<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

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

For Quarter Ended: SEPTEMBER 30, 1998           Commission file number:  0-16332


                           NATIONAL INFORMATION GROUP
             (Exact name of registrant as specified in its charter)

              CALIFORNIA                                        94-3031790
       (State of Incorporation)                               (IRS Employer 
                                                            Identification No.)

 395 OYSTER POINT BOULEVARD, SUITE 500
    SOUTH SAN FRANCISCO, CALIFORNIA                                94080
(Address of principal executive office)                         (Zip Code)

                                 (650) 872-6772
                         (Registrant's telephone number)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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      [ ]


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: October 26, 1998
shares as of 4,115,627.

<PAGE>   2

                           NATIONAL INFORMATION GROUP
                               INDEX TO FORM 10-Q


<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                                     PAGE
<S>                                                                                <C>
Item 1 - Financial Statements:

         Consolidated Balance Sheets as of September 30, 1998 and
         December 31, 1997                                                            2

         Consolidated Statements of Earnings for the periods
         ended September 30, 1998 and 1997                                            3

         Consolidated Statements of Shareholders' Equity
         for the nine months ended September 30, 1998 and 1997                        4

         Consolidated Statements of Cash Flows for the
         nine months ended September 30, 1998 and 1997                                5

         Notes to Consolidated Financial Statements                               6 - 8

Item 2 - Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                              9 - 19

Item 3 - Quantitative and Qualitative Disclosures About Market Risk                  19

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings                                                           20

Item 2 - Changes in Securities                                                       20

Item 3 - Defaults Upon Senior Securities                                             20

Item 4 - Submission of Matters to a Vote of Security Holders                         20

Item 5 - Other Information                                                           20

Item 6 - Exhibits and Reports on Form 8-K                                            20

SIGNATURES                                                                           21
</TABLE>



                                       1
<PAGE>   3

                   NATIONAL INFORMATION GROUP AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                 As of September 30, 1998 and December 31, 1997
                (in thousands of dollars, except share amounts)

<TABLE>
<CAPTION>
                                                     September 30,    December 31,
                                                        1998             1997
                                                     -------------    ------------
                                                     (unaudited)
<S>                                                  <C>              <C>    
ASSETS:
Fixed maturities                                      $11,201          $15,359
Equity securities                                       5,388            4,200
Short-term investments                                  4,527            9,290
                                                      -------          -------
  Total investments                                    21,116           28,849
                                                      -------          -------

Cash                                                    4,694            1,113
Net premiums and accounts receivable                   10,136            8,990
Accrued interest receivable                               518              449
Property and equipment, net                             7,536            5,424
Deferred acquisition costs                              2,385            2,704
Deferred federal income taxes receivable                3,283            3,117
Intangible assets                                      15,347           13,178
Other assets                                            2,790            2,918
                                                      -------          -------
  Total assets                                        $67,805          $66,742
                                                      =======          =======

LIABILITIES:
Reserve for losses and LAE                            $ 3,054          $ 3,232
Unearned premiums                                       5,467            6,217
Commissions payable                                       332              837
Accrued expenses and other liabilities                  4,641            6,125
Drafts payable                                            757              832
Notes payable                                          13,546            9,601
Reserve for return premiums                             1,816            4,399
Deferred revenue                                        8,658            7,719
                                                      -------          -------
  Total liabilities                                    38,271           38,962
                                                      -------          -------

SHAREHOLDERS' EQUITY:
Common stock, no par value;
  authorized, 15,000,000 shares;
  issued and outstanding 4,115,627
  in 1998 and 4,032,882 in 1997                        19,364           18,610
Retained earnings                                      10,170            9,170
                                                      -------          -------
  Total shareholders' equity                           29,534           27,780
                                                      -------          -------
  Total liabilities and shareholders' equity          $67,805          $66,742
                                                      =======          =======
</TABLE>


   The accompanying notes are an integral part of these financial statements.



                                       2
<PAGE>   4

                   NATIONAL INFORMATION GROUP AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
                For the periods ended September 30, 1998 and 1997
          (in thousands of dollars, except share and per share amounts)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                 Third Quarter                            Nine Months
                                        -------------------------------         ------------------------------

                                           1998                1997                1998               1997
                                        -----------         -----------         -----------        -----------
<S>                                     <C>                 <C>                 <C>                <C>        
Net premiums written                    $     3,274         $     5,141         $    12,100        $    14,855
Change in unearned premiums                     155                (425)                750             (1,491)
                                        -----------         -----------         -----------        -----------

Net premiums earned                           3,429               4,716              12,850             13,364
Real estate information services              8,844               5,919              26,529             15,898
Tracking fees                                 3,905               1,893               8,039              5,495
Net commission income                           337                 310                 789                698
Net investment income                           479                 389               1,410              1,280
                                        -----------         -----------         -----------        -----------

  TOTAL REVENUES                             16,994              13,227              49,617             36,735
                                        -----------         -----------         -----------        -----------

Loss and LAE incurred                         1,480               1,605               5,043              4,491
Commissions to non-affiliates                 1,050                 152               2,938              1,254
Personnel expenses                            7,682               5,716              22,628             16,289
All other expenses                            5,973               4,393              16,699             10,826
                                        -----------         -----------         -----------        -----------

  TOTAL EXPENSES                             16,185              11,866              47,308             32,860
                                        -----------         -----------         -----------        -----------

Income before (benefit from)
  provision for income taxes                    809               1,361               2,309              3,875

(Benefit from) provision for
  income taxes                                 (131)                483                 354              1,358
                                        -----------         -----------         -----------        -----------

  NET INCOME                            $       940         $       878         $     1,955        $     2,517
                                        ===========         ===========         ===========        ===========

Weighted average common and
   common equivalent shares
   outstanding:       Basic               4,082,410           3,949,732           4,110,804          3,936,481
                                        ===========         ===========         ===========        ===========

                      Diluted             4,212,349           4,063,047           4,233,156          4,049,796
                                        ===========         ===========         ===========        ===========


Net income per share: Basic             $       .23         $      0.22         $       .48        $      0.64
                                        ===========         ===========         ===========        ===========

                      Diluted           $       .22         $      0.22         $       .46        $      0.62
                                        ===========         ===========         ===========        ===========
</TABLE>



   The accompanying notes are an integral part of these financial statements.



