SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549



                                    FORM 8-K


                                 CURRENT REPORT
                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

               Date  of  Report (Date  of   earliest   event reported):
                                December 5, 1997

                            THE SHERWOOD GROUP, INC.
             (Exact name of registrant as specified in its charter)


              Delaware                   1-9480                 22-23394480
        (State or other juris-        (Commission              (IRS Employer
       diction of incorporation)      File Number)            Identification
                                                                   Number)



             10 Exchange Place Centre, Jersey City, New Jersey 07302
               (Address of principal executive office) (Zip Code)


            Registrant's telephone number including area code: (201) 946-2200


                                 Not Applicable
              (Former name and former address, as changed since last report)



<PAGE>


Item 5.  Other Events

         On December 5, 1997, The Sherwood Group,  Inc., a Delaware  corporation
(the  "Company")  entered into a Stock Purchase  Agreement (the "Stock  Purchase
Agreement") with IAT Reinsurance  Syndicate Ltd., a corporation formed under the
laws of the Commonwealth of Bermuda ("IAT"), pursuant to which IAT has agreed to
acquire  1,500,000  shares (the  "Shares") of common  stock,  par value $.01 per
share,  of the Company (the "Common  Stock") for a purchase price of $19,312,500
in cash (the "Purchase Price"),  subject to certain  conditions.  The closing of
transactions  contemplated  by the Stock  Purchase  Agreement is  scheduled  for
January 31, 1998, or at such other mutually agreed upon date (the "Closing").

         In the event of a change of control of the  Company,  as defined in the
Stock Purchase Agreement, the Company has the right to repurchase the Shares for
the Purchase  Price plus interest at the rate of twelve percent (12%) per annum,
plus  out-of-pocket  expenses  incurred  by IAT in  connection  with  the  Stock
Purchase Agreement.

         The Company has agreed in connection with the Stock Purchase  Agreement
to  grant  registration  rights  with  respect  to the  Shares,  the  terms  and
conditions  of which are to be agreed  upon by the  Company and IAT prior to the
Closing.

         Peter R.  Kellogg is the sole holder of the voting  stock of IAT. As of
December 12, 1997,  Mr.  Kellogg  beneficially  owned directly and indirectly an
aggregate of 1,021,500 shares of the Company's Common Stock,  constituting 8.03%
of the Common Stock outstanding. Of those shares of Common Stock, 650,000 shares
were  owned by Mr.  Kellogg  personally,  350,000  shares  were owned by IAT and
21,500  shares were owned by the Peter R. and Cynthia K. Kellogg  Foundation,  a
charitable  entity of which Mr.  Kellogg is a trustee.  Upon the  closing of the
transactions  contemplated  by the Stock  Purchase  Agreement,  Mr. Kellogg will
beneficially  own directly and  indirectly an aggregrate of 2,521,500  shares of
the  Company's  Common  Stock,  or 17.7% of the Common Stock  outstanding  as of
December 12, 1997 and giving effect to the issuance of the Shares.

     Mr. Kellogg is also a limited  partner of S.G.I.  Partners,  L.P.  ("SGI"),
which is the beneficial owner of 4,000,000 shares of the Company's Common Stock,
or 31.4% of the Common Stock  outstanding  as of December 12, 1997.  Mr. Kellogg
disclaims any beneficial ownership of the shares of Common Stock held by SGI.

         The foregoing  summary does not purport to be complete and is qualified
in its entirety by reference to the full text of the Stock Purchase Agreement, a
copy of which is  attached  hereto as Exhibit 10 and is  incorporated  herein by
reference.






Item 7.  Financial Statements and Exhibits.

         (c) Exhibits.

             Exhibit No.         Description

             10                  Stock Purchase Agreement between The Sherwood
                                 Group, Inc. and IAT Reinsurance Syndicate Ltd.



                                   SIGNATURES

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

                                               THE SHERWOOD GROUP, INC.


Dated:  December 15, 1997                   By:  /s/  Arthur Kontos
                                               ------------------------
                                                Name:    Arthur Kontos
                                                Title:   Chief Executive Officer



<PAGE>




                             EXHIBIT INDEX

       Exhibit No.               Description

       10                        Stock Purchase Agreement between The Sherwood
                                 Group, Inc. and IAT Reinsurance Syndicate Ltd.





<PAGE>


                                                                     
                                                              Exhibit 10.25

















                            STOCK PURCHASE AGREEMENT

                          Dated as of December 5, 1997

                                     between

                            THE SHERWOOD GROUP, INC.

                                       and

                         IAT REINSURANCE SYNDICATE LTD.















12/5/97


<PAGE>


                                                                       
                            STOCK PURCHASE AGREEMENT


         This  STOCK  PURCHASE  AGREEMENT  dated as of  December  5,  1997  (the
"Agreement")  by and between THE SHERWOOD GROUP,  INC., a Delaware  corporation,
having its principal office at 10 Exchange Place Centre, Jersey City, New Jersey
07302 ("Seller"), and IAT REINSURANCE SYNDICATE LTD., a corporation formed under
the laws of the  Commonwealth  of Bermuda with offices at Cedar House,  41 Cedar
Avenue, Hamilton, Bermuda ("Buyer").

                                    RECITALS:

         A. Buyer wishes to acquire  1,500,000  shares of the common stock,  par
value $.01 per share, of the Seller (the "Shares").

         B. Seller  desires to issue to Buyer,  the  Shares,  upon the terms and
subject to the conditions set forth in this Agreement.

