Chairman's Letter

We've been around for 32 years in Canada and the U.S. I'd like to tell you
about some of the significant milestones we have passed.

December 31, 1976, ended our twelfth year since the inception of the
originating company in our group. We concluded that year by writing
$20 million of gross premiums and had a profit of $600,000, record figures
for our company, which, at the time, had offices in four locations;
Vancouver, Toronto, Montreal and Fort Lauderdale. As exciting as the
year was, it was of consequence to only a small group of people, for we
were a "private" company at the time, with a staff of forty.

In 1978 we formed Symons General Insurance Company and followed
that with the acquisition of Pafco Insurance Company in 1983. In less than
three years we took Pafco Financial Holdings "public" on the Toronto
Stock Exchange, with a market valuation of twenty times the net price
we paid for the underlying company, Pafco Insurance Company Ltd.
In 1985 we acquired the Ontario General Insurance Company which we
later sold to take advantage of certain financial aspects in the company.
In 1987 we began focusing on our development in the United States.
We purchased the "desirable" business of a company in Indianapolis
which specialized, as did Pafco Insurance Company of Canada, in the writing
of non-standard automobile insurance. To underwrite this and other
business, we licensed Pafco General Insurance Company of Indiana and then
expanded its operations to other states, obtaining licensing where it was
advantageous to do so.

In June of 1990, in a move to strengthen our Untied States operations, we
sold The Canadian Pafco Insurance Company and the Canadian book of
insurance business in Granite Insurance Company, formerly Symons
General Insurance Company. Concurrently we formed Granite Reinsurance
Company of Barbados to provide a finite reinsurance facility.

Granite Reinsurance concluded 1995 with a gross premium income of
$47,810,000 and a profit of $4,862,000 for the year. Originally established
with a paid in capital of $125,000 and a contribution of $700,000 to
surplus from Granite Insurance Company. Granite Re ended

1995 with a net worth of $18,087,000, which, apart from the contributions to
capital noted above, was self funded from the operations of the company.
In November of 1990, we acquired IGF Insurance Company of Des
Moines, a crop insurer, for $6.1 million and have seen it develop to such
an extent that we were recently offered in excess of 6 times our original
acquisition price. This was declined by the Board of Directors because
it was considered to be inadequate as there are better means of capitalizing
its growth potential.

As you will read in this report, IGF increased its profits substantially in 1995
and doubled its gross revenues to $93,087,147 (U.S.). For the first quarter of
1996 we have seen this pattern of growth continue and, with the recently
enacted 1996 Farm Bill signed by President Clinton on April 5, 1996, we
expect this growth to accelerate.

This asset, IGF, has become increasingly important to our Group, not only for
the extraordinary growth of its income, but for the increasingly profitable
nature of that income.

A major business transaction was initiated on January 31, 1996, which
may well prove to be the most outstanding thing we have done to date. We
formed a partnership arrangement with Goldman Sachs Capital Partners II, an
affiliate of Goldman Sachs & Co., the highly regarded U.S. investment house,
creating GGS Management Holdings, Inc. This new company will become a major
player in the non-standard auto insurance business in the United States. The
Company entered into an agreement to acquire the Superior American Insurance
Company, Superior Guaranty Insurance Company and another corporation known
as Standard Plan, Inc. We merged our Pafco General Insurance Company to GGS
Management. (No, the initials aren't mine, they represent Goran, Goldman
Sachs.)

Superior writes in excess of $100 million in non-standard auto insurance, which,
along with similar business underwritten by Pafco General Insurance Company of
approximately $49 million, will make the new entity the 13th largest writer of
non-standard auto insurance in the U.S. This segment of the insurance business
exceeded $15 billion of premium nationwide in 1995.

The acquisition of Superior, et. al. was at a very attractive price of 5% over
GAAP book value, approximately $67 million. As a comparison to this, the sale of
our Canadian business in June of 1990 has approximated 200% over GAAP book
value, albeit over a period of five years.

Oh yes, we now operate in 13 locations throughout Canada, the U.S., Barbados and
Bermuda. It has been a fabulous year for the Company and I can't wait to
conclude a report on the activities for 1996. They could be even more
outstanding. As an example of our anticipated growth, we have set as a
target for 1996 to double gross sales of our products. This would require that
we exceed $400 million of business, a large step towards the stated aim of
Goran's President to reach annual sales of $500 million by the year 2000.

No company can succeed without a great deal of effort. We are no exception and
it would be less than fitting if I didn't mention that a lot of hard work
and long hours go into our results. We have progressed to such a degree that
I would have to fill most of a page if I were to single out those who have
made

sacrifices of their time to the improvement and development of the company. In
fact, I would probably have to include the names of all of our more than 400
employees.

During the year, we extended the Board of Goran to include Jim Torrance Q.C., a
former Director who again agreed to serve with the company, and John McKeating,
a new appointee. This brought the complement of the Board back to where it
should be, with more outside Directors than "insiders", a desirable position for
a public company.

We have had extensive meetings throughout the year, not unusual considering the
many activities of our group. The Board has given unstinting assistance to me
and I wish to thank them and praise them for their considered and practical
deliberations and advice.

/s/ G. Gordon Symons
G. Gordon Symons
Chairman of the Board
April 16, 1996

==============================================================

"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: The statements contained in this letter are forward looking
statements that involve risks and uncertainties, including, but not limited
to, product demand and market acceptance risks, the effect of economic
conditions, the impact of competitive products and pricing, product develop-
ment, the results of financial efforts, acquisitions completed or
attempted, the effect of the Company's accounting policies, and other
risks detailed in the Company's Securities and Exchange Commission filings.

