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



                                    FORM 10-Q
 
                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                    FOR THE QUARTER ENDED SEPTEMBER 30, 1998
 


                         Commission File Number 1-14373

                         INSIGNIA FINANCIAL GROUP, INC.
             (Exact Name of Registrant as Specified in Its Charter)

           Delaware                                       56-2084290
   (State of Incorporation)                (I.R.S. Employer Identification No.)


   375 Park Avenue, New York, New York                     10152
 (Address of Principal Executive Offices)                (Zip Code)

                               (212) 750-6070
              (Registrant's Telephone Number, Including Area Code)

                          Insignia/ESG Holdings, Inc.
                     200 Park Avenue, New York, New York
          (Former Name and Former Address, If Changed Since Last Report)
                                   ----------

     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_____
 

     At October 31, 1998, the  Registrant had 21,408,106  shares of Common Stock
outstanding.



<PAGE>


                         INSIGNIA FINANCIAL GROUP, INC.

                                    FORM 10-Q

                    FOR THE QUARTER ENDED SEPTEMBER 30, 1998


                                   ----------
                                      INDEX
                                      -----

                                                                          Page
                                                                          ----
PART I - FINANCIAL INFORMATION
 

      Item 1.  Consolidated Financial Statements (unaudited)............

      Condensed Consolidated Statements of Income for the
              Three and Nine Months Ended September, 30, 1998 and 1997 .    2
 
           Condensed Consolidated Balance Sheets
               as of September 30, 1998 and December 31, 1997...........    3
 
           Condensed Consolidated Statements of Cash Flows
               for the Nine Months Ended September 30, 1998 and 1997....    4
 

           Notes to Condensed Consolidated Financial Statements.........  5-10
      
     Item 2.  Managements  Discussion  and Analysis of
                Financial  Condition  and Results of Operations......... 11-15

PART II - OTHER INFORMATION
     
     Item 1. Legal Proceedings..........................................   16

     Item 6. Exhibits and Reports on Form 8-K...........................   16


SIGNATURES                                                                 17



<PAGE>

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

Item 1.  Financial Statements
-------  --------------------

a)   Income Statements
                         INSIGNIA FINANCIAL GROUP, INC.
                      (F.K.A. INSIGNIA/ESG HOLDINGS, INC.)
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                             (Thousands of Dollars)
                                   (Unaudited)
<TABLE>
<CAPTION>



                                      Three Months Ended     Nine Months Ended
                                          September 30,         September 30,
                                          -------------         -------------
                                      1998          1997     1998         1997
                                      ----          ----     ----         ----

Revenues
<S>                                   <C>         <C>       <C>        <C>     
   Real estate services               $131,721    $73,864   $358,360   $177,838
   Interest                                874         54      1,939        184
   Other                                    69         12        164         12
                                            --         --        ---         --
                                       132,664     73,930    360,463    178,034
                                       -------     ------    -------    -------

Costs and expenses
   Real estate services                118,091     63,256    318,401    152,294
   Administrative                        2,033      2,269      5,561      5,212
   Interest                                382         --      1,088         --
   Depreciation and amortization         6,340      3,348     17,263     10,471
                                         -----      -----     ------     ------
                                       126,846     68,873    342,313    167,977
                                       -------     ------    -------    -------
                                         5,818      5,057     18,150     10,057

Equity earnings (loss) in real 
  estate ventures                         (465)        84     (1,323)       241
Minority interests                         113         --        259         --
                                           ---                   ---           

Income before income taxes               5,466      5,141     17,086     10,298

   Provision for income taxes            2,460      2,057      7,689      4,119
                                         -----      -----      -----      -----

Net income                            $  3,006    $ 3,084   $  9,397   $  6,179
                                      ========    =======   ========   ========

Per share amounts - Basic:            $    .14    $   .16   $    .45   $    .32
                                      ========    =======   ========   ========
Per share amounts - diluted:          $    .13    $   .14   $    .43   $    .29
                                      ========    =======   ========   ========

Weighted average common shares
 and assumed conversions            22,377,358 21,507,809 21,998,319 21,615,033
                                    ========== ========== ========== ==========
<FN>
 



----------
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>


<PAGE>

b) Balance Sheets
                          INSIGNIA FINACIAL GROUP, INC.
                      (F.K.A. INSIGNIA/ESG HOLDINGS, INC.)
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Thousands of Dollars)
<TABLE>
<CAPTION>

                                                      September 30, December 31,
                                                         1998          1997
                                                         ----          ----
                                                      (Unaudited)     (Note)
Assets
<S>                                                    <C>         <C>      
   Cash and cash equivalents                           $  34,124   $   9,250
   Restricted cash                                         4,299          --
   Receivable from Old Insignia                           23,500          --
   Receivables                                           128,543      89,662
   Mortgage loans held for sale                           15,738      11,991
   Real estate interests                                  49,087      19,454
   Property and equipment                                 22,028      11,235
   Property management contracts                          41,297      48,614
   Costs in excess of net assets of 
     acquired businesses                                 224,212     138,019
   Other assets                                            8,975       6,269
                                                           -----       -----
     Total assets                                       $551,803    $334,494
                                                        ========    ========

Liabilities and Shareholders' Equity
   Liabilities:
     Accounts payable                                   $ 11,354    $  9,673
     Commissions payable                                  53,038      51,285
     Accrued and sundry liabilities                       43,607      28,105
     Accrued incentives                                   20,530      15,706
     Accrued obligations arising from Merger              15,451          --
     Mortgage warehouse line of credit                    15,756      12,495
     Notes payable                                        17,495       8,396
                                                          ------       -----
                                                         177,231     125,660
                                                         -------     -------

Minority interests                                           106         390

Stockholders' Equity
   Common stock, par value $.01 per share
      - authorized 80,000,000 shares, 
      21,408,106 issued and outstanding shares (1998)        214          --
   Additional paid-in capital                            374,252          --
   Retained earnings                                          --          --
   Investment and net advances from Old Insignia              --     208,444
                                                                     -------
   Total stockholders' equity                            374,466     208,444
                                                         -------     -------

   Total liabilities and stockholders' equity           $551,803    $334,494
                                                        ========    ========
<FN>


     NOTE:  The Balance  Sheets at December  31, 1997 has been  derived from the
audited  financial  statements  at  that  date  but  does  not  include  all the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements.