         NOW,  THEREFORE,  in  consideration  of the premises and the respective
representations,  warranties,  covenants,  agreements and conditions hereinafter
set forth, the parties hereto, intending to be legally bound, agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

         Section  1.1.  Definitions.  (a) As used in this  Agreement,  the terms
defined in the  Preamble  and the  Recitals  hereto  shall  have the  respective
meanings ascribed  thereto,  and the following terms shall have the meanings set
forth below (such  definitions  to be  applicable  equally to the  singular  and
plural forms thereof):

         "Change of Control":  shall be deemed to have  occurred if the board of
directors  of Seller  approves  and Seller  executes  and  delivers a definitive
agreement with a Person (i) to merge into or,  consolidate  with, or engage in a
similar  transaction  with  such  Person  where,  as a  result  of such  merger,
consolidation,  or similar transaction, the stockholders of Seller will own less
than  50%  of  the  outstanding  shares  of  the  survivor  after  such  merger,
consolidation or similar  transaction or (ii) to sell all or  substantially  all
Seller's  assets to a Person or (iii) the  stockholders of Seller approve a plan
of complete liquidation of Seller.

         "Closing":  as defined in Section 7.1.

         "Closing Date":  as defined in Section 7.1.

         "Closing Documents":  collectively, this Agreement and all other 
documents and instruments to be executed and delivered by Seller pursuant
hereto, including the Registration Rights Agreement.

         "GAAP":  generally accepted United States accounting principles.

         "Governmental Authority":  any nation or government, any state or other
political  subdivision  thereof,  any  regulatory  agency or body and any entity
exercising  executive,  legislative,   judicial,  regulatory  or  administrative
functions of or pertaining to government.

         "HSR":  Hart Scott Rodino Antitrust Improvement Act of 1976, as
amended, and the rules and regulations issued thereunder.

         "Laws": all federal, state, local and foreign laws, ordinances, orders,
rules  and  regulations  (including,   without  limitation,  those  relating  to
discrimination in employment,  occupational safety and health,  trade practices,
competition and pricing,  product warranties,  zoning,  building and sanitation,
toxic and  chemical  substances,  employment,  retirement  and labor  relations,
product advertising and pollution,  discharge,  disposal and emission of wastes,
materials and gases into the environment.

         "Person"  means  an  individual,  a  partnership,  a  corporation,   an
association,  a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department,  agency, or political
subdivision thereof).

         "Registration Rights Agreement" means the Registration Rights Agreement
between  Seller  and  Buyer  dated  the date of this  Agreement  respecting  the
registration of the Shares under the Securities Act.

         "Securities Act": the Securities Act of 1933, as amended, and any rules
and regulations promulgated thereunder and any successor federal statute, rules 
or regulations.

         "Securities Exchange Act": Securities Exchange Act of 1934, as amended,
and any rules and regulations  promulgated  thereunder and any successor federal
statutes, rules or regulations.

         "SEC":  United States Securities and Exchange Commission.

         "Seller Reports":  as defined in Section 3.6.

         "Subsidiary"  means any  corporation  with respect to which a specified
Person (or a Subsidiary  thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient  securities to elect a majority
of the directors.

         (b) Knowledge. To the extent that any representation, warranty or other
provision  in the  Agreement  is, by its  terms,  based  upon or  limited by the
"knowledge" of Seller,  that term signifies that no information  has come to the
attention of Seller or any of the president,  executive vice  president,  senior
vice  president  or vice  president  of Seller that would give such party actual
knowledge or actual notice that such  representation  or warranty or the subject
matter of such provision is not true, accurate or complete.


                                   ARTICLE II

                         ISSUANCE AND PURCHASE OF SHARES

         Section 2.1. Sale and Purchase of Shares. Seller hereby agrees to issue
to Buyer, and Buyer hereby agrees to purchase and accept from Seller, the Shares
upon  the  terms,  conditions,   representations,   warranties,   covenants  and
agreements set forth herein.

         Section  2.2.  Purchase  Price.  The  purchase  price for the Shares is
$19,312,500  (the "Purchase  Price") payable to Seller in immediately  available
funds by wire  transfer  on the date this  Agreement  is  executed by Seller and
Buyer.  Seller will return the  Purchase  Price to Buyer if the Closing does not
occur prior to the termination of this Agreement.

         Section 2.3 Use of Proceeds.  Pending the  Closing,  Seller may utilize
the funds representing the Purchase Price for investment in its subsidiaries.



                                   ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF SELLER

         Seller represent and warrant to Buyer as follows:

         Section 3.1.  Capitalization of Seller. The authorized capital stock of
Seller consists of 51,000,000  shares,  1,000,000 of which are preferred  stock,
par value $.01 per share,  none of which are outstanding,  50,000,000  shares of
common stock,  $.01 par value per share, of which  12,724,624  shares are issued
and  currently  outstanding  as of the date  hereof  and  845,898  of which  are
reserved at the date hereof for  issuance  for options  granted or to be granted
under The Sherwood Group,  Inc. 1995 Stock Option Plan, as amended and 1,618,577
of which at the date hereof are held as treasury  stock.  All of the Shares when
issued  and paid  for as  provided  in this  Agreement  will be  fully  paid and
nonassessable.

         Section 3.2.  Organization; Corporate Name.  Seller is a corporation 
duly organized, validly existing and in good standing under the laws of the
State of Delaware.