=============================================================

ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Management Discussion and Analysis of Financial Conditions and
Results of Operations for Superior Insurance Company and its
Subsidiaries, Superior American Insurance Company, Superior Guaranty
Insurance Company, and Standard Plan.

Superior Insurance Company and its subsidiaries were purchased by GGS
Management Company, a joint venture of SIG Inc. (52%) and Goldman Sachs
Investment Fund (48%) on April 30, 1996.

The following is a brief summary of the results of operations of Superior
and its subsidiaries. In 1995, the company's gross premiums written
decreased to $94,755,672 from $112,891,444 in 1994 and $115,674,036 in 1993.
The decrease in premium in 1995 resulted from the withdrawal from
several unprofitable territories including Texas. The Company reorganized
following a poor year in 1994, and returned to profit in 1995. The results
from 1993 to 1994 showed a slight reduction of approximately $3,000,000 of
premiums mainly due to a very competitive market.

Net Premiums Written

The net premiums written are not materially different from gross
premiums written in any years, as the company does not reinsure proportional
coverage. The Company only buys excess of loss reinsurance protection.

Net Premiums Earned

Net premiums earned in 1995 were $97,614,483 compared with $112,822,969 in 1994
and $118,100,000 in 1993. When a company's volume reduces, the earned
premium is slightly greater than the written premium, and the opposite
is true when a company is growing.

Net Investment Income

Investment income in 1995 was $8,406,613 compared with $6,632,374 in
1994. The increase in investment income principally was from realized
gains on its investment portfolio as a result of a positive bond market at
December 1995. The investment income in 1994 of $6,632,374 compares with
$11,728,516 in 1993. The significant reduction was a result of substantially
reduced assets through dividends to its parent company in 1993 and 1994
(collectively of approximately $21,000,000). In addition, as the loss ratio
increased in 1994, the available cash for investment reduced substantially
and interest rates reduced between 1993 and 1994, thus reducing the overall
investment yields.

Other Income

Other income increased in 1995 to $2,325,628 up from $1,321,419 in 1994. This
compares with $4,731,990 in 1993. The distinct changes in the year-to-year Other
Income is affected by writeoffs of bad debts on premiums outstanding, which were
substantial in 1994, billing fee income which was affected by a ruling in the
state of Florida in 1994 and a reduction in premiums in 1995. Other income is
principally billing fee income which usually represents between 3 1/2%

and 4% of gross written premiums. So, other income follows the premium volume
plus with minus bad debt recovery writeoff.

Combined Loss Ratios

The determination of profitability of property and liability insurance companies
is best determined by its combined loss ratio. This is a ratio of the net
premiums earned as a ratio of all claims and operating expenses. The combined
loss ratio in 1995 for the Company was 107.6%. This compared with 116.3% for
1994. The dramatic improvement was a direct result of reducing expenses, closure
of 6 regional offices, improvement in insurance rates and product distribution
and the withdrawal from unprofitable Texas, the increase in rates and dual
products in Florida, and continued emphasis in building business in the
profitable state of California, brought the loss ratio from 77.3% in 1994 down
to 68.1% in 1995. The 1993 combined ratio was 103.4%. This ballooned
to 116.3% in 1994 as a result of the expense ratios dramatically
increasing due to additional offices, increased cost of telephones,
computers and payroll. The loss ratio ballooned to 77.3% in 1994 compared to
67% in 1993 as a direct result of bad faith claims, which were not protected by
reinsurance then (these are now protected). The increase in loss ratio was
also contributed to by the lack of new rate increases in its prime terri-
tories, increased claims and generally, an overall inability to control the
claims department during the period until June 1995 when Superior hired a new
senior claims executive.

Net Income

The net income after tax for Superior, was $4,100,000 for 1995. This
compares with a loss of $4,500,000 for 1994. The improvement in 1995, as
mentioned earlier, is a result of reduction in expenses and a reduction in loss
ratio. The loss of $4.5M in 1994 compares with a profit of $11,000,000 in 1993.
The cause of this loss was explained in the previous paragraph. Included in the
change in profit, was a reduction in investment income from $11,700,000 to
$6,600,000 from 1993 to 1994.

Liquidity and Capital Resources

The capital surplus of Superior has been greater than is necessary for non
standard automobile. Insurance companies. The Company has operated at
less than 3:1 premium writing to capital and surplus. In 1995, the statutory
capital and surplus was $49,276,000 compared to net premiums of $94,800,000 a
ratio of 1.92 of premiums to 1 of surplus. The assets of the Company are
invested conservatively in liquid bonds and a limited amount of equities. The
surplus of the Company changed from 1995 when an additional $5,699,473 was
added to the surplus through earnings, compared to a reduction in surplus in
1994 of $13,078,722. Through dividend and losses, $12,000,000 of this
reduction in surplus was a dividend to the parent company. This compares to
an addition to surplus in 1993 of $389,925 after giving effect to a
$10,000,000 dividend to the parent company in 1993. The parent company
of Superior has dividends of $42,000,000 through the period of 1991 to 1994.
The Company has available for dividend for the 1995 year, earned surplus in
excess of $5,000,000.

Summary

Superior is a non standard automobile operation, operating principally
from offices located in Tampa, Florida, Anaheim, California, and Atlanta,
Georgia. It also writes business in Virginia, Ohio, and Texas and a smaller
amount in other states. The Company writes non standard automobile,
with limits and driver classes similar to Pafco operations. The location of
business fits well with Pafco's with no duplication of states.

