its financial condition or
results of operations.

As an insurance holding company, Argonaut Group is largely dependent on
dividends and other permitted payments from its insurance subsidiaries to pay
any cash dividends to its shareholders and for its operating capital. The
ability of the Company's insurance subsidiaries to pay dividends to the Company
is subject to certain restrictions imposed under California insurance law, which
is the state of domicile for Argonaut Insurance Company, the Company's immediate
insurance subsidiary under which all other insurance subsidiaries are owned.
During 2002, Argonaut Insurance Company will be permitted to pay dividends of up
to $71.6 million to the Company without additional approval from the California
Department of Insurance. In March 2002, Argonaut Insurance Company declared and
paid a dividend of $5 million to the Company.

                                       8
<PAGE>

Reinsurance

As is common practice within the insurance industry, the Company transfers a
portion of the risks insured under its policies to other companies through
reinsurance. It is the goal of the Company to limit the exposure to surplus from
losses resulting from catastrophes and large or unusually hazardous risks
through this ceded reinsurance. As reinsurance arrangements do not discharge an
insurer from its direct obligations to policyholders on risks insured, Argonaut
Group remains contingently liable. The collectability of reinsurance is subject
to the solvency of the reinsurance company. It is the Company's policy to only
place reinsurance with those companies which exhibit strong financial position.

Additional information relating to the Company's reinsurance activities is
included under the captions "Management's Discussion and Analysis of Results of
Operations and Financial Condition - Liquidity and Capital Resources " and "Note
3 - Reinsurance" in the Notes to the Consolidated Financial Statements in the
Company's Annual Report to Shareholders for the Year Ended December 31, 2001,
which is incorporated herein by reference. See Exhibit Index.

Investments

The Company holds a well-diversified portfolio of investments in high quality
bonds, U.S. Treasury notes and government agencies, state and municipal bonds
and preferred and common stocks.

The Company's investment strategy is to maximize after-tax investment income and
total investment returns while minimizing risk and maintaining adequate
securities in the amounts and duration needed to meet cash requirements for
current operations and long-term liabilities. The Company manages a portion of
its fixed income portfolio internally. Additionally, two professional fixed
income managers are utilized to manage the remainder of the portfolio under
guidelines established by the Company. The majority of the equity portfolio is
managed through an external investment manager.

Additional information relating to the Company's investment portfolio is
included under the captions "Management's Discussion and Analysis of Results of
Operations and Financial Condition - Market Risk" and "Note 2 - Investments" and
"Note 9 - Net Investment Income" in the Notes to the Consolidated Financial
Statements in the Company's Annual Report to Shareholders for the Year Ended
December 31, 2001, which is incorporated herein by reference. See Exhibit Index.

                                       9
<PAGE>

Reserves for Losses and Loss Adjustment Expenses

Liabilities for unpaid losses and loss adjustment expenses include the
accumulation of individual case estimates for claims reported as well as
estimates of incurred but not reported claims and estimates of claim settlement
expenses. Estimates are based upon past claim experience modified for current
trends as well as prevailing economic, legal and social conditions, plus
assumptions considered reasonable where facts are not known. While management
believes that amounts included in the consolidated financial statements are
adequate, there can be no assurance that future changes in loss development,
favorable or unfavorable, will not occur. The estimates are continually reviewed
and any changes are reflected in current operations.

The Company's objective is to set reserves that are adequate; that is, the
amounts originally recorded as reserves should at least equal the ultimate net
cost to investigate and settle claims. However, the process of establishing
adequate reserves is inherently uncertain, and the ultimate net cost of a claim
may vary materially from the amounts reserved. The reserving process is
particularly imprecise for claims involving asbestos, environmental and other
emerging long-tailed exposures now confronting property and casualty insurers.
The Company regularly monitors and evaluates loss and loss adjustment expense
reserve development to verify reserve adequacy. Any adjustment to reserves is
reflected in net income for the accounting period in which the adjustment is
made. Additional information relating to the Company's reserves for losses and
loss adjustment expenses is included under the captions "Management's Discussion
and Analysis of Results of Operations and Financial Condition - Results of
Operations" and "Note 5 - Reserves for Losses and Loss Adjustment Expenses" and
"Note 15 - Run Off Lines" in the Notes to the Consolidated Financial Statements
in the Company's Annual Report to Shareholders for the Year Ended December 31,
2001, which is incorporated herein by reference. See Exhibit Index.

