---

## UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

## FORM 10-Q

(Mark One)

|X|               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2001

OR

|_|               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from
to
Commission file number 1-12338

VESTA INSURANCE GROUP, INC.
(Exact name of registrant as specified in its charter)

|Delaware                                 | 63-1097283         
|---------------------------------------- | -------------------
|(State of other jurisdiction of          | (I.R.S. Employer   
|incorporation or organization)           | Identification No.)
|                                         |                    
|3760 River Run Drive                     | 35243              
|Birmingham, Alabama                      | (Zip Code)         
|(Address of principal executive offices) |                    

(205) 970-7000(Registrant's telephone number, including area code)

Not Applicable(Former name, former address and former fiscal year, 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. |X|   Yes      |_|    No

Indicate the number of
shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date.

The number of shares outstanding of the registrant's common stock,
$.01 par value, as of May 11, 2001
24,424,746

---

|Part I  | Financial Information                                                                 | Page
|------- | ------------------------------------------------------------------------------------- | ----
|Item 1. | Financial Statements:                                                                 |     
|        | Consolidated Balance Sheets at March 31, 2001 and December 31, 2000                   | 1   
|        | Consolidated Statements of Income and Comprehensive Income for the                    |     
|        | Three Months ended March 31, 2001 and 2000                                            | 2   
|        | Consolidated Statements of Cash Flows for three months ended March 31, 2000 and 2001  | 3   
|        | Notes to Consolidated Financial Statements                                            | 4   
|Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 7   
|        |                                                                                       |     
|
|Item 1. | Legal Proceedings                                                                     | 10  
|Item 2. | Changes in Securities                                                                 | 12  
|Item 3. | Defaults Upon Senior Securities                                                       | 12  
|Item 4. | Submission of Matters to a Vote of Securities                                         | 12  
|Item 5. | Other Information                                                                     | 12  
|Item 6. | Exhibits and Reports on Form 8-K                                                      | 13  

---

`Part I
                           Item 1. Financial Statements
                            Vesta Insurance Group, Inc.
                            Consolidated Balance Sheets
               (Amounts in thousands except share and per share data)




                                                                March 31,      December 31,
                                                                  2001            2000
                                                               -----------     -----------
Assets:
  Investments:
  Fixed maturities available for sale - at fair value
   (cost:  2001 - $760,245; 2000 - $795,118)                   $   766,386    $   798,205
  Equity securities--at fair value:
   (cost: 2001--$15,520; 2000--$30,221)                            16,584         31,285
  Mortgage and collateral loans                                     59,272         63,060
  Policy loans                                                      61,952         61,413
  Short-term investments                                            21,573         22,586
  Other invested assets                                             37,741         29,343
                                                                -----------    -----------
         Total investments                                         963,508      1,005,892
  Cash                                                              31,104         13,374
  Accrued investment income                                         14,551         17,017
  Premiums in course of collection (net of
   allowances for losses of $3,937 in 2001
   and $3,937 in 2000)                                              26,847         23,882
  Reinsurance balances receivable                                  354,067        353,949
  Reinsurance recoverable on paid losses                            59,572         57,325
  Deferred policy acquisition costs                                 44,208         45,954
  Deferred income taxes                                             17,376         22,457
  Other assets                                                      99,309         82,149
                                                                -----------    -----------
         Total assets                                          $ 1,610,542    $ 1,621,999
                                                                ===========    ===========

Liabilities:
  Policy liabilities                                           $   664,214    $   660,284
  Losses and loss adjustment expenses                              262,474        263,689
  Unearned premiums                                                104,110        104,755
  Federal Home Loan Bank advances                                  147,922        150,691
  Short term debt                                                   14,997          5,000
  Long term debt                                                    86,423         86,419
  Other liabilities                                                 96,579        102,825
                                                                -----------    -----------
         Total Liabilities                                       1,376,719      1,373,663

Commitments and contingencies: See Note B

Deferrable Capital Securities                                       29,750         33,225

Stockholders' equity:
  Preferred stock, $.01 par value, 5,000,000 shares
   authorized, issued:2001 - 0 and 2000 - 2, 950,000                                   30
  Common stock, $.01 par value, 100,000,000 shares
   authorized,  issued:2001 - 24,864,322 and 2000 - 18,964,322         249            190
  Additional paid-in capital                                       150,464        167,382
  Accumulated other comprehensive income, net of  tax expense
   of $2,522 and $1,453 in 2001 and 2000, respectively               4,683          2,698
  Retained earnings                                                 60,503         57,643
  Treasury stock (439,576 shares and 166,294 shares at cost)
   at March 31, 2001 and December 31, 2000, respectively            (3,397)        (5,865)
  Unearned stock                                                    (8,429)        (6,967)
                                                               -----------    -----------
        Total stockholders' equity                                 204,073        215,111
                                                               -----------    -----------
        Total liabilities, deferrable capital securities
          and stockholders' equity                             $ 1,610,542    $ 1,621,999
                                                               ===========    ===========`

See accompanying Notes to Consolidated Financial Statements

---

`Vesta Insurance Group, Inc.
                      Consolidated Statements of Income and Comprehensive Income
                              (Amounts in thousands except per share data)
                                     Statements of Income

                                                                        Three months ended
                                                                             March 31,
                                                                         2001        2000
                                                                      ----------   ---------
Revenues:
  Net premiums written                                                 $ 61,212    $ 49,127
  Decrease in unearned premium                                            4,183       7,438
                                                                        --------    --------
  Net premiums earned                                                    65,395      56,565
  Policy fees                                                             1,253         239
  Net investment income                                                  15,603       7,003
  Realized gains                                                          1,706        --
  Other                                                                   2,146          88
                                                                       --------    --------
     Total revenues                                                      86,103      63,895
Expenses:
  Policyholder benefits                                                   8,057        --
  Losses and loss adjustment expenses incurred                           38,701      39,779
  Policy acquisition expenses                                            14,402      12,443
  Operating expenses                                                     14,653       9,985
  Interest on debt                                                        4,658       3,403
  Goodwill and other intangible amortization                                526         151
                                                                       --------    --------
     Total expenses                                                      80,997      65,761
Income (loss) from continuing operations before taxes,
 minority interest and deferrable capital securities                      5,106      (1,866)
Income tax expense (benefit)                                              1,787        (778)
Minority interest, net of tax                                               249        --
Deferrable capital security distributions, net of tax                       383         571
                                                                       --------    --------
Net Income (loss) from continuing operations                              2,687      (1,659)
Income from discontinued operations, net of tax                               5       3,913
Extraordinary gain on debt extinguishments, net of tax                     --         4,567
                                                                       --------    --------
     Net income                                                           2,692       6,821
Preferred stock dividend                                                   (163)       (563)
Gain on redemption of preferred securities, net of tax                      565        --
                                                                       --------    --------
Net income available to common stockholders                            $  3,094    $  6,258
                                                                       ========    ========
Net income (loss) from continuing operations per share - Basic         $   0.14    $  (0.09)
                                                                       ========    ========
Net income available to common shareholders per share - Basic          $   0.16    $   0.33
                                                                       ========    ========
Net income (loss) from continuing operations per share - Diluted       $   0.13    $  (0.07)
                                                                       ========    ========
Net income available to common shareholders per share - Diluted        $   0.15    $   0.28
                                                                       ========    ========