         Section 3.3.  Authority.  No further corporate act or proceeding on the
part of Seller is  necessary to authorize  this  Agreement or the other  Closing
Documents  or the  consummation  of the  transactions  contemplated  hereby  and
thereby. This Agreement constitutes and, when executed and delivered,  the other
Closing  Documents  will  constitute,  valid and  binding  agreements  of Seller
enforceable  against Seller in accordance with their respective terms, except as
limited by  bankruptcy,  insolvency,  reorganization,  moratorium  or other laws
affecting  creditors'  rights  generally,  and by general  equitable  principles
affecting the availability of equitable relief.

         Section 3.4. No  Violation.  Neither the execution and delivery of this
Agreement or the other Closing Documents,  nor the consummation by Seller of the
transactions  contemplated hereby and thereby (i) will violate any statute, law,
rule, regulation, order, writ, injunction or decree of any court or Governmental
Authority  applicable  to  Seller  or any  Subsidiary,  (ii)  will  require  any
authorization,  consent, approval,  exemption or other action by, or filing with
or notice to, any court or  Governmental  Authority or any other  Person,  other
than the filings with and  approvals  disclosed  in Schedule  3.4, or (iii) will
violate or conflict  with,  or  constitute  a default (or an event  which,  with
notice or lapse of time, or both,  would  constitute a default)  under,  or will
result in the  termination  of, or accelerate  the  performance  required by, or
result in the creation of any lien,  security  interest,  charge or  encumbrance
upon any of the assets material to the business,  assets or financial  condition
of  Seller,  under any term or  provision  of (a) the  Restated  Certificate  of
Incorporation,  as amended,  or By-laws of Seller, or (b) any material contract,
commitment, understanding,  arrangement, agreement or restriction of any kind or
character to which Seller or any  Subsidiary  is a party,  or by which Seller or
any Subsidiary, or any of their respective assets or properties may be bound.

         Section 3.5. Brokers or Finders.  Neither Seller, nor any person acting
on its behalf has employed any broker or finder or  consultant,  or has incurred
any obligation or liability for any brokerage fees,  commissions,  finders' fees
or consultants'  fees in connection with the  transactions  contemplated by this
Agreement,  and no Person has or will have any right,  interest  or valid  claim
against or upon Buyer, for any such fee or commission.

         Section 3.6. SEC Reports;  Financial  Statements.  Seller has filed all
reports,  registration  statements  and filings,  together  with any  amendments
required  to be made  thereto,  required  to be  filed  with the SEC  under  the
Securities  Exchange Act since January 1, 1993,  including,  but not limited to,
Form 10-K,  Form 10-Q and proxy  statements,  and will so file all such reports,
statements and filings required after the date hereof (collectively, the "Seller
Reports"). Included or to be included in the Seller Reports are the consolidated
financial  statements  of  Seller,  which  consist of the  audited  consolidated
statement of condition at May 31, 1997, and the related  consolidated  statement
of income and retained earnings and changes in financial position for the fiscal
year then ended. Seller financial statements fairly presented, and the financial
statements  contained  in the Seller  Reports  filed  after the date hereof will
fairly  present,  the financial  position of Seller and its  Subsidiaries  (on a
consolidated  basis) as at the dates thereof and the results of  operations  and
changes in financial position for the periods then ended in conformity with GAAP
applied on a  consistent  basis  (subject to any  exceptions  as to  consistency
specified in the financial statements, and, in the case of the interim financial
statements,  to normal recurring year-end  adjustments).  As of their respective
dates, the Seller Reports referred to herein  complied,  or will comply,  as the
case may be, in all material respects with all rules and regulations promulgated
by the SEC and did not,  or will not,  as the case may be,  contain  any  untrue
statement  of a material  fact or omit to state a material  fact  required to be
stated therein or necessary in order to make the statements therein, in light of
the  circumstances  under which they were made,  not  misleading.  Since May 31,
1997,  neither Seller nor any of its Subsidiaries has suffered any change in its
condition (financial or otherwise), properties, assets, liabilities,  prospects,
business  or  operations  which  have  been,  in any  case or in the  aggregate,
materially adverse to Seller and its Subsidiaries taken as a whole.

         Section  3.7.  Disclosure.  No  representation  or  warranty  of Seller
contained in this  Agreement or fact disclosed in the Schedules of Seller hereto
contains  any untrue  statement or omits to state a material  fact  necessary in
order to make the statements  herein or therein,  in light of the  circumstances
under which they were made, not misleading.


                                   ARTICLE IV

                     REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer represents and warrants to Seller as follows:

         Section 4.1. Status.  Buyer is a corporation,  duly organized,  validly
existing and in good standing under the laws of the  Commonwealth of Bermuda and
is an  "accredited  investor"  as  defined  in Rule 501 of  Regulation  D of the
Securities Act.

         Section 4.2.  Validity.  This  Agreement  and the  Registration  Rights
Agreement   constitute  the  valid,  legal  and  binding  agreements  of  Buyer,
enforceable  against Buyer in accordance with their respective terms,  except as
such may be limited by  bankruptcy,  insolvency,  reorganization,  moratorium or
other laws  affecting  creditors'  rights  generally,  and by general  equitable
principles  affecting the availability of equitable relief. No further corporate
act or proceeding on the part of Buyer is necessary to authorize  this Agreement
and the  Registration  Rights  Agreement or the  consummation of the transaction
contemplated thereunder by Buyer.