The Company has received asbestos and environmental liability claims arising out
of general liability coverage primarily written in the 1970's and into the
mid-1980's. The Company has established a specialized claims unit that
investigates and adjusts all asbestos and environmental claims. Beginning in
1986, standard liability policies contained an expressed exclusion for asbestos
and environmental related damage except as noted below. In addition to the
previously described general uncertainties encountered in estimating reserves,
there are significant additional uncertainties in estimating the amount of the
Company's potential losses from asbestos and environmental claims. Among the
uncertainties impacting the estimation of such losses are: (1) potentially long
waiting periods between exposure and emergence of any bodily injury or property
damage; (2) difficulty in identifying sources of asbestos or environmental
contamination; (3) difficulty in properly allocating responsibility and/or
liability for asbestos or environmental damage; (4) changes in underlying laws
and judicial interpretation of those laws; (5) potential for an asbestos or
environmental claim to involve many insurance providers over many policy
periods; (6) long reporting delays from insureds to insurance companies (7)
historical data concerning asbestos and environmental losses, which is more
limited than historical information on other types of claims; (8) questions
concerning interpretation and application of insurance coverage; and (9)
uncertainty regarding the number and identity of insureds with potential
asbestos or environmental exposure. Management believes that these factors
continue to render reserves for asbestos and environmental losses significantly
less subject to traditional actuarial methods than are reserves on other types
of losses. The Company currently underwrites environmental and pollution
coverages on a limited number of policies and underground storage tanks. The
Company establishes reserves to the extent that, in the judgment of management,
the facts and prevailing law reflect an exposure for the Company or its ceding
company not dissimilar to those results the industry has experienced with regard
to asbestos and environmental related claims. Due to the uncertainties discussed
above, the ultimate losses may vary materially from current loss reserves and
could have a material adverse effect on the Company's future financial
condition, results of operations and cash flows.
                                       10
<PAGE>

The following tables on pages 11 and 12 indicate the manner in which reserves
for losses and loss adjustment expenses at the end of a particular year change
as time passes. The information presented in Table I is net of the effects of
reinsurance. The information presented in Table II includes only amounts related
to direct and assumed insurance.

In the following tables, the first line shows the reserves as originally
reported at the end of the stated year. The second section shows the cumulative
amounts paid as of the end of successive years related to those reserves. The
third section shows the original recorded reserves as of the end of successive
years adjusted to reflect facts and circumstances later discovered. The last
line, cumulative deficiency or redundancy, compares the adjusted reserves to the
reserves as originally established and shows that the reserves as originally
recorded were either inadequate or excessive to cover the estimated cost of
claims as of December 31, 2001.


<PAGE>


                                       11

<TABLE>
<CAPTION>
Table I

                Analysis of Losses and Loss Adjustment Expense (LAE) Development (in millions)
                              (Net of Reinsurance)



                     1992       1993      1994      1995       1996      1997       1998      1999     2000      2001
                     ----       ----      ----      ----       ----      ----       ----      ----     ----      ----
<S>                 <C>        <C>       <C>       <C>         <C>       <C>        <C>      <C>       <C>       <C>
Reserves for Losses
and LAE (a)         $1,201.9   $1,107.6    $976.6    $858.1     $951.0    $884.0     $763.2   $706.5   $757.6    $929.6
Cumulative Amount
Paid as of: (b)
One year later         276.9      259.9     239.7     214.2      179.0     172.7      149.8    160.9    154.0
Two years later        489.2      444.7     417.9     356.2      309.7     278.7      274.0    282.8
Three years later      638.9      588.8     531.5     468.6      392.7     374.1      373.6
Four years later       759.5      684.1     623.9     537.9      469.5     452.4
Five years later       839.9      758.5     682.9     606.2      537.9
Six years later        906.8      814.8     742.4     668.8
Seven years later      962.7      864.8     799.2
Eight years later    1,010.3      915.3
Nine years later     1,057.0
Reserves
Re-estimated as of:
One year later       1,197.1    1,086.8     996.5   1,073.6      934.0     819.2      785.4    833.9    773.2
Two years later      1,202.0    1,083.0   1,180.8   1,038.9      895.5     851.1      884.3    835.6
Three years later    1,203.0    1,283.4   1,159.2   1,014.1      916.0     922.8      879.8
Four years later     1,403.1    1,277.3   1,152.5   1,033.8      979.4     917.9
Five years later     1,400.6    1,268.2   1,154.6   1,092.6      972.5
Six years later      1,396.2    1,262.2   1,202.0   1,082.8
Seven years later    1,391.3    1,299.8   1,190.8
Eight years later    1,428.9    1,282.8
Nine years later     1,408.4
Cumulative
(Deficiency)
Redundancy:  (c)     ($206.5)   ($175.2)  ($214.2)  ($224.7)    ($21.5)   ($33.9)   ($116.6) ($129.1)  ($15.6)
<FN>


(a)    Reserves for losses and LAE, net of reserves for reinsurance.
(b)    Cumulative amount paid, net of reinsurance payments.
(c)    Represents changes of net reserves between the original estimate (for
       each accident year) of the indicated year and the reserve re-estimated as
       of the end of the current year.  Re-estimated reserves are calculated by
       adding cumulative amount paid to unpaid loss and LAE and incurred but not
       reported(IBNR) at year end for each accident year.
</FN>
</TABLE>


<PAGE>


13

                                       12

<TABLE>
<CAPTION>

Table II

                      Analysis of Losses and Loss Adjustment Expense (LAE) Development (in millions)
                         (Direct and Assumed Insurance)