                   Statements of Comprehensive Income 
Net income                                                             $  2,692    $  6,821
Other comprehensive income, net of tax:
     Unrealized holding gains on available-for-sale securities
      net of tax expense of $1,666 and $756 in 2001,
      and 2000, respectively                                              3,094       1,404
     Less realized gains on available-for-sale securities
      net of tax expense of $597 in 2001                                  1,109        --
                                                                       --------    --------
                                                                          1,985       1,404
Gain on extinuishment of preferred securities,
   net of tax expense of $305 in 2001.                                      565

                                                                       --------    --------
Comprehensive income                                                   $  5,242    $  8,225
                                                                       ========    ========`

See accompanying Notes to Consolidated Financial Statements

---

`Vesta Insurance Group, Inc.
                      Consolidated Statements of Cash Flows
                           (Amounts in thousands)

                                                           Three months ended
                                                                 March 31
                                                            2001          2000
                                                       ------------   -----------
Operating Activities:
  Net income                                             $   2,692    $   6,821
  Adjustments to reconcile net income
   to cash used in operations
    Changes in:
    Loss and LAE reserves, and future policy liabilities   (14,739)     (23,488)
    Unearned premium reserves                               (1,359)     (14,716)
    Reinsurance balances receivable                           (119)       4,267
    Premiums in course of collection                        (2,964)       8,634
    Reinsurance recoverable on paid losses                  (2,247)       3,379
    Other assets and liabilities                              (425)     (26,721)
  Policy acquisition costs deferred                        (12,657)      (6,701)
  Policy acquisition costs amortized                        14,402       10,278
  Realized gains                                            (1,706)        --
  Amortization and depreciation                              2,573        1,284
  Extraordinary gain                                                     (6,717)
                                                          ---------    ---------
      Net cash used in operations                          (16,549)     (43,680)

Investing Activities:
  Investments sold, matured, and called:
    Fixed maturities available for sale                    104,292       37,926
  Investments acquired:
    Fixed maturities available for sale                    (47,112)     (12,066)
    Equity securities                                       (2,057)        --
    Other invested assets                                   (6,843)        --
  Net decrease in short-term investments                     3,448       46,768
  Additions to property and equipment                       (3,590)        --
                                                         ---------    ---------
      Net cash provided from investing activities           48,138       72,628

Financing Activities:
  Net change in short term debt                              9,997         --
  Net change in FHLB borrowings                             (3,334)        --
  Net deposits and withdrawals to (from)
   insurance liabilities                                    (1,508)        --
  Retirement of long term debt and
   preferred securities                                       --        (33,045)
  Issuance of common stock                                  32,350         --
  Acquisition of common stock                              (50,951)        --
  Dividends paid                                              (413)        --
                                                         ---------    ---------
      Net cash used in financing activities                (13,859)     (33,045)
Increase (decrease) in cash                                 17,730       (4,097)
Cash at beginning of period                                 13,374       17,677
                                                         ---------    ---------
Cash at end of period                                    $  31,104    $  13,580
                                                         =========    =========`

See accompanying Notes to Consolidated Financial Statements

---

Vesta Insurance Group, Inc.
Notes to Consolidated Financial Statements
(amounts in thousands except per share amounts)

Note A--Significant Accounting Policies

Basis
of Presentation: The accompanying unaudited interim financial statements have
been prepared in conformity with accounting principles generally accepted in the
United States and, in the opinion of management, reflect all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
results for such periods. The results of operations and cash flows for any
interim period are not necessarily indicative of results for the full year.
These financial statements should be read in conjunction with the financial
statements and related notes which have been issued by the Company and filed
with the Securities and Exchange Commission.

Reclassifications:
Certain amounts in the financial statements presented have been reclassified
from amounts previously reported in order to be comparable between years. These
reclassifications have no effect on previously reported stockholders
equity or net income during the period involved.

New
Accounting Standard: In June 1998, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 133, Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 133 and subsequent amendments standardize the
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, by requiring that an entity recognize those items
as assets or liabilities in the financial statements and measure them at fair
value. Management has evaluated our activities and has determined that Vesta
does not currently have any material derivative exposures and that the adoption
of the SFAS No. 133 on January 1, 2001 did not have a material impact on the
financial statements.

Income
per share. Basic EPS is computed by dividing income available to common
shareholders by the weighted average common shares outstanding for the period.
Diluted EPS is calculated by adding to shares outstanding the additional net
effect of potentially dilutive securities or contracts which could be exercised
or converted into common shares except when the additional shares would produce
anti-dilutive results.

Reconciliation
of income available to common shareholders and average shares outstanding for
the three months ending March 31, 2001 and 2000 are as follows:

`2001              2000
                                                         -------------     ------------
Net income available to common shareholders                   $ 3,094          $ 6,258
Preferred stock dividends on convertible preferred stock          163              563
                                                         -------------     ------------
Adjusted net income available to common shareholders          $ 3,257          $ 6,821

Weighted average shares outstanding-basic (1)                  18,857           18,826
Stock options and restricted stock                                336               39
Weighted average convertible preferred stock (1)                1,901            5,900
                                                         -------------     ------------
Weighted average shares outstanding-diluted (1)                21,094           24,765`

(1) Reflects  weighted  averages.  At March 31, 2001,  Vesta had 24.4 million shares  outstanding  and zero shares of
          convertible  preferred stock outstanding.  Weighted average shares outstanding for earnings per share purposes do not
          include shares held by the Agent's Stock  Incentive Plan Trust,  that have not been  allocated to  participants,  and shares
          issued as restricted stock that represent unearned amounts.