         Section 4.3. No  Violation.  Neither the execution and delivery of this
Agreement and the Registration  Rights Agreement,  nor the consummation by Buyer
of the  transactions  contemplated  hereby  and  thereby  (i) will  violate  any
statute, law, rule,  regulation,  order, writ, injunction or decree of any court
or  Governmental  Authority  applicable  to Buyer or any  Subsidiary or Peter R.
Kellogg, (ii) will require any authorization,  consent,  approval,  exemption or
other  action  by,  or  filing  with or notice  to,  any  court or  Governmental
Authority  or any  other  Person,  other  than the  filings  with and  approvals
disclosed in Schedule 4.3, or (iii) will violate or conflict with, or constitute
a default  (or an event  which,  with  notice or lapse of time,  or both,  would
constitute a default) under, or will result in the termination of, or accelerate
the  performance  required by, or result in the  creation of any lien,  security
interest, charge or encumbrance upon any of the assets material to the business,
assets or financial  condition of Buyer,  under any term or provision of (a) the
basic corporate  documents of Buyer, or (b) any material  contract,  commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which Seller,  or any  Subsidiary,  or Peter R. Kellogg is a party,  or by which
Buyer or any Subsidiary or Peter R. Kellogg,  or any of their respective  assets
or properties may be bound.

         Section 4.4. Governmental Filings. Except as provided in Schedule 4.3.,
no notices,  reports or other filings are required to be made by Buyer with, nor
are any consents,  registrations,  approvals, permits or authorizations required
to be obtained by Buyer from, any  Governmental  Authorities of the Commonwealth
of Bermuda, the several states of the United States or any foreign jurisdictions
or any other  Person in  connection  with the  execution  and  delivery  of this
Agreement  by  Buyer  and  the   consummation  by  Buyer  of  the   transactions
contemplated hereby.

         Section 4.5. Brokers and Finders.  Except as set forth in Schedule 4.4,
neither  Buyer nor any  person  acting on its behalf has  employed  any  broker,
finder or consultant,  or incurred any obligation or liability for any brokerage
fees, commissions,  or finders' fees or consultants' fees in connection with the
transactions  contemplated by this Agreement,  and in any event no Person has or
will have any right, interest or valid claim against or upon Seller for any such
fee or commission.

         Section  4.6.  Ownership of Shares.  Inclusive  of 1,021,500  shares of
Common  Stock of  Seller  owned by Peter R.  Kellogg  and the  Shares,  Peter R.
Kellogg will not be deemed to be beneficially  own more than 2,521,500 shares of
Common  Stock  of  Seller  upon  consummation  of the  Closing.  All the  voting
securities of Buyer are beneficially owned by Peter R. Kellogg.  For purposes of
this Agreement,  the term beneficially own or beneficially  owned shall have the
meaning  given such term in Rule 13d-3 of the rules and  regulations  of the SEC
under the Securities Exchange Act.

         Section 4.7.  Investment Intent.

                           (i)      Buyer is able to bear the  economic  risk of
                                    an investment  in the Shares,  including the
                                    loss of the entire investment.

                           (ii)     Buyer  has  prior   substantial   investment
                                    experience,    including    investments   in
                                    non-registered securities.

                           (iii)  Buyer is fully  familiar  with the  affairs of
Seller.

                           (iv)     Buyer has been afforded the  opportunity  to
                                    ask questions of, and receive  answers from,
                                    directors and  executive  officers of Seller
                                    concerning  Seller, the terms and conditions
                                    of  the  offering  of  the  Shares  and  any
                                    additional  information  requested by Buyer.
                                    Buyer   has   been    furnished   with   all
                                    information  and all  documents  which Buyer
                                    has requested.

                           (v)      Neither  the  offer  nor the sale of the  
                                    Shares  is being  registered under the 
                                    Securities  Act or the  securities  laws of 
                                    any state.  The Shares are being  offered  
                                    and sold in  reliance  on  exemptions  from
                                    registration   under  the   Securities  Act
                                    and  the  various  state securities laws for
                                    transactions  not involving any public  
                                    offering.  Accordingly,  none of the Shares
                                    can be sold, pledged, hypothecated or
                                    otherwise  transferred  (each  individually
                                    a  "Transfer")  by  Buyer unless and until 
                                    each is registered  under the  Securities 
                                    Act and the securities  laws  of  each  
                                    applicable  state  or  an  exemption  from
                                    registration   pursuant  to  the  Securities
                                    Act  and  such  laws  is available to Buyer.

                           (vi)     Seller is  relying  on  exemptions  from the
                                    various  federal and state  securities  laws
                                    which   depend,   in  part,   upon   Buyer's
                                    investment  intent and upon the  information
                                    Buyer has set forth in this Agreement.  This
                                    Agreement  is  delivered  to Seller by Buyer
                                    with  the   understanding  and  intent  that
                                    Seller will rely on the  representations and
                                    warranties   of  Buyer   contained  in  this
                                    Agreement  and with Buyer's  consent to such
                                    reliance.

                           (vii)    The  Shares  are  being  purchased  by Buyer
                                    for its own  account  for investment  and 
                                    not for  distribution  or resale or  
                                    fractionalization thereof or reselling  
                                    thereof or any part  thereof  within the 
                                    meaning of the  Securities  Act  other  than
                                    in  compliance  therewith  or in
                                    accordance  with an exemption  therefrom.  
                                    Buyer will not Transfer any of the Shares 
                                    unless they are registered  under the 
                                    Securities Act and the securities  laws of 
                                    each  applicable  state or unless an 
                                    exemption from each such  registration is 
                                    available for such Transfer,  and such
                                    Transfer  will not violate the terms of this
                                    Agreement or the Shares.  Buyer has adequate
                                    means of providing for its current needs and
                                    possible business  contingencies and has no
                                    need for liquidity of this investment in the
                                    Shares.