                     1992       1993      1994      1995      1996      1997       1998      1999     2000      2001
                     ----       ----      ----      ----      ----      ----       ----      ----     ----      ----
<S>                 <C>        <C>       <C>       <C>        <C>       <C>        <C>       <C>      <C>       <C>
Reserves for Losses
and LAE (a)         $1,390.9   $1,284.1  $1,161.5  $1,026.1   $1,158.8  $1,063.2     $935.8   $897.4   $930.7   $1,147.8
Cumulative Amount
Paid as of: (b)
One year later         325.6      288.3     267.5     245.2      234.7     197.0      177.8    218.9    190.0
Two years later        564.4      499.3     474.8     437.8      389.3     329.6      358.2    375.2
Three years later      739.3      668.9     625.4     572.1      498.5     479.0      490.8
Four years later       884.2      787.9     737.5     665.5      617.0     588.5
Five years later       983.5      881.4     817.9     774.0      712.1
Six years later      1,069.3      951.1     916.0     861.6
Seven years later    1,134.2    1,039.2     996.5
Eight years later    1,219.5    1,113.1
Nine years later     1,289.6
Reserves
Re-estimated as of:
One year later       1,414.2    1,291.7   1,179.7   1,300.3    1,159.7   1,006.2      990.1  1,048.3    966.2
Two years later      1,448.8    1,278.8   1,423.1   1,282.8    1,134.3   1,069.7    1,108.6  1,063.3
Three years later    1,440.6    1,533.8   1,404.1   1,267.2    1,182.5   1,156.5    1,115.1
Four years later     1,694.5    1,526.6   1,412.1   1,317.3    1,248.4   1,162.3
Five years later     1,687.5    1,532.5   1,440.9   1,379.7    1,251.9
Six years later      1,698.0    1,546.4   1,489.9   1,380.7
Seven years later    1,708.6    1,585.5   1,488.4
Eight years later    1,746.2    1,578.7
Nine years later     1,738.2
Cumulative (Deficiency)
Redundancy:  (c)     ($347.3)   ($294.6)  ($326.9)  ($354.6)    ($93.1)   ($99.1)   ($179.3) ($165.9)  ($35.5)

<FN>

(a)    Reserves for losses and LAE, excluding effects of reinsurance.
(b)    Cumulative amount paid, excluding effects of reinsurance.
(c)    Represents changes of direct and assumed reserves between the original
       estimate (for each accident year) of the indicated year
       and the reserve re-estimated as of the end of the current year.
       Re-estimated reserves are calculated by adding cumulative amount paid to
       unpaid loss and LAE and incurred but not reported (IBNR) at year end for
       each accident year.
</FN>
</TABLE>

                                       11
<PAGE>

Employees

As of March 15, 2002, the Company had 814 employees. The Company provides a
comprehensive benefits program for substantially all of its employees, including
retirement plans, savings plans, disability programs, group life programs, group
health programs and tuition reimbursements programs. Management believes that
the Company's relationship with its employees is good.

Item 2.  Properties

Argonaut Insurance Company's headquarters are located in a facility that
consists of an office building on approximately two acres of land in Menlo Park,
California. Argonaut Great Central's headquarters are located in a facility in
Peoria, Illinois. Argonaut Insurance Company and Argonaut Great Central own the
buildings in which their headquarters are located. In addition, the Company has
entered into other leases in conjunction with its operations at various
locations throughout the country. The Company believes that its properties are
adequate for its present needs

Item 3.  Legal Proceedings

On August 30, 1996, the Los Angeles County Metropolitan Transportation Authority
("MTA") filed a civil action against Argonaut Insurance Company alleging breach
of contract, breach of the covenant of good faith and fair dealing, and
requesting ancillary relief in the form of an accounting, an injunction and
restitution in connection with allegations regarding failures to perform under
certain contracts of insurance. The MTA contends that it has been damaged by an
unspecified amount.

Argonaut Insurance Company has responded to the complaint, and brought certain
counterclaims against the MTA in connection with the facts underlying the
lawsuit. The Company believes it has meritorious defenses, and intends to
vigorously contest these claims. The trial judge for the MTA litigation has
ordered that the first stage of this case to be tried before a three-judge panel
instead of jury by agreement of the parties, although no trial date has been
set. That trial will primarily consider a portion of Argonaut Insurance
Company's counterclaim for sums it contends are due to it from the MTA. The
Company is unable, with any degree of certainty, to comment upon the range of
any potential loss, or whether such an outcome is probable or remote, in light
of the limited discovery conducted in the case, and the preliminary
investigation conducted thus far.

Argonaut Insurance Company has been sued in sixteen lawsuits brought on behalf
of alleged classes of purchasers of retrospectively rated workers' compensation
insurance, alleging that the defendants, including other compensation insurers,
charged the purported class unlawful premiums. Plaintiffs have threatened to
bring similar claims against Argonaut Insurance Company in several other states.
Argonaut Insurance Company intends to vigorously defend these lawsuits and has
been successful in having a number of them dismissed or stayed. Management is
unable to determine the potential financial impact of these lawsuits at this
time.