                                       3
<PAGE>   5

                   NATIONAL INFORMATION GROUP AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
             For the nine months ended September 30, 1998 and 1997
                 (in thousands of dollars, except share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                             Common Stock                                  Total
                                     --------------------------        Retained         Shareholders'
                                      Shares           Amount          Earnings            Equity
                                     ---------        ---------        ---------        -------------
<S>                                  <C>              <C>              <C>              <C>      
Balance at December 31, 1996         3,896,937        $  17,592        $  10,960         $  28,552

Net income                                  --               --            2,517             2,517

Options exercised                       91,278              664               --               664

Dividends paid                              --               --           (4,660)           (4,660)
Unrealized gain, net
  of deferred tax                           --               --               45                45
                                     ---------        ---------        ---------         ---------

Balance at September 30, 1997        3,988,215        $  18,256        $   8,862         $  27,118
                                     =========        =========        =========         =========


Balance at December 31, 1997         4,032,882        $  18,610        $   9,170         $  27,780

Net income                                  --               --            1,955             1,955

Options exercised                       82,745              754               --               754

Dividends paid                              --               --             (813)             (813)
Unrealized loss, net
  of deferred tax                           --               --             (142)             (142)
                                     ---------        ---------        ---------         ---------

Balance at September 30, 1998        4,115,627        $  19,364        $  10,170         $  29,534
                                     =========        =========        =========         =========
</TABLE>



   The accompanying notes are an integral part of these financial statements.



                                       4
<PAGE>   6

                   NATIONAL INFORMATION GROUP AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
             For the nine months ended September 30, 1998 and 1997
                 (in thousands of dollars, except share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                 September 30,    September 30,
                                                                     1998             1997
                                                                 -------------    -------------
<S>                                                              <C>              <C>     
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                                    $  1,955         $  2,517
     Adjustments to reconcile net income to net cash
       provided by operating activities:
       Depreciation and amortization                                  1,722            1,014
       Change in assets and liabilities:
         Increase in net premiums and accounts receivable
           and accrued interest receivable                           (1,215)          (3,019)
         Increase in deferred revenue                                   939               39
         Decrease (increase) in deferred acquisition costs              319             (504)
         (Decrease) increase in insurance liabilities                (3,586)           5,448
         (Decrease) increase in accrued expenses
           and other liabilities                                     (1,484)           1,049
         (Increase) decrease in deferred income tax
           receivable                                                  (166)             476
         Other, net                                                    (377)            (608)
                                                                   --------         --------

           Net cash (used) provided by operating activities          (1,893)           6,412
                                                                   --------         --------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of investments                                         (8,359)         (47,218)
     Sale of investments                                                407               --
     Maturity of investments                                         15,543           50,215
     Purchase of equipment                                           (3,383)          (2,144)
     Purchase of Arts, including acquisition costs                   (2,620)          (9,881)
                                                                   --------         --------

           Net cash provided (used) by investing activities           1,588           (9,028)
                                                                   --------         --------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Stock options exercised                                            754              547
     Dividends to shareholders                                         (813)          (4,660)
     Proceeds from borrowings                                         4,740            9,268
     Principal payments on notes payable                               (795)            (834)
                                                                   --------         --------

           Net cash provided by financing activities                  3,886            4,321
                                                                   --------         --------

     Net increase in cash                                             3,581            1,705
     Cash at beginning of period                                      1,113            3,183
                                                                   --------         --------

     Cash at end of period                                         $  4,694         $  4,888
                                                                   ========         ========
</TABLE>



   The accompanying notes are an integral part of these financial statements.



                                       5
<PAGE>   7

                   NATIONAL INFORMATION GROUP AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Financial Information

         In the opinion of management, the financial information for National
Information Group, formerly National Insurance Group, ("National" and, together
with its subsidiaries, the "Company") contained in this Report reflects all
adjustments (consisting only of normal recurring adjustments) which are
necessary to a fair presentation of financial position and results of operations
for the interim periods. The results for the nine-month period ended September
30, 1998 and September 30, 1997 are not necessarily indicative of the results to
be expected in the future.

         The consolidated balance sheet data at December 31, 1997 was derived
from audited financial statements, but does not include all disclosures required
by generally accepted accounting principles.

2.  Acquisition

         In September 1997, two wholly-owned subsidiaries of National acquired
substantially all of the assets and assumed certain liabilities of American
Realty Tax Services, Inc., a Virginia corporation, and American Realty Tax
Services of New York, Inc., a Virginia corporation (collectively, "ARTS"). As a
result of this acquisition, National performs real estate tax services through
its wholly-owned subsidiaries, Pinnacle Real Estate Tax Services, Inc., a
Delaware corporation, and Pinnacle Real Estate Tax Services of New York, Inc., a
Delaware corporation (collectively, "PinTax"). Please refer to "Notes to
Consolidated Financial Statements" in the Company's annual report on Form 10-K
for the year ended December 31, 1997 for details regarding this transaction. The
financial results for the third quarter of 1998 reflect a full quarter of
operating results of PinTax, but the results for the comparable period of 1997
reflect approximately one-half month of operations for PinTax.