----------
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>


<PAGE>

c)   Statements of Cash Flows

                         INSIGNIA FINANCIAL GROUP, INC.
                      (F.K.A. INSIGNIA/ESG HOLDINGS, INC.)
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Thousands of Dollars)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                         Nine Months Ended
                                                            September 30,
                                                            -------------
                                                           1998      1997
                                                           ----      ----
Operating Activities
<S>                                                     <C>       <C>     
   Net income                                           $  9,397  $  6,179
   Adjustments to reconcile net income to net cash
   Provided by operations:
     Depreciation and amortization                        17,263    10,471
     Equity loss (earnings) in real estate ventures        1,323      (241)
     Minority interests                                     (259)       --
     Changes in operating assets and liabilities:
       Receivables                                       (17,835)  (17,770)
       Other assets                                          366    (1,158)
       Accounts payable and accrued expenses              (1,503)    6,335
       Commissions payable                                 1,753    11,384
                                                           -----    ------
   Net cash provided by operating activities              10,505    15,200
                                                          ------    ------

Investing activities
   Net additions to property and equipment               (11,586)   (2,876)
   Net increase in restricted cash                        (4,299)       --
   Payments made for acquisition of businesses,                             
     net of acquired cash                                (61,690)   (5,859)
   Net increase in mortgage loans held for sale           (3,747)       --
   Proceeds from Balcor property dispositions                196     2,387
   Investments in real estate                            (30,926)   (3,264)
   Distributions from real estate investments              3,054     2,556
   Advances made under note agreements                    (4,925)   (5,013)
  Collections on notes receivable                          2,638     1,965
                                                           -----     -----
     Net cash used in investing activities              (111,285)  (10,104)
                                                        --------   ------- 

Financing activities
   Payments on notes payable                              (6,113)       --
   Proceeds from notes payable                             8,766        --
  Net contribution of capital from Old Insignia          122,579       (33)
                                                         -------       --- 
     Net cash provided by (used in) financing 
     activities                                          125,232       (33)
                                                         -------       --- 

  Effect of exchange rate changes in cash                    422        --
                                                             ---          

Increase in cash and cash equivalents                     24,874     5,063
Cash and cash equivalents at beginning of period           9,250        44
                                                           -----        --
Cash and cash equivalents at end of period              $ 34,124   $ 5,107
                                                        ========   =======


<FN>

----------
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>



<PAGE>

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
        ----------------------------------------------------------------

1.   Business

     On March 17, 1998,  Insignia Financial Group, Inc. ("Old Insignia") entered
     into an Agreement and Plan of Merger (as subsequently  amended and restated
     as of May 26, 1998, the "Merger  Agreement") with Apartment  Investment and
     Management Company, a Maryland corporation ("AIMCO"), and AIMCO Properties,
     L.P., a Delaware  limited  partnership,  pursuant to which Old Insignia was
     merged into AIMCO,  with AIMCO as the survivor (the  "Merger").  The Merger
     was consummated on October 1, 1998.

     On September  21, 1998,  Old Insignia  completed the spin off of certain of
     its businesses through a pro rata distribution (the  "Distribution") to its
     stockholders  of all of the  outstanding  Common Stock,  par value $.01 per
     share ("New Insignia Common  Stock"),  of  Insignia/ESG  Holdings,  Inc., a
     Delaware  corporation  and a wholly owned  subsidiary of Old Insignia ("New
     Insignia" or "Insignia").  New Insignia  comprises a fully  integrated real
     estate services company with operations  throughout the United States,  the
     United  Kingdom,   Italy  and  Germany.   New  Insignia  provides  property
     management,   leasing,  tenant  representation,   investment  sales,  asset
     management,  investor  services,  consulting,  brokerage,  development  and
     investment  banking  services  to  owners  and  users  of real  estate.  In
     addition, New Insignia has ownership of real estate,  primarily investments
     in partnerships,  through  co-investments with institutional  partners, and
     property held for development. New Insignia consists of Insignia/ESG,  Inc.
     ("Insignia/ESG"),  New  Insignia's  commercial  real estate  services unit,
     which includes Richard Ellis Group Limited  ("Richard Ellis") in the United
     Kingdom,  Insignia RE GmbH in Germany, and the 60% owned Insignia/CAGISA in
     Italy;  Insignia  Residential Group, Inc., a New York based cooperative and
     condominium  management  company;  and Realty  One,  Inc.,  a full  service
     residential real estate  brokerage and mortgage banking firm  headquartered
     in Cleveland, Ohio (collectively, the "New Insignia Businesses").

     Old Insignia  effected the  Distribution of the New Insignia  Businesses by
     distributing  to each  record  holder of Old  Insignia  Common  Stock as of
     September  15,  1998  (the   "Distribution   Record   Date")   certificates
     representing that number of whole shares of New Insignia Common Stock equal
     to two-thirds of the number of shares of Old Insignia  Common Stock held by
     such holder.
 
     Most of Old  Insignia's  existing  liabilities,  other than those  directly
     relating  to the  New  Insignia  Businesses,  remained  with  Old  Insignia
     post-Distribution  and were  assumed  by  AIMCO  upon  consummation  of the
     Merger.

     In  connection  with the Merger,  Old Insignia was  obligated to contribute
     approximately  $23.5  million to New  Insignia.  This  contribution,  which
     represented funding for liabilities of New Insignia arising from the Merger
     and the payment for warrants as discussed in Note 2 below, was collected on
     the date of the Merger. Liabilities totaling approximately $15.5 million in
     aggregate  were assumed from Old Insignia at the time of the  Distribution.
     New Insignia paid these  liabilities,  which relate  primarily to executive
     compensation  arising  from the  Merger,  in  early  October  although  New
     Insignia reflects no expense relating to these payments.