                           (viii)   Buyer  specifically  represents with respect
                                    to the  offer  and sale of the  Shares to it
                                    that it has not received any  advertisement,
                                    article,   notice  or  other   communication
                                    published  in  a  newspaper,   magazine,  or
                                    similar media or broadcast  over  television
                                    or radio, nor has Buyer attended any seminar
                                    or meeting to which  Buyer has been  invited
                                    by  any  general   solicitation  or  general
                                    advertising representing such offer or sale.

                           (ix)     Buyer  understands  that the offer and sale 
                                    of the Shares has not been registered  under
                                    the  Securities  Act, nor pursuant to the 
                                    provisions of  the   securities   or   other
                                    laws  of  any   other   applicable
                                    jurisdictions,  in reliance upon the  
                                    exemption for private  offerings contained 
                                    in Section 4(2) of the  Securities  Act and
                                    the laws of such jurisdictions.  Buyer is 
                                    fully aware that the  Shares,  sold to Buyer
                                    are being sold in reliance  upon such  
                                    exemptions based upon Buyer's 
                                    representations,  warranties and agreements.
                                    Buyer is fully aware of the  restrictions on
                                    sale, transferability and  assignment of the
                                    Shares,  and that Buyer must bear the 
                                    economic  risk of an  investment herein for 
                                    an indefinite  period of time because the 
                                    offer and sale of the Shares  has not been  
                                    registered  under the  Securities  Act and,
                                    therefore,  the Shares cannot be offered or
                                    sold unless the Shares are subsequently  
                                    registered under the Securities Act or an 
                                    exemption from such registration is 
                                    available.

                           (x)      Buyer is making the investment hereunder for
                                    Buyer's  own account and not for the account
                                    of others and for  investment  purposes only
                                    and not with a view to or for the  transfer,
                                    assignment,  resale or distribution thereof,
                                    in whole or in part.  Buyer  has no  present
                                    plans  to  enter  into  any  such  contract,
                                    undertaking, agreement or arrangement.

                           (xi)     The  representations  and warranties in this
                                    Section of this Agreement  shall survive the
                                    Closing Date.

                           (xii)    The  address  set forth in Section  10.7 for
                                    Buyer is Buyer's true and correct residence,
                                    and  Buyer  has  no  present   intention  of
                                    becoming  a resident  of any other  country,
                                    state or jurisdiction  prior to its purchase
                                    of the Shares.

                           (xiii)   Buyer   acknowledges  that  Seller  and  its
                                    officers    and   agents    have   made   no
                                    representations   or   warranties,   whether
                                    orally or in writing, or express or implied,
                                    as  to  the  financial  condition,   assets,
                                    operations, business, prospects or condition
                                    of  Seller  other  than as set forth in this
                                    Agreement and the Seller Reports.

                           (xiv)    Buyer  understands  the  meaning  and  legal
                                    consequences      of      the      foregoing
                                    representations  and  warranties,  which are
                                    true and  correct as of the date  hereof and
                                    will be true and  correct  as of the date of
                                    Buyer's  purchase  of the  Shares  purchased
                                    hereby.   Each   such   representation   and
                                    warranty shall survive such purchase.

                           (xv)     Each of the  certificates  representing  the
                                    Shares   shall   bear    substantially   the
                                    following legend:

                                            "THE   SHARES   EVIDENCED   BY  THIS
                                    CERTIFICATE  HAVE NOT BEEN REGISTERED  UNDER
                                    THE SECURITIES ACT OF 1933, AS AMENDED,  AND
                                    HAVE  BEEN  ACQUIRED  BY THE  PURCHASER  FOR
                                    INVESTMENT PURPOSES.  SAID SHARES MAY NOT BE
                                    SOLD OR  TRANSFERRED  UNLESS  (A) THEY  HAVE
                                    BEEN  REGISTERED  UNDER SAID ACT, OR (B) THE
                                    TRANSFER  AGENT  (OR  THE  COMPANY  IF  THEN
                                    ACTING AS ITS  TRANSFER  AGENT) IS PRESENTED
                                    WITH EITHER A WRITTEN  OPINION  SATISFACTORY
                                    TO COUNSEL FOR THE COMPANY OR A  "NO-ACTION'
                                    OR  INTERPRETIVE  LETTER FROM THE SECURITIES
                                    AND EXCHANGE  COMMISSION  TO THE EFFECT THAT
                                    SUCH  REGISTRATION IS NOT REQUIRED UNDER THE
                                    CIRCUMSTANCES OF SUCH SALE OR TRANSFER."


         Section  4.8.  Disclosure.  No  representation  or  warranty  of  Buyer
contained in this  Agreement or fact  disclosed in the Schedules of Buyer hereto
contains  any untrue  statement or omits to state a material  fact  necessary in
order to make the statements  herein or therein,  in light of the  circumstances
under which they were made, not misleading.


                                    ARTICLE V

                   CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS

         The obligations of Buyer  hereunder are subject to the  satisfaction or
fulfillment,  at or  prior  to the  Closing  Date,  of  each  of  the  following
conditions, any or all of which may be waived in whole or in part by Buyer:

         Section 5.1.  Representations  and Warranties True on the Closing Date.
The  representations  and  warranties of Seller set forth in Article III of this
Agreement,  and the statements contained in the Schedules of Seller hereto or in
any other Closing Document delivered by Seller pursuant to this Agreement, shall
be true and  correct in all  material  respects  when made and as of the Closing
Date as  though  made or given on and as of the  Closing  Date,  except  for any
changes  contemplated  or permitted by the terms of this  Agreement or otherwise
consented to in writing by Buyer.