Argonaut Insurance Company is a defendant in a case entitled Diamond Woodworks
vs. Argonaut Insurance Company, in the Superior Court of Orange County,
California. The case arose out of Argonaut Insurance Company's alleged
mishandling of a workers' compensation claim and alleged fraudulent acts towards
the plaintiff. On June 19, 2000 the jury awarded approximately $700,000 in
compensatory damages and $14 million in punitive damages against the Argonaut
Insurance Company, which verdict was subsequently confirmed by the Court.
Argonaut Insurance Company filed post judgment motions and the judgment for
punitive damages was reduced to $5.5 million. Argonaut Insurance Company is
pursuing an appeal of the adverse final judgment, and has posted a surety bond
for the judgment pending appeal. The Company has recorded the $700,000 judgment
for compensatory damages but has not recorded the $5.5 million judgment for
punitive damages. Management is currently unable to estimate the amount (if any)
of punitive damages that will be paid.

The insurance subsidiaries of the Company are parties to legal actions
incidental to their business. Based on the advice of counsel, management of the
Company believes that the resolution of these matters will not materially affect
the Company's financial condition or results of operations.

                                       12
<PAGE>

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

No matters were submitted to a vote of Argonaut Group's security holders during
the last quarter of its fiscal year ended December 31, 2001.


                                     PART II

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

Market Information

The Company's common stock trades on the NASDAQ National Market under the symbol
AGII. The information on high and low common stock prices set forth under the
caption "Common Stock Market Prices - unaudited" in the Company's Annual Report
to Shareholders for the Year Ended December 31, 2001 is incorporated herein by
reference. See Exhibit Index.

Holders of Common Stock

The number of holders of record of the Company's Common Stock as of February 19,
2002 was 6,198.

Dividends

The information set forth under the captions "Management's Discussion and
Analysis of Results of Operations and Financial Condition - Liquidity and
Capital Resources" and as "Note 8 - Shareholders' Equity" in the Notes to the
Consolidated Financial Statements in the Company's Annual Report to Shareholders
for the Year Ended December 31, 2001 is incorporated herein by reference. See
Exhibit Index.


                                       13
<PAGE>

Item 6. Selected Financial Data

The information set forth under the caption "Selected Financial Data" in the
Company's Annual Report to Shareholders for the Year Ended December 31, 2001 is
incorporated herein by reference. See Exhibit Index.

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

The information set forth under the caption "Management's Discussion and
Analysis of Results of Operations and Financial Condition" in the Company's
Annual Report to Shareholders for the Year Ended December 31, 2001 is
incorporated herein by reference. See Exhibit Index.

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

The information under the caption "Management's Discussion and Analysis of
Results of Operations and Financial Condition" in the Company's Annual Report to
Shareholders for the Year Ended December 31, 2001 is incorporated herein by
reference. See Exhibit Index.

Item 8. Financial Statements and Supplementary Data

The Report of Independent Public Accountants and the Consolidated Financial
Statements and the related Notes to Consolidated Financial Statements of
Argonaut Group, Inc. and its subsidiaries listed on the index to financial
statements set forth in Item 14(a) 1 of this Annual Report on Form 10-K are
incorporated herein by reference to the Annual Report to Shareholders for the
Year Ended December 31, 2001.

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

On March 25, 2002, the Company decided not to reappoint Arthur Andersen LLP
("Andersen") as its independent auditors to audit the Company's consolidated
financial statements for the year ended December 31, 2002. The decision was
recommended to the Board of Directors by the Audit Committee and approved by the
Board of Directors. The decision to change independent auditors was the result
of a competitive bidding process for such audit services planned since the
fourth quarter of 2001 and conducted during the first quarter of 2002. The
current circumstances surrounding Andersen were considered as part of the
evaluation process.

Andersen's reports on the Company's consolidated financial statements for each
of the years ended December 31, 2001 and 2000 did not contain an adverse opinion
or disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles.

                                       14
<PAGE>

During the years ended December 31, 2001 and 2000 and through March 25, 2002,
there were no disagreements with Andersen on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which agreements, if not resolved to Andersen's satisfaction, would have caused
them to make reference to the subject matter of such disagreements in connection
with their report on the Company's consolidated financial statements for such
years. During the years ended December 31, 2001 and 2000 and through March 25,
2002, there were no "reportable events" as defined in Item 304(a)(1)(v) of
Regulation S-K.

We provided Andersen with a copy of the foregoing disclosures. Attached, as
Exhibit 16 hereto is a letter dated March 25, 2002 from Andersen to the
Securities and Exchange Commission stating its agreement with such disclosures.

Also filed herewith as Exhibit 99 is a letter dated March 25, 2002 from the
Company to the Securities and Exchange Commission detailing certain quality
assurances with respect to the audit of its consolidated financial statements
for the year ended December 31, 2001 that Andersen provided to the Company in a
letter dated March 25, 2002.