     New Insignia  reassumed the original  corporate  name,  Insignia  Financial
     Group, Inc., on November 2, 1998. New Insignia had conducted business under
     the  corporate  name  Insignia/ESG  Holdings,  Inc.  since  approval of the
     Distribution by the  shareholders of Old Insignia on September 14, 1998. In
     addition,  New Insignia  reclaimed Old  Insignia's  original New York Stock
     Exchange  trading symbol,  IFS, and trading of its common shares under this
     symbol commenced on November 2, 1998.

2.   Options, Warrants and Restricted Stock

     On September 30, 1998,  Old Insignia  distributed  to record holders of the
     6.5% Convertible Preferred Securities ("Preferred  Securities") of Insignia
     Financing I, a subsidiary of Old  Insignia,  on September 15, 1998 warrants
     to purchase  approximately  1.2 million shares of New Insignia Common Stock
     (four  warrants for each $500  liquidation  amount of Preferred  Securities
     held by them).  Each warrant  represents the right to purchase one share of
     New  Insignia  Common Stock at an exercise  price of $14.50 per share.  The
     term of each warrant is five years,  although  these warrants do not become
     exercisable until September 30, 2000. Old Insignia purchased these warrants
     from New Insignia on September 14, 1998 for approximately $8.5 million.  As
     a result of the Merger,  the  Preferred  Securities  are the  obligation of
     AIMCO and are convertible into AIMCO securities, as Insignia Financing I is
     now a subsidiary of AIMCO.

     In  connection  with the Merger,  New  Insignia  assumed  certain  existing
     options and warrants to purchase  shares of Old  Insignia  Common Stock and
     awards of  unvested  restricted  shares (as  adjusted to give effect to the
     Distribution  ratio).  Such  options and  warrants  represent  the right to
     purchase  approximately 4.4 million shares of New Insignia Common Stock and
     are in  addition to  approximately  1.2  million  options to  purchase  New
     Insignia  Common Stock granted under the New Insignia 1998 Stock  Incentive
     Plan at the time of the Distribution.

     The  following  table  summarizes  the  outstanding  options,  warrants and
     unvested  restricted  shares of New Insignia at September  30, 1998: 
<TABLE>
<CAPTION>

                                                  Total          Exercise
                                               Outstanding         Price
                                               -----------         -----


<S>                                             <C>           <C>      <C>   
     Old Insignia employee options assumed      3,384,000     $ 3.74 - $15.49
     Old Insignia warrants assumed                971,000          $8.25
     Old Insignia restricted shares assumed       259,000           N/A
     Employee options granted                   1,205,000     $12.63 - $13.88
     Warrants sold to Old Insignia for     
         distribution to holders of 
         Old Insignia Preferred Securities      1,196,000         $14.50
                                                ---------         
                                                7,015,000
                                                ---------
</TABLE>

3.   Basis of Presentation

     These financial  statements  present the consolidated  financial  position,
     results  of  operations  and  cash  flows  of the New  Insignia  Businesses
     spun-off  into New Insignia as if New Insignia  were a separate  entity for
     all periods presented.  Old Insignia's  historical cost bases in the assets
     and liabilities of the New Insignia Businesses have been reflected in these
     financial   statements.   The  financial  information  in  these  financial
     statements  is not  necessarily  indicative  of  results  that  would  have
     occurred had the New Insignia Businesses been a separate stand-alone entity
     during the periods presented or of future results of New Insignia.

     The New  Insignia  Businesses  have  utilized  Old  Insignia's  centralized
     systems for cash management, payroll, employee benefit plans, insurance and
     various  administrative  services.  As a  result,  substantially  all  cash
     received  by  these  entities  was  deposited  in and  commingled  with Old
     Insignia's  general  corporate funds.  Similarly,  real estate services and
     administrative  expenses,  capital expenditures and other cash requirements
     of the New  Insignia  Businesses  were  paid by Old  Insignia  and  charged
     directly or allocated to these  entities.  Administrative  expenses,  which
     included, among other things,  investment banking,  information technology,
     legal, finance,  accounting and facilities expenses,  were allocated to New
     Insignia.  These  allocations  were  approximately  $5.6  million  and $5.2
     million for the nine months of 1998 and 1997, respectively. The allocations
     were based upon detailed  analysis of the  operations of Old Insignia using
     various methods,  including acquisition activities,  employee headcount and
     estimated  management  time devoted to the  operations  of the New Insignia
     Businesses. Certain assets and liabilities related to the operations of the
     New Insignia  Businesses  were managed and  controlled by Old Insignia on a
     centralized  basis.  Such assets and liabilities have been allocated to New
     Insignia based on the use of, or interest in, those assets and liabilities.
     In the opinion of management,  the methods for allocating expenses,  assets
     and liabilities are believed to be reasonable.

4.   Interim Financial Information

     The accompanying unaudited condensed consolidated financial statements have
     been prepared in accordance with generally accepted  accounting  principles
     for interim  financial  information and with the  instructions to Form 10-Q
     and Article 10 of Regulation S-X.  Accordingly,  they do not include all of
     the information  and footnotes  required by generally  accepted  accounting
     principles for complete financial statements. In the opinion of management,
     all  adjustments  (consisting  of  normal  recurring  accruals)  considered
     necessary for a fair presentation have been included. Operating results for
     the  three  and  nine  month  periods  ended  September  30,  1998  are not
     necessarily  indicative  of the results  that may be expected  for the year
     ended  December 31, 1998.  For further  information,  refer to the combined
     financial  statements and footnotes  thereto  included in the  Registration
     Statement  on  Form  10 of  Insignia/ESG  Holdings,  Inc.  filed  with  the
     Securities and Exchange Commission on August 5, 1998.

5.   Reclassifications

     Certain  amounts  have  been  reclassified  to  conform  with  the  current
     presentation.  These reclassifications have no effect on net income for any
     period presented.