         Pursuant to the asset purchase agreement, PinTax paid to the sellers of
ARTS (the "Sellers") in May 1998 approximately $2.47 million and in September
1998 approximately $0.06 million of additional consideration ("Additional
Consideration"). The Additional Consideration resulted from PinTax receiving
cash revenues in excess of certain targets for the twelve-month period ended
April 30, 1998. Of these amounts, approximately $1.50 million of Additional
Consideration was paid in cash; the remaining $1.03 million of Additional
Consideration was paid in the form of a note to the Sellers (the "Purchaser
Note"). The Purchaser Note bears simple interest of 8% per annum. Principal and
interest are due in equal quarterly installments over the three years ending May
2001, with the first installment due on June 18, 1998.

3.  Dividend

         On August 6, 1998 the Company's Board of Directors declared a dividend
of $0.05 per share, which was paid on August 25, 1998 to shareholders of record
on August 17, 1998. The aggregate amount of the dividend payment was $205,319.



                                       6
<PAGE>   8

4.  Comprehensive income

         In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting
Comprehensive Income. SFAS No. 130 establishes standards for the reporting and
display of comprehensive income and its components in a full set of
general-purpose financial statements. Comprehensive income is defined as the
change in equity of a business enterprise during a period from transactions and
other events and circumstances from non-owner sources. SFAS No. 130 is effective
for fiscal years beginning after December 15, 1997. The Company's comprehensive
income for the third quarter ended September 30, 1998 and September 30, 1997
includes unrealized gains net of deferred tax of $26,000 and $76,000,
respectively, resulting in total comprehensive income for the third quarter
ended September 30, 1998 and September 30, 1997 of $966,000 and $954,000,
respectively. The Company's comprehensive income for the nine months ended
September 30, 1998 and September 30, 1997 includes unrealized gains/(losses) net
of deferred taxes of $(142,000) and $45,000, respectively, resulting in total
comprehensive income for the nine months ended September 30, 1998 and September
30, 1997 of $1,813,000 and $2,562,000, respectively.

5.  Segment reporting

         In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information. SFAS No. 131 requires publicly-held
companies to report financial and other information about key revenue-producing
segments of the entity for which such information is available and utilized by
the chief operating decision maker. Specific information to be reported for
individual segments includes profit or loss, certain revenue and expense items
and total assets. A reconciliation of segment financial information to amounts
reported in the financial statements would be provided. SFAS No. 131 is
effective for fiscal years beginning after December 15, 1997. The Company does
not believe that SFAS No. 131 will have a material impact on its financial
statements.

6.  Accounting for the Costs of Computer Software Developed or Obtained for 
    Internal Use

         In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 provides
guidance for determining whether computer software is internal-use software and
on accounting for the proceeds of computer software originally developed or
obtained for internal use and then subsequently sold to the public. It also
provides guidance on capitalization of the costs incurred for computer software
developed or obtained for internal use. SOP 98-1 is effective for fiscal years
beginning after December 15, 1998. The company has not yet determined the impact
of SOP 98-1 on its financial statements.

7.  Income Taxes

         In the third quarter of 1998, the Company reached favorable resolution
on various income tax matters related to an examination by the Internal Revenue
Service. The Company had previously provided a reserve for such matters. The
reserve was reversed in the third quarter of 1998, resulting in an adjustment
decreasing income tax expense by $471,000.



                                       7
<PAGE>   9

8.  Reclassification

         For comparative purposes, certain prior year amounts have been
reclassified to conform to the current year presentation. Such reclassifications
had no impact on net income or shareholders' equity.

9.  Subsequent events

         On October 26, 1998 the Company's Board of Directors declared a
dividend of $0.11 per share. The dividend is payable on November 10, 1998 to
shareholders of record on November 4, 1998.



          These quarterly interim financial statements are unaudited.



                                       8
<PAGE>   10

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

         The following discussion should be read in conjunction with the interim
financial statements and the notes thereto, which are set forth elsewhere in
this Report.

         In addition to historical information, this Report contains
forward-looking statements. Such statements include, but are not limited to,
forward-looking statements made in this Report which are identified by the words
"believe", "expects", "aware", "anticipates" or similar expressions as they
relate to National Information Group ("National" and, together with its
subsidiaries, the "Company") or its management. These forward-looking statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those reflected in these forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in this Report under the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Factors Affecting Future Operating Results." These forward-looking
statements reflect management's opinions as of the date of this Report. Undue
reliance should not be placed on such forward looking statements. The Company
undertakes no obligation to revise or publicly release the results of any
revision to these forward-looking statements. Readers should carefully review
the risk factors described in other documents the Company files from time to
time with the Securities and Exchange Commission.

RESULTS OF OPERATIONS
THIRD QUARTER OF 1998 COMPARED WITH THIRD QUARTER OF 1997:

         The dollar amounts referred to in this section comparing operating
results for the third quarter ended September 30, 1997 with September 30, 1998
are approximate amounts stated in millions unless otherwise indicated. These
figures are based upon the financial statements included elsewhere in this
Report, which amounts are stated in thousands, unless otherwise noted. All
percentages referred to in this section comparing operating results for the
third quarter ended September 30, 1997 with September 30, 1998 are approximate
percentages and are based only on dollar amounts set forth in the financial
statements contained elsewhere in this Report, which amounts are stated in
thousands, unless otherwise noted.

   Revenue

         Total revenues of the Company for the third quarter increased from
$13.2 million in 1997 to $17.0 million in 1998, an increase of $3.8 million, or
28.5%.