         Section 5.2. Compliance With Agreement. Seller shall have performed and
complied in all material  respects with each obligation and covenant required to
be performed or complied with by Seller at or prior to the Closing Date pursuant
to the terms of this  Agreement,  including  delivery of the  Closing  Documents
specified in Section 7.2, which shall be in form and substance  satisfactory  to
Buyer's counsel.

         Section 5.3. Absence of Suit. No action,  suit or proceeding before any
court or any Governmental Authority shall have been commenced or threatened, and
no  investigation  by any  Governmental  Authority  shall  have been  commenced,
against Buyer,  Seller,  or any of their respective  affiliates,  (i) seeking to
restrain,  prohibit or enjoin the consummation of the transactions  contemplated
hereby or to change any of the terms  thereof,  (ii)  questioning  the validity,
legality or enforceability of any such transactions, or (iii) seeking damages in
connection with any such transactions.

         Section 5.4.  Consents and Approvals.  All filings  required to be made
prior to the Closing Date by Seller with, and all material consents,  approvals,
waivers and authorizations  required to be obtained prior to the Closing Date by
Seller and/or  Seller's  Subsidiaries  from,  Governmental  Authorities or other
Persons in connection  with the execution and delivery of this Agreement and the
consummation  of the  transactions  contemplated  hereby  by  Buyer  or  Seller,
including  without  limitation,  the approval of any regulatory  body shall have
been made or obtained (as the case may be).

         Section  5.5.  Actions  Satisfactory.  The  form and  substance  of all
actions,  proceedings,  instruments  and documents  required to  consummate  the
transactions  contemplated  by  the  Agreement  shall  be  satisfactory  in  all
reasonable respects to Buyer and its counsel.

         Section 5.6. HSR Act. Any waiting period applicable to the consummation
of the sale of the Shares to Buyer under the HSR Act shall have  expired or been
terminated.

         Section 5.7. Registration Rights Agreement.  Seller shall have executed
and delivered to Buyer the Registration Rights Agreement.


                                   ARTICLE VI

                  CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS

         The obligations of Seller  hereunder are subject to the satisfaction or
fulfillment, at or prior to the Closing Date, of the following conditions:

         Section 6.1.  Representations  and Warranties True on the Closing Date.
The  representations  and  warranties  of Buyer set forth in  Article IV of this
Agreement shall be true and correct in all material respects when made and as of
the Closing Date as though made or given on and as of the Closing Date.

         Section 6.2. Compliance With Agreement.  Buyer shall have performed and
complied in all material respects with each agreement and obligation required to
be performed or complied  with by it at or prior to the Closing Date pursuant to
the terms of this  Agreement,  including  the delivery of the Closing  Documents
specified in Section 7.3, which shall be in form and substance  satisfactory  to
Seller's counsel.

         Section 6.3. Absence of Suit. No action,  suit or proceeding before any
court or any Governmental Authority shall have been commenced or threatened, and
no  investigation  by any  Governmental  Authority  shall  have been  commenced,
against Buyer or Seller or any of their  respective  affiliates,  (i) seeking to
restrain,  prohibit or enjoin the consummation of the transactions  contemplated
hereby or to change any of the terms  thereof,  (ii)  questioning  the validity,
legality or enforceability of any such transactions, or (iii) seeking damages in
connection with any such transactions.

         Section 6.4.  Consents and Approvals.  All filings  required to be made
prior to the Closing Date by Buyer with, and all material  consents,  approvals,
waivers and authorizations  required to be obtained prior to the Closing Date by
Buyer from, Governmental  Authorities or any other Person in connection with the
execution  and  delivery  of  this  Agreement  and  the   consummation   of  the
transactions  contemplated  hereby  by Buyer or Seller  shall  have been made or
obtained (as the case may be).

         Section  6.5.  Actions  Satisfactory.  The  form and  substance  of all
actions,  proceedings,  instruments  and documents  required to  consummate  the
transactions  contemplated  by  this  Agreement  shall  be  satisfactory  in all
reasonable respects to Seller and his counsel.

         Section 6.6. HSR Act. Any waiting period applicable to the consummation
of the sale of the Shares to Buyer under the HSR Act shall have  expired or been
terminated.


                                   ARTICLE VII

                                     CLOSING

         Section 7.1. Closing Date. The closing of the acquisition of the Shares
and the  consummation  of the  transactions  contemplated  by the Agreement (the
"Closing") shall take place at the offices of Crummy, Del Deo, Dolan, Griffinger
& Vecchione,  One Riverfront Plaza, Newark, New Jersey, at 10:00 a.m. on January
31, 1998 or at such other time and place as may be  mutually  agreed upon by the
parties (the "Closing Date").  All proceedings to take place on the Closing Date
shall be deemed to take place  simultaneously and no delivery shall be deemed to
have been made until all such proceedings have been completed.

         Section  7.2.  Documents  to be  Delivered  by Seller.  At the Closing,
Seller shall deliver to Buyer the following documents:

                  (a)      Stock Certificates.  Certificates representing the 
Shares registered in the name of Buyer.