New Independent Accountants

On March 25, 2002, the Company appointed Ernst & Young LLP ("Ernst & Young") to
serve as its independent auditors to audit the Company's consolidated financial
statements for the fiscal year ending December 31, 2002. The decision was
recommended to the Board of Directors by the Audit Committee and approved by the
Board of Directors at the conclusion of a competitive bidding process.

Ernst & Young was Front Royal's auditor prior to the Company's acquisition of
Front Royal and Andersen relied on Ernst & Young to audit Front Royal for the
period August 31, 2001 through December 31, 2001.

During the years ended December 31, 2001 and 2000 and through March 25, 2002,
the Company did not consult Ernst & Young with respect to the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the Company's
consolidated financial statements, or any other matters or reportable events as
set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.

                                       15
<PAGE>

                                    PART III

Item 10.       Directors and Executive Officers of the Registrant

Incorporated herein by reference is the information appearing under the captions
"Election of Directors, Executive Officers," "Security Ownership of Principal
Shareholders and Management," and "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's Proxy Statement to be filed with the Securities and
Exchange Commission relating to the Company's Annual Meeting of Shareholders to
be held on April 30, 2002.

Item 11.       Executive Compensation

Incorporated herein by reference is the information appearing under the captions
"Compensation of Executive Officers," "Indemnification," "Pension Plan," and
"Compensation of Directors" in the Company's Proxy Statement to be filed with
the Securities and Exchange Commission relating to the Company's Annual Meeting
of Shareholders to be held on April 30, 2002.

Item 12.       Security Ownership of Certain Beneficial Owners and Management

Incorporated herein by reference is the information appearing under the caption
"Security Ownership of Principal Shareholders and Management" in the Company's
Proxy Statement to be filed with the Securities and Exchange Commission relating
to the Company's Annual Meeting of Shareholders to be held on April 30, 2002.

Item 13.       Certain Relationships and Related Transactions

Incorporated herein by reference is the information appearing under the caption
"Compensation Committee Interlocks and Insider Participation" in the Company's
Proxy Statement to be filed with the Securities and Exchange Commission relating
to the Company's Annual Meeting of Shareholders to be held on April 30, 2002.


                                     PART IV

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

(a)1.    Financial Statements

         Selected Financial Data

         Report of Independent Public Accountants

         Consolidated Balance Sheets  -  December 31, 2001 and 2000

         Consolidated Statements of Operations
              For the Years Ended December 31, 2001, 2000 and 1999

         Consolidated Statements of Comprehensive Income
              For the Years Ended December 31, 2001, 2000 and 1999

         Consolidated Statements of Shareholders' Equity
              For the Years Ended December 31, 2001, 2000 and 1999

         Consolidated Statements of Cash Flow
              For the Years Ended December 31, 2001, 2000 and 1999

                                       16
<PAGE>

         Notes to Consolidated Financial Statements

         Quarterly Financial Data (Unaudited)

         Common Stock Market Prices (Unaudited)

         Management's Discussion and Analysis of Results of Operations and
              Financial Condition

(a)2.    Financial Statement Schedules
              Report of Independent Public Accountants on Schedules

         Schedule II - Condensed Financial Information of Registrant
              December 31, 2001 and 2000

         Schedule III - Supplementary Insurance Information for the years ended
              December 31, 2001, 2000 and 1999

All other schedules and notes specified under Regulation S-X are
omitted because they are either not applicable, not required or the
information called for therein appears in response to the items of Form
10-K or in the Consolidated Financial Statements and the related Notes to
Consolidated Financial Statements of Argonaut Group, Inc. and its
subsidiaries listed on the above index.

(a)3.   Exhibits

The following exhibits are numbered in accordance with Item 601 of Regulation
S-K and, except as noted, are filed herewith.

       2.     Information Statement of Registrant (incorporated by reference to
              the Exhibit 2 to the Registrant's Form 10 Registration Statement
              dated September 3, 1986, filed with the Securities and Exchange
              Commission on September 4, 1986).

       3.1    Certificate of Incorporation of Registrant (incorporated by
              reference to the Exhibit 3.1 to the Registrant's Form 10
              Registration Statement dated September 3, 1986, filed with the
              Securities and Exchange Commission on September 4, 1986).

       3.2    Bylaws of the Registrant (incorporated by reference to the Exhibit
              3.2 to the Registrant's Form 10 Registration Statement dated
              September 3, 1986, filed with the Securities and Exchange
              Commission on September 4, 1986).

      10.1    Argonaut  Group,  Inc.  1986 Stock Option Plan  (incorporated  by
              reference  to the  Exhibit  10.1  to  the  Registrant's  Form  10
              Registration  Statement dated  September 3, 1986,  filed with the
              Securities and Exchange Commission on September 4, 1986).

