<PAGE>

                                                                       



                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

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

                         FOR QUARTER ENDED JUNE 30, 1998

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

                          Commission File Number 1-7801

                            ORION CAPITAL CORPORATION
             (Exact name of registrant as specified in its charter)

             Delaware                                     95-6069054
  (State of other jurisdiction of                       (I.R.S. Employer
  incorporation or organization)                    Identification Number)

               9 Farm Springs Road, Farmington, Connecticut 06032
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code: (860)674-6600

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.

           Yes(x)                                          No (  )


27,562,439  shares of Common  Stock,  $1.00 par value,  of the  registrant  were
outstanding on August 7, 1998.

                                  Page 1 of 34
                        Exhibit Index Appears at Page 32


                                       1
<PAGE>


                            ORION CAPITAL CORPORATION
                                 FORM 10-Q INDEX
                       For the Quarter Ended June 30, 1998

                                                                            Page

PART I. FINANCIAL INFORMATION

     Item 1. Consolidated Financial Statements:
             Consolidated Balance Sheet at June 30, 1998 (Unaudited)
             and December 31, 1997                                         3 - 4

             Consolidated Statement of Earnings for the three and six-
             months ended June 30, 1998 and 1997 (Unaudited)                   5

             Consolidated Statement of Stockholders' Equity for the
             six-months ended June 30, 1998 and 1997 (Unaudited),
             and for the year ended December 31, 1997                          6

             Consolidated Statement of Cash Flows for the six-months
             ended June 30, 1998 and 1997 (Unaudited)                      7 - 8

             Notes to Consolidated Financial Statements (Unaudited)        9 -14

             Independent Accountants' Review Report                           15

     Item 2. Management's Discussion and Analysis of Financial
             Condition and Results of Operations                         16 - 27
 
PART II. OTHER INFORMATION                                                    28
                                       2
<PAGE>

                          PART I. FINANCIAL INFORMATION
                   ORION CAPITAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                     ASSETS
<TABLE>
<CAPTION>

                                                           June 30,1998  December 31,
(In millions)                                              (Unaudited)       1997
-------------------------------------------------------------------------------------
<S>                                                          <C>          <C>

ASSETS:
Investments: -
Fixed maturities, at amortized cost
   (market $312.5 - 1998 and $322.4 - 1997) ..............   $    303.5   $    312.8
Fixed maturities, at market (amortized cost
   $1,362.7 - 1998 and $1,395.4 - 1997) ..................      1,428.8      1,469.8
Common stocks, at market (cost $150.4 -
   1998 and $163.0 - 1997) ...............................        216.0        245.4
Non-redeemable preferred stocks, at market
   (cost $172.0 - 1998 and $183.6 - 1997) ................        184.8        193.1
Other long-term investments ..............................        118.7         94.3
Short-term investments ...................................        302.4        228.3
                                                             ----------   ----------

      Total investments ..................................      2,554.2      2,543.7

Cash .....................................................         21.3          9.3
Accrued investment income ................................         25.6         29.6
Investment in affiliate ..................................         30.7         31.3
Accounts and notes receivable ............................        200.1        189.3
Reinsurance recoverables and prepaid reinsurance .........        821.6        622.2
Deferred policy acquisition costs ........................        158.6        147.1
Property and equipment ...................................         80.1         70.8
Excess of cost over fair value of net assets acquired ....        166.6        140.0
Other assets .............................................        140.8        100.8
                                                             ----------   ----------

      Total assets .......................................   $  4,199.6   $  3,884.1
                                                             ==========   ==========

</TABLE>
[FN]

                   See Notes to Consolidated Financial Statements (Unaudited)

                                       3
<PAGE>

                   ORION CAPITAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                         June 30, 1998    December 31,
(In millions, except for share data)                     (Unaudited)         1997
--------------------------------------------------------------------------------------
<S>                                                         <C>            <C>

LIABILITIES:
Policy liabilities: -
  Losses ................................................   $  1,553.4     $  1,476.4
  Loss adjustment expenses ..............................        410.0          395.3
  Unearned premiums .....................................        617.0          551.6
  Policyholders' dividends ..............................         21.0           20.5
                                                            ----------     ----------
Total policy liabilities ................................      2,601.4        2,443.8
Notes payable ...........................................        209.9          310.2
Other liabilities .......................................        363.6          282.0
                                                            ----------     ----------
Total liabilities .......................................      3,174.9        3,036.0
                                                            ----------     ----------

Contingencies (Note 7)

Company-obligated mandatorily redeemable preferred
   capital securities of subsidiary trusts holding solely
   the junior subordinated debentures of the Company ....        250.0          125.0

STOCKHOLDERS' EQUITY:
Preferred stock, authorized 5,000,000 shares; issued
   and outstanding - none
Common stock, $1 par value; authorized 50,000,000
   shares; issued 30,675,300 shares .....................         30.7           30.7
Capital surplus .........................................        149.6          152.1
Retained earnings .......................................        540.4          469.5
Accumulated other comprehensive income ..................         95.1          109.2
Treasury stock, at cost (3,001,907 shares -
  1998 and 3,069,756 shares - 1997) .....................        (36.2)         (34.3)
Deferred compensation on restricted stock ...............         (4.9)          (4.1)
                                                            ----------     ---------- 
    Total stockholders equity ..........................        774.7          723.1
                                                            ----------     ----------
    Total liabilities and stockholders equity ..........   $  4,199.6     $  3,884.1
                                                            ==========     ==========
</TABLE>
[FN]

                   See Notes to Consolidated Financial Statements (Unaudited)

                                       4
<PAGE>

                    ORION CAPITAL CORPORATON AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF EARNINGS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                     
                                                     Three Months Ended        Six Months Ended
                                                           June 30,                June 30,
                                                     --------------------    ---------------------
(In millions, except for per share data)                 1998        1997        1998        1997
---------------------------------------------------------------------------------------------------
<S>                                                 <C>         <C>         <C>         <C>

REVENUES:
Premiums earned .................................   $   370.4   $   335.2   $   719.2   $   659.2
Net investment income ...........................        42.5        41.3        83.9        81.5
Realized investment gains .......................        22.7         8.4        51.7        24.2
Other income ....................................         7.0         5.2        12.6        10.1
                                                    ---------   ---------   ---------   ---------
 Total revenues .................................       442.6       390.1       867.4       775.0
                                                    ---------   ---------   ---------   ---------

EXPENSES:
Losses incurred .................................       199.1       173.5       377.7       343.5
Loss adjustment expenses ........................        51.6        52.2       105.3       101.1
Amortization of deferred policy acquisition costs       103.1        93.3       203.9       188.1
Other insurance expenses ........................         7.8        10.5        14.7        16.6
Dividends to policyholders ......................         7.2         4.8        13.6         9.9
Interest expense ................................         3.1         6.2         8.9        12.3
Other expenses ..................................        12.5        10.6        23.5        21.7
                                                    ---------   ---------   ---------   ---------
 Total expenses .................................       384.4       351.1       747.6       693.2
                                                    ---------   ---------   ---------   ---------
Earnings before equity in earnings (loss) of
  affiliate, federal income taxes and minority
  interest expense ..............................        58.2        39.0       119.8        81.8
Equity in earnings (loss) of affiliate ..........          --         0.3        (0.7)        0.9
                                                    ---------   ---------   ---------   ---------
Earnings before federal income taxes and
  minority interest expense .....................        58.2        39.3       119.1        82.7
Federal income taxes ............................        16.7        10.0        32.7        20.8
Minority interest expense:
  Subsidiary trust preferred securities, net
    of federal income taxes .....................         3.3         1.8         6.1         3.3
  Subsidiary net earnings .......................          --         2.1          --         3.7
                                                    ---------   ---------   ---------   ---------
 Net earnings ...................................   $    38.2   $    25.4   $    80.3   $    54.9
                                                    =========   =========   =========   =========
 Net earnings per basic common share ............   $    1.39   $    0.93   $    2.93   $    2.01
                                                    =========   =========   =========   =========
 Net earnings per diluted common share ..........   $    1.36   $    0.91   $    2.85   $    1.97
                                                    =========   =========   =========   =========

</TABLE>
[FN]
           See Notes to Consolidated Financial Statements (Unaudited)

                                       5
<PAGE>

                    ORION CAPITAL CORPORATON AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                                                           
<TABLE>
<CAPTION>
                                              Six Months Ended         Six Months Ended         Year Ended
                                               June 30, 1998            June 30, 1997        December 31, 1997
(In millions)                                   (Unaudited)              (Unaudited)
------------------------------------------------------------------------------------------------------------------
<S>                                            <C>         <C>          <C>        <C>          <C>        <C>