Financial Condition and
Results of Operations

Results of Operations
- - - --------------------------------------------------------------------------------
Once again, Goran's gross premium and net income reached record levels
in 1995. The Company's 1995 gross premium written increased to
$208,216,310 from $173,413,709 in 1994. More than half of the
increase in premium in 1995 over 1994 resulted from growth in the
crop insurance business, gross premium written grew $18.9 million in
1995 as compared to 1994, with premium growth coming from
both the multi peril and the hail business. The crop premium volume in
1995 of $93.3 million recognized a gain in U.S. government subsidies of $28.2
million compared to $16.3 million of subsidies in 1994 included in a total crop
premium of $74.4 million for 1994. Gross written premiums for 1994 was
restated to include the subsidy of $16.3 million on a basis consistent with
that of 1995. All other lines of business experienced gross written premium
increases from 1994 to 1995 as follows: finite reinsurance premiums increased
by $8.1 million to $40.7 million, nonstandard automobile premiums increased
by $5.1 million to $67.3 million and surplus lines premiums increased by
$2.7 million to $7.0 million.

In 1995, net premiums written (gross written less reinsurance to government FCIC
program and third party reinsurers) increased by 48.3% from $79.9 million in
1994 to $118.5 million in 1995. This increase resulted from higher premium
volumes on a gross basis as described above, combined with a reduced
dependence on quota share reinsurance in both the nonstandard automobile lines
(reduced from approximately 38% in 1994 to 25% in 1995) and on hail
reinsurance. The quota share reinsurance that was placed with third party
reinsurers in 1994 was taken over internally for 1995.

In 1995, the Groups net premiums earned grew to $104.4 million from
$75.0 million in 1994. The earning of premium follows the term of the
respective policies, net premiums earned trails net premiums written. For
example, in a growing book of business, net premiums earned will also grow but
will lag behind the written premium.

In 1995, investment income grew to $4.8 million from $4.6 million in
1994, an increase of approximately 5%. The increase of the Company's investment
portfolio in 1995 was partially offset by reduced investment yields in 1995 as
interest rates trended lower. Investment income in 1993 of $5.6 million reduced
to an investment income of $4.6 million in 1994 due to lower yields, and
lower investment assets in 1994 in Granite Reinsurance due to settlement of
claims.

Other income includes billing fees and bad debt provisions, decreased to
$3.2 million in 1995 from $4.4 million in 1994, which later amount included a
payment of $2 million of a written down note from the Company's parent,
Symons International Group Ltd. Without this unusual income in 1994, other
income would have increased from $2.4 million in 1994 to $3.2 million in 1995.
Approximately half of the increase resulted from increased billing fee revenue
from a combination of increased nonstandard automobile volume along with an
increased billing fee rate implemented in the last half of 1995. In addition
other income increased in 1995 due to increased commissions from business
written in the Company's surplus lines operations.

Net claims incurred increased to $74.4 million in 1995 from $58.2 million in
1994, which increase is more than offset by the increase in net premiums
earned. The loss ratio decreased from 77.5% in 1994 to 71.2% in 1995
primarily as a result of improved loss ratios from the finite reinsurance

division which were 71.3% in 1994 and 59.1% in 1995, as well as
increased profitability in the Company's crop hail business in 1995 compared
with 1994.

Net commissions expense is composed of three components: (i) commission expense
paid to the Company's agents; (ii) commission income from reinsurers,
including a 31% commission earned by the Company's crop operations with
respect to multi peril crop insurance; and (iii) underwriting gain or loss on
the Company's multi peril crop insurance business reported by the Company
as an adjustment to the Company's commission income on this business.

In 1995 the Company recorded a net commission recovery of $1.2 million
compared to a net commission expense of $2.0 million in 1994. Commissions
paid to the Company's agents in 1995 of $34.4 million remained relatively
constant with that paid in 1994 of $35.0 million.

Ceded commission income in 1995 of $35.6 million increased from $33.0
million in 1994. Included in these amounts is an underwriting gain adjustment
from the multi peril crop line of business of $13.2 million in 1995 and $4.5
million in 1994. The effect of the increased multi peril underwriting gain
included in commission income is partly offset by reduced ceding commissions on
nonstandard automobile quota share reinsurance in 1995 versus 1994.

Operating expenses of $23.7 million in 1995 compared with $15.1 million
in 1994, with such expenses increasing proportionately with net premiums earned
in the respective years with an expense ratio on this basis of 20.2% in 1994 and
22.6% in 1995. Included in 1995's operating expenses is an accrual for bad
debt expenses of $1.9 million with respect to the nonstandard automobile book
of

business, of which $960,000 relates to an adjustment of 1993 and 1994
balances. During 1995, the Company identified such uncollected amounts and
implemented a full collection department to curtail such write-offs in the
future. Without the write-off in 1995 of bad debt expense relating to prior
years, the expense ratio for 1995 would have been 21.7%.

Interest expense in 1995 was $2.4 million compared to$2.5 million in
1994. Interest savings in 1995 and 1994 resulting from principal repayments to
the Company's debenture holders and the retirement of the Company's term
loan by SIG in June 1995.

In 1995, income tax expense of $3.4 million relates to a tax provision on
income emanating from the U.S. operations. By comparison, a tax provision in
1994 of $939,000 was accounted for by an amortization of deferred income
taxes of $300,000 with the balance of the provision emanating from a tax
provision on the income from U.S. operations.