         Net premiums written by the Company's wholly owned subsidiary, Great
Pacific Insurance Company ("GPIC"), for the third quarter decreased from $5.1
million in 1997 to $3.3 million in 1998, a decrease of $1.8 million or 36.3%.
The decrease was primarily a result of the loss in the third and fourth quarter
of 1997 of two hazard insurance tracking customers.

         Net premiums earned by GPIC for the third quarter decreased from $4.7
million in 1997 to $3.4 million in 1998, a decrease of $1.3 million or 27.3%.
Premium revenue is generally 



                                       9
<PAGE>   11

earned ratably over a twelve month period and is affected by policies written
over the prior twelve months and by policies canceled during the quarter. Such
cancellations would be applicable to premiums written in all prior periods. The
combined effect of changes in premiums written, earned and canceled within any
period is measured in terms of the change in unearned premiums. For the three
months ended September 30, 1998, unearned premiums decreased by $0.2 million
compared to an increase in unearned premiums of $0.4 million for the same
quarter of 1997.

         Real estate information services revenue, which includes revenues from
flood zone determination services and real estate tax services, increased from
$5.9 million in the third quarter of 1997 to $8.8 million in the same quarter of
1998, an increase of $2.9 million, or 49.4%. Approximately 80.2% of the increase
was a result of the September 1997 acquisition of certain assets and assumption
of certain liabilities of American Realty Tax Services, Inc. and American Realty
Tax Services of New York, Inc. (the "Arts Acquisition"). As a result of the Arts
Acquisition, National, through its wholly-owned subsidiaries, Pinnacle Real
Estate Tax Services, Inc. and Pinnacle Real Estate Tax Services of New York,
Inc. (collectively, "PinTax"), derives revenues from performing real estate tax
services for certain customers. The remaining amount of the increase was a
result of an increase in the volume of flood zone determination services from
new and existing customers.

         Tracking fees for the third quarter increased from $1.9 million in 1997
to $3.9 million in 1998, an increase of $2.0 million, or 106.3%. The increase
was primarily the result of adding new auto tracking customers in the third
quarter of 1998 and of growth in the motor vehicle lease portfolios of the
Company's customers.

         Expenses

         Loss and loss adjustment expenses (LAE) incurred for the third quarter
of 1998 did not change materially from the same period in 1997. The average loss
and loss adjustment expense per new claim reported in the third quarter of 1998
was approximately $6,900, compared to $6,100 for the same period in 1997. The
number of claims for losses decreased from 264 in 1997 to 213 in 1998.

         Commissions to non-affiliates in the third quarter increased from $0.2
million (3.2% of net premiums earned) in 1997 to $1.1 million (30.6% of net
premiums earned) in 1998, an increase of $0.9 million or 590.8%. The percentage
of commissions paid to net premiums earned varies depending upon customer and
agent/broker mix. The increase in commission expense - both in amount and as a
percentage of net premiums earned - is due to a larger percentage of GPIC's
commissions being paid to independent agents or brokers.

         Personnel expenses in the third quarter increased from $5.7 million in
1997 to $7.7 million in 1998, an increase of $2.0 million, or 34.4%. This
increase was a result of (i) personnel expenses of PinTax, of which
approximately one-half month of expenses were reported in the third quarter of
1997 because the Arts Acquisition occurred in September 1997; (ii) an increase
in the volume of flood zone determination services and motor vehicles being
tracked; and (iii) an increase in hiring of corporate and operations personnel
to facilitate growth in the Company's customer base. Personnel expenses as a
percent of total revenue increased from 43.2% in 1997 to 45.2% in 1998.



                                       10
<PAGE>   12

         All other expenses in the third quarter increased from $4.4 million in
1997 to $6.0 million in 1998, an increase of $1.6 million, or 36.0%. This
increase was primarily a result of general, administrative and operating
expenses of PinTax, of which approximately one-half month of expenses were
reported in the third quarter of 1997 because the Arts Acquisition occurred in
September 1997. In addition, the increase in other expenses was a result of an
increase in general, administrative and operating costs of the Company's other
subsidiaries resulting from growth in the Company's customer base and the costs
to implement new customers.

         As a result of the above factors, income before provision for income
taxes for the third quarter decreased from $1.4 million in 1997 to $0.8 million
in 1998, a decrease of $0.6 million. The provision for income taxes includes the
reversal of a $0.5 million income tax reserve due to the favorable resolution of
certain matters related to an Internal Revenue Service examination. Net income
for the third quarter of 1997 was $0.9 million, or $0.22 per diluted share,
compared with net income of $0.9 million, or $0.22 per diluted share in 1998.
The weighted average number of diluted shares outstanding for the third quarter
of 1997 and 1998 were 4,063,047 and 4,212,349, respectively.

NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH THE NINE MONTHS ENDED
SEPTEMBER 30, 1997:

         The dollar amounts referred to in this section comparing operating
results for the nine months ended September 30, 1997 with September 30, 1998 are
approximate amounts stated in millions unless otherwise indicated. These figures
are based upon the financial statements included elsewhere in this Report, which
amounts are stated in thousands, unless otherwise noted. All percentages
referred to in this section comparing operating results for the nine months
ended September 30, 1997 with September 30, 1998 are approximate percentages and
are based only on dollar amounts set forth in the financial statements contained
elsewhere in this Report, which amounts are stated in thousands, unless
otherwise noted.

         Revenue

         Total revenue of the Company for the nine-month period increased from
$36.7 million in 1997 to $49.6 million in 1998, an increase of $12.9 million, or
35.1%.

         Net premiums written for the period decreased from $14.9 million in
1997 to $12.1 million in 1998, a decrease of $2.8 million, or 18.5%. The
decrease was primarily a result of the loss in the third and fourth quarters of
1997 of two hazard insurance tracking customers.