COMMON STOCK:
Balance, beginning of period                   $  30.7                  $  15.3                 $  15.3
Stock issued in 2-for-1
common stock split                                   -                     15.4                    15.4 
                                               -------                  -------                 ------- 
Balance, end of period                         $  30.7                  $  30.7                 $  30.7 
                                               =======                  =======                 ======= 
CAPITAL SURPLUS:
Balance, beginning of period                   $ 152.1                  $ 158.6                 $ 158.6
Exercise of stock options and net
issuance of restricted stock                      (2.5)                    (0.4)                    0.5
Acquisition of Guaranty National                     -                        -                     8.4
Stock issued in 2-for-1
common stock split                                   -                    (15.4)                  (15.4)
                                               -------                  -------                 ------- 
Balance, end of period                         $ 149.6                  $ 142.8                 $ 152.1 
                                               =======                  =======                 ======= 
RETAINED EARNINGS:
Balance, beginning of period                   $ 469.5                  $ 370.8                 $ 370.8
Net earnings                                      80.3     $ 80.3          54.9    $ 54.9         115.8    $ 115.8 
                                                           ------                  ------                  ------- 
Dividends declared                                (9.4)                    (8.3)                  (17.1)
                                               -------                  -------                 ------- 
Balance, end of period                         $ 540.4                  $ 417.4                 $ 469.5 
                                               =======                  =======                 ======= 
ACCUMULATED OTHER
COMPREHENSIVE INCOME:
Balance, beginning of period                   $ 109.2                  $  70.1                 $  70.1
Unrealized investment
gains (losses), net of taxes                                (14.1)                    7.9                     41.3
Unrealized foreign exchange
translation losses, net of taxes                                -                    (0.4)                    (2.2)
                                                           ------                  ------                  ------- 
Other comprehensive income (loss)                (14.1)     (14.1)          7.5       7.5          39.1       39.1 
                                               -------     ------       -------    ------       -------    ------- 
Comprehensive income                                       $ 66.2                  $ 62.4                  $ 154.9 
                                                           ======                  ======                  ======= 
Balance, end of period                         $  95.1                  $  77.6                 $ 109.2 
                                               =======                  =======                 ======= 
TREASURY STOCK:
Balance, beginning of period                   $ (34.3)                 $ (35.0)                $ (35.0)
Exercise of stock options and net
issuance of restricted stock                       6.6                      0.6                     3.2
Acquisition of treasury stock                     (8.5)                    (0.9)                   (2.5)
                                               -------                  -------                 ------- 
Balance, end of period                         $ (36.2)                 $ (35.3)                $ (34.3)
                                               =======                  =======                 ======= 
DEFERRED COMPENSATION ON
RESTRICTED STOCK:
Balance, beginning of period                   $  (4.1)                 $  (3.1)                $  (3.1)
Net issuance of restricted stock                  (1.6)                     0.2                    (1.9)
Amortization of deferred
compensation on restricted stock                   0.8                      0.4                     0.9 
                                               -------                  -------                 ------- 
Balance, end of period                         $  (4.9)                 $  (2.5)                $  (4.1)
                                               =======                  =======                 ======= 
                                
</TABLE>
[FN]
           See Notes to Consolidated Financial Statements (Unaudited)


                                       6
<PAGE>
           
                   ORION CAPITAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                               Six Months Ended June 30,
                                                               -------------------------
(In millions)                                                     1998            1997
----------------------------------------------------------------------------------------
<S>                                                            <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Premiums collected .........................................   $  741.6        $  667.7
Net investment income collected ............................       82.0            69.2
Losses and loss adjustment expenses paid ...................     (501.0)         (429.9)
Policy acquisition costs paid ..............................     (228.8)         (207.9)
Dividends paid to policyholders ............................      (13.1)          (10.9)
Interest paid ..............................................      (11.3)          (12.0)
Payments on trust preferred securities .....................       (7.3)             --
Federal income tax payments ................................      (31.6)          (18.0)
Other payments .............................................      (17.7)          (23.3)
                                                               --------        -------- 
Net cash provided by operating activities ..................       12.8            34.9
                                                               --------        --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of fixed maturity investments ...................       63.3            62.8
Sales of fixed maturity investments ........................      526.8           158.4
Sales of equity securities .................................      258.7            95.5
Investments in fixed maturities ............................     (502.2)         (342.1)
Investments in equity securities ...........................     (205.0)          (79.6)
Acquisition of businesses, net of cash acquired ............      (36.0)             --
Net purchases of short-term investments ....................      (76.6)          (49.4)
Other receipts (payments) ..................................      (27.5)            6.7
                                                               --------        --------
Net cash provided by (used in) investing activities ........        1.5          (147.7)
                                                               --------        -------- 

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of trust preferred securities ...      121.9           123.0
Proceeds from exercise of stock options ....................        0.8             0.3
Repayment of notes payable .................................     (109.5)           (0.4)
Dividends paid to stockholders .............................       (8.9)           (7.7)
Purchases of common stock ..................................       (6.6)           (0.7)
Other receipts .............................................         --             0.3
                                                               --------        --------
Net cash provided by (used in) financing activities ........       (2.3)          114.8
                                                               --------        --------

Net increase in cash .......................................       12.0             2.0
Cash balance, beginning of period ..........................        9.3            11.6
                                                               --------        --------
Cash balance, end of period ................................   $   21.3        $   13.6
                                                               ========        ========

</TABLE>
[FN]
           See Notes to Consolidated Financial Statements (Unaudited)

                                       7
<PAGE>
 
                   ORION CAPITAL CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF CASH FLOWS - (Continued)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                             Six Months Ended June 30,
                                                             -------------------------
(In millions)                                                    1998         1997
--------------------------------------------------------------------------------------
<S>                                                           <C>         <C>

RECONCILIATION OF NET EARNINGS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net earnings ............................................     $   80.3    $   54.9
                                                              --------    --------

ADJUSTMENTS:
Depreciation and amortization ...........................          9.0         6.1
Amortization of excess of cost over fair
   value of net assets acquired .........................          2.7         1.5
Deferred federal income taxes ...........................         (4.0)       (1.9)
Amortization of fixed maturity investments ..............         (0.5)       (1.2)
Non-cash investment income ..............................         (9.0)       (9.2)
Equity in (earnings) loss of affiliate,
   net of dividends received ............................          0.7        (0.7)
Realized investment gains ...............................        (51.6)      (24.1)
Minority interest in subsidiary earnings ................           --         3.7
Other ...................................................          0.1          --

CHANGES IN ASSETS AND LIABILITIES:
Decrease (increase) in accrued investment income ........          4.2        (2.6)
Increase in accounts and notes receivable ...............        (12.4)      (17.3)
Decrease (increase) in reinsurance recoverable
   and prepaid reinsurance ..............................        (84.3)       16.6
Increase in deferred policy acquisition costs ...........        (10.1)       (5.6)
Increase in other assets ................................         (3.0)       (4.5)
Increase (decrease) in losses ...........................         17.7       (14.9)
Increase in loss adjustment expenses ....................         14.9        22.6
Increase in unearned premiums ...........................         43.2         6.6
Increase (decrease) in policyholders' dividends .........          0.5        (1.0)
Increase in other liabilities ...........................         14.4         5.9
                                                              --------    --------

 Total adjustments and changes ..........................        (67.5)      (20.0)
                                                              --------    -------- 

Net cash provided by operating activities ...............     $   12.8    $   34.9
                                                              ========    ========
</TABLE>
[FN]

           See Notes to Consolidated Financial Statements (Unaudited)


                                       8
<PAGE>


                   ORION CAPITAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                     Six Months Ended June 30, 1998 and 1997

NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION

     The  consolidated  financial  statements  and notes thereto are prepared in
accordance  with  generally  accepted  accounting  principles  for  property and
casualty  insurance  companies.  The consolidated  financial  statements include
Orion  Capital   Corporation   ("Orion")  and  its   wholly-owned   subsidiaries
(collectively  the "Company").  The Company's  investment in its  unconsolidated
affiliate is accounted for using the equity  method.  All material  intercompany
balances and transactions have been eliminated.

     The Company  completed two tender offers,  which increased its ownership of
Guaranty National  Corporation  ("Guaranty  National") from 49.5% to 81% in July
1996 and to 100% in December  1997. A minority  interest  charge was recorded by
the Company for the portion of Guaranty National's earnings  attributable to the
shares  not  owned  by the  Company  in 1997  until  it  became  a  wholly-owned
subsidiary.

     As of January 1, 1998 the Company adopted Financial Accounting Standard No.
130, "Reporting  Comprehensive Income". This statement establishes standards for
the reporting and  presentation  of  comprehensive  income and its components in
financial   statements.   Comprehensive   income   encompasses  all  changes  in
shareholders'  equity (except those arising from transactions with shareholders)
and  includes  net  income,   net   unrealized   capital   gains  or  losses  on
available-for-sale securities and foreign currency translation adjustments. This
new standard requires  additional  disclosures and does not affect the Company's
financial position or results of operations.

     In the  opinion of  management,  the  accompanying  consolidated  financial
statements  reflect  all  adjustments  (consisting  solely of  normal  recurring
adjustments)  necessary to present  fairly the Company's  results of operations,
financial  position  and cash flows for all periods  presented.  Although  these
consolidated financial statements are unaudited,  they have been reviewed by the
Company's  independent  accountants,  Deloitte & Touche LLP, for conformity with
accounting  requirements for interim financial  reporting.  Their report on such
review is included herein.  These  consolidated  financial  statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company's 1997 Annual Report on Form 10-K.