                                       17
<PAGE>

      10.2    Argonaut Group, Inc. Retirement Plan (incorporated by reference to
              the Exhibit 10.2 to the Registrant's Form 10 Registration
              Statement dated September 3, 1986, filed with the Securities and
              Exchange Commission on September 4, 1986).

      10.3    Tax Agreement by and among Registrant and its subsidiaries and
              Teledyne, Inc. (incorporated by reference to the Exhibit 10.3 to
              the Registrant's Form 10 Registration Statement dated September 3,
              1986, filed with the Securities and Exchange Commission on
              September 4, 1986).

      10.4    Argonaut   Group,   Inc.  1986  Stock  Option  Plan,  as  amended
              (incorporated by reference to the Exhibit 4.3 to the Registrant's
              Registration  Statement on Form S-8 filed with the Securities and
              Exchange Commission on February 13, 1987).

      10.5    401(k) Retirement  Savings Plan (incorporated by reference to the
              Exhibit  10.4  to the  Registrant's  Form  10-K  filed  with  the
              Securities and Exchange Commission on February 28, 1989).

      10.6    Employee Stock Investment Plan (incorporated by reference to the
              Exhibit 4.3 to the Registrant's Registration Statement on Form S-8
              filed with the Securities and Exchange Commission on October 10,
              1989).

      10.7    Argonaut   Group,   Inc.  1986  Stock  Option  Plan,  as  amended
              (incorporated by reference to the Exhibit 4.3 to the Registrant's
              Registration  Statement on Form S-8 filed with the Securities and
              Exchange Commission on December 9, 1997).

      10.8    Argonaut Group, Inc. Stock Option Plan, as amended (incorporated
              by reference to the Exhibit 4.3 to the Registrant's Registration
              Statement on Form S-8 filed with the Securities and Exchange
              Commission on August 27, 1999).

      10.9    Employee Stock Investment Plan (incorporated by reference to the
              Exhibit 4.3 to the Registrant's Registration Statement on Form S-8
              filed with the Securities and Exchange Commission on October 22,
              1999).

      10.10   Stock  Purchase  Agreement  By  and  Among  Queensway   Financial
              Holdings Limited,  Queensway Holdings,  Inc., Hermitage Insurance
              Company,  North Pointe Financial Services,  Inc.,  Universal Fire
              And Casualty Insurance  Company,  Argonaut Specialty Group, Inc.,
              and Argonaut Insurance Company  (incorporated by reference to the
              Registrant's  Form 10-Q filed with the  Securities  and  Exchange
              Commission on May 14, 2001.) Dated as of April 12, 2001.

      10.11   Agreement  and Plan of  Merger By and  Among  Argonaut  Insurance
              Company, Argonaut Midwest Insurance Company, Argonaut Acquisition
              Corp.  and Front Royal,  Inc.  (incorporated  by reference to the
              Registrant's  Form 10-Q filed with the  Securities  and  Exchange
              Commission on May 14, 2001.) Dated as of May 7, 2001.

      13.     The following  materials are excerpted  from the Annual Report to
              Shareholders  of Argonaut  Group,  Inc. for the fiscal year ended
              December 31, 2001:
                  a)  Selected Financial Data
                  b)  Financial Statements
                  c)  Common Stock Market Prices
                  d)  Management's Discussion and Analysis of Results of
                      Operations and Financial Condition

      16.     Letter from Arthur Andersen LLP to the Securities and Exchange
              Commission dated March 25, 2002

      21.     Subsidiaries of Registrant, as amended

      23.     Consent of Independent Public Accountants - Arthur Anderson LLP

      23.1    Consent of Independent Public Accountants - Ernst & Young LLP

      99.     Assurance Letter as required by Temporary Note 3T.

(b)    Reports on Form 8-K.

       None



                                       18
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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

                                                ARGONAUT GROUP, INC.

                                                By   /s/  Mark E. Watson, III
                                                    --------------------------
                                                     Mark E. Watson, III
                                                     President

Date:  March 28, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

     Signature                       Title                             Date

/s/  Mark E. Watson, III         President, Chief Executive       March 28, 2002
-------------------------------  Officer and Director
Mark E. Watson

/s/  Mark W. Haushill            Vice President, Chief            March 28, 2002
-------------------------------  Financial Officer and Treasurer
Mark W. Haushill                 (principal financial and
                                 accounting officer)


/s/  Byron L. LeFlore, Jr.       Vice President, General          March 28, 2002
-------------------------------  Counsel and Secretary
Byron L. LeFlore, Jr.

/s/  Gary V. Woods                          Director              March 28, 2002
-------------------------------
Gary V. Woods

/s/  Michael T. Gray                        Director              March 28, 2002
-------------------------------
Michael T. Gray

/s/  Jerrold V. Jerome                      Director              March 28, 2002
-------------------------------
Jerrold V. Jerome

/s/  Judith R. Nelson                       Director              March 28, 2002
-------------------------------
Judith R. Nelson

/s/  John R. Power                          Director              March 28, 2002
-------------------------------
John R. Power

/s/  George A. Roberts                      Director              March 28, 2002
-------------------------------
George A. Roberts

/s/  Fayez S. Sarofim                       Director              March 28, 2002
-------------------------------
Fayez S. Sarofim

<PAGE>







              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES



To the Shareholders of Argonaut Group, Inc.