Financial Condition

The Company's assets have grown to $154,112,461 in 1995, up from
$130,372,717 in 1994 and $112,852,129 in 1993. The largest component of
assets is investments in bonds and stocks. A breakdown of these
investments is highlighted in the Notes to Consolidated Financial Statements.

The Company's second largest asset category is accounts receivable.
This primarily represents monies held on behalf of our insurance and
reinsurance subsidiaries by major third party reinsurance

or insurance companies to support outstanding claims and unearned
premiums. The majority of these funds earn interest and are held
in trust for Granite Re. Receivables from insurance companies
were $47,559,037 in 1995, up from $34,391,569 in 1994 due to
increased volume and the corresponding increased reinsurance
claims reserves, and 1994 was up from $24,922,897 in 1993, also due
to increased insurance claims reserves that follows increased business.
Total receivables represented 42% of total assets in 1995 and 43%
in 1994. Also included in the above receivables is premium recorded
but not yet received from the insured. This is business that has been
taken on but the premium has not been paid to us at the date of this
statement.

Deferred acquisition costs is the amount paid to agents and premium tax
that would be refunded to us should all our policies in force be canceled on
December 31. The offset is the unearned premium. In 1995 increased to
$10.4 million from $6.3 million in 1994. This increase in deferred costs
reflects increases in unearned premiums to $36.7 million in 1995 from
$22.8 million in 1994.

The total liabilities of the Company were $136,880,727 in 1995, compared to
$123,264,530 in 1994. Outstanding claims increased in 1995 to $62.8
million from $58.2 million in 1994, reflecting an increase in volume in
1995 over 1994, partially offset by a lower loss ratio from 77.5% in 1994
to 71.2% in 1995. Management believes the capital and surplus of the
Company is currently sufficient to support its current level of premiums
written. However, from time to time the Company may consider raising
additional capital to pursue acquisition opportunities or to finance
internal growth.

Shareholders' equity has continued to grow, reaching $17,231,734 at
year-end 1995, compared to $7,108,187 at the end of 1994. While
shareholders' equity is now $17,231,734, it does not reflect the equity
upon which Goran conducts its various insurance operations. The
underlying insurance subsidiaries had statutory surplus at December
31, 1995 of: Pafco, $11,967,800 (U.S.); IGF, $9,219,463 (U.S.);
Granite Re, $18,086,777; and Granite, $3,792,638. This amounts
to a total $50.8 million. It is on these equity bases that the Company's
insurance business is written as a ratio to capital and surplus of $50.8
million is 2.33 to 1.00, which is well below the industry threshold of
3.00 to 1.00.

Goran's long term debt decreased to $15,132,250 in 1995 from
$18,530,800 in 1993. The repayment of debt resulted from scheduled
principle payments to the Company's debenture holders in the amount
of $1,995,750 at December 31, 1995 and the scheduled retirement of
SIG's term loan with a fixed payment of $1,000,000 during 1995. During
1995, debenture holders exercised warrants at $3 per common share,
yielded a total of $393,750. The number of outstanding warrants
at December 31, 1995 was 337,625. These warrants do not trade.

During 1995, IGF continued to profit by borrowing funds under a
revolving line of credit to finance premium receivables from the farmers.
By utilizing this lower cost of credit, revolving line of credit, IGF stops
the running of 15% interest payable to FCIC while continuing to earn
15% interest on the receivables from the farmer.

Overview

U.S. Operations

Symons International Group, Inc. ("SIG") is a wholly owned subsidiary of
Goran Capital, Inc. SIG is a holding company located in Indianapolis, Indiana.
Its subsidiaries write various lines of insurance. SIG owns 100% and
operates the following companies:

Pafco General Insurance Company ("Pafco"), Indianapolis, IN
(nonstandard automobile)

IGF Insurance Company ("IGF"), Des Moines, IA and has 5 branch
offices throughout the U.S.A (crop insurance)

Symons International Group, Inc. (Florida) ("SIGF"), Ft Lauderdale,
FL (surplus lines insurance)

The results of each of these subsidiaries are discussed below, following
a general discussion on the consolidated results of the U.S. operations. For
the benefit of the reader, it is felt that the entity discussions should
center on the specific product lines written by each organization. Pafco
would refer to the nonstandard automobile insurance business of Goran which is
written predominantly by Pafco; however, the licenses of IGF are used in certain
states where we write non standard automobile but Pafco does not have a
license. The crop insurance business is written by IGF, however, the licenses
of Pafco are used in certain jurisdictions to facilitate business where IGF is
not licensed itself. The remaining aspects of the U.S. operations is surplus
lines property and casualty

business written through SIG Florida, predominantly on a surplus lines basis.

Consolidated Results of SIG

Gross premium volume for the U.S. operations increased 18.4% to
$122,088,007 (U.S.) in 1995 versus $103,133,564 (U.S.). All three
product lines showed increases in 1995 with a significant increase
coming from the crop insurance business.

Net written premiums for 1995 were $53,447,000 (U.S.) compared to
$35,139,000 (U.S.) in 1994. This was an increase of 52.1% resulting
primarily from the Company's decision to reduce its dependence on quota
share reinsurance. This allowed the Company to retain more of the gross
premiums being written by its nonstandard automobile segment as well as
its crop insurance business. IGF's crop insurance business enjoyed
significant growth and profitability during 1995. The Crop Insurance
Reform Act signed into law in October 1994 enabled the crop insurance
industry to increase its premium writings, and IGF materially grew its
premium volume as well. With increased premium production and normal
crop growing season, the multi peril crop business produced good
underwriting profits. The crop hail business also produced profits along
with a growth in premium writings from $9 million in 1994 to $16 million
in 1995. IGF focused on increasing its crop hail premium writings in
order to spread its risk. The Company utilizes stop loss reinsurance
minimize the effect of adverse weather conditions on the Company's
results.