NOTE 2 - ACQUISITIONS

     On April 30, 1998 the Company completed the acquisition of the non-standard
personal  automobile  insurance  business of North  Carolina - based  Strickland
Insurance Group,  Inc.  ("Strickland").  The acquisition  included two insurance
companies,  a premium  finance  company,  a claim  adjusting  firm and a general
agency in Florida.  In 1997,  Strickland  reported  approximately $99 million of
personal  automobile  gross  premiums  written and $46  million of net  premiums
written.  The purchase  price was $44.0 million in cash,  subject to adjustment,
and  included  acquisition  expenses  of $0.2  million.  The  Company  made cash
payments of $38.5  million,  to Strickland on April 30, 1998 and $2.0 million in
1997 with $3.3 million of the purchase  price retained by the Company in part to
secure obligations of Strickland. Simultaneous with the acquisition, the

                                       9
<PAGE>

Company repaid $9.4 million of Strickland bank debt. The acquisition  includes a
purchase  price  contingency  for  loss  development  incurred  by the  acquired
business  during the period  from the  acquisition  date to  December  31,  2000
pertaining to accident  years prior to the  acquisition  date.  The Company used
cash and short-term  investments to fund the acquisition and debt payments.  The
acquisition  was  accounted  for as a purchase  and  accordingly,  the  acquired
business has been included in the Company's  consolidated  financial  statements
since the date of acquisition.  The total consideration  exceeded the fair value
of  the  net  assets  acquired  by  approximately  $28.9  million,   subject  to
adjustment, and is being amortized over 25 years.

     As described in Note 9, the Company  completed the  acquisition  of Grocers
Insurance Company from United Grocers, Inc. on July 9, 1998.

NOTE 3 - INVESTMENT IN AFFILIATE

     As of June  30,  1998  the  Company  owned  24.7%  of the  common  stock of
Intercargo  Corporation  ("Intercargo"),  a publicly held  company.  The Company
records its share of  Intercargo's  operating  results on a quarterly lag, after
Intercargo has reported its financial results.  Summarized financial information
of Intercargo reflected by the Company for the three and six month periods ended
June 30, 1998 and 1997 is as follows:

<TABLE>
<CAPTION>
                                           Three Months Ended June 30,      Six Months Ended June 30,
                                           ---------------------------      -------------------------
(In millions)                                 1998            1997             1998          1997    
-----------------------------------------------------------------------------------------------------
<S>                                        <C>             <C>              <C>           <C>   

REVENUES:
Premiums earned ........................   $  11.7         $  13.7          $  28.5       $  30.1   
Investment and other income ............       1.8             1.3              3.8           5.0
                                           -------         -------          -------       -------
                                              13.5            15.0             32.3          35.1
                                           -------         -------          -------       -------
EXPENSES:
Insurance expenses .....................      12.9            13.6             31.7          31.3
Interest ...............................        --             0.2               --           0.5
                                           -------         -------          -------       -------  
                                              12.9            13.8             31.7          31.8
                                           -------         -------          -------       ------- 
Earnings before equity in earnings
 of affiliate and federal income taxes         0.6             1.1              0.6           3.3
Equity in earnings of affiliate ........        --             1.0               --           2.0
Federal income taxes ...................      (0.2)           (0.3)            (2.3)         (0.6)
                                           -------         -------          -------       -------
Net earnings (loss) ....................   $   0.4         $   1.8          $  (1.7)      $   4.7
                                           =======         =======          =======       =======
Company's proportionate share,
   including goodwill amortization .....   $     -         $   0.3          $  (0.7)      $   0.9
                                           =======         =======          =======       =======
                                                                     
</TABLE>


                                       10
<PAGE>


NOTE 4 - REINSURANCE

     In the normal  course of business,  the  Company's  insurance  subsidiaries
reinsure certain risks,  generally on an  excess-of-loss or pro rata basis, with
other companies to limit exposure to losses.  Reinsurance does not discharge the
primary  liability of the original insurer.  The table below summarizes  certain
reinsurance information.

<TABLE>
<CAPTION>
                                         Three Months Ended June 30,     Six Months Ended June 30,
                                         ---------------------------     -------------------------
(In millions)                               1998             1997           1998           1997
--------------------------------------------------------------------------------------------------
<S>                                      <C>              <C>            <C>            <C>   

Direct premiums written                  $ 445.5          $ 376.7        $ 887.3        $ 748.3
Reinsurance assumed                         54.8             30.0           68.9           55.2
                                         -------          -------        -------        -------
Gross premiums written                     500.3            406.7          956.2          803.5
Reinsurance ceded                         (115.5)           (66.5)        (202.4)        (129.0) 
                                         -------          -------        -------        -------    
Net premiums written                     $ 384.8          $ 340.2        $ 753.8        $ 674.5
                                         =======          =======        =======        =======
                                          
Direct premiums earned                   $ 442.5          $ 372.0        $ 878.1        $ 734.1
Reinsurance assumed                         29.3             29.1           40.2           62.6
                                         -------          -------        -------        -------
Gross premiums earned                      471.8            401.1          918.3          796.7
Reinsurance ceded                         (101.4)           (65.9)        (199.1)        (137.5)  
                                         -------          -------        -------        -------    
Net premiums earned                      $ 370.4          $ 335.2        $ 719.2        $ 659.2
                                         =======          =======        =======        =======
Loss and loss adjustment expenses
 incurred recoverable from reinsurers    $  95.5          $  41.6        $ 165.8        $  74.2
                                         =======          =======        =======        =======
</TABLE>
                                          
NOTE 5 - TRUST PREFERRED SECURITIES

The  Company-obligated  mandatorily  redeemable  preferred capital securities of
subsidiary  trusts  holding  solely the junior  subordinated  debentures  of the
Company ("Trust Preferred Securities") comprise the following:
<TABLE>
<CAPTION>                                         June 30,          December 31,
(In millions)                                       1998                1997
-----------------------------------------------------------------------------
<S>                                             <C>                <C>
8.73% Trust Preferred Securities
  due January 1, 2037                           $   125.0          $   125.0
7.701% Trust Preferred Securities
  due April 15, 2028                                125.0                  -
                                                ---------          ---------  
                                                $   250.0          $   125.0
                                                =========          =========
                                                                    
</TABLE>
     On February 2, 1998 Orion issued $125 million of 7.701% Junior Subordinated
Deferrable  Interest  Debentures due April 15, 2028 to Orion Capital Trust II, a
Delaware statutory business trust sponsored by the Company.  Orion Capital Trust
II then sold $125 million of 7.701%  capital  securities,  which mature on April
15, 2028 ("Capital  Securities"),  in a private  placement.  Approximately  $100
million of the net proceeds from the sale of the junior subordinated  debentures
were used to retire bank indebtedness of Guaranty National. Orion registered the
Capital  Securities  under the  Securities  Act of 1933  pursuant to an exchange
offer  which  expired on June 4, 1998.  On January  13,  1997 Orion  issued $125
million  of 8.73%  Trust  Preferred  Securities  which may be  redeemed  without
premium on or after January 1, 2007.


                                       11
<PAGE>

         The Trust  Preferred  Securities are  subordinate to all liabilities of
the Company. The Company may defer interest distributions on the Trust Preferred
Securities;  however, during any period when such cumulative  distributions have
been deferred,  Orion may not declare or pay any dividends or  distributions  on
its common  stock.  The  Trusts  are  consolidated  in the  Company's  financial
statements because they are wholly-owned by the Company.  The sole assets of the
Trusts  are the  Debentures  issued  by  Orion.  Orion  has  given  its  partial
guarantee,  which when taken together with the Company's  obligations  under the
declaration of the Trusts, the Debentures,  and the indentures pursuant to which
the Trust  Preferred  Securities  are issued  including its  obligations  to pay
costs, expenses, debts and liabilities of the Trusts (other than with respect to
the Trust Preferred Securities),  provides a full and unconditional guarantee of
amounts due on the Trust Preferred Securities.

NOTE 6 - STOCKHOLDERS' EQUITY AND EARNINGS PER COMMON SHARE

         In the first half of 1998,  the Company  repurchased  132,000 shares of
its common stock at an aggregate  cost of $6.6 million under a stock  repurchase
program  approved by the Board of Directors (see Note 9) and 34,744 shares at an
aggregate cost of $1.9 million relating to employee benefit plans.

     Basic  earnings per share  computations  are based on the weighted  average
number of shares  of  common  stock  outstanding  during  the  period  excluding
dilution.  Diluted earnings per share reflects the potential decrease that could
occur if all stock  options  and other  stock-based  awards were  exercised  and
converted into common stock, if their effect is dilutive.  The weighted  average
common shares were  27,457,000 and  27,299,000  for the three months ended,  and
27,429,000  and  27,302,000  for the six months  ended  June 30,  1998 and 1997,
respectively.  The weighted  average common and diluted  equivalent  shares were
28,160,000  and  27,803,000  for the three  months  ended,  and  28,145,000  and
27,801,000 for the six months ended June 30, 1998 and 1997, respectively.

NOTE 7 - CONTINGENCIES

     Orion and its subsidiaries are routinely  engaged in litigation  incidental
to their  businesses.  Management  believes that there are no significant  legal
proceedings  pending  against the  Company  which,  net of reserves  established
therefor, are likely to result in judgments for amounts that are material to the
financial  condition,  liquidity  or  results  of  operations  of Orion  and its
consolidated subsidiaries, taken as a whole.