6.   Credit Agreement

     On October 22, 1998, New Insignia  closed on a three year revolving  credit
     facility in the amount of $185 million.  The credit  agreement was arranged
     by First Union  National Bank and Lehman  Brothers and involves a syndicate
     of nine  national and  international  financial  institutions.  This credit
     facility will be used for future working capital and acquisition  needs. No
     borrowings have been made on this facility through November 10, 1998.

7.   Stock Repurchase

     On October 27, 1998, New Insignia announced that its Board of Directors had
     approved  a program to  repurchase  up to $10  million  of its  outstanding
     common stock. At November 10, 1998, 19,100 shares of common stock have been
     repurchased at an aggregate cost of approximately $250,000.

8.   Earnings Per Share

     In 1997, the Financial Accounting Standards Board issued Statement No. 128,
     Earnings  Per  Share   ("Statement   128").   Statement  128  replaced  the
     calculation of primary and fully diluted  earnings per share with basic and
     diluted  earnings  per share.  Unlike  primary  earnings  per share,  basic
     earnings per share  exclude any dilutive  effects of options,  warrants and
     convertible  securities.  Diluted earnings per share is very similar to the
     previously  reported fully diluted  earnings per share.  Earnings per share
     amounts  for all  periods  have  been  presented  in  conformity  with  the
     Statement 128 requirements.

     Earnings  per share data is  presented  for the three and nine months ended
     September 30, 1998 and 1997 based on the weighted  average common shares of
     Old Insignia  Common Stock,  as adjusted for the  two-thirds  Distribution.
     which commenced  trading on September 22, 1998.  Assumed  conversions  have
     been determined based on the options and warrants of New Insignia using the
     treasury stock method and average prices of New Insignia Common Stock.  The
     per share  data for the nine  month  period  ended  September  30,  1997 is
     presented on a pro forma  basis,  as New Insignia did not exist during this
     entire period. The results may not be indicative of the actual results that
     may have occurred if New Insignia had been operating on a stand-alone basis
     for the periods presented.
<TABLE>
<CAPTION>

                                        Three Months Ended     Nine Months Ended
                                          September 30,          September 30,
                                          -------------          -------------
                                          1998        1997     1998        1997
                                          ----        ----     ----        ----
                                             (Thousands, except share data)

     Basic
<S>                                       <C>       <C>         <C>      <C>   
     Average common shares outstanding    21,305    19,425      20,926   19,380
     Assumed conversions                      --        --          --       --
     Total                                21,305    19,425      20,926   19,380
     Net income                          $ 3,006   $ 3,084     $ 9,397  $ 6,179
     Per share amounts - basic           $   .14   $   .16     $   .45  $   .32

     Diluted
     Average common shares outstanding    21,305    19,425      20,926   19,380
     Assumed conversions                   1,072     2,083       1,072    2,235
     Total                                22,377    21,508      21,998   21,615
     Net income                          $ 3,006   $ 3,084     $ 9,397  $ 6,179
     Per share amounts - diluted         $   .13   $   .14     $   .43  $   .29
 
</TABLE>

9.   Financial Accounting Standards

     In 1997, the Financial Accounting Standards Board issued Statement No. 130,
     Reporting Comprehensive Income ("Statement 130"). Statement 130 establishes
     new rules for the  reporting  and display of  comprehensive  income and its
     components.   Statement  130  requires   unrealized   gains  or  losses  on
     available-for-sale securities and foreign currency translation adjustments,
     reported  separately  in  shareholders'  equity,  to be  included  in other
     comprehensive  income.  New Insignia adopted Statement 130 as of January 1,
     1998. Total comprehensive  income for the nine month period ended September
     30, 1998 was approximately $11.2 million. The difference between net income
     and  comprehensive  income  is due  in its  entirety  to  foreign  currency
     translation  adjustments.  No  differences  existed  between net income and
     comprehensive income for the nine month period ended September 30, 1997.

     In 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
     Financial  Accounting  Standards No. 131,  Disclosures about Segments of an
     Enterprise and Related  Information  ("Statement  131"), which is effective
     for years  beginning  after  December 15, 1997.  Statement 131  establishes
     standards for the way that public business  enterprises  report information
     about operating  segments in annual financial  statements and requires that
     those enterprises  report selected  information about operating segments in
     interim  financial  reports.  It also  establishes  standards  for  related
     disclosures  about  products  and  services,  geographic  areas  and  major
     customers.  Statement 131 is effective for financial  statements for fiscal
     years  beginning  after  December 15, 1997, and therefore New Insignia will
     adopt  the new  requirements  retroactively  in 1998.  Management  does not
     anticipate  that the  adoption  of  Statement  131 will have a  significant
     effect  on how New  Insignia  reports  segment  disclosures.  New  Insignia
     currently  operates in principally  two business  segments,  commercial and
     residential services.

     In 1998, the Accounting  Standards  Executive Committee issued Statement of
     Position 98-5,  Reporting on the Costs of Start-Up Activities ("SOP 98-5"),
     which is effective  for  financial  statements  for fiscal years  beginning
     after December 15, 1998. SOP 98-5 requires costs of start-up activities and
     organization costs to be expensed as incurred.  Initial  application should
     be reported as the  cumulative  effect of a change in accounting  principle
     and expensed in the first quarter in the year of adoption. At September 30,
     1998, New Insignia had no amounts capitalized as organizational  costs that
     would be affected by the requirements of SOP 98-5.

10.  The following is a summary of New Insignia's  material  contingencies as of
     September 30, 1998:

     In  connection  with the Merger  Agreement,  New Insignia and AIMCO entered
     into an Indemnification  Agreement. The Indemnification  Agreement provides
     generally  that  following  consummation  of the Merger,  New Insignia will
     indemnify and hold harmless  AIMCO from and against all losses in excess of
     $9.1 million resulting from (i) breaches of representations,  warranties or
     covenants  of Old Insignia or New  Insignia in the Merger  Agreement,  (ii)
     actions taken by or on behalf of Old Insignia prior to  consummation of the
     Merger  and  (iii) the  Distribution.  New  Insignia  is also  required  to
     indemnify  AIMCO  against all losses  (without  regard to any dollar  value
     limitation)  resulting from (a) amounts paid or payable to employees of Old
     Insignia  actually  paid by AIMCO,  other  than those  employees  AIMCO has
     agreed to retain following the consummation of the Merger,  (b) obligations
     to third parties for goods, services,  taxes or indebtedness incurred prior
     to the  consummation  of the  Merger,  other  than as agreed to by AIMCO or
     included in the approximately  $458 million of indebtedness and liabilities
     of Old  Insignia  and its  subsidiaries  which were assumed by AIMCO in the
     Merger, and (c) Insignia's  ownership and operation of New Insignia and the
     New Insignia Businesses.