The recently enacted "Freedom to Farm" bill will allow IGF to
experience increased growth for 1996,

as the government withdraws from the delivery basis catastrophe
insurance coverage and the insurance industry takes this over.

Nonstandard automobile insurance operations experienced a slight
growth in premium volume during 1995, reversing a two year period of
decline. During 1995 the operations focused on simplifying its processes
and on improving service to customers. Although premium production
grew, competition remained strong. The competitive market kept the
company from meaningless growth and rate increase resulting in a higher
than expected loss ratio for the year. In addition, severe winter storm
activity at the end of the year added to the loss ratio. The
expense ratio of non standard automobile was much higher than
budgeted as the company geared up for the growth and improved
business for 1996. The first quarter of 1996 is benefiting by these
expenses in 1995 as premiums is growing and less ratios reducing.

SIG Florida continued the growth it enjoyed in both 1993 and 1994 by
recording gross premiums written on behalf of Pafco of $6,792,490
(U.S.) in 1995 as compared to $5,159,795 (U.S.) in 1994. The Florida
operation continues to prosper from the growth in the surplus lines
market opportunities in the southeast United States, and the addition of
sound management and marketing staff, SIG Florida also generates
commission income on products sold for third party companies.

Pafco General Insurance Company ("Pafco")
[PAFCO LOGO]

Pafco underwrites nonstandard automobile business through its
headquarters in Indianapolis, Indiana. A portion of the business is placed
through IGF in order to utilize licenses it has in Missouri, Arkansas and
Illinois. Pafco's gross written premiums in 1995, excluding crop insurance
fronted for

IGF, were $44,577,000 (U.S.) as compared to $39,795,000 (U.S.) in 1994.
In spite of a moderate growth in gross premiums, net premiums grew
significantly to $34,018,000 (U.S.) in 1995 as compared to $24,713,000
(U.S.) in 1994. The growth in net premiums was principally a result of a
further reduction in quota share reinsurance on the nonstandard
automobile business. The net operating results of $(250,000) for 1995
compared to $(350,000) for 1994 are inclusive of dividend income from
IGF Insurance Company in 1995 of $2,000,000 (U.S.) and $350,000
(U.S.) in 1994. 1995 saw the Company focus its attention on
improving its service to its agents and the ease by which both agents and
our customers are able to do business with Pafco. This has borne fruit in
the first quarter of 1996 with material increase in volume and improved
combined loss ratio.

Pafco's statutory capital and surplus in 1995 increased to $11,967,800
(U.S.) up from $7,848,000 (U.S.) in 1994. The strong performance of
the crop insurance business on IGF increased the value of Pafco's
investment in IGF significantly.

IGF Insurance Company ("IGF")

[IGF LOGO]

IGF writes principally MPCI and crop hail insurance and provides
licenses for Pafco's automobile insurance in three states. Although
premiums for this coverage are included in IGF, the net profit or loss is
transferred to Pafco through reinsurance programs. Gross premiums
written in 1995 were $78,216,551 (U.S.) as compared to $64,239,124
(U.S.) in 1994. IGF's 1995 performance increased significantly as a
result of gains in its crop insurance business which reflect favorable
growing conditions. The Crop Insurance Reform Act enacted in October
1994 provided opportunity for the crop insurance industry to increase its
premium volumes. IGF benefited from this Act and also grew

at a rate faster than most of its principal competitors due to the
marketing efforts of its management team.

IGF exceeded industry results on its multi peril and crop hail business,
because of its unique underwriting criteria. IGF continued to benefit from
its change in 1994 to an in-house adjusting force, which resulted in
enhanced effectiveness on adjusting crop claims. By hiring full time
employees to perform this function, IGF has benefited by tighter claims
controls and cost savings. IGF's statutory capital and surplus increased in
1995 to $9,219,463 (U.S.) from $4,875,465 (U.S.) in 1994. The
increase in surplus 1995 related to crop insurance increase in business
and underwriting profits.

In 1995, IGF concluded its repurchase of the balance of its outstanding
common shares which were principally held by small investors who
purchased stock when IGF was created in 1972. At year-end 1995,
Goran owned 100% of the Company versus 98.8% in 1994. Symons
International Group, Inc. (Florida) ("SIGF") Through its specialized
surplus lines underwriting unit, Goran writes third party property and
casualty insurance coverage in Pafco and other insurance
companies under contract with SIG Florida. The volume of business
continues to increase and operating results have further improved as a
result of decreased competition in the southeast United States in this
market segment and addition of quality underwriters. Further automation
in 1995 has enhanced the processing capabilities in the office in order to
accommodate its growth in premium writing.

Non-U.S. Operations

Goran's business outside the United States is conducted through the
following wholly-owned subsidiaries:

Granite Insurance Company (Toronto, Canada) ("Granite") (sold
its business in 1990 in runoff)

Granite Reinsurance Company Limited (Barbados and Bermuda)
("Granite Re") (Finite reinsurance)

Granite Insurance Company ("Granite")

[Granite Insurance LOGO]

Granite is a Canadian federally licensed insurance company which is
presently servicing its investment portfolio and its very few outstanding
claims. Granite stopped writing business on December 31, 1989 and
sold its book of Canadian business in June 1990. The outstanding claims
continue to be settled in accordance with actuarial estimates and
management's expectations. During 1995, Granite's invested assets
reduced to $7,456,155 from $10,195,091 in 1994. This was the result of
settlements of claims and the runoff of outstanding claims.
Total outstanding claims decreased to $2,950,000 in 1995 from
$4,411,000 in 1994. It is expected that the run off of outstanding claims
will continue at least until 1998. Granite's net earnings were $270,156 in
1995, compared to $826,423 in 1994 reflecting the reduction of invested
assets, which in turn reduces earnings from investment yields.