                                       12
<PAGE>



NOTE 8 - ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income balances, net of taxes, are as follows:

<TABLE>
<CAPTION>


                                           Unrealized         Unrealized Foreign     Accumulated Other
                                         Investment Gains    Exchange Translation      Comprehensive
                                            (Losses)            Gains (Losses)         Income (Loss)
(In millions)
------------------------------------------------------------------------------------------------------
<S>                                        <C>                    <C>                     <C>

Six Months ended June 30, 1998:
Balance, beginning of period ...........   $   113.6              $    (4.4)              $   109.2
Current period change ..................       (14.1)                    --                   (14.1)
                                           ---------              ---------               --------- 
Balance, end of period .................   $    99.5              $    (4.4)              $    95.1
                                           =========              =========               =========

Six Months ended June 30, 1997:
Balance, beginning of period ...........   $    72.3              $    (2.2)              $    70.1
Current period change ..................         7.9                   (0.4)                    7.5
                                           ---------              ---------               --------- 
Balance, end of period .................   $    80.2              $    (2.6)              $    77.6
                                           =========              =========               =========

Year ended December 31, 1997:
Balance, beginning of year .............   $    72.3              $    (2.2)              $    70.1
Current year change ....................        41.3                   (2.2)                   39.1
                                           ---------              ---------               ---------
Balance, end of year ...................   $   113.6              $    (4.4)              $   109.2
                                           =========              =========               ========= 
</TABLE>

     The pretax  unrealized  investment  gains (losses) were $(21.7) million and
$12.1 million for the six months ended June 30, 1998 and 1997, respectively, and
$62.9  million for the year ended  December  31,  1997.  The pre-tax  unrealized
foreign exchange translation losses were $0.6 million for the three months ended
June 30, 1997 and $3.4 million for the year ended December 31, 1997.

NOTE 9 - SUBSEQUENT EVENTS

     On July 8, 1998 the Company entered into a credit agreement with a group of
banks which  provides for unsecured  borrowings  up to $150 million.  The credit
agreement expires on July 8, 2003 and provides for two one-year extensions.  The
Company intends to use the credit facility for general corporate  purposes which
may include acquisitions. The credit agreement carries an annual facility fee on
unused amounts of the limit. Borrowings under the credit agreement bear interest
at LIBOR (London Interbank Offerred Rate) plus a margin based upon the Company's
credit ratings.  The credit  agreement  requires the Company to maintain certain
financial   covenants  and  limits  the  Company's   ability  to  incur  secured
indebtedness  or  certain  contingent  obligations  except for  certain  secured
indebtedness. There are currently no borrowings under this credit agreement.

     On July 9, 1998 the Company  completed the acquisition of Grocers Insurance
Group   ("Grocers")  from  United  Grocers,   Inc  ("United").   Grocers  is  an
Oregon-based  specialty  insurance  holding company serving the grocery and food
service  industry.  In 1997,  Grocers reported  approximately $23 million of net

                                      13
<PAGE>

premiums  written,   principally   general   liability,   property  and  workers
compensation  with the majority of its volume  concentrated in the  Northwestern
states.  The  purchase  price  was  $36.3  million  in cash.  The  Company  paid
approximately $32.3 million to United on July 9, 1998. The Company retained $4.0
million of the purchase price to secure  obligations of United and Grocers.  The
Company  used  cash  and  short-term  investments  to  fund  the  purchase.  The
acquisition will be accounted for as a purchase and accordingly, Grocers will be
included in the Company's  consolidated  financial  statements  from the date of
acquisition.

         The Company recently announced plans to accelerate the  realignment
of  Orion  Specialty  because   it has not  met  the  Company's profitability
expectations.  The realignment   is anticipated to negatively impact the
Company's operating results in   the   second half of 1998 by approximately
$12.5 million on a pre-tax basis or $.35 per  diluted  share on an after-tax 
basis. The  realignment  is  planned  to  result in  Orion Specialty's  
continued  shift  away  from  commodity  business,   primarily commercial 
auto and  transportation,  to a smaller number of  more client-focused 
programs and specialty niches. The realignment is   expected to result in the
cancellation of business with current net premium volume of approximately $100
million on an annual basis.  Under the realignment plan, the Company will 
record a charge of $36.7 million in the third quarter related to the cancelled
business.  Major components of this charge will include loss reserve 
strengthening of $27.8 million, which is based upon a recently completed
actuarial study, severance and program termination expenses of $7.0 million,
and asset write downs of $1.9 million.
       
         Part of the realignment plan will  include  the sale of  Orion 
Specialty's  Colorado  Casualty  unit,  which produces  approximately $55
million in annual net premiums written, but consists largely of business 
which does not fit the Company's specialization strategy. On August 12, 1998,
the Company  reached an agreement to sell Colorado  Casualty to Liberty 
Mutual Insurance  Company. The transaction is expected to result in a pre-tax 
operating gain of approximately $24.2 million.  The Company anticipates that
sale will be completed in the late third quarter or early fourth quarter
of 1998, subject to regulatory approvals.

         The Company's Board of Directors increased  authorization for purchases
of its common stock by an additional  $50 million on August 4, 1998,  increasing
the remaining stock purchases authorization to $66.4 million at August 7, 1998.



                                       14
<PAGE>





                     INDEPENDENT ACCOUNTANT'S REVIEW REPORT


Board of Directors and Stockholders
Orion Capital Corporation
Farmington, Connecticut


     We have  reviewed  the  accompanying  consolidated  balance  sheet of Orion
Capital  Corporation and  subsidiaries  (the "Company") as of June 30, 1998, and
the  related  consolidated  statements  of  earnings  for  the  three-month  and
six-month  periods  ended  June  30,  1998  and  1997,  and  the  statements  of
stockholders'  equity and cash flows for the  six-month  periods  ended June 30,
1998  and  1997.  These  financial  statements  are  the  responsibility  of the
Company's management.

     We conducted our review in accordance  with  standards  established  by the
American  Institute  of  Certified  Public  Accountants.  A  review  of  interim
financial  information consists principally of applying analytical procedures to
financial data and of making inquiries of persons  responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the  expression  of an opinion  regarding the  financial  statements  taken as a
whole. Accordingly, we do not express such an opinion.

         Based on our  review,  we are not aware of any  material  modifications
that should be made to such consolidated  financial statements for them to be in
conformity with generally accepted accounting principles.

         We have  previously  audited,  in accordance  with  generally  accepted
auditing standards,  the consolidated balance sheet of Orion Capital Corporation
and  subsidiaries  as  of  December  31,  1997,  and  the  related  consolidated
statements  of earnings,  stockholders'  equity and cash flows for the year then
ended;  and in our report dated  February 11, 1998, we expressed an  unqualified
opinion on those consolidated financial statements.  The consolidated statements
of  earnings  and  cash  flows  for the year  ended  December  31,  1997 are not
presented herein. In our opinion,  the information set forth in the accompanying
consolidated  balance  sheet as of December  31,  1997 and related  consolidated
statement of stockholders'  equity for the year then ended is fairly stated,  in
all material respects, in relation to the consolidated financial statements from
which it has been derived.



DELOITTE & TOUCHE LLP


Hartford, Connecticut
July 29, 1998



                                       15
<PAGE>

                   ORION CAPITAL CORPORATION AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                     SIX MONTHS ENDED JUNE 30, 1998 AND 1997

GENERAL

Orion  Capital   Corporation   ("Orion")  and  its   wholly-owned   subsidiaries
(collectively  the "Company")  operate  principally in the property and casualty
insurance  business.  The Company  reports  its  insurance  operations  in three
segments.  In  addition,   the  miscellaneous  income  and  expenses  (primarily
interest,   general  and   administrative   expenses  and  other   consolidating
elimination  entries) of the parent company are reported as a fourth segment. As
result of the  acquisition of Guaranty  National,  the 1997 segment  disclosures
have been revised to conform with the current basis of  presentation.  The three
insurance segments as of June 30, 1998 are as follows:

REGIONAL OPERATIONS - this segment includes the workers  compensation  insurance
       products and services sold by the EBI Companies ("EBI").

SPECIAL PROGRAMS - this segment comprises the following:

     DPIC Companies ("DPIC"), which markets professional liability insurance;

     Orion Specialty,  which writes specialty  insurance programs and commercial
     non-standard automobile insurance;

     Wm. H.  McGee  ("McGee"),  an  underwriting  management  company  that
     specializes  in  ocean  marine,   inland  marine  and  commercial  property
     insurance; and

     The Company's  24.7% interest in Intercargo  Corporation  ("Intercargo"),
     which sells insurance coverages for international trade.

GUARANTY NATIONAL COMPANIES ("Guaranty  National") - this segment specializes in
non-standard personal automobile insurance.

The Company  increased  its  ownership of Guaranty  National to 100% in December
1997. Beginning in 1998, the commercial business lines of Guaranty National were
consolidated  with  Connecticut  Specialty  to form a new  company  named  Orion
Specialty. Orion Specialty focuses on specialty commercial insurance.

Following  the  formation  of  Orion   Specialty,   Guaranty   National   became
substantially  a  personal  non-standard  automobile  insurance  operation.  The
Company  increased  its  ownership  in Guaranty  National,  in part,  to provide
Guaranty National with additional  financing  options,  on terms that may not be
available to it as an independent  entity, so that it can continue its expansion
in the non-standard personal automobile insurance business.