     The Indemnification Agreement requires AIMCO to indemnify and hold harmless
     New  Insignia  from all  losses  that  arise  out of the  operation  of the
     business  of Old  Insignia  acquired  by AIMCO after the Merger and for all
     losses in excess of $9.1 million arising from breach of any representation,
     warranty or covenant of AIMCO in the Merger Agreement.

     Pursuant to the Merger  Agreement,  New  Insignia and AIMCO are required to
     settle in cash any differences  between the actual adjusted net liabilities
     of Old  Insignia  on the date of the  Merger  and the $458  million of such
     adjusted net liabilities stipulated in the Merger Agreement.

     Settlements may be made based upon information  available through March 31,
     1999,  except as to income taxes, as to which settlement is to be made with
     respect to any  amounts  attributable  to  periods  ending on or before the
     October 1, 1998  Merger  date.  Although  there will  almost  certainly  be
     adjustments  to the amounts  estimated on the Merger  date,  which would be
     recorded as an adjustment to shareholders' equity at the Distribution date,
     New Insignia does not believe any such adjustments will be material.

     New Insignia and certain subsidiaries are defendants in lawsuits arising in
     the ordinary course of business. Such lawsuits are primarily insured claims
     arising from accidents at managed properties. Claims may demand substantial
     compensatory and punitive damages.

     Management believes that the aforementioned  contingencies will be resolved
     without material loss to New Insignia or its subsidiaries.

11. Acquisitions

     Richard Ellis Group Limited

     In February 1998, the shareholders of Richard Ellis accepted Old Insignia's
     offer to acquire  100% of the stock of Richard  Ellis.  Richard  Ellis is a
     real estate services and investment firm located in the United Kingdom. The
     total  purchase  price was  approximately  $82.9  million,  of which  $14.7
     million is  contingent  on the future  performance  of Richard  Ellis.  The
     transaction  was  completed on February 26, 1998.  Old Insignia  funded the
     Cash component of the acquisition  from borrowings on its revolving  credit
     facility,  and  issued  617,371  shares of Old  Insignia  Common  Stock and
     options  enabling Richard Ellis employees to purchase 853,741 shares of Old
     Insignia Common Stock. The acquisition was accounted for as a purchase.

     Hotel Partners

     On May 11, 1998, Old Insignia acquired Hotel Partners ("Hotel Partners"), a
     Chicago-based  international  brokerage  firm  focused  exclusively  on the
     hospitality  segment  of the  real  estate  industry.  The  total  purchase
     consideration  paid by Old  Insignia for Hotel  Partners was  approximately
     $7.0 million which was paid in cash at closing.  Additional  payments of up
     to $29.1  million,  over a five year period,  are  contingent on the future
     performance  of Hotel  Partners.  The  acquisition  was  accounted for as a
     purchase.

     Jackson Cross Company

     On June 15, 1998,  Old Insignia  acquired  Jackson Cross Company  ("Jackson
     Cross"),  a prominent  commercial  real estate service firm with operations
     primarily   in  the  greater   Philadelphia   area.   The  total   purchase
     consideration paid by Old Insignia for Jackson Cross was approximately $9.1
     million, consisting of $8.6 million paid in cash at closing and $500,000 in
     guaranteed deferred payments. Additional payments of up to $5.4 million are
     contingent on the future  performance of Jackson Cross. The acquisition was
     accounted for as a purchase.

     Other Information

     Pro Forma results of operations for the nine month periods ended  September
     30,  1998 and  1997,  assuming  consummation  of the  Distribution  and the
     acquisition of Richard Ellis (1998), Realty One (1997) and Barnes,  Morris,
     Pardoe & Foster (1997) as of January 1, 1997, are as follows (in thousands,
     except per share data):
<TABLE>
<CAPTION>


                                            Nine Months Ended
                                              September 30,
                                          1998            1997
                                          ----            ----

<S>                                    <C>             <C>     
    Revenues                           $370,695        $321,029
    Net Income                            9,495           9,855
                                          =====           =====

    Per share amounts - diluted        $    .43        $    .46
                                       ========        ========
</TABLE>

12.  Equity

     During the nine month period ended September 30, 1998, New Insignia had the
     following changes in the equity accounts:

     a)   Issuance of  21,408,106  shares of New  Insignia  Common  Stock in the
          Distribution.

     b)   Contribution  of  capital  from  Old  Insignia  at  the  time  of  the
          Distribution totaling $374,466,000.

     c)   Net income of $9,397,000 for the nine months ended September 30, 1998,
          which is included in total contributed capital. 




<PAGE>

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

     New Insignia  (referred to hereafter  as  "Insignia")  has three  principal
business  units-  commercial  real  estate  services,  residential  real  estate
services and real estate ownership. The commercial real estate services business
is comprised of Insignia/ESG's  United States  operations,  Richard Ellis in the
United Kingdom,  Insignia RE GmbH in Germany and  Insignia/CAGISA  in Italy. The
residential  services business is comprised of Realty One, a single-family  home
brokerage and mortgage  banking  business,  and Insignia  Residential  Group,  a
cooperative and condominium apartment services business.