Earnings per share for discontinued  operations and extraordinary gains for the three months ended March 31, 2001 and
2000 are as follows:

`2001            2000
                                     ------------    -------------
Basic Earnings per share:
  Discontinued Operations               $  0.0         $   0.21
  Extraordinary Gain                        --         $   0.24
Diluted Earnings per share:
  Discontinued Operations               $  0.0         $   0.16
  Extraordinary Gain                        --         $   0.18`

---

Note B--Commitments and Contingencies

Securities Litigation

Subsequent
to the filing of our quarterly report on Form 10-Q for the period ended March
31, 1998 with the U.S. Securities and Exchange Commission (SEC or
Commission), we commenced an internal investigation to determine the
exact scope and amount of certain reductions of reserves and overstatement of
premium income in our reinsurance assumed business that had been recorded in the
fourth quarter of 1997 and the first quarter of 1998. This investigation
concluded that inappropriate amounts had, in fact, been recorded and we
determined that we should restate our previously issued 1997 financial
statements and first quarter 1998 Form 10-Q. Additionally, during our internal
investigation we were advised by our then outside auditors that there was an
error in the accounting methodology used to recognize earned premium income in
our reinsurance business. We had historically reported certain assumed
reinsurance premiums as earned in the year in which the related reinsurance
contracts were entered even though the terms of those contracts frequently
bridged two years. We determined that reinsurance premiums should be recognized
as earned over the contract period and corrected the error in our accounting
methodology by restating previously issued financial statements. On June 1, 1998
and June 29, 1998, we issued press releases, which were filed with the
Commission, regarding the matters addressed in this section.

We
restated our previously issued financial statements for 1995, 1996, and 1997 and
our first quarter 1998 Form 10-Q for the above items by issuance of a current
report on Form 8-K dated August 19, 1998. These restatements resulted in a
cumulative decrease to stockholders equity of approximately $75.2 million
through March 31, 1998. Commencing in June 1998, we and several of our current
and former officers and directors were named as defendants in several purported
class action lawsuits filed in the United States District Court for the Northern
District of Alabama. Several of our officers and directors also have been named
in a derivative action lawsuit in the Circuit Court of Jefferson County,
Alabama, in which Vesta is a nominal defendant. In addition, we received various
inquiries and requests for information from various state departments of
insurance and other regulatory authorities, including a subpoena issued to Vesta
on August 24, 1998 by the 34 Commission as part of a formal, non-public order of
investigation. We fully responded to such requests in 1998, and no further
requests for information from Vesta have been made by the Commission.

In
March 1999, the actions filed in the United States District Court for the
Northern District of Alabama were consolidated into a single action in that
district and certified as a class action. Torchmark Corporation and KPMG Peat
Marwick LLP, our outside auditor at the time, were added as additional
defendants in the consolidated class action. The consolidated amended complaint
alleges violations of certain federal securities laws and seeks unspecified but
potentially substantial damages. The court has denied all motions to dismiss and
the class action is presently in discovery, with a trial date set for November
5, 2001. We are vigorously defending this litigation but there is no assurance
of its outcome. The parties have conducted settlement discussions, but have not
been successful in reaching any resolution. The derivative case has been stayed
and placed on the administrative docket.

We
have several layers of directors and officers liability insurance
coverage (D&O insurance), the terms of which may cover all or a
portion of the damages or settlement costs of the class action. These policies
provide up to $100 million in D&O insurance to cover damages or settlement
costs and an additional policy provides another layer of $10 million D&O
insurance to cover any damages awarded by a court in these actions. Cincinnati
Insurance Company (Cincinnati) issued the primary policy that
provides the first $25 million of D&O insurance. Federal Insurance Company
(The Chubb Group of Insurance Companies) issued an excess D&O insurance
policy which provides coverage for the second $25 million in losses, if
necessary. The balance of the coverage is provided by a group of insurers and
was purchased after the class actions comprising the consolidated class action
were filed. In September 1998, after these actions were filed, Cincinnati, which
provides the primary insurance policy, filed a lawsuit in the United States
District Court for the Northern District of Alabama seeking to rescind the
policy and avoid the coverage. That action was dismissed for lack of subject
matter jurisdiction, and we then filed an action against Cincinnati in the
Circuit Court of Jefferson County, Alabama, to enforce the policy and to recover
damages arising out of Cincinnatis actions. Cincinnati filed an answer and
counterclaim in that action, seeking to rescind the policy and avoid the
coverage. This action is in the discovery stage and the outcome is uncertain.
There is no assurance that the primary insurance coverage will ultimately be
available for any damages or settlement costs incurred. The outcome of this
litigation may also materially affect the availability of the excess policy
issued by The Chubb Group. The damages sought by stockholder plaintiffs in the
consolidated class action, either at trial or through settlement, may be
substantial. If the damages or settlement costs incurred in connection with the
consolidated class action and derivative action are ultimately determined not to
be covered by our D&O insurance policies for any reason, we may incur a
significant and material loss which could have a material and adverse impact on
our financial condition and results of operation.

The
consolidated class action is in the discovery stage and the derivative action
has been placed on the administrative docket. The ultimate outcome of these
matters is uncertain. Accordingly, we have not currently set aside any financial
reserves relating to any of the above-referenced actions.

---

Indemnification Agreements and Liability Insurance

Pursuant
to Delaware law and our Bylaws, we are obligated to indemnify our current and
former officers and directors for certain liabilities arising from their
employment with or services to Vesta, provided that their conduct complied with
certain requirements. Pursuant to these obligations, we have agreed to advance
costs of defense and other expenses on behalf of certain current and former
officers and directors, subject to an undertaking from such individuals to repay
any amounts advanced in the event a court determines that they are not entitled
to indemnification.