         Net premiums earned by GPIC for the period decreased from $13.4 million
in 1997 to $12.9 million in 1998, a decrease of $0.5 million, or 3.8%. Premium
revenue is generally earned ratably over a twelve-month period and is affected
by policies written over the prior twelve months and by policies canceled during
the quarter. Such cancellations would be applicable to premiums written in all
prior periods. The combined effect of changes in premiums written, earned and
canceled within any period is measured in terms of the change in unearned
premiums. For the nine months ended September 30, 1998, unearned premiums
decreased by $0.8 million, compared to an increase in unearned premiums of $1.5
million for 



                                       11
<PAGE>   13

the same nine months of 1997. The decrease was primarily a result of the loss in
the third and fourth quarters of 1997 of two hazard insurance tracking
customers.

         Real estate information services revenue for the period increased from
$15.9 million in 1997 to $26.5 million in 1998, an increase of $10.6 million, or
66.9%. Approximately 69.1% of the increase was a result of revenues from real
estate tax services; approximately one-half month of these revenues were
reported in the nine months ended September 30, 1997 since the Arts Acquisition
occurred in September 1997. The remaining amount of the increase was a result of
an increase in the volume of flood zone determination services from new and
existing customers.

         Tracking fees for the period increased from $5.5 million in 1997 to
$8.0 million in 1998, an increase of $2.5 million, or 46.3%. The increase
primarily resulted from the addition of new auto tracking customers in the third
quarter of 1998 and the growth in the motor vehicle lease portfolios of the
Company's customers.

   Expenses

         Loss and loss adjustment expenses (LAE) incurred for the nine month
period increased from $4.5 million (33.6% of net premiums earned) in 1997 to
$5.0 million (39.2% of net premiums earned) in 1998, an increase of $0.5 million
or 12.3%. The average loss and loss adjustment expense per new claim reported in
the nine month period ended September 30, 1998 was approximately $6,700,
compared to $7,200 for the same period in 1997. The number of claims for losses
increased from 623 in the first 9 months of 1997 to 756 in the same period of
1998.

         Commissions to non-affiliates for the period increased from $1.3
million (0.9% of net premiums earned) in 1997 to $2.9 million (22.9% of net
premiums earned) in 1998, an increase of $1.7 million, or 134.3%. The percentage
of commissions paid to net premiums earned varies depending upon customer and
agent/broker mix. The increase in commission expense - both in amount and as a
percentage of net premiums earned - is due to a larger percentage of GPIC's
commissions being paid to independent agents and brokers.

         Personnel expenses for the period increased from $16.3 million in 1997
to $22.6 million in 1998, an increase of $6.3 million or 38.9%. This increase
was a result of (i) personnel expenses of PinTax, of which approximately
one-half month of expenses were reported in the first nine months of 1997
because the Arts Acquisition occurred in September 1997; (ii) an increase in the
volume of flood zone determination services and motor vehicles being tracked;
and (iii) an increase in hiring of corporate and operations personnel to
facilitate growth in the Company's customer base. Personnel expenses as a
percent of total revenue increased from 44.3% in 1997 to 45.6% in 1998.

         All other expenses in the nine-month period increased from $10.8
million in 1997 to $16.7 million in 1998, an increase of $5.9 million, or 54.2%.
This increase was primarily a result of general, administrative and operating
expenses of PinTax, of which approximately one-half month of expenses were
reported in the nine months ended September 30, 1997 because the Arts
Acquisition occurred in September 1997. In addition, the increase in other
expenses was a result of an increase in general, administrative and operating
costs of the 



                                       12
<PAGE>   14

Company's other subsidiaries resulting from growth in the Company's customer
base and the costs to implement new customers.

         As a result of the above factors, income before provision for income
taxes for the first nine month period decreased from $3.9 million in 1997 to
$2.3 million in 1998, a decrease of $1.6 million. The provision for income taxes
includes the reversal of a $0.5 million income tax reserve due to the favorable
resolution of certain matters related to an Internal Revenue Service
examination. Net income for the first nine months of 1997 was $2.5 million, or
$0.62 per diluted share compared with net income of $2.0 million, or $0.46 per
diluted share in 1998. The weighted average number of diluted shares outstanding
for the nine months ended September 30, 1997 and 1998 were 4,049,796 and
4,233,156, respectively.

LIQUIDITY AND CAPITAL RESOURCES

         Liquidity is a measure of a company's ability to secure sufficient cash
to meet its contractual obligations and operating needs. National is a holding
company with no operations and no sources of income itself except interest or
investment income. The principal assets of National are the stock of its
subsidiaries. National is, and for the foreseeable future will continue to be,
dependent on the dividends from its subsidiaries and lines of credit to meet its
liquidity requirements, including debt service obligations. Dividends payable to
National by GPIC are subject to certain regulatory restrictions described below.

         The Company's primary sources of cash are from operating income and
lines of credit. In the third quarter of 1998, the Company derived a substantial
portion of its operating cash from the operating profits of Pinnacle Data
Corporation ("Pinnacle Data"), as well as the net premiums written from GPIC.
The Company believes that its cash flow from operations, existing cash balances
and lines of credit will be sufficient to meet its working capital needs for the
foreseeable future.

         In May 1998, National entered into a $2 million revolving credit
facility (the "Credit Facility") with its primary commercial bank. The Credit
Facility replaced National's previous revolving credit facility (the "Previous
Facility"). The only material changes to the Previous Facility were: (i) an
increase in the amount of credit by $1 million; and, (ii) an extension of the
maturity date to March 31, 1999. In September 1998, the Credit Facility was
increased to $4.275 million and the maturity date was extended to May 31, 1999.
As of September 30, 1998, National had $2 million outstanding under the Credit
Facility and was in compliance with all its terms and covenants.