[PAGE CONTAINS PHOTOGRAPHS OF AUTOMOBILES IN THE
MIDDLE MARGIN]

Investment income in 1995 was $683,637 compared to $986,683 in 1994.

Granite Reinsurance Company Limited ("Granite Re")

[Granite Reinsurance LOGO]

Granite Re is managed by Jardine Pinehurst Management Company Ltd.
of Bermuda. Granite Re underwrites finite risk reinsurance and stop loss
reinsurance. This reinsurance involves a defined maximum risk at the
time of entering into a contract. The Company participates in various
programs of reinsurance in Bermuda, the United States and Canada.
Reinsurance normally requires that a substantial premium be paid upon
the purchase of cover. Such premiums are invested in high grade
bonds, some of which are pledged to support the liabilities assumed
under the reinsurance program. The amount pledged is reflected in the
Notes To Consolidated Financial Statements. One of Granite Re
Canadian Treaties has expired and will not be renewed. The runoff will
provide continuous revenue for years to come but gross written
premiums of about $30,000,000 will cease and will be replaced with new
programs over the next few years. Gross premiums written during the 12
months ended November 30, 1995 were $34,802,851 (U.S.) compared to
$23,844,330 (U.S.) during the 11 months ended November 30, 1994.
Net income rose to $3,975,350 (U.S.) in 1995 compared to $1,887,687
(U.S.) in 1994. This increased profitability resulted primarily from
a reduced loss ratio on the Company's finite book from 71.6% in 1994 to
59.1% in 1995, combined with increased premium volumes in 1995.

Granite Re began operation on July 1, 1990, with a capital base of
$125,000 (U.S.) And $700,000 (U.S.) In 1992. The impact of profitable
underwriting since the inception of the Company is reflected in the
growth of its shareholders' equity to $13,248,445 (U.S.) in 1995 from
$9,343,095 (U.S.) in

[PAGE CONTAINS PHOTOGRAPHS OF FARM SCENERY IN THE
MIDDLE MARGIN]

1994. Granite Re will continue to focus selling reinsurance that limits its
liability to a defined amount. In addition, Granite Re intends to broaden
its base to include captive reinsurance, which will generate fees for the
Company on a risk free basis. Such programs are risk free because they
generally require that users furnish full collateral funds, which the
reinsurer then reinvests. Granite Re thereby expects funds available for
reinvestment to increase, generating greater investment returns.

The programs currently underwritten by Granite Re generate a loss
portfolio that is matched with cash. Such portfolios take about eight
years to runoff, thus generating investment returns and underwriting
gains during the life of the runoff. Meanwhile, new business written in
1995 and beyond will be added to the portfolio of outstanding losses and
invested assets, perpetuating the growth of Granite Re through fees,
investment income and underwriting profits.

GORAN CAPITAL INC.

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995 AND 1994

GORAN CAPITAL INC.

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995 AND 1994

TABLE OF CONTENTS

Auditors' Report 1

Consolidated Balance Sheets 2

Consolidated Statements of Operations 3

Consolidated Statements of Deficit 4

Consolidated Statements of Changes in Cash Resources 4

Notes to Consolidated Financial Statements 5 - 18

AUDITORS' REPORT

To the Shareholders of
Goran Capital Inc.

We have audited the consolidated balance sheets of Goran Capital Inc.
as at December 31, 1995 and 1994 and the consolidated statements of
operations, deficit and changes in cash resources for the years then ended.
These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform an
audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at December 31,
1995 and 1994 and the results of its operations and the changes in its
financial position for the years then ended in accordance with
generally accepted accounting principles.

/s/ Schwartz Levitsky Feldman
Toronto, Ontario
March 18, 1996 Chartered Accountants
Except as to notes 2(h) and 20,
which are March 11, 1997

- - - --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- - - --------------------------------------------------------------------------------
AS AT DECEMBER 31
(In thousands of U.S. dollars)

Assets 1995 1994
-------- --------
Cash and investments (note 4) $ 54,366 $ 46,328
-------- --------
Accounts receivable
Premiums receivable 11,233 13,948
Due from insurance companies 34,837 24,516
Accrued and other receivables 1,231 1,485
-------- --------
47,301 39,949

Reinsurance recoverable on outstanding claims 41,667 15,315
Prepaid reinsurance premiums 6,263 6,987
Capital assets (note 5) 2,088 861
Other assets (notes 6 and 12) 1,417 1,063
Deferred policy acquisition costs 7,641 4,460
Deferred income taxes 73 214
Goodwill -- 62
-------- --------
Total Assets $160,816 $115,239

Liabilities

Accounts payable
Due to insurance companies $ 1,986 $ 8,441
Due to associated companies 188 135
Accrued and other payables 8,310 3,858
-------- --------
10,484 12,434

Outstanding claims (notes 2(e) and 3) 87,655 56,801
Unearned premiums (note 3) 33,159 23,270
Bank loans (note 7) 5,811 5,441
Debentures (note 8) 11,085 12,210
Minority interest in subsidiary -- 16
-------- --------
Total Liabilities 148,194 110,172