Arbitration

As
discussed above, we corrected our accounting for assumed reinsurance business
through restatement of our previously issued financial statements. Similar
corrections were made on a statutory accounting basis by recording cumulative
adjustments in Vesta Fires 1997 statutory financial statements. The impact
of this 35 correction has been reflected in amounts ceded under our 20% whole
account quota share treaty which was terminated on June 30, 1998 on a run-off
basis. We believe such treatment is appropriate under the terms of this treaty
and have calculated the quarterly reinsurance billings presented to the three
treaty participants accordingly. The aggregate amount included herein as
recoverable from such reinsurers totaled approximately $55.2 million as of March
31, 2001. We have collected approximately $48.5 million from the drawdown of
collateral on hand.

NRMA
Insurance, Ltd. (NRMA), one of the participants in the 20% whole
account quota share treaty, filed a lawsuit in the United States District Court
for the Northern District of Alabama contesting our billings. NRMA sought
rescission of the treaty and a temporary restraining order preventing us from
drawing down approximately $34.5 million of collateral. We filed a demand for
arbitration as provided for in the treaty and also filed a motion to compel
arbitration which was granted in the United States District Court action. Vesta
has entered into a $25 million letter of credit in favor of NRMA to fund any
amounts NRMA may recover as a result of the arbitration. We filed for
arbitration against the other two participants in the treaty and all of these
arbitrations are in their early stages. While management believes its
interpretation of the treatys terms and computations based thereon are
correct, these matters are in their early stages and their ultimate outcome
cannot be determined at this time.

During
1999, F&G Re (on behalf of USF&G), filed for arbitration under two
aggregate stop loss reinsurance treaties whereby F&G Re assumed certain risk
from us. F&G Re is seeking to rescind the treaties and avoid its obligation.
Under the terms of the two treaties, we believe we will be entitled to
recoveries of approximately $28.2 million as losses mature from prior accident
years. Vesta has recorded a reinsurance recoverable of approximately $28.2
million as of March 31, 2001 and December 31, 2000 related to these two
treaties. This arbitration is in its early stage and the ultimate outcome cannot
be determined at this time.

A
dispute has also arisen with CIGNA Property and Casualty Insurance Company
(CIGNA) (now ACE USA) under a personal lines insurance quota share
reinsurance agreement, whereby we assumed certain risks from CIGNA. During
September 2000, CIGNA filed for arbitration under the reinsurance agreement,
seeking payment of the balances that CIGNA claims are due under the terms of the
treaty. In addition, during the fourth quarter, the treaty was terminated on a
cut-off basis. Vesta is seeking recoupment of all improper claims payments and
excessive expense allocations and charges from CIGNA. This arbitration is in its
early stages and the ultimate outcome cannot be determined at this time.

If
the amounts recoverable under the relevant treaties are ultimately determined to
be materially less than the amounts that we have reported as recoverable, we may
incur a significant, material, and adverse impact on our financial condition and
results of operations.

Other Litigation

Vesta,  through its  subsidiaries,  is routinely a party to pending or threatened legal  proceedings and arbitration  relating to
the regular conduct of its insurance business.  These proceedings involve alleged breaches of contract,  torts (including bad faith and
fraud claims),  and miscellaneous other specified relief. Based upon information  presently available,  and in light of legal and other
defenses  available to us and our  subsidiaries,  management  does not consider  liability  from any  threatened or pending  litigation
regarding routine matters to be material.

Note C--Segment Information

In
2000, we changed our segments to reflect our entering new lines of business, and
exiting old lines of business. We operate several segments, which are
distinguishable by their product offerings. The accounting policies of the
operating segments are the same as used in preparing the consolidated financial
statements. Segment pre-tax income is generally income before income tax, and
minority interest, if any. Premiums, policy fees, other income, loss and benefit
expenses, and amortization of deferred acquisition costs are attributed directly
to each operating segment. Operating expenses are allocated to the segments in a
manner which most appropriately reflects the operations of that segment. Net
investment income and interest expense are allocated only to those segments for
which such amounts are considered an integral part of the financial results for
that segment.

---

A brief description of each segment is as follows:

Standard Property-Casualty

The
standard property-casualty segment primarily consists of the marketing and
distribution of personal lines products including Homeowners and Personal Auto
coverages. Vestas products are distributed through approximately 1,600
independent agencies in 24 states. Our personal auto line targets drivers over
age thirty-five with above average driving records and our homeowners products
cover the full range of homes.

Life and Health Insurance

On
June 30, 2000, we entered the life and annuity business through a 71% investment
in American Founders Financial Corporation, a holding company for two life
insurance companies domiciled in Texas and we entered the health insurance
business through the acquisition of Aegis Financial Corporation in December,
2000. American Founders and Aegis have approximately $2.2 billion (face value)
of life and annuity products in force and $22.3 million of health insurance
premiums in force at March 31, 2001. American Founders markets traditional life
products, universal life products, fixed-rate annuities, pension contracts and
related products through independent agents throughout the majority of the
United States. Aegis Financial markets health insurance through captive agents
throughout the United States.

Specialty Lines

In
2000, we began utilizing our licenses to write business for the benefit of
certain reinsurance companies. In this segment, we enter into arrangements
whereby we write targeted property-casualty insurance coverages and reinsure
substantially all of the risks to reinsurers in exchange for fees. This business
takes advantage of our certificates of authority granting us license to write
insurance in many states. Income in this segment is generated on a
fee-for-service basis primarily.

Non-Standard

In
December 2000, we acquired a 52% economic interest in Instant Auto Insurance
Holdings, Inc. Instant Auto operates as a non-standard insurance agency. Its
principal revenue stream is agents fees and commissions.