         GPIC collects and invests premiums written in advance of the payments
for associated claims. In the absence of a catastrophic loss, this timing
difference between premium collection and claims payment, combined with
investment income, normally provides short-term funds in excess of normal
operating demands for cash. As of September 30, 1998, the Company had cash and
short-term investments aggregating $9.2 million compared to $10.4 million at
December 31, 1997.

         Of the Company's cash and short-term investments as of September 30,
1998, $8.4 million was held by GPIC compared to $8.7 million at December 31,
1997. Insurance companies, including GPIC, are subject to laws and regulations
which restrict their ability to 



                                       13
<PAGE>   15

pay dividends to parent companies or other shareholders. Under California law,
the maximum amount of dividends that GPIC may pay National in any twelve (12)
month period without prior regulatory approval is the greater of (i) net income
for the preceding calendar year, or (ii) 10% of policyholders surplus
(shareholders' equity adjusted to a statutory basis) as of the previous December
31. For the year ended December 31, 1997, GPIC had net income of $1.7 million
and as of December 31, 1997, policyholders' surplus of $25.6 million. For the
year ending December 31, 1998, the maximum dividend permitted to be paid by GPIC
to National is approximately $2.6 million. In May 1998, GPIC made a dividend
payment to National in the amount of $2.5 million.

         Industry and regulatory guidelines suggest that a property and casualty
insurers' annual statutory net written premium should not exceed approximately
three times its policyholder's surplus. GPIC's surplus ratio is significantly
lower than such guidelines. For the year ended December 31, 1997, GPIC's net
written premium to policyholder surplus ratio was .8 to 1. Management believes
that, as of September 30, 1998, this ratio has not materially changed.

         Consolidated stockholders' equity at September 30, 1998, totaled $29.5
million, or $6.97 per diluted share compared to $27.8 million, or $6.73 per
diluted share, at December 31, 1997.

         Inflation or deflation and other factors generally affect the rate of
investment return in the securities and financial markets, and increases and
decreases in such investment return rates have a corresponding effect on the
Company's investment income.

FACTORS AFFECTING FUTURE OPERATING RESULTS

         These factors, together with statements regarding certain risks and
uncertainties contained in other parts of this Report, may affect the Company's
operating results. Investors should read this section in connection with any
forward-looking statement made in this Report, including statements preceded or
followed by the words "believes", "anticipates", "expects", "aware" or similar
expressions as they relate to the Company or its management.

         Flood Zone Determinations

         The Company derives a substantial portion of its total revenues from
fees for flood zone determination services. These services are primarily
provided to assist lenders in complying with federal laws which in many
instances require lenders to determine whether property being financed is
located in a federally designated Special Flood Hazard Area ("SFHA") and require
borrowers to obtain flood insurance. Any change in federal legislation or
secondary market requirements changing these requirements on lenders or
borrowers, or the development by competitors of enhanced service or delivery
systems could have a material adverse effect on the Company's business or
operating results.

         Earnings Volatility

         The Company's financial results can be significantly affected by a
number of factors. Those factors include, but are not limited to, the volume of
lender-placed insurance and the rate of cancellation of insurance policies, the
addition or loss of customers, changes in fees or rates



                                       14
<PAGE>   16

the Company charges for its services or insurance, changes in the number of
loans or personal property leases being tracked for major customers, increases
or decreases in interest rates, increases or decreases in losses and loss
adjustment expenses (LAE), catastrophic loss or a series of loss events, and
assessments from mandatory insurance pools or associations. In addition,
revenues from the Company's flood zone determination services and real estate
tax services are directly related to the volume of mortgage loan originations,
both new and refinanced, and any change in the level of such activity could have
a material impact on the Company's performance.

         The Insurance Industry

         The Company derives a significant amount of its revenues from insurance
premiums and investment income. In the event that, for whatever reason, GPIC
experiences abnormally high losses, purchases reinsurance from reinsurers who
will not or cannot pay losses submitted, or other adverse developments occur,
then any such event or combination of events could have a material adverse
impact on the Company. In addition, insurance companies and others have often
been sued under certain legal theories, such as bad faith handling or settlement
of claims, which could subject GPIC to liability in excess of policy limits. An
adverse outcome of any such lawsuit could have a material negative impact on the
Company.

         Reserve Adequacy

         GPIC is required to maintain reserves to cover its estimated ultimate
liability for loss and loss adjustment expenses with respect to reported losses
and incurred but not reported claims. These reserves are estimates of what GPIC
expects the ultimate settlement and administration of claims will cost, and are
based on known facts and circumstances, predictions of future events, estimates
of future trends in claims severity and other variable, subjective factors. No
assurances can be given that such estimates will be adequate to cover actual
losses incurred by GPIC. Any significant changes in GPIC's estimate of ultimate
losses on reported claims may materially adversely affect the results of GPIC's
operations in the period reported. GPIC has at times in the past experienced
adverse developments in its loss reserves. GPIC's loss and loss adjustment
expense reserves are reviewed on an annual basis by unaffiliated actuaries.
GPIC's most recent actuarial review of such reserves as of December 31, 1997
concluded that the reserves (i) met the requirements of the insurance laws of
California, (ii) were computed in accordance with accepted loss reserving
standards and principles and (iii) make a reasonable provision for all unpaid
loss and loss expense obligations of GPIC under the terms of its policies and
agreements.

         GPIC also maintains a reserve for return premiums which is based upon
GPIC's historical experience. As is prevalent in the lender-placed insurance
industry, a substantial amount of GPIC's premiums written are refunded to
policyholders. The amount of such refunds can be affected by, among other
things, inaccurate or untimely data submitted by customers, which GPIC uses as a
basis for recording written premiums or the loss of a significant customer. No
assurance can be given that the reserve for return premiums will be adequate to
cover actual refunded premiums paid by GPIC in the future.