We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements included in Argonaut Group,
Inc.'s annual report to shareholders incorporated by reference in this Form
10-K, and have issued our report thereon dated January 29, 2002. Our audit was
made for the purpose of forming an opinion on the basic consolidated financial
statements taken as a whole. The schedules listed in Part IV, Item 14(a)(2) are
the responsibility of the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic consolidated financial statements. These schedules have been
subjected to the auditing procedures applied in our audit of the basic
consolidated financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic consolidated financial statements
taken as a whole.





                                                             ARTHUR ANDERSEN LLP


San Francisco, California
January 29, 2002


<PAGE>



                              ARGONAUT GROUP, INC.
                                   SCHEDULE II
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                 ($ in millions)

<TABLE>
<CAPTION>
BALANCE SHEETS

                                                                          December 31,
                                                                   ------------  -----------
                                                                        2001          2000
                                                                   ------------  -----------
<S>                                                                <C>           <C>
Assets
   Short-term investments                                          $        4.4  $       1.0
   Cash and cash equivalents                                                0.1          0.1
   Investment in subsidiaries                                             446.6        493.6
   Goodwill                                                                27.4         30.0
   Deferred Federal income taxes                                            0.5          5.8
   Other assets                                                             8.8         10.3
                                                                   ------------  -----------


Total Assets                                                       $      487.8  $     540.8
                                                                   ============  ===========

Liabilities & Shareholders' Equity
   Income taxes payable                                            $        3.1  $       3.6
   Other liabilities                                                        2.3          3.3
   Due to subsidiaries                                                     34.9         32.8
                                                                   ------------  ------------


Total Liabilities                                                          40.3         39.7

Shareholders Equity                                                       447.5        501.1
                                                                   ------------  ------------


Total Liabilities and Shareholders' Equity                         $      487.8  $     540.8
                                                                   ============  ============
</TABLE>

<TABLE>
<CAPTION>

STATEMENTS OF OPERATIONS


                                                                  For the Years Ended December 31,
                                                               ---------         ---------      --------
                                                               2001               2000           1999
                                                               ---------         ---------      --------
<S>                                                            <C>               <C>            <C>

Revenues

                                                               $  (0.5)          $   3.8        $   3.7

Expenses:
  Amortization of goodwill                                          2.8               2.8           2.8
  Other expenses                                                    4.1               9.5           5.0
  Total operating expenses
                                                               ---------         --------       --------
                                                               ---------         --------       --------
                                                                    6.9              12.3           7.8
                                                               ---------         --------       --------
                                                               ---------         --------       --------

Loss before tax and undistributed earnings                        (7.4)             (8.5)          (4.1)
Benefit for income taxes                                          (1.2)             (4.5)          (0.4)
                                                               ---------         --------       --------
                                                               ---------         --------       --------

Net loss before equity in earnings of subsidiaries                (6.2)             (4.0)           (3.7)

Equity in earnings (loss) of subsidiaries                           9.1            (79.3)          (11.5)
                                                               ---------         ---------      ---------
                                                               ---------         ---------      ---------

Net income (loss)                                              $   2.9           $ (83.3)       $  (15.2)
                                                               =========         =========      =========
</TABLE>



<PAGE>




                              ARGONAUT GROUP, INC.
                                   SCHEDULE II
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                 ($ in millions)

<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOW


                                                                               For the Years Ended
                                                                                  December 31,
                                                                       -----------------------------------
                                                                         2001         2000        1999
                                                                       -----------------------------------
<S>                                                                    <C>          <C>         <C>


Cash flows from operating activities:
   Net income (loss)                                                    $ 2.9       $(83.3)     $(15.2)
   Adjustments to reconcile net income (loss) to
   net cash provided by operations:
     Amortization                                                         2.8          2.8          2.8
     Undistributed loss (earnings) in subsidiaries                       (9.1)        79.3         11.5
     Dividend from subsidiaries                                          34.1         50.6         66.4
     Change in deferred federal income tax payable                        5.3         (2.5)        (0.6)
     Change in due from/to subsidiaries                                   2.1         (3.2)        13.3
     Change in federal income tax payable                                (0.5)         2.8         (6.2)
     Other, net                                                          (1.2)         1.1          0.1
                                                                       -----------------------------------
   Net cash provided by operations                                       36.4         47.6         72.1
                                                                       -----------------------------------

Cash flows from investing activities:
     Change in short-term investments                                    (3.4)        (0.9)        10.0
                                                                       -----------------------------------
   Net cash provided (used) by investing activities                      (3.4)        (0.9)        10.0
                                                                       -----------------------------------