                                       16
<PAGE>



On April 30, 1998 the Company  completed  the  acquisition  of the  non-standard
personal  automobile  insurance  business of North  Carolina - based  Strickland
Insurance Group,  Inc.  ("Strickland").  The acquisition  included two insurance
companies,  a premium  finance  company,  a claim  adjusting  firm and a general
agency in Florida.  In 1997,  Strickland  reported  approximately $99 million of
personal  automobile  gross  premiums  written and $46  million of net  premiums
written. The purchase price was $44.0 million in cash subject to adjustment. The
acquisition  was  accounted  for as a purchase  and  accordingly,  the  acquired
business has been included in the Company's  consolidated  financial  statements
from the date of acquisition. The total consideration exceeded the fair value of
the acquired net assets by approximately  $28.9 million,  subject to adjustment,
and is being amortized over 25 years.

On July 9, 1998 the Company completed the acquisition of Grocers Insurance Group
("Grocers") from United Grocers,  Inc. for $36.3 million in cash.  Grocers is an
Oregon-based  specialty  insurance  holding company serving the grocery and food
service  industry.  In 1997,  Grocers  wrote  approximately  $23  million of net
premiums,  principally general liability, property and workers compensation with
the  majority  of its  volume  concentrated  in  the  Northwestern  states.  The
acquisition will be accounted for as a purchase. Grocers will be included in the
Company's consolidated financial statements from the date of acquisition.

The Company recently announced plans to accelerate the realignment   of Orion
Specialty   because  it  has  not  met  the  Company's profitability 
expectations.  The realignment is anticipated to negatively impact the Company's
operating results in the second half of 1998 by approximately $12.5 million on
a pre-tax basis or $.35 per diluted share on an after-tax basis. The realign-
ment  is  planned  to  result in Orion Specialty's   continued shift  away 
from  commodity  business,   primarily commercial auto and  transportation, 
to a smaller number of more client-focused programs and specialty niches.
The realignment is expected to result in the cancellation of business with 
current net premium volume of approximately $100 million on an annual basis.  
Under the realignment plan, the Company will record a charge of $36.7 million 
in the third quarter of 1998 related to the cancelled business.  Major 
components of this charge will include loss reserve strengthening of $27.8 
million, which is based upon a recently completed actuarial study, severance
and program termination expenses of $7.0 million and asset write downs of 
$1.9 million. 

Part of the realignment will include the sale of Orion  Specialty's  Colorado 
Casualty unit, which produces approximately $55 million in net premiums 
written annually,  but consists  largely of business which does not fit the
Company's  specialization strategy.  On August 12, 1998, the Company reached
an agreement to sell Colorado Casualty to Liberty  Mutual  Insurance  Company.
The transaction is expected to result in a pre-tax operating gain of 
approximately $24.2 million. The Company  anticipates that sale will be 
completed in the late third quarter or early fourth quarter of 1998, subject to
regulatory approvals.

                                       17
<PAGE>



RESULTS OF OPERATIONS

OVERVIEW

Earnings  (loss) by segment before  federal  income taxes and minority  interest
expense are summarized as follows:
<TABLE>
<CAPTION>

                                   Three Months Ended June 30,                Six Months Ended June 30,
                                ------------------------------------       ----------------------------------
(In millions)                   1998            1997        % Change       1998         1997         % Change
-------------------------------------------------------------------------------------------------------------
<S>                           <C>            <C>               <C>       <C>          <C>               <C>

Regional Operations ........  $ 24.5         $ 16.8            45.8%     $ 52.9       $ 37.5            41.1%
Special Programs ...........    27.7           16.5            67.9%       57.4         37.6            52.7%
Guaranty National ..........    10.4            9.8             6.1%       18.3         16.7             9.6%
                              ------         ------            -----     ------       ------            -----
                                62.6           43.1            45.2%      128.6         91.8            40.1%
Other ......................    (4.4)          (3.8)           15.8%       (9.5)        (9.1)            4.4%
                              ------         ------            -----     ------       ------            -----
                              $ 58.2         $ 39.3            48.1%     $119.1       $ 82.7            44.0%
                              ======         ======            =====     ======       ======            ===== 
</TABLE>
                                               

Operating  earnings,  after-tax realized  investment gains, net earnings and per
diluted common share amounts are summarized as follows:
<TABLE>
<CAPTION>

                                             Three Months Ended June 30,                 Six Months Ended June 30,
                                      -----------------------------------------   --------------------------------------
(In millions, except share data)           1998          1997       % Change           1998         1997       % Change
------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>           <C>               <C>         <C>          <C>               <C>

Operating earnings                     $   23.4      $   20.3          15.3%       $   46.7     $   39.7           18.0%
After-tax realized investment
   gains                                   14.8           5.1         189.9%           33.6         15.2          120.6%
                                       --------      --------         ------       --------     --------          ------
Net earnings                           $   38.2      $   25.4          50.3%       $   80.3     $   54.9           46.5%
                                       ========      ========         ======       ========     ========          ====== 
                                       
Per diluted common share:
Operating earnings                     $   0.83      $   0.73          13.7%       $   1.66     $   1.42           16.9%
After-tax realized investment
   gains                                   0.53          0.18         194.4%           1.19         0.55          116.4%
                                       --------      --------         ------       --------     --------          ------      
Net earnings                           $   1.36      $   0.91          49.5%       $   2.85     $   1.97           44.7%
                                       ========      ========         ======       ========     ========          ====== 
</TABLE>
                                      
The Company's  operating  earnings increased 15.3% in the second quarter of 1998
and 18.0% in the first half of 1998 compared to the same 1997 periods. Operating
earnings  represents  earnings  after taxes,  excluding net realized  investment
gains. On a diluted per common share basis,  operating  earnings increased 13.7%
in the second  quarter of 1998 and 16.9% in the first half of 1998  compared  to
the same 1997  periods.  The strong  performance  from the  Company's  insurance
operations,  in  particular  EBI,  DPIC and  Guaranty  National,  combined  with
significant increases in after-tax realized investment gains resulted in a 50.3%
and 46.5%  increase  in net  earnings  for the second  quarter and first half of
1998, respectively,  compared to the same 1997 periods.  Weighted average common
shares  and  diluted  equivalents  outstanding  were  28,160,000  for the second
quarter  of 1998 and  28,145,000  for the six  months  ended  June 30,  1998 and
27,803,000 and 27,801,000, for the corresponding 1997 periods, respectively.

                                       18
<PAGE>

REVENUES

Revenues are summarized as follows:
<TABLE>
<CAPTION>

                                     Three Months Ended June 30,                     Six Months Ended June 30,
                               ----------------------------------------      ----------------------------------------
(In millions)                      1998           1997        % Change           1998           1997         % Change
---------------------------------------------------------------------------------------------------------------------
<S>                            <C>            <C>               <C>          <C>            <C>                <C>

Net premiums written           $  384.8       $  340.2           13.1%       $  753.8       $  674.5            11.8%
                               ========       ========          ======       ========       ========           ====== 
                            
Net premiums earned            $  370.4       $  335.2           10.5%       $  719.2       $  659.2             9.1%
Net investment income              42.5           41.3            2.9%           83.9           81.5             2.9%
Realized investment gains          22.7            8.4          170.2%           51.7           24.2           113.6%
Other                               7.0            5.2           34.6%           12.6           10.1            24.8%
                               --------       --------          ------       --------       --------           ------      
                               $  442.6       $  390.1           13.5%       $  867.4       $  775.0            11.9%
                               ========       ========          ======       ========       ========           ====== 
</TABLE>
                            
PREMIUMS WRITTEN

The Company's net premiums written by segment are as follows:
<TABLE>
<CAPTION>

                                     Three Months Ended June 30,                     Six Months Ended June 30,
                               ----------------------------------------      ----------------------------------------
(In millions)                      1998           1997        % Change           1998           1997         % Change
---------------------------------------------------------------------------------------------------------------------
<S>                            <C>            <C>               <C>          <C>            <C>                <C>

Regional Operations            $  106.8      $   90.0            18.6%       $  217.4       $  177.8            22.3%
Special Programs                  171.5         167.9             2.1%          333.8          332.3             0.5%
Guaranty National                 106.5          82.3            29.4%          202.6          164.4            23.2%
                               --------      --------            -----       --------       --------            -----    
                               $  384.8      $  340.2            13.1%       $  753.8       $  674.5            11.8%
                               ========      ========            =====       ========       ========            ===== 
</TABLE>
In November  1996,  the Company sold the renewal book of business of its assumed
reinsurance  operation to concentrate on businesses where the Company can better
service its specialized niche markets.  Excluding  premiums from this operation,
the Company's net premiums  written  increased by 14.3% in the second quarter of
1998 and 13.3% in the first half of 1998 over the same 1997 periods.

Regional Operations

Net premiums  written for Regional  Operations  increased by 18.6% in the second
quarter of 1998 and 22.3% in the first half of 1998 from comparable 1997 periods
largely due to growth  generated by EBI's  multi-state  program  established  in
1997.  Additionally,  the increase in net premiums written in 1998 is attributed
to EBI's continued  geographic  expansion and penetration,  partly offset by the
impact of statutory rate reductions of last year.