Shareholders' Equity (note 10) 12,622 5,067
-------- --------
Total Liabilities and
Shareholders' Equity $160,816 $115,239

/s/ /s/
Director Director

Approved on behalf of the board
2

- - - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
- - - --------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31
(In thousands of U.S. dollars, except per share data)

1995 1994
--------- ---------
Revenue
Gross premiums written $ 151,717 $ 126,978

Net premiums earned $ 76,102 $ 54,944

Net investment and other income (note 4 and 13(a)) 5,872 6,624
--------- ---------

81,974 61,568
--------- ---------
Expenses

Net claims incurred 54,193 42,595

Commissions and operating expenses (note 16(b)) 16,352
12,516

Interest expense 1,761 1,843
--------- ---------

72,306 56,954
--------- ---------

Income before undernoted items 9,668 4,614

Provision for income taxes (note 11) 2,497 688

Minority interest -- (14)
--------- ---------
Net income $ 7,171 $ 3,940
========= =========

Earnings per share - basic $ 1.43 $ 0.81
========= =========
Earnings per share - fully diluted $ 1.26 $ 0.71
========= =========

- - - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF DEFICIT
- - - --------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31
(In thousands of U.S. dollars)

1995 1994
-------- --------
Retained earnings (deficit), beginning of year $(11,066) $(15,006)

Net income for the year 7,171 3,940
-------- --------

Retained earnings (deficit), end of year $ (3,895) $(11,066)

- - - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN CASH
RESOURCES
- - - --------------------------------------------------------------------------------
(In thousands of U.S. dollars)

1995 1994
-------- --------

Cash provided by (used in):

Operating activities
Net income $ 7,171 $ 3,940
Items not involving cash 11,010 7,058
Changes in working capital relating to operations (8,544) (12,422)
-------- --------

9,637 (1,424)
-------- --------
Financing activities
Reduction of debentures (1,462) (1,047)
Increase of borrowed funds 220 722
Issue of share capital 303 34
-------- --------

(939) (291)
-------- --------
Investing activities
Net (purchase) sale of marketable securities (4,147) 2,118
Net purchase of capital assets (1,681) (628)
Foreign currency translation adjustment 155 (402)
-------- --------

(5,673) 1,088
-------- --------

Increase (decrease) in cash resources during the year 3,025 (627)
Cash resources, beginning of year 7,588 8,215
-------- --------

Cash resources, end of year $ 10,613 $ 7,588

Cash resources are comprised of:
Cash (bank overdraft) $ 4,171 $ (116)
Short-term investments 6,442 7,704
-------- --------

$ 10,613 $ 7,588

- - - --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- - - --------------------------------------------------------------------------------
DECEMBER 31, 1995 AND 1994
(In thousands of U.S. dollars)

- - - --------------------------------------------------------------------------------
1. Organization
- - - --------------------------------------------------------------------------------

Goran Capital Inc. ("Goran") is the parent company of the Goran
group of companies.

The consolidated financial statements include the accounts of all
subsidiary companies of Goran, which are 100% owned, as follows:

1. Symons International Group, Inc. ("SIG Inc.") including its
subsidiary companies for which SIG Inc. acts as a manager, as
follows:

a) Pafco General Insurance Company ("PGIC") - an
Indiana based insurance company;

b) IGF Insurance Company ("IGF") - an Indiana based
insurance company;

c) Pafco Premium Finance Company - an Indiana based
premium finance company;

d) Hailplus, Corp. - an Iowa based premium finance
company; and

e) Symons International Group, Inc. of Ft. Lauderdale,
Florida ("SIG-FL") - a Florida based managing general
insurance agency.

2. Granite Reinsurance Company Ltd. ("Granite") - a finite risk
reinsurance company based in Barbados.

3. Granite Insurance Company ("GIC") - a Canadian federally
licensed insurance company which ceased writing new
insurance policies on January 1, 1990.

- - - --------------------------------------------------------------------------------
2. Summary of significant accounting policies
- - - --------------------------------------------------------------------------------

These consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in Canada
("Canadian GAAP").

a) Basis of consolidation

The consolidated financial statements include the accounts of Goran and
its subsidiary companies, all of which are 100% owned.

All significant intercompany transactions and balances have been
eliminated.

b) Premiums

Premiums are taken into income evenly over the lives of the related
policies.

c) Commissions

Commission expenses and related reinsurance commission recoveries
are recorded at the effective date of the respective insurance
policy.

- - - --------------------------------------------------------------------------------
2. Summary of significant accounting policies (cont'd)
- - - --------------------------------------------------------------------------------

d) Deferred policy acquisition costs

Deferred policy acquisition costs comprise of agents' commissions,
premium taxes and certain general expenses which are related
directly to the acquisition of premiums. These costs, to the extent
that they are considered recoverable, are deferred and amortized
over the same period that the related premiums are taken into
income.

e) Outstanding claims

The reserve for outstanding claims has been reported on by
independent actuaries. The Company's policy regarding the
recognition of the time value of money on outstanding claims is as
follows:

i) Direct claims

The reserve includes the recognition of the time value of
money on direct claims liabilities. Using an interest rate of 7.5%
(1994 - 7.5%) net claims incurred have been decreased by $161 (1994 -
increased by $88) and outstanding claims at December 31, 1995 reduced
by $1,327 (1994 - $1,134).

ii) Assumed claims

The Company has not recognized the time value of money with
respect to assumed claims liabilities over which it does not have direct
control over the timing of settlement of the liabilities. If the Company had
discounted these claims using an interest rate of 7.5% (1994 - 7.5%) net
claims incurred would have been increased by $1,147 (1994 reduced
by $1,264) and outstanding claims at December 31, 1995 would have
been reduced by $2,348 (1994 - $3,401).