Cash flows from financing activities:
     Retirement of common stock                                          (3.2)       (10.6)       (44.1)
     Payment of cash dividend                                           (29.8)       (36.2)       (38.9)
     Exercise of stock options                                            -            -            0.8
                                                                       -----------------------------------
   Net cash used by financing activities                                (33.0)       (46.8)       (82.2)
                                                                       -----------------------------------

Change in cash & cash equivalents                                         -           (0.1)        (0.1)
Cash & cash equivalents, beginning of period                              0.1          0.2          0.3
                                                                       -----------------------------------
Cash & cash equivalents, end of period                                 $  0.1       $  0.1       $  0.2
                                                                       ===================================
</TABLE>


<PAGE>



                              ARGONAUT GROUP, INC.
                                  SCHEDULE III
                       SUPPLEMENTARY INSURANCE INFORMATION
                  Years Ended December 31, 2001, 2000, and 1999
                                 ($ in millions)

<TABLE>
<CAPTION>

                                                                                                   Amort.    Other
                                         Future             Other    Premium   Net Invt  Ben Loss, (Deferral)Insur.    Premiums
                               DPAC     Benefits   UPR      Payables Revenue   Income    & LAE     DPAC      Exp       Written
            Segment             (a)       (b)       (c)      (d)       (e)     (f)(1)     (g)      (h)       (i)(2)    (j)
------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>      <C>        <C>      <C>      <C>       <C>       <C>       <C>       <C>       <C>
Year Ended December 31, 2001

Specialty E&S                  $ 15.7   $  145.9    $64.1   $ -      $ 36.8     $ 3.4    $ 22.3    $ -       $ 12.3    $ 39.8
Specialty Commercial              6.6      155.3     43.3     -        54.5       6.7      40.3     (1.2)      17.2      55.3
Specialty Workers' Comp         -          846.6     56.3     -       124.8      40.4     125.8      -         55.7     115.7
MGU                             -         -         -         -         5.8       0.1       6.2     (0.8)       0.9       8.8
Run-off Lines                   -         -         -         -          -         -       (5.1)     -          5.1       -
Corporate & Other               -         -         -         -          -        3.0       0.2      -          7.5       -
                               -------  --------   -------- -------- --------- --------- --------  --------- --------- ---------
                               $ 22.3   $1,147.8   $163.7    $-      $221.9     $53.6    $189.7    $(2.0)    $ 98.7    $219.6
                               =======  ========   ======== ======== ========= ========= ========  ========= ========= =========
Year Ended December 31, 2000

Specialty E&S                  $ -      $ -        $ -      $ -      $ -        $ -      $ -       $ -       $ -       $  -
Specialty Commercial             -          51.1     19.4     -        29.8       5.6      28.2      1.7       12.0      32.7
Specialty Workers' Comp           0.2      879.6     50.3     -        94.2      52.6     206.6      1.4       65.2     129.8
MGU                              -          -         -       -         0.6        -        0.9        -        -         1.4
Run-off Lines                    -          -         -       -         -          -       11.9        -        -          -
Corporate & Other                -          -         -       -         -         3.8       -          -        2.8       -
                               --------- --------- -------- --------- --------- -------- --------  --------- --------- ---------
                                $ 0.2    $ 930.7    $69.7   $ -      $124.6     $62.0    $247.6    $ 3.1      $80.0    $163.9

                               ========= ========= ======== ========= ========= ======== ========  ========= ========= =========
Year Ended December 31, 1999

Specialty E&S                  $  -     $  -       $ -      $ -      $-         $  -     $ -       $  -       $ -       $-
Specialty Commercial              1.9       52.2     15.9     -        31.4       6.0      27.0       -        11.0      31.2
Specialty Workers' Comp           1.4      845.2     28.0     -        61.6      58.1      93.0      1.5       50.1      91.0
MGU                               -         -         -       -        -         -          -         -         -         -
Run-off Lines                     -         -         -       -        -                    1.4       -         -         -
Corporate & Other                 -         -         -       -        -          4.4      -          -         2.0       -
                               --------- --------- -------- --------- --------- -------- --------  --------- --------- ---------
                                 $3.3   $  897.4   $ 43.9   $-       $ 93.0     $68.5    $121.4     $1.5     $ 63.1     122.2
                               ========= ========= ======== ========= ========= ========= ======== ========= ========= =========
<FN>
(a)  Deferred Policy Acquisition Costs                                        (h)  Amortization of Deferred Policy
(b)  Future Policy Benefits                                                        Acquisition Costs
     Claims, and Claim Adjustment Expenses                                    (i)  Other Insurance Expenses
(c)  Unearned Premiums                                                        (j)   Premiums Written
(d)  Other Policy Claims and Benefits Payable
(e)  Premium Revenue                                                          (1)  Net investment income allocated based upon
                                                                                   each segment's share of investable funds
(f)  Net Investment Income
(g)  Benefits, Claims, and Claim Adjustment Expenses                          (2)  Other insurance expenses allocated based
                                                                                  on specific identification, where possible,
                                                                                  and related activities.



</FN>
</TABLE>