                                       19
<PAGE>

SPECIAL PROGRAMS

Net premiums written from Special Programs are as follows:
<TABLE>
<CAPTION>

                                     Three Months Ended June 30,                     Six Months Ended June 30,
                               ----------------------------------------      ----------------------------------------
(In millions)                      1998           1997        % Change           1998           1997         % Change
---------------------------------------------------------------------------------------------------------------------
<S>                            <C>            <C>               <C>          <C>            <C>                <C>
Orion Specialty                $ 101.8        $ 101.7            0.1%        $ 205.3        $ 203.7             0.8%
DPIC                              49.7           47.0            5.6%           92.0           91.0             1.1%
McGee                             20.2           15.9           27.6%           36.8           28.6            28.8%
                               -------        -------         -------        -------        -------          -------    
                                 171.7          164.6            4.3%          334.1          323.3             3.3%
Assumed reinsurance               (0.2)           3.3         -106.3%           (0.3)           9.0          -103.6%
                               -------        -------         -------        -------        -------          -------    
                               $ 171.5        $ 167.9            2.1%        $ 333.8        $ 332.3             0.5%
                               =======        =======         =======        =======        =======          ======= 
</TABLE>
                           
Net premiums written by DPIC for professional  liability insurance,  the largest
special  program,  increased in 1998  primarily  as a result of  continual  high
levels of policy renewals and growth in project  policies offset in part by rate
reductions in a very competitive professional liability insurance market.

Orion  Specialty's net premiums written  increased  slightly due to increases in
net premiums  from the contract and brokerage  division and standard  commercial
insurance  operations,  partly offset by lower premiums from the cancelled truck
liability, cancelled ocean marine and coal mine programs.

McGee's net premiums  written  increase in 1998 reflects the  Company's  greater
participation  in  the  underwriting  pools  managed  by  McGee.  The  Company's
participation in McGee's United States pool is approximately 71% and 52% in 1998
and 1997, respectively.  Participation in McGee's Canadian pool is approximately
72% and 61% in 1998 and 1997, respectively.

GUARANTY NATIONAL

The net  premiums  written  growth in 1998 over the  comparable  1997  period is
primarily  due  to  the  acquisitions  of  Strickland's   non-standard  personal
automobile  insurance  business  and  Unisun  Insurance  Company,  growth in the
monthly  product  business in  California,  and  increases in premiums  from the
Northwestern  states,  offset in part, by modest rate reductions due from a very
competitive  market.  Premium  growth in California  is primarily  attributed to
enacted legislation requiring all drivers to maintain liability insurance.


PREMIUMS EARNED

The Company's premiums earned increased 10.5% and 9.1% in the second quarter and
first half of 1998  compared to the same 1997  periods,  respectively.  Premiums
earned reflect the recognition of income from the changing levels of net premium
writings.

                                       20
<PAGE>

NET INVESTMENT INCOME

Pre-tax net investment  income was $83.9 million and $81.5 million for the first
half of 1998 and 1997, and $42.5 million and $41.3 million for the corresponding
second  quarter  periods,  respectively.  The  pre-tax  yields  on  the  average
investment portfolio were 7.0% for the first six months of 1998 and 7.1% for the
first six months of 1997, with after-tax yields of 5.3% and 5.4%,  respectively.
Net investment  income  increased 2.9% in both the first half and second quarter
of 1998 primarily due to a higher  investment  base. The higher  investment base
for 1998  reflects the  investment of proceeds from the issuance of $125 million
7.701% Trust  Preferred  Securities in February 1998 and the effects of positive
operating  cash flow.  These  increases have been partly offset by cash used for
acquisitions  as well as  repayment of the $100  million  bank  indebtedness  of
Guaranty National.

Net  investment   income  reflects   equity  earnings  in  limited   partnership
investments  of $3.8 million for the second quarter of 1998 and $3.9 million for
the same 1997  period,  and $9.0  million  for the  first  half of 1998 and $8.6
million  for the same  1997  period.  Over 50% of the  equity  earnings  in 1998
resulted  from three  limited  partnership  investments.  Earnings  from limited
partnership  investments can vary considerably from year-to-year.  The Company's
long-term  experience  with  limited  partnership  investments  has  been  quite
favorable;  however,  they represent only 4.5% and 3.6% of total  investments at
June 30, 1998 and December 31, 1997, respectively.

Fixed maturity  investments,  which the Company has both the positive intent and
the ability to hold to maturity,  are recorded at amortized cost. Fixed maturity
investments  which may be sold in response  to, among other  things,  changes in
interest rates,  prepayment  risk,  income tax strategies or liquidity needs are
classified as  available-for-sale  and are carried at market value. The carrying
value of fixed maturity and short-term  investments is $2,034.7  million at June
30, 1998 and $2,010.9 million at December 31, 1997, or  approximately  79.0% and
78.8% of the Company's cash and investments, respectively.

The  Company's  investment  philosophy  is to achieve a superior  rate of return
after taxes, while maintaining a proper balance of safety,  liquidity,  maturity
and marketability.  The Company invests primarily in investment grade securities
and strives to enhance  the  average  return of its  portfolio  through  limited
investment  in a  diversified  group  of  non-investment  grade  fixed  maturity
securities or securities that are not rated.  The risk of loss due to default is
generally  considered  greater  for  non-investment  grade  securities  than for
investment grade securities  because the former,  among other things,  are often
subordinated to other  indebtedness of the issuer and are often issued by highly
leveraged  companies.  At June 30, 1998 and  December 31,  1997,  the  Company's
investment in non-investment  grade and non-rated fixed maturity securities were
carried at $238.3 million and $256.7 million,  respectively.  These  investments
represented a total of 9.3% and 10.1% of cash and  investments and 5.7% and 6.6%
of total assets at June 30, 1998 and December 31, 1997, respectively.

REALIZED INVESTMENT GAINS

Net realized  investment gains are $51.7 million and $24.2 million for the first
six  months  of  1998  and  1997,   and  $22.7  million  and  $8.4  million  for
corresponding  second quarter  period,  respectively.  Approximately  25% of the
year-to-date  1998 net realized  investment  gains resulted from the sale of two

                                       21
<PAGE>

investments  in entities  which were  acquired or taken public  during the first
quarter.  Realized  investment  gains may be reduced by provisions for losses on
securities deemed to be other-than-temporarily  impaired.  Impairment provisions
of $2.5 million and $1.8 million  were  recognized  in the six months ended June
30,  1998 and  1997,  respectively.  Any such  provision  is based on  available
information  at the  time and is made in  consideration  of the  decline  in the
financial condition of the issuers of such securities. Realized investment gains
(losses) vary from period to period,  depending on market conditions relative to
the Company's  investment  holdings,  the timing of investment  sales generating
gains   and   losses,   the   occurrence   of   events   which   give   rise  to
other-than-temporary impairment of investments, and other factors.

EXPENSES AND OTHER

Operating Ratios

The following table sets forth certain ratios of insurance operating expenses to
premiums earned:
<TABLE>
<CAPTION>

                                                        Three Months Ended                    Six Months Ended
                                                              June 30,                             June 30,
                                                -----------------------------------   --------------------------
                                                       1998             1997                1998            1997
----------------------------------------------------------------------------------------------------------------
<S>                                                  <C>              <C>                 <C>             <C>    

Loss and loss adjustment expenses                     67.7%            67.3%               67.2%           67.5%
Policy acquisition costs and other
   insurance expenses                                 30.0%            31.0%               30.3%           31.0%
                                                     ------           ------              ------          ------
   Total before policyholders' dividends              97.7%            98.3%               97.5%           98.5%
Policyholders' dividends                               1.9%             1.4%                1.9%            1.5%
                                                     ------           ------              ------          ------ 
                                                
   Combined ratio                                     99.6%            99.7%               99.4%          100.0%
                                                     ======           ======              ======          ====== 
                                                
Loss and loss adjustment expenses ratio by segment:
     Regional Operations                              58.1%            59.0%               57.3%           58.8%
     Special Programs                                 73.2%            69.9%               71.5%           70.2%
     Guaranty National                                68.9%            71.3%               70.4%           71.4%

</TABLE>

The  improvement  in the loss ratio for  Regional  Operations  results  from the
favorable loss  experience  and lower loss expenses  achieved by EBI through its
service-oriented  approach  offset in part by less  favorable  loss  development
relating to prior accident  years.  EBI's service  oriented  approach is to work
with its customers to prevent losses and reduce claim costs.

The  increase  in the 1998 loss ratio for Special  Programs  compared to 1997 is
primarily   attributable  to  higher  losses  from  program  business  at  Orion
Specialty,  including cancelled programs, and an increased unfavorable effect of
the assumed  reinsurance  business exited in late 1996. Net earned premiums from
the exited  reinsurance  business declined at a greater rate than losses in 1998
compared  to 1997.  The loss ratio at DPIC has  improved  in 1998 in relation to
1997 as a result of its loss prevention competencies.

Guaranty  National's  loss ratio improved in 1998 compared to 1997 primarily due
to a decline in claims frequency and claims severity.

                                       22
<PAGE>

The ratios of policy  acquisition costs and other insurance expenses to premiums
earned (the  "expense  ratio") are 30.0% and 30.3% for the three  months and six
months  ended June 30, 1998,  respectively,  and 31.0% for the  respective  1997
periods.  Policy  acquisition  costs include direct costs,  such as commissions,
premium  taxes,  and salaries that relate to and vary with the production of new
business.  These costs are  deferred and  amortized as the related  premiums are
earned, subject to a periodic test for recoverability.