                  (b) Compliance Certificate.  A certificate signed by Seller to
the  effect  that the  representations  and  warranties  of Seller  set forth in
Article III of this  Agreement are true and correct in all material  respects on
and as of the  Closing  Date with the same effect as though made or given on and
as of the Closing  Date  (except for changes  contemplated  or  permitted by the
terms of this  Agreement or  consented to in writing by Buyer),  and that Seller
have  performed and complied in all material  respects with each  obligation and
covenant  required to be performed or complied with by Seller on or prior to the
Closing Date.

                  (c) Good Standing Certificates. A good standing certificate of
current date of Seller, from the Secretary of State of the State of Delaware.

                  (d) Secretary's Certificates.  Certificate,  dated the Closing
Date,  executed by the  Secretary  of Seller,  which shall  identify by name and
title and bear the signature of each officer  thereof  authorized to execute any
Closing  Document to be executed and delivered on behalf of Seller,  pursuant to
the terms of this Agreement and shall have attached to it as exhibits (i) a copy
of the By-laws, as amended, of the Seller, and (ii) a copy of the Certificate of
Incorporation,  as amended, of the Seller certified by the Secretary of State of
the state of its formation as of a recent date.

                  (e) Opinion of Counsel. The opinion of Crummy, Del Deo, Dolan,
Griffinger & Vecchione,  P.C.,  counsel to Seller,  addressed to Buyer dated the
Closing Date, in form reasonably satisfactory to Buyer and its counsel.

                  (f) Other  Documents.  All  other  documents,  instruments  or
writings  required to be delivered to Buyer at or prior to the Closing  pursuant
to the terms of this Agreement, including the Registration Rights Agreement have
been executed and delivered by Seller.

         Section 7.3. Documents to be Delivered by Buyer. At the Closing,  Buyer
shall deliver to Seller the following documents:

                  (a) Compliance  Certificate.  A certificate signed by Buyer to
the effect that the representations and warranties of Buyer set forth in Article
IV of this Agreement are true and correct in all material  respects on and as of
the  Closing  Date with the same effect as though made or given on and as of the
Closing Date (except for changes  contemplated or permitted by the terms of this
Agreement or consented  to in writing by Seller),  and that Buyer has  performed
and complied in all material respects with each obligation and covenant required
to be performed or complied with by Buyer on or prior to the Closing Date.

                  (b) Good Standing  Certificate.  A copy of the basic corporate
documents of Buyer  certified by the appropriate  governmental  authority of the
Commonwealth of Bermuda as of a recent date.

                  (c)  Opinion  of  Counsel.  The  opinion  of  counsel to Buyer
addressed to Seller, dated the Closing Date, in form reasonably  satisfactory to
Seller and its counsel.

                  (d) Other  Documents.  All  other  documents,  instruments  or
writings  required to be  delivered  to Seller at or prior to the  Closing  Date
pursuant to this Agreement.



                                  ARTICLE VIII

                           TERMINATION AND ABANDONMENT

         Section 8.1. Termination by Mutual Consent.  This Agreement may be 
terminated at any time prior to the Closing Date by the mutual written consent 
of Buyer and Seller.

         Section 8.2.  Termination  by Buyer or Seller.  This  Agreement  may be
terminated  at any time prior to the Closing  Date by Buyer or Seller (i) if the
Closing has not occurred on or before January 31, 1998, unless the party seeking
to  invoke  this  subclause  (i)  is  then  in  material  breach  of  any of its
obligations  hereunder;  (ii)  if a  court  of  competent  jurisdiction  or  any
Governmental Authority shall have issued an order, decree or ruling or taken any
other  action,  in each case  permanently  restraining,  enjoining  or otherwise
prohibiting the  transactions  contemplated  by this Agreement,  and such order,
decree,  ruling or other action shall have become  final and  nonappealable,  or
(iii) if the other party shall have breached or failed to comply in all material
respects  with  its  representations,   warranties,   covenants  and  agreements
contained in this Agreement;  provided,  however, that if such breach or failure
is  reasonably  capable of being  cured on or before  January  31, 1998 and such
party  commences  such cure as soon as  practicable  and  diligently  prosecutes
(subject to any other limitations of this Agreement) such cure, such party shall
be entitled to postpone the Closing Date for a period  reasonably  sufficient to
effect such cure to the  reasonable  satisfaction  of the party  asserting  such
breach or failure, but in no event beyond January 31, 1998.

         Section 8.3. Effect of Termination. In the event of termination of this
Agreement  pursuant to this  Article  VIII,  no party hereto (or, in the case of
Seller,  any of its  directors or officers)  shall have any liability or further
obligation  to any  other  party  to  this  Agreement,  provided  that,  if this
Agreement is so terminated  by a party because one or more of the  conditions to
such party's  obligations  hereunder  is not  satisfied as a result of the other
party's willful failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies for breach of contract or
otherwise,  including, without limitation,  damages relating thereto, shall also
survive such termination  unimpaired.  If this Agreement is terminated without a
Closing,  Seller will return the Purchase Price received by Seller to Buyer upon
the date of such termination.


                                   ARTICLE IX

                                REPURCHASE RIGHT

         In the event a Change of Control  occurs within sixty (60) days after a
Closing,  Seller shall have the right upon ten (10) days notice to Buyer after a
Change of Control to repurchase  the Shares for the Purchase Price plus interest
at the rate of twelve  per cent (12%) per annum on the  Purchase  Price from the
date of payment by Buyer to Seller to the date the Purchase Price is returned to
Buyer plus the out-of-pocket  expenses of Buyer incurred in connection with this
Agreement. Buyer shall tender certificates representing the Shares duly endorsed
for  transfer  to Seller or its  designee  upon  payment of the above  amount to
Buyer.