Corporate and Other

Our
corporate and other segment primarily consists of unallocated net investment
income, unallocated interest expense, and certain overhead expenses not directly
associated with a particular segment

---

`A summary of segment results for the three months ending March 31, 2001 and 2000 is as follows:

2001                                                Standard     Life and
                                                    Property-     Health   Specialty               Corporate
                                                    Casualty    Insurance    Lines   Non-Standard  and Other
                                                   ---------    ---------  --------- ------------  ---------
Revenues:                                                            (in thousands)
  Premiums earned                                  $  56,847   $   7,465   $   1,083
  Net investment income                                 --        10,780        --     $     157    $   4,666
  Policy fees                                            355         898        --          --           --
  Realized gains                                        --           601        --          --          1,105
  Other                                                 --            52         843         442          809
                                                   ---------   ---------   ---------   ---------    ---------
     Total revenues                                   57,202      19,796       1,926         599        6,580
Expenses:
  Loss, LAE and policyholder benefits                 37,902       8,057         799        --           --
  Policy acquisition costs                            12,058       2,122         222        --           --
  Operating expenses                                   6,362       3,761          61       1,389        3,080
  Interest on debt                                      --         2,430        --          --          2,228
  Goodwill and other intangible amortization            --          --          --          --            526
                                                   ---------   ---------   ---------   ---------    ---------
     Total expenses                                   56,322      16,370       1,082       1,389        5,834

Pre-tax income (loss) from continuing operations   $     880   $   3,426   $     844   $    (790)   $     746
                                                   =========   =========   =========   =========    =========

Operating segment assets:
  Investments and other assets                     $ 206,867   $ 907,837   $   8,219      27,114    $ 294,593
  Deferred acquisition costs                          26,203      17,660         345        --           --
                                                   ---------   ---------   ---------   ---------    ---------
                                                   $ 233,070   $ 925,497   $   8,564   $  27,114    $ 294,593
                                                   =========   =========   =========   =========    =========`

`2000                                               Standard     Life and
                                                   Property-     Health   Specialty                Corporate
                                                   Casualty     Insurance    Lines   Non-Standard  and Other
                                                   ----------   ---------  --------- ------------  ---------
Revenues:                                                            (in thousands)
  Premiums earned                                  $ 56,565           --         --           --
  Net investment income                                  --           --         --           --    $ 7,003
  Policy fees                                           239           --         --           --         --
  Realized losses                                        --           --         --           --         --
  Other                                                  --           --         --           --         88
                                                   ----------    --------  --------- ------------  ---------
     Total revenues                                  56,804           --         --           --      7,091
Expenses:
  Loss, LAE and policyholder benefits                39,779           --         --           --         --
  Policy acquisition costs                           12,443           --         --           --         --
  Operating expenses                                  7,311           --         --           --      2,674
  Interest on debt                                       --           --         --           --      3,403
  Goodwill and other intangible amortization             --           --         --           --        151
                                                   ----------    --------  ---------  ----------   ---------
     Total expenses                                  59,533           --         --           --      6,228

Pre-tax income (loss) from continuing operations   $ (2,729)          --         --           --      $ 863
                                                   ==========    ========  =========  ============ =========

Operating segment assets:
  Investments and other assets                     $ 338,486          --         --           --    $355,800
  Deferred acquisition costs                          29,897          --         --           --          --
                                                   ----------    --------  ---------  ------------  ---------
                                                   $ 368,383                                        $355,800
                                                   ==========    ========  =========  ============  =========`

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Note D--Stock Transactions

In the first quarter of 2001, we engaged in a number of stock transactions.  On January 20, 2001, we issued approximately
380,000 shares of common stock in exchange for $3.475 million face amount of Deferrable Capital Securities.  On January 26, 2001, the
holders of our Series A Convertible Preferred Stock converted their shares into 5.9 million shares of  common stock pursuant to their
original conversion terms.  We repurchased that common stock for approximately $47.2 million.  In separate transactions, we sold 5.5
million shares of common stock to a number of investors for approximately $32.3 million.  These transactions and other transactions
resulted in Vesta repurchasing 6.4 million shares of its common stock for approximately $50.8 million and issuing 5.9 million shares
of its common stock for approximately 32.3 million of cash and $3.475 million face amount of Deferrable Capital Securities.

Note E--Subsequent Event

On April 18, 2001 we entered into a definitive agreement to acquire the outstanding stock of Florida Select Insurance
Holdings, Inc for approximately $64.5 million.  The transaction is subject to regulatory approval.  Florida Select writes homeowners
business primarily in the State of Florida.  As of and for the year ended December 31, 2000, Florida Select has consolidated assets
of approximately $106.6 million, stockholders' equity of approximately $31.5 million,  net income of approximately $6.6 million, and
gross written premiums of approximately $63.5 million.

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

Results of Operations

Vesta
writes insurance on selected personal lines risks only. Our Standard-Property
Casualty writings are balanced between risks of property damage (faster
determination of ultimate loss but is highly unpredictable) and casualty
exposure (more predictable but takes longer to determine the ultimate loss). We
also write life, annuity, and health insurance business. Additionally, we are
actively involved in the writing of insurance on our polices for the benefit of
reinsurance companies, commonly referred to as servicing carrier or fronting,
which generates fee-for-service income.

Our
revenues from operations are derived primarily from net premiums earned on risks
written by our insurance subsidiaries, investment income and investment gains or
losses. Our expenses consist primarily of payments for claims and underwriting
expenses, including agents commissions and operating expenses.

Comparison of First Quarter 2001 to First Quarter 2000

Income  available to common  shareholders  decreased by $3.2 million,  or 50.8% to $3.1 million for the quarter  ended  March 31,
2001,  from $6.3 million for the quarter ended March 31, 2000. On a diluted per share basis,  income  available to common  shareholders
for the first  quarter of 2001 was $.15 per share  versus income of $.28 per share for the first  quarter of 2000.  The decrease in
income available to common shareholders is primarily  attributable to a $4.6 million after-tax gain on debt extinguishments  recognized
during the first quarter of 2000 and $3.9 million of net income from  discontinued  operations in the first quarter of 2000,  partially
offset by an increase in net income from  continuing  operations  of $4.4 million from a $1.7 million loss for the quarter  ended March
31, 2000 to $2.7 million of income for the quarter ended March 31, 2001.

Standard Property-Casualty

Net
premiums written for standard property-casualty lines increased by $3.1 million,
or 6.3%, to $52.2 million for the quarter ended March 31, 2001, from $49.1
million for the quarter ended March 31, 2000. Net premiums earned for
standard property-casualty lines increased $.2 million, or .3 % to $56.8 million
for the quarter ended March 31, 2001, from $56.6 million for the quarter
ended March 31, 2000. The increase in net premiums written and net premiums
earned are primarily attributable to continued rollover from other segments of
certain policies acquired in prior years, and an increase in new policy
applications, partially offset by a loss of certain policies in the 1st quarter
of 2000 that occurred when we were temporarily downgraded by A.M. Best to a B
(good).