Management  believes  that the Company's  reserves for loss and loss  adjustment
expenses make  reasonable and sufficient  provision for the ultimate cost of all
losses on claims  incurred.  However,  there can be no assurance that changes in
loss trends will not result in additional  development of prior years'  reserves
in the future. The Company will record $27.8 million of loss reserve 
strengthening relating to the Orion Specialty realignment plan in the third
quarter of 1998. Provisions for losses and loss  adjustment expenses  include
development of loss and  loss adjustment  expense  reserves relating to prior
accident  years,  which increased the calendar year combined ratio by 1.1 
percentage  points  in the first  half of 1998 and 0.6  percentage points in 
the same period of 1997.Variability in claim emergence and settlement patterns
and other trends in loss  experience  can result in future  development patterns
different than expected. After considering the additonal reserve strengthening
to be recorded for Orion Specialty realignment, the Company believes that any 
such variability or development will generally  continue at the low levels
experienced in recent years,  considering  actions that have been taken to 
increase  reserving levels,improve underwriting standards and emphasize loss 
prevention and control.

The  Company  limits both  current  losses and future  development  of losses by
ceding business to reinsurers.  The Company  continually  monitors the financial
strength of its  reinsurers  and, to the  Company's  knowledge,  has no material
exposure with regard to potential  unrecognized  losses due to reinsurers having
known financial difficulties.

INTEREST EXPENSE

Interest  expense is $3.1  million and $6.2  million for the second  quarters of
1998 and 1997, and $8.9 million and $12.3 million for the first half of 1998 and
1997,  respectively.  Interest  expense  declined  in  1998 as a  result  of the
repayment of the $100 million bank indebtedness of Guaranty National in February
1998 with  proceeds from the issuance of the  Company's  7.701% Trust  Preferred
Securities.

OTHER EXPENSES

Other  expenses are $12.5 million and $10.6  million for the second  quarters of
1998 and 1997,  respectively,  and $23.5 million and $21.7 million for the first
half of 1998 and  1997,  respectively.  The  increase  is  partly  due to higher
goodwill amortization from acquisitions in 1997 and 1998.

EQUITY IN EARNINGS (LOSS) OF AFFILIATE

Equity in earnings  (loss) of  affiliate  consists  of earnings  (loss) from the
Company's  24.7%  investment  in  Intercargo.  The Company  records its share of
Intercargo's results in the subsequent quarter.

                                       23
<PAGE>

FEDERAL INCOME TAXES

Federal income taxes  (including tax benefits from  subsidiary  trust  preferred
securities)  and the related  effective tax rates are $14.9 million  (28.1%) and
$9.0 million (24.7%) for the second quarters of 1998 and 1997, respectively. The
corresponding  amounts  for the  first  six  months  of 1998 and 1997 are  $29.4
million (26.8%) and $19.0 million (24.5%), respectively. The Company's effective
tax  rates  for  1998 and 1997  are  less  than  the  statutory  tax rate of 35%
primarily because of income derived from tax- advantaged securities.

MINORITY INTEREST EXPENSE

Minority  interest  expense in  subsidiary  Trust  Preferred  Securities of $3.3
million and $6.1  million for three  months and six months  ended June 30, 1998,
and $1.8 million and $3.3 million for corresponding 1997 periods,  respectively.
Minority  interest expense in subsidiary Trust Preferred  Securities  represents
the financing cost,  after the federal income tax benefit,  on Orion's 8.73% and
7.701%  Trust  Preferred  Securities.  The  increase in 1998  reflects  minority
interest  expense  associated  with the  issuance of $125  million  7.701% Trust
Preferred Securities in February 1998.

Minority  interest expense of $2.1 million and $3.7 million was recorded for the
after-tax  portion of  Guaranty  National's  1997  second  quarter and six month
earnings  attributable  to  stockholders  of  Guaranty  National  other than the
Company, respectively. Guaranty National became a wholly-owned subsidiary of the
Company in December 1997.

LIQUIDITY AND CAPITAL RESOURCES

Cash  provided  by  operating  activities  decreased  by $22.1  million to $12.8
million  in the first six  months of 1998 from  $34.9  million  in the same 1997
period.  The  decrease in  operating  cash flow for 1998 is the result of higher
payments for losses,  policy acquisition costs,  federal income taxes,  minority
interest  from  subsidiary   trust  preferred   securities  and   policyholders'
dividends,  and  includes  loss  payments for the assumed  reinsurance  business
exited  by  the  Company  in  1996  and   acceleration  of  claim   settlements.
Furthermore,  reinsurance  recoverable  has  increased  as a  result  of  recent
acquisitions.  Partially  offsetting  these  increased  cash outflows are higher
premiums collected,  reflective of the Company's current rate of growth, as well
as higher investment income collected and funds held for others.

The Company's  investment  activities provided $1.5 million of cash in the first
six  months of 1998 and used  $147.7  million of cash in the first six months of
1997.  Cash  is  used  in  investment  activities  primarily  for  purchases  of
investments  and  acquisition  activities.  Investment  purchases  are funded by
maturities and sales of  investments,  as well as by the net cash from operating
cash flows after cash provided by or used in financing activities. Cash used for
acquisitions totaled $46.8 million (excluding acquired cash of $10.8 million) in
the first six months of 1998. The Company paid $38.5 million,  to Strickland for
the purchase its non-standard  personal  automobile  insurance business on April
30,1998  and $2.0  million  in 1997  with $3.3  million  of the  purchase  price
retained by the Company in part to secure obligations of Strickland.  On July 9,
1998 the Company paid  approximately  $32.5 million to United Grocers,  Inc. for
the  purchase  of Grocers  Insurance  with $4.0  million of the  purchase  price
retained by the Company to secure obligations of United and Grocers.

                                       24
<PAGE>

The Company's  financing  activities used $2.3 million of cash for the first six
months of 1998 and provided $114.8 million of cash for the same 1997 period. The
net proceeds  from the  issuance of trust  preferred  securities  by the Company
provided   $121.9  million  and  $123.0  million  of  cash  in  1998  and  1997,
respectively.  Net  proceeds  from the  issuance of the 7.701%  Trust  Preferred
Securities  were used to repay the $100  million bank  indebtedness  of Guaranty
National in February 1998.  Simultaneous  with the  acquisition of  Strickland's
non-standard  personal automobile  business,  the Company repaid $9.4 million of
assumed bank debt in the  acquisition.  Cash used in financing  activities  also
includes  dividend  payments,  scheduled debt repayments and payments related to
the Company  common stock  repurchase  program.  Orion  increased  the quarterly
dividend  rate on its common stock by 12.5% and 14.3% in the second  quarters of
1998 and 1997, respectively.

Orion's uses of cash consist of debt  service,  dividends  to  stockholders  and
overhead  expenses.  These cash uses are funded from  existing  available  cash,
financing  transactions  and  receipt of  dividends,  reimbursement  of overhead
expenses  and amounts in lieu of federal  income  taxes from  Orion's  insurance
subsidiaries.  Payments of  dividends  by Orion's  insurance  subsidiaries  must
comply with insurance regulatory  limitations  concerning  stockholder dividends
and  capital  adequacy.  State  insurance  regulators  have broad  discretionary
authority  with respect to  limitations on the payment of dividends by insurance
companies.  Limitations under current  regulations are well in excess of Orion's
cash requirements.

Orion's insurance subsidiaries maintain liquidity in their investment portfolios
substantially  in  excess of that  required  to pay  claims  and  expenses.  The
insurance  subsidiaries  held cash and short-term  investments of $239.3 million
and $160.4  million at June 30, 1998 and December 31,  1997,  respectively.  The
consolidated  policyholders' surplus of Orion's insurance subsidiaries is $808.1
million and $789.0 million at June 30, 1998 and December 31, 1997, respectively.
The Company's  statutory operating leverage ratios of trailing twelve months net
premiums  written to  policyholders'  surplus is 1.8:1 at both June 30, 1998 and
December 31, 1997.

The terms of Orion's  indentures  for its $100 million of 7.25% Senior Notes due
2005 and its $110  million of 9.125%  Senior  Notes due 2002 limit the amount of
liens  and   guarantees  by  the  Company  and  its  ability  to  incur  secured
indebtedness  without equally and ratably securing the senior notes.  Management
does not believe that these limitations unduly restrict the Company's operations
or limit  Orion's  ability to pay  dividends on its stock.  At June 30, 1998 the
Company  is in  compliance  with  the  terms  of  its  senior  note  indentures.
Management  believes that the Company  continues to have substantial  sources of
capital and liquidity from the capital markets and bank borrowings.


On January  13,  1997 Orion  issued $125  million of 8.73%  Junior  Subordinated
Deferrable  Interest  Debentures due January 1, 2037 (the "8.73% Debentures") to
Orion Capital Trust I ("Trust I"), a Delaware statutory business trust sponsored
by Orion.  Trust I simultaneously  sold $125 million of 8.73% capital securities
(the "8.73% Trust Preferred Securities") which have substantially the same terms
as the 8.73%  Debentures.  The net  proceeds  from the sale of the  8.73%  Trust
Preferred  Securities were used in part for the acquisition of Guaranty National
common  stock in December  1997.  The 8.73% Trust  Preferred  Securities  may be
redeemed without premium on or after January 1, 2007.