                                       15
<PAGE>   17
         Underwriting Risks

         Traditional insurance companies underwrite risks individually or by
class, following an in-depth analysis of such risks. Although GPIC applies
underwriting techniques to a small portion of insured risks, the immediate
coverage required by purchasers of lender-placed insurance generally requires
GPIC to write specialized insurance within pre-designated limits and geographic
area, at a flat rate, without the application of traditional underwriting
criteria to individual risks. Accordingly, GPIC may be insuring individual risks
that it might not have insured had it applied traditional analysis to such
risks. In addition, GPIC may not have adequate spread of risk in a particular
geographic area.

         Reinsurance Considerations

         GPIC's business is partially dependent upon its ability to cede to
reinsurers risks insured by GPIC. The amount, availability and cost of
reinsurance are subject to prevailing market conditions, beyond the control of
GPIC, which can affect GPIC's level of business and profitability. GPIC is
ultimately liable for the reinsured risk if for any reason the reinsurers do not
cover or will not pay GPIC for the losses of the insureds. As a result of the
increased cost and more limited availability of reinsurance, in the future, GPIC
may elect to retain a higher portion of the risk historically ceded to
reinsurers. If GPIC were to retain a higher proportion of insured risks, it
would increase its exposure to significant losses relating to properties insured
by GPIC. This increased exposure could have a material adverse effect on GPIC's
results of operation.

         Rapid Technological Change and New Products; Product Delays

         The markets for the Company's information services are highly
competitive and characterized by rapidly changing technology. The Company
believes that its future success will depend, in part, on its ability to
identify, develop, install and support new services in a timely fashion, and on
market acceptance of such services. No assurance can be given that the
introduction of new technologies will enable the Company to gain market share,
realize cost savings, increase revenues or retain customers.

         Shortage of Skilled Labor

         The Company's delivery and upgrade of products and services to its
customers is dependent upon, among other factors, the Company's ability to
attract and retain key and management professionals, including skilled computer
programmers and systems analysts. Businesses located in San Francisco, San
Mateo, Contra Costa, Alameda and Santa Clara counties of California, and in
other areas in which the company maintains facilities, are experiencing a
tightening of the labor market, which may result in one or more of the
following: an increase in personnel costs, a delay in service installations, and
a reduction in customer service. The Company is unable to predict when the
conditions in the labor market will change.

         Year 2000 Compliance

         The Company has considered the potential impact of the year 2000 on its
information


                                       16
<PAGE>   18

technology and non-information technology systems. The "Year 2000" problem
relates to the fact that many computer systems will be affected in some way by
the rollover of the two-digit year value to "00". Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail. The "Year 2000" issue creates risk for the Company from unforeseen
problems in its own computer and embedded systems and from third parties with
whom the Company does business. Failure of the Company's and/or third parties'
computer systems and/or failure to be Year 2000 compliant could have a material
impact on the Company's ability to conduct its business.


         Commencing in 1996 the Company initiated a program to address the Year
2000 compliance problem through normal planned enhancements of existing systems,
development of new applications, and upgrades to operating systems and databases
already covered by maintenance agreements. With respect to the Company's major
information technology systems, all operating systems, database engines and
tools, and all software applications are Year 2000 compliant and, with respect
to the vast majority of them, Company testing thereof to assure compliance is
complete. Final testing of all such systems is expected to be complete prior to
December 1, 1998.

         The Company continues to address Year 2000 compliance issues with
respect to various networking systems within the Company, which include but are
not limited to various hardware and related software, such as bridges, routers,
gateways, hubs, switches, modems, security systems, and their respective
operating systems. Most such hardware and software has been obtained from third
party vendors, and the Company is working with many of these third party vendors
to obtain software upgrades to make such hardware and software Year 2000
compliant. The Company does not anticipate that it will be required to replace
any material amount of hardware or acquire any material amount of software to
achieve Year 2000 compliance of such hardware and software. All such hardware
and software are expected to be Year 2000 compliant by the end of the second
quarter of 1999.

         The Company is aware of issues concerning Year 2000 compliance with
non-information technology systems and has commenced a program to address those
issues. The full range of such issues is expected to be identified by the end of
the fourth quarter of 1998 and the Company expects to take such action as is
necessary, provided the action is within the Company's direct control, to make
such non-information technology systems Year 2000 compliant by the end of the
second quarter of 1999. Such non-information technology systems include such
things as mail metering systems, office security systems, heating, ventilating
and air conditioning systems and building elevators.

         The Company is in the process of surveying certain of its customers to
determine the status of their Year 2000 compliance programs. A number of the
Company's customers interface electronically with the Company. Therefore, it is
critical that such customers' interfaces are Year 2000 compliant in order for
such customers to be able to continue to interface with the Company after
December 31, 1999. The Company expects such survey to be complete by the end of
the fourth quarter of 1998. The majority of the Company's customers are in the
financial institutions industry. The regulatory agencies that regulate financial
institutions have been closely monitoring financial institutions regarding Year
2000 compliance. The Company believes the financial institutions industry is
considered to be a leader with respect to Year 2000 preparation efforts.


                                       17
<PAGE>   19

         Certain of the taxing authorities across the United States provide real
estate tax information in electronic format to PinTax, which tax information
PinTax uses in performing real estate tax services. There can be no assurance
that such taxing authorities will be Year 2000 compliant. If taxing authorities
suffer any serious systems failures, they may be unable to provide tax
information to PinTax in electronic format. In such case, PinTax may experience
difficulty in accessing such information and would likely incur additional
expenses in obtaining such tax information, if such information could be
obtained. In certain cases, such information may be unavailable until such
systems failures are corrected, which, depending on the duration of any such
failure, could severely adversely affect the ability of PinTax to provide real
estate tax services with respect to such affected jurisdictions.