Loss
and loss adjustment expenses (LAE) for standard property-casualty
lines decreased by $1.9 million, or 4.8%, to $37.9 million for the quarter ended
March 31, 2001, from $39.8 million for the quarter ended March 31,
2000. The loss and LAE ratio for property-casualty lines for the quarter ended
March 31, 2001 was 66.3% as compared to 70.0 % at March 31, 2000. The
decrease in the loss and LAE incurred and the loss and LAE ratio is primarily
attributable to improved underwriting results partially offset by normal winter
storm activity.

Policy
acquisition expenses remained flat for the quarter-to-quarter comparison,
consistent with earned premium. Operating expenses decreased by $.9 million, or
12.3% to $6.4 million for the quarter ended March 31, 2001, from $7.3
million for the quarter ended March 31, 2000, as we continued our cost reduction
efforts.

Life and Health Insurance

On
June 30, 2000, we entered the life and annuity business through a 71% investment
in American Founders Financial Corporation, a holding company for two life
insurance companies domiciled in Texas and we entered the health insurance
business through the acquisition of Aegis Financial Corporation, a holding
company for two life and health insurance companies domiciled in Texas, in
December, 2000. American Founders and Aegis have approximately $2.2 billion
(face value) of life and annuity products in force and $22.3 million of health
insurance premiums in force at March 31, 2001. Life insurance premiums and
policy fees were $3.3 million for the quarter ended March 31, 2001 compared
to zero for the comparable prior period due to the acquisition of American
Founders on June 30, 2000 and Aegis in December 2000. Health insurance premiums
totaled $5.2 million for the quarter ended March 31, 2001 versus zero for the
comparable prior period. Health insurance benefits incurred totaled $2.1 million
for the quarter and Health insurance commission expense was $1.6 million.

Specialty Lines

In
2000, we began utilizing our licenses to write business for the benefit of
reinsurance companies. In this segment, we enter into arrangements whereby we
write targeted property-casualty insurance coverages and reinsure substantially
all of the risks to reinsurers in exchange for fees. This business takes
advantage of our certificates of authority granting us license to write
insurance in many states. Income in this segment is generated on a
fee-for-service basis primarily. Net premiums written for specialty lines were
$1.5 million for the quarter ended March 31, 2001. Net premiums earned for
specialty lines were $1.1 million for the quarter ended March 31, 2001. For
the quarter ended March 31, 2001, the Company earned approximately $.8
million of fees.

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Non-Standard

In
December 2000, we acquired a 52% economic interest in Instant Auto Insurance
Holdings, Inc. Instant Auto operates as a non-standard insurance agency. Its
principal revenue stream is agents fees and commissions. Fees and
commissions totaled $.4 million for the three months ended March 31, 2001 as
Instant Auto began executing its strategy of building its agency business.

Net Investment Income

Net
investment income increased by $8.6 million, or 123%, to $15.6 million for the
quarter ended March 31, 2001, from $7.0 million for the quarter ended
March 31, 2000. The weighted average yield on invested assets (excluding
realized and unrealized gains) was 6.6% for the quarter ended March 31,
2001, compared with 6.57% for the quarter ended March 31, 2000. The
increase in investment income is primarily attributable to an increase in
average invested assets resulting from our acquisitions.

Federal Income Taxes

Federal
income taxes increased by $2.6 million to $1.8 million of expense for the
quarter ended March 31, 2001 as a result of income in the current period
compared to a loss in the prior period.

Liquidity and Capital Resources

Vesta is a holding  company whose  principal  asset is its  investment in the capital stock of the companies  constituting  the
Vesta Insurance Group, a group of wholly owned insurance  companies  including Vesta Fire and a majority  ownership in a life insurance
holding company which includes  American Founders Life Insurance  Company.  The insurance  subsidiaries  comprising the Vesta Group are
individually  supervised  by various  state  insurance  regulators.  Vesta  Fire and  American  Founders  are our  principal  operating
subsidiaries.

Dividends and Management Fees

The
principal uses of funds at the holding company level are to pay operating
expenses, principal and interest on outstanding indebtedness and deferrable
capital securities and dividends to stockholders if declared by the Board of
Directors. During the last three years, our insurance subsidiaries have produced
operating results and paid dividends sufficient to fund our needs. Except for
the regulatory restrictions described above, we are not aware of any demands or
commitments of the insurance subsidiaries that would prevent them from paying
dividends sufficient to meet our anticipated needs (including debt service) for
at least the next twelve months. See, BusinessRegulation.

As
a holding company with no other business operations, we rely primarily on fees
generated by our management agreement with our insurance subsidiaries and
dividend payments from Vesta Fire to meet our cash requirements (including our
debt service) and to pay dividends to our stockholders. Transactions between
Vesta and its insurance subsidiaries, including the payment of dividends and
management fees to Vesta by such subsidiaries, are subject to certain
limitations under the insurance laws of those subsidiaries domiciliary
states. The insurance laws of the state of Illinois, where Vesta Fire is
domiciled, permit the payment of dividends in any year which, together with
other dividends or distributions made within the preceding 12 months, do not
exceed the greater of 10% of statutory surplus as of the end of the preceding
year or the net income for the preceding year, with larger dividends payable
only after receipt of prior regulatory approval.

Credit Facilities

On
March 3, 2000, we established a revolving credit facility with First Commercial
Bank, Birmingham, Alabama (First Commercial) which consists of the
following lines of credit:

- a $7.5 million unsecured line which bears interest at First Commercial's prime rate +1/4%;

- an additional $7.5 million line which bears interest at First  Commercial's  prime rate, secured by a pledge of the management
          contract between our wholly owned management company, J. Gordon Gaines, Inc., and our operating insurance subsidiaries.

Each
of these credit facilities mature on December 31, 2002. In addition, the credit
agreements related to these facilities contain typical financial covenants which
require us to maintain certain financial standards. As of March 31, 2001, none
of credit line was available.