f) Investments

Investments in bonds, mortgages and debentures are carried at
amortized cost providing for the amortization of the discount or
premium to maturity date. Investments in short-term investments,
real estate, and equities are carried at cost. Gains and losses on
disposal of investments are taken into income when realized.
When there has been a loss in value of an investment that is other than
a temporary decline, the investment is written down to recognize
the loss.

g) Capital assets

Capital assets are recorded at cost, net of accumulated
amortization. Amortization is provided at rates sufficient to
amortize the costs over the estimated useful lives of the assets.

h) Foreign currency translation

Foreign currency transaction gains and losses are included in the
statement of operations.

h) Goran and each of its subsidiaries have been determined to be
self-sustaining operations and are translated using the current rate
method whereby all assets and liabilities are translated into U.S. dollars at
the year end rate of exchange and revenue and expense items are
translated at the average rate of exchange for the year. The resulting
unrealized translation gain or loss is deferred and shown separately in
shareholders' equity. These adjustments are not included in operations
until realized through a reduction in the Company's net investment in such
operations.

- - - --------------------------------------------------------------------------------
3. Reinsurance
- - - --------------------------------------------------------------------------------

a) The Company's insurance subsidiaries follow a policy of
underwriting and reinsuring contracts of insurance which limits
their liability to a maximum amount on any one claim of $220 (1994
- - - - $214) in Canada, and $250 (1994 - $350) in the USA, with the
result that unearned premiums and outstanding claims are stated
net of reinsurance. As the primary insurers, the Company's insurance
subsidiaries maintain the principal liability to the policyholder.

b) The effect of reinsurance on the activities of the Group can be
summarized as follows:

1995 Gross Ceded Net
---- ----- ----- ---

Premiums written $151,717 $(65,357) $86,360
Premiums earned 145,366 (69,264) 76,102
Incurred losses and loss
adjustment expenses 148,001 (93,808) 54,193
Commission expense
(note 16(b)) 25,069 (25,950) (881)
Outstanding claims 87,655 (41,667) 45,988
Unearned premiums 33,159 (6,264) 26,895

1994 Gross Ceded Net
---- ----- ----- ---

Premiums written $126,978 $(68,503) $58,475
Premiums earned 120,241 (65,297) 54,944
Incurred losses and loss
adjustment expenses 76,321 (33,726) 42,595
Commission expense
(note 16(b)) 25,617 (24,174) 1,443
Outstanding claims 56,801 (15,315) 41,486
Unearned premiums 23,270 (6,987) 16,283

c) On June 30, 1991 Granite assumed an outstanding claims
portfolio of $22,630, with loss dates of May 31, 1990 and prior, and
received a bond and short-term investment portfolio with a value of
$22,546. The December 31, 1995 balances in the claims portfolio and
the investment portfolio are $3,509 (1994 - $5,535) and $4,761
(1994 - $8,333) respectively.

This portfolio has been deposited with a Canadian trust company
to support the liabilities assumed. The invested funds are used to
settle claims liabilities as they become due.

- - - --------------------------------------------------------------------------------
4. Cash and investments
- - - --------------------------------------------------------------------------------

1995 1994
------------------------- -------------------------
Book Value Market Value Book Value Market Value
Cash (overdraft) $ 4,171 $ 4,171 $ (116) $ (116)
Short-term investments 6,442 6,442 7,704 7,704
Equities 6,421 6,069 7,634 6,867
Bonds and debentures 27,949 28,080 21,557 20,971
Mortgages 3,583 3,583 3,713 3,683
Real estate 3,922 3,922 3,912 3,912
Other loan receivable 1,878 1,878 1,924 1,924
-------- -------- -------- --------
$ 54,366 $ 54,145 $ 46,328 $ 44,945
======== ======== ======== ========

a) At December 31, 1995, cash and investments of approximately
$20,510 (1994 - $20,031) are on deposit or held in trust by cedents,
and to a limited amount regulatory authorities, to secure certain of the
outstanding claims of the Company.

b) The Company realized a net gain of $198 (1994 - $358) from
the sale of investments during the year, and recorded an unrealized
loss of $58 (1994 - $161) on equities, and $Nil (1994 - $190) on
bonds. The carrying value of equities and bonds held at December
31, 1995 includes a provision of $357 (1994 - $950) for
investments considered to have a decline in value that is other than
temporary. Where market value is not readily determinable, book value is
used as an approximation.

c) The hotel property in Las Vegas that was acquired in 1992
was sold in 1994 for $4,533. PGIC took back an 8% first mortgage of
$3,000 from the purchaser, and realized a gain of $147.

d) As part of the sale of a subsidiary in 1990, the Company and its
subsidiaries invested in junior subordinated participating debentures
of the purchaser maturing on January 1, 1996 equivalent to $2,007,
bearing interest at a rate of 10% per annum, and preferred shares of a
subsidiary of the purchaser. The debentures and shares were redeemed
by the issuer during 1995.

- - - --------------------------------------------------------------------------------
5. Capital assets
- - - --------------------------------------------------------------------------------

1995 1994
---------------------------- --------
Accumulated
Cost Amortization Net Net

Furniture, fixtures and
equipment $3,686 $1,613 $2,073 $ 836

Automobiles 133 118 15 25
------ ------ ------ ------
Total $3,819 $1,731 $2,088 $ 861
====== ====== ====== ======