                                       25
<PAGE>

On February  2, 1998 Orion  issued $125  million of 7.701%  Junior  Subordinated
Deferrable  Interest  Debentures due April 15, 2028 (the "7.701%  Debenture") to
Orion  Capital  Trust II ("Trust  II"),  a  Delaware  statutory  business  trust
sponsored by Orion. Trust II then sold $125 million of 7.701% capital securities
(the "7.701% Trust Preferred  Securities"),  which have  substantially  the same
terms as the 7.701% Debentures,  in a private  placement.  The net proceeds from
the sales of the  7.701%  Trust  Preferred  Securities  were used to repay  $100
million bank indebtedness of Guaranty National in February 1998.

The 8.73% and 7.701% capital  securities are  subordinated to all liabilities of
the  Company.  The Company may defer  interest  distributions  on these  capital
securities;  however, during any period when such cumulative  distributions have
been deferred,  Orion may not declare or pay any dividends or  distributions  on
its common stock.

On July 8, 1998 the  Company  entered  into a credit  agreement  with a group of
banks which  provides for unsecured  borrowings  up to $150 million.  The credit
agreement  expires  on July 8,  2003 and  provides  for two  one-year  extension
periods.  The Company intends to use the credit  facility for general  corporate
purposes which may include acquisitions.  The credit agreement carries an annual
facility fee on the unused amounts of the credit facility.  Borrowings under the
credit agreement bear interest at LIBOR (London Interbank  Offerred Rate) plus a
margin based upon the Company's credit ratings.  The credit  agreement  requires
the Company to maintain certain financial  covenants including a maximum debt to
total  capitalization  ratio of 0.4 to 1.0, as defined,  and a minimum  combined
statutory surplus of $650 million plus 30% of the Company's  aggregate  combined
annual statutory net income.  The credit agreement limits the Company's  ability
to incur  secured  indebtedness  or certain  contingent  obligations  except for
indebtedness secured by liens specifically permitted by the credit agreement and
additional secured indebtedness with a principal amount not exceeding 10% of the
Company's  consolidated net worth, as defined. There are currently no borrowings
under  this  credit  agreement.  Management  does not  believe  that the  credit
agreement's covenants or limitations unduly restrict the Company's operations or
limit Orion's ability to acquire additional indebtedness.

For the  year-to-date  period  to August 7,  1998 the  Company  has  repurchased
235,800 shares of its common stock at an aggregate cost of $11.6 million under a
stock repurchase program approved by the Board of Directors. The Company's Board
of Directors  increased  authorization  for  purchases of its common stock by an
additional  $50  million  on August 4,  1998,  increasing  the  remaining  stock
purchase authorization to $66.4 million at August 7, 1998.

LEGAL PROCEEDINGS

Orion and its  subsidiaries  are routinely  engaged in litigation  incidental to
their  businesses.  Management  believes  that  there are no  significant  legal
proceedings  pending  against the  Company  which,  net of reserves  established
therefor, are likely to result in judgments for amounts that are material to the
financial  condition,  liquidity  or  results  of  operations  of Orion  and its
consolidated subsidiaries, taken as a whole.

                                       26
<PAGE>

ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED

In June 1997,  the  Financial  Accounting  Standards  Board issued SFAS No. 131,
"Disclosures  About  Segments of an Enterprise and Related  Information",  which
changes  the way  public  companies  report  information  about  segments.  This
statement  will be  adopted  by the  Company  in the  fourth  quarter  of  1998.
Financial  statement  disclosures for prior periods are required to be restated.
The Company is in the process of  evaluating  the  disclosure  requirements  and
presently  expects that the adoption of this standard will have no impact on the
Company's consolidated results of operation, financial position or cash flows.

FORWARD-LOOKING STATEMENTS

All  statements  made in this  quarterly  report that do not reflect  historical
information  are  forward-looking  statements  within the meaning of the Private
Securities  Litigation  Reform  Act of  1995.  Such  forward-looking  statements
involve known and unknown risks,  uncertainties and other factors that may cause
the actual results,  performance or achievements of the Company to be materially
different  from any future  results,  performance or  achievements  expressed or
implied by the  forward-looking  statements.  Such factors include,  among other
things,  (i) general  economic  and  business  conditions;  (ii)  interest  rate
changes;  (iii)  competition  and  regulatory  environment  in which the Company
operates;  (iv)  claims  frequency;  (v)  claims  severity;  (vi)  medical  cost
inflation;  (vii) increases in the cost of property repair; (viii) the number of
new and renewal  policy  applications  submitted to the Company;  and (ix) other
factors over which the Company has little or no control.  The Company  disclaims
any obligation to update or to publicly  announce the impact of any such factors
or any revisions to any  forward-looking  statements to reflect future events or
developments.



                                       27
<PAGE>





                           PART II. OTHER INFORMATION

ITEM 1. - NONE

ITEM 2. - SECURITIES OF THE REGISTRANT.

     On  September  11,  1996 the Board of  Directors  adopted  the 1996  Equity
Incentive  Plan,  pursuant  to which  options to  purchase  700,000  shares were
authorized for issuance.  The Plan was approved by the  stockholders on April 9,
1997.

     A Registration  Statement on Form S-8 was filed with respect to the Plan on
July 10, 1998 covering 1,400,000 shares (the original authorization, adjusted to
give effect to a two-for-one stock split in July, 1997).  Through June 30, 1998,
21,605  shares  were,  upon  exercise of options  awarded  pursuant to the Plan,
acquired by and issued to participants in the Plan.

ITEM 3. - NONE

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

At the Orion  Annual  Meeting  of  Stockholders  held on May 28,  1998  ("Annual
Meeting"), 27,529,520 shares of Orion Common Stock were outstanding and entitled
to vote (the  "Outstanding  Common Stock") and 26,895,878  shares of Outstanding
Common Stock or 97.7%  consisting of a quorum,  were  represented  at the Annual
Meeting, in person or by proxy.

PROPOSAL 1

At the Annual  Meeting the  directors  nominated  were elected by the  following
votes:

                                      Number of Shares       Number of Shares
                                         Voted For               Withheld

W. Marston Becker                        26,702,949              192,929
Gordon F. Cheesbrough                    26,757,717              138,161
John C. Colman                           26,756,418              139,460
David H. Elliott                         26,741,773              154,105
Victoria R. Fash                         26,760,198              135,680
Robert H. Jeffrey                        26,757,129              138,749
Gordon W. Kreh                           26,761,521              134,357
Warren B. Lyons                          26,758,417              137,461
James K. McWilliams                      26,755,067              140,811
Ronald W. Moore                          26,760,941              134,937
William B. Weaver                        26,747,290              148,588


                                       28
<PAGE>

PROPOSAL 2

Shareholders  ratified the selection of Deloitte & Touche LLP as the independent
certified public accountants, as auditors for the Company for the year 1998. The
vote was as follows:

26,797,844  shares or 99.64% of the Company's  Common Stock  represented  at the
meeting  were voted FOR.  16,665  shares or .06% of the  Company's  Common Stock
represented at the meeting were voted AGAINST.

81,369 shares or .30% of the Company's  Common Stock  represented at the meeting
ABSTAINED.

There were no Broker Non-Votes on this proposal.

PROPOSAL 3

Shareholders  approved the Orion Capital  Corporation  Employees' Stock Purchase
Plan. The vote was as follows:

26,091,584 shares or 94.78% of the Company's outstanding Common Stock were voted
FOR.

515,684  shares or 1.87% of the  Company's  outstanding  Common Stock were voted
AGAINST.

288,610 shares or 1.05% of the Company's outstanding Common Stock ABSTAINED.

There were no Broker Non-Votes on this proposal.

ITEM 5. - NONE

ITEM 6. -  EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

Exhibit 3(ii):           By-Laws of the Company, as amended on July
                         29, 1998.

Exhibit 4:               Credit Agreement, dated as of July 8, 1998,
                         between the Company, the lenders named therein,
                         First Union National Bank, as Administrative Agent,
                         Bank of America National Trust and Savings Association,
                         as Documentation Agent, and Fleet National Bank, as
                         Syndication Agent.

Exhibit 11:              Computation of Earnings Per Common Share.

                                       29
<PAGE>

Exhibit 15:              Deloitte & Touche LLP Letter  re:unaudited  interim
                         financial information.

Exhibit 27:              Financial Data Schedule.

Report on Form 8-K

None.

              
                                       30


<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, thereunto duly authorized.

                                                   ORION CAPITAL CORPORATION

Date:  August 12, 1998                             By: /s/ W. Marston  Becker
                                                   --------------------------
                                                   Chairman of the Board and
                                                   Chief Executive Officer



Date:  August 12, 1998                             By: /s/ Donald W. Ebbert, Jr.
                                                   -----------------------------
                                                   Executive Vice President and
                                                   Chief Financial Officer



                                       31



<PAGE>


                                  EXHIBIT INDEX



Exhibit 3(ii):          By-Laws of the Company, as amended on July
                        29, 1998.

Exhibit 4:              Credit Agreement, dated as of July 8, 1998,
                        between the Company, the lenders named therein,
                        First Union National Bank, as Administrative
                        Agent, Bank of America National Trust and Savings
                        Association, as Documentation Agent, and Fleet
                        National Bank, as Syndication Agent.

Exhibit 11:             Computation of Earnings Per Common Share


Exhibit 15:             Deloitte & Touche LLP Letter
                        Re:unaudited interim financial information


Exhibit 27:             Financial Data Schedule



                                       32