---

Long Term Debt and Preferred Stock

Annual
distribution obligations for the Companys long term debt and preferred
stock outstanding at March 31, 2001 are as follows:

|Security                                      | Principal     | Annual Interest Obligation
|--------------------------------------------- | ------------- | --------------------------
|8.75% Senior Debentures due 2025              | $87 million   | $7.6 million              
|8.525% Deferrable Capital Securities due 2027 | $29.8 million | $2.5 million              
|Subsidiary Preferred Stock                    | $7 million    | $.5 million               

Cash flows

The
principal sources of funds for our insurance subsidiaries are premiums,
investment income and proceeds from the sale or maturity of invested assets.
Such funds are used principally for the payment of claims, operating expenses,
commissions and the purchase of investments. As is typical in the insurance
industry, we collect cash in the form of premiums and invest that cash until
claims are paid. Cash collected from premiums and cash paid for claims is
included in cash flow from operations, while the cash impact from our investing
activities is included in cash flow from investing activities. In periods such
as 2001 and 2000, where we are exiting certain lines of business such as
commercial lines and reinsurance assumed lines we are funding the payout of
commercial and reinsurance assumed claims through the liquidation of invested
assets, consistent with the historical insurance business model. However, this
generates cash outflows from operations that can be misleading.

On
a consolidated basis, net cash used in operations for the three months ended
March 31, 2001 and 2000, was $16.6 million and $43.7 million, respectively. Cash
flow from operations was negative for the current quarter due to the continued
payout of claims from our discontinued operations, the payout of
standard-property casualty claims incurred in prior periods, and the timing of
payment of certain payables and other operational items. Net cash provided by
investing activities was $48.2 million and $72.6 million for the three months
ended March 31, 2001 and 2000, respectively as we funded the discontinuance of
the reinsurance assumed and commercial lines of business. We also utilized the
excess cash generated by our investing activities in our financing activities.
Net cash used in financing activities was $13.9 million and $33.0 million for
the three month periods ending March 31, 2001 and 2000, respectively as we
repurchased common stock in 2001 and repurchased outstanding debt in 2000.

Market Risk of Financial Instruments

Vestas
principal assets are financial instruments, which are subject to the market risk
of potential losses from adverse changes in market rates and prices. Our primary
risk exposures are interest rate risk on fixed maturity investments, mortgages
and collateral loans and annuity liabilities and equity price risk for stocks.
Vesta manages its exposure to market risk by selecting investment assets with
characteristics such as duration, yield and liquidity to reflect the underlying
characteristics of the related insurance.

Special Note Regarding Forward-Looking Statements

Any
statement contained in this report which is not a historical fact, or which
might otherwise be considered an opinion or projection concerning the Company or
its business, whether express or implied, is meant as and should be considered a
forward-looking statement as that term is defined in the Private Securities
Litigation Reform Act of 1996. Forward-looking statements are based on
assumptions and opinions concerning a variety of known and unknown risks,
including but not necessarily limited to changes in market conditions, natural
disasters and other catastrophic events, increased competition, changes in
availability and cost of reinsurance, changes in governmental regulations, and
general economic conditions, as well as other risks more completely described in
the Companys filings with the Securities and Exchange Commission,
including its most recent Annual Report on Form 10-K. If any of these
assumptions or opinions prove incorrect, any forward-looking statements made on
the basis of such assumptions or opinions may also prove materially incorrect in
one or more respects.

---

PART II
Item 1. Legal Proceedings

Securities Litigation

Subsequent
to the filing of our quarterly report on Form 10-Q for the period ended March
31, 1998 with the U.S. Securities and Exchange Commission (SEC or
Commission), we commenced an internal investigation to determine the
exact scope and amount of certain reductions of reserves and overstatement of
premium income in our reinsurance assumed business that had been recorded in the
fourth quarter of 1997 and the first quarter of 1998. This investigation
concluded that inappropriate amounts had, in fact, been recorded and we
determined that we should restate our previously issued 1997 financial
statements and first quarter 1998 Form 10-Q. Additionally, during our internal
investigation we were advised by our then outside auditors that there was an
error in the accounting methodology used to recognize earned premium income in
our reinsurance business. We had historically reported certain assumed
reinsurance premiums as earned in the year in which the related reinsurance
contracts were entered even though the terms of those contracts frequently
bridged two years. We determined that reinsurance premiums should be recognized
as earned over the contract period and corrected the error in our accounting
methodology by restating previously issued financial statements. On June 1, 1998
and June 29, 1998, we issued press releases, which were filed with the
Commission, regarding the matters addressed in this section.

We
restated our previously issued financial statements for 1995, 1996, and 1997 and
our first quarter 1998 Form 10-Q for the above items by issuance of a current
report on Form 8-K dated August 19, 1998. These restatements resulted in a
cumulative decrease to stockholders equity of approximately $75.2 million
through March 31, 1998. Commencing in June 1998, we and several of our current
and former officers and directors were named as defendants in several purported
class action lawsuits filed in the United States District Court for the Northern
District of Alabama. Several of our officers and directors also have been named
in a derivative action lawsuit in the Circuit Court of Jefferson County,
Alabama, in which Vesta is a nominal defendant. In addition, we received various
inquiries and requests for information from various state departments of
insurance and other regulatory authorities, including a subpoena issued to Vesta
on August 24, 1998 by the 34 Commission as part of a formal, non-public order of
investigation. We fully responded to such requests in 1998, and no further
requests for information from Vesta have been made by the Commission.

In
March 1999, the actions filed in the United States District Court for the
Northern District of Alabama were consolidated into a single action in that
district and certified as a class action. Torchmark Corporation and KPMG Peat
Marwick LLP, our outside auditor at the time, were added as additional
defendants in the consolidated class action. The consolidated amended complaint
alleges violations of certain federal securities laws and seeks unspecified but
potentially substantial damages. The court has denied all motions to dismiss and
the class action is presently in discovery, with a trial date set for November
5, 2001. We are vigorously defending this litigation but there is no assurance
of its outcome. The parties have conducted settlement discussions, but have not
been successful in reaching any resolution. The derivative case has been stayed
and placed on the administrative docket.