     Insignia/ESG is one of the largest commercial real estate services firms in
the United States  according to January 1998 issue of Commercial  Property News.
With the  acquisition  of Richard  Ellis in the United  Kingdom,  the opening of
Insignia  RE  GmbH  in  Germany,   and  the   purchase  of  a  60%  interest  in
Insignia/CAGISA  in Italy,  Insignia/ESG  is  becoming  a global  leader in real
estate services.  The financial statements of Richard Ellis have been translated
using  the  following  exchange  rates:  $1.6981  for the  balance  sheet  as of
September  30, 1998 and $1.6629 for the  statement of income for the nine months
ended September 30, 1998.  Exchange rates have been determined  based on the end
of the period rate, in the case of the balance  sheet,  and the average rate for
the period, in the case of the statement of income.

     Revenues  from  tenant   representation,   investment  sales,   debt/equity
placements  and property  leasing,  which  collectively  generate a  substantial
majority  of  Insignia's  revenue,  are  transactional  in nature and  therefore
subject to changes  in  business  activity.  Insignia  believes  that its large,
diversified client base,  geographical reach,  overall size and number of annual
transactions  help to offset  the  impact of changes  in  business  activity  on
revenues  and  profitability.  Such  changes in  business  activity,  as well as
seasonal  factors  in Realty  One's  business,  significantly  impact  quarterly
results.  A  significant  portion  of the  expenses  associated  with the  above
mentioned activities are directly correlated to revenue.

     Insignia's  primary objective is to increase earnings and stockholder value
through internal growth and the acquisition of select businesses.  The following
results are based on the  historical  financial  statements  of the New Insignia
Businesses and include certain assumptions concerning the allocation of overhead
costs from Old  Insignia.  These  results  may not be  indicative  of the actual
results that may have occurred if the New Insignia Businesses had been operating
on a stand-alone basis for the periods presented or in the future.

Financial Condition
-------------------

     Total assets  increased by  approximately  $217.3 million from December 31,
1997 to $551.8  million at  September  30,  1998.  The  majority of the increase
relates to  acquisitions,  including  Richard Ellis,  Hotel Partners and Jackson
Cross.  Assets include a $23.5 million  receivable from Old Insignia,  which was
collected on the date of the Merger.  Real estate  interests  increased by $29.6
million,  reflecting the continued  co-investment and development activity.  The
remainder  of the asset growth was financed  primarily  by  investments  and net
advances from Old Insignia prior to spin off,  including  common equity and cash
payments with respect to acquisitions.

     Liabilities increased by approximately $51.6 million from December 31, 1997
to $177.2  million at September  30, 1998.  The  increase  primarily  represents
normal  liabilities  of the  businesses  acquired,  together with $15 million in
liabilities  paid in October arising from the Merger of Old Insignia into AIMCO.
All retained  earnings of Insignia are considered  contributed  capital from Old
Insignia at the time of the  Distribution  and,  therefore,  included in paid-in
capital at September 30, 1998.

Results of Operations
---------------------

     Insignia posted  increases in real estate service revenues of 78% to $131.7
million  and 102% to  $358.4  million  for the  three  and nine  months of 1998,
compared to the corresponding  periods in 1997. These  significant  growth rates
are attributable  primarily to acquisition  contributions,  the largest of which
were Realty One and Barnes, Morris, Pardoe & Foster ("Barnes Morris") in October
1997 and Richard Ellis in February  1998.  Additionally,  favorable  real estate
markets in the United States and United Kingdom contributed to the growth.


     Insignia  posted a decrease in net income of 3% to $3 million for the three
months  and an  increase  of 52% to $9.4  million  for the nine  months of 1998,
compared to 1997. The quarterly decline in net income is primarily  attributable
to increased  real estate  investments,  which are expected to show losses after
depreciation for financial reporting purposes,  and an increase in the effective
tax rate.

     Net EBITDA is  defined  as income  before  depreciation,  amortization  and
income taxes. Results for the three and nine months of 1998 reflect increases in
Net EBITDA of 47% to $12.6  million and 76% to $37.0  million,  in comparison to
1997.  Increases  were achieved by each of  Insignia's  three  business  units -
commercial services,  residential services and real estate ownership.  After Tax
Cash Flow, defined as net income plus depreciation and amortization  deducted in
determining  net income,  increased 55% to $10.2 million for the quarter and 73%
to $29.3 million for the nine months of 1998.

EBITDA from Real Estate Services
--------------------------------

     Insignia's businesses produced increases in EBITDA,  defined as real estate
revenues less direct expenses and administrative  costs, of 39% to $11.6 million
for the  third  quarter  and 69% to $34.4  million  for the nine  months of 1998
compared to 1997.  The  acquisitions  of Richard Ellis and Realty One,  together
with selective  acquisitions  of domestic  commercial real estate services firms
and  favorable  real estate  markets,  constituted a majority of the increase in
EBITDA.

Commercial Services

     Commercial  real estate services are conducted in the United States through
Insignia/ESG  and in the United Kingdom through Richard Ellis.  These businesses
produced revenue increases of 40% to $95.1 million for the third quarter and 64%
to $261.2 million for the nine months of 1998,  compared to 1997.  Richard Ellis
accounted for  approximately  57% of the revenue  increase for the third quarter
and  approximately  37% of the revenue increase for the nine months period.  The
remainder of the increase is  attributable to domestic  acquisitions,  including
Barnes Morris, Hotel Partners, and Jackson Cross, and internal growth.
 
Residential Services

     Residential  services  consist of Realty One, which provides  single family
home  brokerage and related  mortgage  banking  services in northern  Ohio,  and
Insignia  Residential  Group,  which  manages  cooperatives,   condominiums  and
apartments in the greater New York City area. These businesses  produced revenue
increases  of 508% to $36.6  million  for the  third  quarter  and 431% to $97.2
million for nine months of 1998,  compared to 1997. This growth is substantially
the  result  of the  October  1997  acquisition  of  Realty  One.  Realty  One's
operations  are seasonal,  with the spring and summer  quarters  reflecting  the
greatest  volume  and  the  winter  quarter  reflecting   significantly  reduced
activity. Realty One's operations for the three and nine months reflect revenues
of $30.2  million and $77.7 million on increases of  approximately  5% and 6% in
unit  volume.  Average  sales  prices of homes  sold by Realty  One  reflect  an
increase  of  approximately  8% in 1998.  Insignia  Residential  Group  produced
revenue  increases of 7% to $6.4  million for the third  quarter and 7% to $19.5
million for the nine months of 1998, compared to 1997.