                                    ARTICLE X

                            MISCELLANEOUS AND GENERAL

         Section 10.1.  Schedules.  The Schedules  referenced in this  Agreement
constitute  an integral  part  hereof.  Information  set forth in the  Schedules
specifically  references  the article or section of this Agreement to which such
information  relates and shall not be deemed to have been disclosed with respect
to any other article or section of this Agreement or for any other purpose.

         Section  10.2.  Further  Assurances.  Seller and Buyer  hereby agree to
execute and deliver such other  documents and  instruments,  and take such other
actions,  as may be necessary or desirable in order to consummate  and implement
the transactions contemplated by this Agreement.

         Section 10.3. Parties-in-Interest;  Assignment. This Agreement shall be
binding upon,  inure to the benefit of, and be enforceable by the parties hereto
and their respective successors and assigns. Buyer may not assign its rights and
obligations  under this  Agreement  to any third  party  without  the consent of
Seller.

         Section 10.4.  Governing Law.  The validity, interpretation, 
enforceability and performance of this Agreement shall be governed by and 
construed in accordance with the laws of the State of New Jersey.

         Section 10.5.  Amendment and Modification.  The parties may amend, 
modify and supplement this Agreement only by a writing signed by all parties.

         Section 10.6.  Waiver of  Conditions.  The conditions to the respective
obligations  of Buyer and Seller to  consummate  the  transactions  contemplated
hereby are for the sole benefit of such party and may be waived by such party in
whole or in part.

         Section  10.7.  Notices.  All  notices,  requests,  demands  and  other
communications hereunder shall be in writing and delivered personally or sent by
express  overnight  or  certified  mail,   postage  prepaid,   or  by  facsimile
transaction:

         if to Buyer:      IAT Reinsurance Syndicate Ltd.
                           41 Cedar Avenue
                           Cedar House,
                           Hamilton, Bermuda
                           Facsimile:  441-292-8666

                           If to Buyer at PO Box:

                           IAT Reinsurance Syndicate Ltd.
                           PO Box 1179
                           Hamilton HMEX, Bermuda

         with a copy to:

                           Peter R. Kellogg
                           120 Broadway
                           New York, New York 10271
                           Facsimile:  (212) 433-7294


         if to Seller:     The Sherwood Group, Inc.
                           10 Exchange Place Centre
                           15th Floor
                           Jersey City, NJ 07302-3913
                           Facsimile:  (973) 946-4510

         with a copy to:

                           Crummy, Del Deo, Dolan, Griffinger & Vecchione
                           A Professional Corporation
                           One Riverfront Plaza
                           Newark, New Jersey 07102-5497
                           Attention:  Frank E. Lawatsch, Jr. Esq.
                           Facsimile:  (973) 639-6249

or to such other  persons or  addresses as may be  designated  in writing by the
party to receive such notice.

         Section 10.8.  Publicity.  Prior to the Closing Date, neither Buyer nor
Seller shall issue or make, or cause to be issued or made, any  announcement  or
written  statement for  dissemination to the public concerning this Agreement or
the  transactions  contemplated  hereby without the prior written consent of the
other,  except such as may be required to be made by law or by regulation of any
Governmental  Authority,  and then only, to the extent practicable,  after prior
consultation  by the party required to make such  announcement or statement with
the other parties hereto  concerning the timing and content of such announcement
or other  statement.  Both parties hereto  acknowledge  that Seller will issue a
press release and, if it so  determines,  make a filing with the SEC  respecting
this Agreement and the Registration Rights Agreement.

         Section 10.9. Transfer Taxes. Any excise, transfer or other similar tax
imposed with respect to the transactions provided for in this Agreement, and any
interest or penalties-related  thereto,  shall be paid by Buyer; and Buyer shall
indemnify and hold Seller  harmless  from and against any such tax,  interest or
penalty that may be assessed against Seller.

         Section 10.10. Expenses.  Whether or not the transactions  contemplated
hereby  are  consummated,  each of the  parties  shall  bear  its  own  expenses
(including,  without  limitation,  the  expenses  of its  brokers,  accountants,
counsel  and other  agents) in  connection  with the  transactions  contemplated
hereby,  except  as is  otherwise  provided  for  in  this  Agreement  or as may
otherwise be agreed to in writing by the parties.

         Section  10.11.  Entire  Agreement.   This  Agreement   (including  the
Schedules thereto),  constitutes the entire agreement between the parties hereto
with respect to the transactions  contemplated  hereby,  and there have been and
are no agreements,  representations or warranties between the parties other than
those set forth or provided for herein or therein.

         Section 10.12.  Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which 
together shall constitute one and the same instrument.

         Section 10.13.  Captions.  The article,  section and paragraph captions
herein are for  convenience of reference  only, do not constitute a part of this
Agreement,  and  shall not be deemed  to limit or  otherwise  affect  any of the
provisions hereof.



<PAGE>


         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
date and year first above written.

                                                  THE SHERWOOD GROUP, INC.


                                                  By:    /s/  Arthur Kontos
                                                  Name:  Arthur Kontos
                                                  Title: President and Chief 
                                                          Executive Officer


                                                  IAT REINSURANCE SYNDICATE LTD.


                                                          /s/  Peter Kellogg
                                                   Name:  Peter R. Kellogg
                                                   Title:    President