We
have several layers of directors and officers liability insurance
coverage (D&O insurance), the terms of which may cover all or a
portion of the damages or settlement costs of the class action. These policies
provide up to $100 million in D&O insurance to cover damages or settlement
costs and an additional policy provides another layer of $10 million D&O
insurance to cover any damages awarded by a court in these actions. Cincinnati
Insurance Company (Cincinnati) issued the primary policy that
provides the first $25 million of D&O insurance. Federal Insurance Company
(The Chubb Group of Insurance Companies) issued an excess D&O insurance
policy which provides coverage for the second $25 million in losses, if
necessary. The balance of the coverage is provided by a group of insurers and
was purchased after the class actions comprising the consolidated class action
were filed. In September 1998, after these actions were filed, Cincinnati, which
provides the primary insurance policy, filed a lawsuit in the United States
District Court for the Northern District of Alabama seeking to rescind the
policy and avoid the coverage. That action was dismissed for lack of subject
matter jurisdiction, and we then filed an action against Cincinnati in the
Circuit Court of Jefferson County, Alabama, to enforce the policy and to recover
damages arising out of Cincinnatis actions. Cincinnati filed an answer and
counterclaim in that action, seeking to rescind the policy and avoid the
coverage. This action is in the discovery stage and the outcome is uncertain.
There is no assurance that the primary insurance coverage will ultimately be
available for any damages or settlement costs incurred. The outcome of this
litigation may also materially affect the availability of the excess policy
issued by The Chubb Group. The damages sought by stockholder plaintiffs in the
consolidated class action, either at trial or through settlement, may be
substantial. If the damages or settlement costs incurred in connection with the
consolidated class action and derivative action are ultimately determined not to
be covered by our D&O insurance policies for any reason, we may incur a
significant and material loss which could have a material and adverse impact on
our financial condition and results of operation.

The
consolidated class action is in the discovery stage and the derivative action
has been placed on the administrative docket. The ultimate outcome of these
matters is uncertain. Accordingly, we have not currently set aside any financial
reserves relating to any of the above-referenced actions.

Indemnification Agreements and Liability Insurance

Pursuant
to Delaware law and our Bylaws, we are obligated to indemnify our current and
former officers and directors for certain liabilities arising from their
employment with or services to Vesta, provided that their conduct complied with
certain requirements. Pursuant to these obligations, we have agreed to advance
costs of defense and other expenses on behalf of certain current and former
officers and directors, subject to an undertaking from such individuals to repay
any amounts advanced in the event a court determines that they are not entitled
to indemnification.

---

Arbitration

As
discussed above, we corrected our accounting for assumed reinsurance business
through restatement of our previously issued financial statements. Similar
corrections were made on a statutory accounting basis by recording cumulative
adjustments in Vesta Fires 1997 statutory financial statements. The impact
of this 35 correction has been reflected in amounts ceded under our 20% whole
account quota share treaty which was terminated on June 30, 1998 on a run-off
basis. We believe such treatment is appropriate under the terms of this treaty
and have calculated the quarterly reinsurance billings presented to the three
treaty participants accordingly. The aggregate amount included herein as
recoverable from such reinsurers totaled approximately $55.2 million as of March
31, 2001. We have collected approximately $48.5 million from the drawdown of
collateral on hand.

NRMA
Insurance, Ltd. (NRMA), one of the participants in the 20% whole
account quota share treaty, filed a lawsuit in the United States District Court
for the Northern District of Alabama contesting our billings. NRMA sought
rescission of the treaty and a temporary restraining order preventing us from
drawing down approximately $34.5 million of collateral. We filed a demand for
arbitration as provided for in the treaty and also filed a motion to compel
arbitration which was granted in the United States District Court action. Vesta
has entered into a $25 million letter of credit in favor of NRMA to fund any
amounts NRMA may recover as a result of the arbitration. We filed for
arbitration against the other two participants in the treaty and all of these
arbitrations are in their early stages. While management believes its
interpretation of the treatys terms and computations based thereon are
correct, these matters are in their early stages and their ultimate outcome
cannot be determined at this time.

During
1999, F&G Re (on behalf of USF&G), filed for arbitration under two
aggregate stop loss reinsurance treaties whereby F&G Re assumed certain risk
from us. F&G Re is seeking to rescind the treaties and avoid its obligation.
Under the terms of the two treaties, we believe we will be entitled to
recoveries of approximately $28.2 million as losses mature from prior accident
years. Vesta has recorded a reinsurance recoverable of approximately $28.2
million as of March 31, 2001 and December 31, 2000 related to these two
treaties. This arbitration is in its early stage and the ultimate outcome cannot
be determined at this time.

A
dispute has also arisen with CIGNA Property and Casualty Insurance Company
(CIGNA) (now ACE USA) under a personal lines insurance quota share
reinsurance agreement, whereby we assumed certain risks from CIGNA. During
September 2000, CIGNA filed for arbitration under the reinsurance agreement,
seeking payment of the balances that CIGNA claims are due under the terms of the
treaty. In addition, during the fourth quarter, the treaty was terminated on a
cut-off basis. Vesta is seeking recoupment of all improper claims payments and
excessive expense allocations and charges from CIGNA. This arbitration is in its
early stages and the ultimate outcome cannot be determined at this time.

If
the amounts recoverable under the relevant treaties are ultimately determined to
be materially less than the amounts that we have reported as recoverable, we may
incur a significant, material, and adverse impact on our financial condition and
results of operations.

Other Litigation

Vesta,  through its  subsidiaries,  is routinely a party to pending or threatened legal  proceedings and arbitration  relating to
the regular conduct of its insurance business.  These proceedings involve alleged breaches of contract,  torts (including bad faith and
fraud claims),  and miscellaneous other specified relief. Based upon information  presently available,  and in light of legal and other
defenses  available to us and our  subsidiaries,  management  does not consider  liability  from any  threatened or pending  litigation
regarding routine matters to be material.

---

Item 2. Changes in Securities

In
the first quarter of 2001, we exchanged 379,918 shares of our common stock for
$3.475 million liquidation amount of the 8.525% Deferrable Capital Securities in
two separate transactions. At the time of each transaction, we delivered shares
from our treasury having a market value (based on the five trading days
preceding the closing date of each transaction) equal to 75% of the total
liquidation amount of the 8.525% Deferrable Capital Securities exchanged. The
transaction was not registered under the Securities Act of 1933 in reliance on
the exemption afforded by Section 3(a)(9) thereof.

Item 3. Defaults Upon Senior Securities
NoneItem 4. Submission of Matters to a Vote of Security Holders
NoneItem 5. Other information
None

---

Item 6. Exhibits and Reports on Form 8-K

a)   EXHIBITS

None

---

b)   Reports on Form 8-K.

Current reports were filed on Form 8-K on January 8, 2001, January 31, 2001, and March 5, 2001 in connection with the release of press releases.

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Signatures

Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.

Vesta Insurance Group, Inc.

Date:  May 14, 2001

Date: May 14, 2001

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