Real Estate Ownership

     Insignia's  FFO from real estate  ownership,  which is defined as income or
loss from real estate  operations  before  depreciation,  increased  66% for the
third quarter to $378,000 and 150% to $1.35 million for the nine months of 1998,
compared to 1997.  These  increases  were achieved  primarily as a result of the
continued  strategy of  purchasing  minority  equity  interests in selected real
estate assets in  partnership  with  institutional  clients as well as operating
income growth from existing co-investment properties. The co-investment program,
which currently holds equity interests  ranging from 10% to 35% in approximately
5.5 million square feet of commercial  property and approximately 3,300 units of
multi-family  property,  was  commenced in late 1996 and continues to contribute
substantially to the real estate ownership positions of Insignia.

     Equity earnings from real estate ownership reflected losses of $465,000 and
$1.3  million  for the third  quarter and nine  months of 1998.  The  difference
between  real estate FFO and equity  earnings  represents  depreciation  of real
estate and, in the third quarter,  a write-down of 100% of Insignia's  equity in
one  investment of  approximately  $510,000  because of the inability to achieve
expected lease rates.

Financing Costs

     Interest  expense,  attributable  entirely to the existing  debt of Richard
Ellis and Realty One at their respective acquisition dates, was $382,000 for the
third quarter and $1.1 million for the nine months of 1998.

Other Expenses Affecting Net Income

     The discussion of Net EBITDA above excludes depreciation,  amortization and
income taxes.  Depreciation and  amortization  increased 89% to $6.3 million for
the third quarter and 65% to $17.3 million for the nine months of 1998, compared
to 1997.  Most of the increase  relates to amortization of cost in excess of net
assets of acquired businesses, most notably Richard Ellis and Realty One. Income
taxes  increased  both as a result of higher  income and  effective tax rates in
1998.

Earnings Per Share

     Insignia  posted a  decrease  in  earnings  per share of 8% or $.01 for the
third  quarter  and an  increase  of 48% or $.14  for the nine  months  of 1998,
compared to 1997. The weighted  average shares have been determined based on the
Old  Insignia  Common  Stock,  effected  for the  two-thirds  Distribution.  The
increase in weighted average shares is a result of increases in the Old Insignia
Common Stock, primarily attributable to shares issued and options assumed in the
Richard Ellis and Realty One acquisitions.

Liquidity and Capital Resources

     Insignia's  liquidity  and  capital  resources  consist  of  cash  on  hand
(including the amount due from Old Insignia collected at the AIMCO Merger date),
cash  provided by operations  and  available  credit under the newly closed $185
million  revolving  credit  facility.  Insignia  uses  After  Tax Cash Flow as a
measure of working capital provided from operations.  Operations by this measure
produced  $10.2 million and $29.3 million for the three and nine months of 1998,
reflecting  strong gains of 55% and 73% over 1997.  Insignia  believes  that its
cash from operating activities is more than adequate to meet its working capital
and capital replacement needs.  However, it is important to note that periods of
revenue growth in the leasing sector of commercial  property  services result in
some portion of working  capital  from  operations  being used to carry  greater
amounts of receivables.

     Capital expenditure requirements are not normally extensive,  consisting of
periodic computer, furniture and fixture replacements. Most capital expenditures
are  typically  incurred in  connection  with  acquisitions  or other  personnel
additions.  Capital  expenditures  for the nine months of 1998 of $11.6  million
consist  primarily of costs  incurred to purchase and implement a new generation
of computer systems for the property management business, equipment purchases by
the  single  family  home  brokerage  business  and  costs  associated  with the
relocation of the  cooperative and  condominium  management  business within the
Midtown area of Manhattan.

     Over the second half of 1998 and into 1999, Insignia anticipates  incurring
capital  expenditures  significantly  in  excess  of  the  normal  needs  of the
business.  Insignia is implementing a new generation of computer systems for the
cooperative and condominium  management  business and has already  completed the
relocation of that business as previously mentioned.  Additionally,  Insignia is
proceeding to develop and  implement  completely  new financial  systems for the
international commercial services businesses, both for the United States and the
United  Kingdom,  using  similar  systems to those  recently  developed  for the
businesses  which  merged  into  AIMCO.  Realty One also  expects to  commence a
program to  substantially  upgrade its broker  productivity and target marketing
systems.  The  aggregate  cost of these  planned  new  systems  and  upgrades is
estimated  at $16  million,  of  which  approximately  $8 million  had been
incurred at September 30, 1998.  Insignia expects to pay for all remaining costs
from operating cash flows and cash on hand.


     The following  chart  provides a overview of the financial  results for the
three and nine month periods ended September 30, 1998 and 1997:
<TABLE>
<CAPTION>

                                   Three Months Ended        Nine Months Ended
                                      September 30,            September 30,
                                      -------------            -------------
                                   1998        1997           1998       1997
                                   ----        ----           ----       ----
Real Estate Revenues
<S>                             <C>         <C>            <C>        <C>     
    Insignia/ESG                $  77,890   $  67,837      $220,794   $159,530
    European                       17,193          --        40,403         --
    Realty One                     30,191          --        77,663         --
    Insignia Residential Group      6,447       6,027        19,500     18,308
                                    -----       -----        ------     ------
     Total real estate revenues   131,721      73,864       358,360    177,838
                                  -------      ------       -------    -------

Costs and Expenses
    Real estate services          118,091      63,256       318,401    152,294
    Administrative                  2,033       2,269         5,561      5,212
                                    -----       -----         -----      -----

EBITDA - Real Estate Services      11,597       8,339        34,398     20,332

    Interest  and other               943          66         2,103        196
    Real estate FFO                   378         228         1,350        540
    Interest expense                 (382)         --        (1,088)        --
    Minority interests                113          --           259         --
                                      ---                       ---           