         The Company is also surveying certain of its major vendors to determine
the status of their Year 2000 compliance programs. Such vendors include, without
limitation, public utilities, software vendors, computer hardware manufacturers
and distributors, and office supply companies. The Company expects such survey
to be complete by the end of the fourth quarter of 1998. If such vendors are
found by the Company to be likely to be non-Year 2000 compliant by December 31,
1999, the Company will take reasonable action to replace such vendors with Year
2000 compliant vendors.

         Since 1996 the Company has incurred approximately $140,000 in costs
related directly to Year 2000 compliance and expects to expend an approximately
$50,000 more before December 31, 1999 in connection with achieving Year 2000
compliance. Such costs will be paid for from cash from operations. The
accounting treatment of costs incurred solely in connection with year 2000
compliance will be treated as period costs and will be expensed as incurred.

         Given the current state of the Company's internal preparedness for Year
2000, the Company believes that the risk of problems arising because of internal
Year 2000 problems is minimal and any such problems are not anticipated to have
any material effect on the Company. However, the Company believes that it is not
possible to determine with complete certainty that all Year 2000 problems
affecting the Company have been identified or corrected. The number of devices
that could be affected and the interactions among these devises are simply too
numerous. In addition, one cannot accurately predict how many external Year 2000
problem related failures will occur or the severity, duration or financial
consequences of these perhaps inevitable external failures. For instance,
failure of public utilities would likely prevent the Company from operating in
the location of such failure and/or communicate and/or transact business with
others. Therefore, the Company considers it possible that the Company or its
clients could suffer a significant number of operational inconveniences and
inefficiencies that may divert management's time and attention, and other
financial and human resources, from the ordinary business activities; and a
lesser number of serious systems failures that may require significant efforts
by the Company or its clients to prevent or alleviate material business
disruptions.

         The Company has a disaster recovery plan which is intended for use in
connection with natural disasters, however, it could be implemented in the case
of certain Year 2000 failures such as a public utilities failure. The disaster
recovery plan contemplates the operation of certain critical portions of the
Company from remote locations for certain limited periods of



                                      18
<PAGE>   20

time. The Company has tested most of its information technology systems at such
remote locations in order to determine that they would be functional after
December 31, 1999 and the Company expects to complete all such testing by the
end of the first quarter of 1999. Nevertheless, if such remote locations were
adversely affected by public utilities failures as well, the Company would be
severely adversely affected during the continuation of any such failures. The
Company intends to consider additional contingency plans during the first half
of 1999.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

     Not applicable.




                                       19
<PAGE>   21

PART II         OTHER INFORMATION

Item 1.  Legal Proceedings

         The Company is routinely a party to litigation incidental to its
business and, from time to time, is a party to other litigation. While the
ultimate results of such litigation cannot presently be determined on the date
of this Report, management believes that no individual item of litigation or
group of similar items of litigation is likely to have a material adverse effect
on the consolidated financial position of the Company.

Item 2.  Changes in Securities

       None.

Item 3.  Defaults upon Senior Securities

       None.

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

       None.


Item 5.  Other Information

       None.

Item 6.  Exhibits and Reports on Form 8-K


(a)  Exhibit Index

<TABLE>
<S>                 <C>
     10.1           Amendment No. 3 to Credit Terms and Conditions, dated
                    September 22, 1998 to Credit Terms and Conditions, dated as
                    of April 2, 1997 between Imperial Bank and National
                    Information Group.

     10.2           Amendment No. 3 to Pledge Agreement, dated September 22,
                    1998 Pledge Agreement, dated as of September 10, 1996
                    between Imperial Bank and National Information Group.

     10.3           Note dated September 22, 1998, made by National Information
                    Group payable to Imperial Bank in the original principal
                    amount of $4,275,000.

     11.1           Computation of weighted average shares outstanding and
                    earnings per share.

     27.1           Financial data schedule.
</TABLE>


(b) Reports on Form 8-K

       None.



                                       20
<PAGE>   22

                                   SIGNATURES


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

                                        NATIONAL INFORMATION GROUP

                                        (Registrant)


November 12, 1998                       /s/ Mark A. Speizer
-------------------------               ----------------------------------------
DATE:                                   (SIGNATURE)
                                        Mark A. Speizer, Chairman
                                        of the Board and Chief
                                        Executive Officer



November 12, 1998                       /s/ Rory C. Snyder
-------------------------               ----------------------------------------
DATE:                                   (SIGNATURE)
                                        Rory C. Snyder,
                                        Vice President, Treasurer and Controller
                                        (Principal Financial Officer and
                                        Principal Accounting Officer)



                                       21
<PAGE>   23

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number              Exhibit Description
------              -------------------
<S>                 <C>
     10.1           Amendment No. 3 to Credit Terms and Conditions, dated
                    September 22, 1998 to Credit Terms and Conditions, dated as
                    of April 2, 1997 between Imperial Bank and National
                    Information Group.

     10.2           Amendment No. 3 to Pledge Agreement, dated September 22,
                    1998 Pledge Agreement, dated as of September 10, 1996
                    between Imperial Bank and National Information Group.

     10.3           Note dated September 22, 1998, made by National Information
                    Group payable to Imperial Bank in the original principal
                    amount of $4,275,000.

     11.1           Computation of weighted average shares outstanding and
                    earnings per share.

     27.1           Financial data schedule.
</TABLE>