Net EBITDA                         12,649       8,633        37,022     21,068

    Income taxes                   (2,460)     (2,057)       (7,689)    (4,119)
                                   ------      ------        ------     ------ 
 
After Tax Cash Flow                10,189       6,576        29,333     16,949

Depreciation                         (908)       (480)       (2,559)    (1,119)
Amortization of intangibles        (5,432)     (2,868)      (14,704)    (9,352)
Depreciation - real estate           (843)       (144)       (2,673)      (299)
 
Net Income                      $   3,006    $  3,084     $   9,397   $  6,179
                                =========    ========     =========   ========
</TABLE>
 

     In addition to net income,  Insignia believes that Net EBITDA and After Tax
Cash Flow are primary  indicators of financial  performance.  These supplemental
indicators are used by management to evaluate operations and in making financial
decisions.  Net EBITDA is defined as Net Income plus depreciation,  amortization
and income taxes. After Tax Cash Flow is defined as Net Income plus depreciation
and amortization.  After Tax Cash Flow, as used for this purpose,  should not be
construed  to  represent  cash  provided by  operations  pursuant  to  generally
accepted  accounting  principles,  which takes into  consideration such items as
changes in elements of working  capital and deferred  taxes.  Neither Net EBITDA
nor After  Tax Cash Flow are terms  defined  by  generally  accepted  accounting
principles, and Insignia's usage of these terms may differ from other companies'
usage of the same of similar terms.

Year 2000  

     In earlier years,  certain computer  programs were written using two digits
rather than four to define the  applicable  years.  These  programs were written
without consideration of the impact of the approaching change in the century and
may experience  problems handling dates beyond 1999 ("Year 2000"). The Year 2000
issue presents  potential concerns for business  computing,  the consequences of
which may include system failures and business process interruption.  Aside from
the  well-known  calculation  problems with the use of two digit date formats as
the year  changes  from 1999 to 2000,  the Year 2000 is a special  case for leap
year.

     Insignia is assessing  the  readiness of its  internal  systems,  including
information technology (IT) and non-IT systems. Although the assessment is still
underway,  management  currently  believes  that all  material  systems  will be
compliant  prior to Year 2000 and that the cost to address the issue is expected
to  range  from  $1.5  million  to $2.5  million,  inclusive  of the  previously
mentioned $16 million in planned upgrades.  To date, an expense of approximately
$340,000  has been  incurred  towards  the Year 2000  issue.  All  organizations
dealing with the Year 2000 issue must address the effect this issue will have on
their third party vendors. Insignia is undertaking steps to identify its vendors
and understand their ability to continue  providing services and products beyond
1999. For the significant vendors,  contingency plans will be developed.  Should
Insignia  or its  significant  third-party  vendors  be unable to  complete  the
required Year 2000  remediation  steps in a timely fashion,  the Year 2000 issue
could have a material  adverse impact on the operations and financial  condition
of Insignia in the future.

Other

     Certain  information  contained in this  quarterly  report,  and  documents
incorporated  by reference  herein,  may constitute  forward-looking  statements
within the meaning of the Private  Securities  Litigation Reform Act of 1995 and
as such may involve  known and unknown  risks,  uncertainties  and other factors
which may cause the actual  results,  performance or achievements of Insignia to
be materially  different from any future results,  performance,  or achievements
expressed  or  implied  by such  forward-looking  statements.  Such  information
includes,  without limitation,  statements  regarding the results of litigation,
the results of the  Distribution  and Merger,  the effects of Year 2000  issues,
Insignia's  future  financial  performance and estimated  capital  expenditures.
Actual  results will be effected by a variety of risks and  factors,  including,
without limitation,  national and local economic  conditions,  real estate risks
and financing risks. Such  forward-looking  statements speak only as of the date
of this  quarterly  report.  Insignia  expressly  disclaims  any  obligation  or
undertaking to release publicly any updates of revisions to any  forward-looking
statements  contained  herein to reflect any change in  Insignia's  expectations
with regard  thereto or any change in events,  conditions  or  circumstances  on
which any such statement is based.



<PAGE>

                           PART II - OTHER INFORMATION
                           ---------------------------

Item 1.  Legal Proceedings
-------  -----------------

     See Note 10 in Notes to Condensed Consolidated  Financial Statements,  Part
I, Item 1, of this Form 10-Q.

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

a)  Exhibits

     3.1  Certificate  of  Amendment  to the  Certificate  of  Incorporation  of
          Insignia/ESG  Holdings,  Inc.,  dated  October 16, 1998, changing the
          name of the Corporation to Insignia Financial Group, Inc.
          
     4.1  Warrant Agreement dated as of September 15, 1998 between  Insignia/ESG
          Holdings and APTS Partners, L.P.
         
     4.2  Warrant Agreement dated as of September 15, 1998 between  Insignia/ESG
          Holdings and APTS Partners, L.P.
       
     4.3  Warrant Agreement dated as of September 15, 1998 between  Insignia/ESG
          Holdings and APTS Partners, L.P.
      
     4.4  Warrant Agreement dated as of September 15, 1998 between  Insignia/ESG
          Holdings and APTS V, L.L.C.
     
     4.5  Warrant Agreement dated as of September 15, 1998 between  Insignia/ESG
          Holdings and Gotham Partners, L.P.
    
     4.6  Warrant Agreement dated as of September 30, 1998, between Insignia/ESG
          Holdings,  Inc.  and  First  Union  National  Bank of  Delaware.  10.1
          Employment   Agreement  dated  September  18,  1998  between  Insignia
          Financial  Group,  Inc.  and  Adam B.  Gilbert.  27.1  Financial  Data
          Schedule for September 30, 1998

b)  Reports on Form 8-K

     None 

<PAGE>
                                   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 there unto duly authorized.



                            INSIGNIA FINANCIAL GROUP, INC.



                            by:    /s/Andrew L. Farkas 
                                   ------------------- 
                                   Andrew L. Farkas
                                   Chairman and Chief Executive Officer




                            by:    /s/James A. Aston   
                                   -----------------   
                                   James A. Aston
                                   Chief Financial Officer


<PAGE>