Edgar Filing: INSURANCE MANAGEMENT SOLUTIONS GROUP INC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-K/A

(MARK ONE)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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COMMISSION FILE NUMBER 000-25273

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

FLORIDA 59-3422536
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

360 CENTRAL AVENUE 33701
ST. PETERSBURG, FLORIDA (Zip Code)
(Address of registrant's principal
executive offices)

(727) 803-2040
(Registrant's telephone
number, including area code)
Securities registered pursuant
to Section 12(b) of the Act:
NONE
Securities registered pursuant
to Section 12(g) of the Act:
TITLE OF EACH CLASS
COMMON STOCK, $.01 PAR VALUE

INDICATE BY CHECK MARK WHETHER THIS REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]

INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X]

As of March 18, 2002, there were outstanding 12,276,063 shares of Common Stock.
The aggregate market value of the Common Stock held by non-affiliates of the
registrant as of March 18, 2002 was $12.6 million.

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

Page
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PART I

ITEM 1. BUSINESS ......................................................................1
ITEM 2. PROPERTIES ...................................................................15
ITEM 3. LEGAL PROCEEDINGS ............................................................15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ..........................17

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS......................................................................17
ITEM 6. SELECTED FINANCIAL DATA ......................................................18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS .......................................................20
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....................30
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ..................................30
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE ........................................................30

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT ...............................31
ITEM 11. EXECUTIVE COMPENSATION .......................................................33
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ...............43
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ...............................45

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K ..............55

The statements contained in this report on Form 10-K that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding the Company's expectations, hopes, beliefs,
intentions, or strategies regarding the future. Forward-looking statements
include statements regarding, among other things: (i) the ability to retain
material customers; (ii) the Company's intentions involving possible strategic
alternatives; (iii) the Company's financing plans; (iv) trends affecting the
Company's financial condition or results of operations; (v) the Company's growth
and operating strategies; (vi) the ability to attract and retain qualified
information services and management personnel; (vii) the impact of competition
from new and existing competitors; (viii) changes in the business and/or
financial condition of the Company's clients; (ix) the ability of Bankers
Insurance Group, Inc. ("BIG") to repay outstanding indebtedness to the Company
and the sufficiency of the collateral securing such indebtedness; (x) potential
increases in the Company's costs; (xi) the declaration and payment of dividends;
(xii) the potential for unfavorable interpretation of existing government
regulations or new government legislation; (xiii) the impact of general economic
conditions on the demand for the Company's

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services; (xiv) the ability to develop new technological solutions for current
and prospective customers; (xv) the ability to establish positive name
recognition in the market place; (xvi) changes in existing service agreements;
(xvii) the ability to obtain new customers and retain existing customers;
(xviii) the ability to obtain third-party information technology outsourcing
services on a timely basis and at reasonable costs; (xix) the outcome of certain
litigation involving the Company; (xx) the outcome of certain administrative
proceedings involving the Company's principal customer; (xxi) trends affecting
the insurance industry; and (xxii) the ability to achieve expected expense
reductions as a result of management initiatives. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in the forward-looking statements as a
result of various factors. All forward-looking statements included in this
document are based on information available to the Company on the date hereof
and the Company assumes no obligation to update any such forward-looking
statement. Among the factors that could cause actual results to differ
materially are the factors detailed in Items 1 through 3 and 7 of this report.
Prospective investors should also consult the risks described from time to time
in the Company's Reports on Form 10-Q, 8-K and 10-K and Annual Reports to
Shareholders.

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EXPLANATORY NOTE

This Form 10-K/A is being filed solely to include Exhibits 10.5,
10.11, 10.12, 10.42 and 10.71 through 10.76, all of which were omitted from the
original Form 10-K filing submitted on April 1, 2002, and to amend Item 14 to
reflect the filing of the foregoing exhibits.

PART I

ITEM 1. BUSINESS

GENERAL

Insurance Management Solutions Group, Inc. (collectively with its
subsidiaries, the "Company"), through its wholly-owned subsidiaries, Insurance
Management Solutions, Inc. ("IMS") and Colonial Claims Corporation ("Colonial
Claims"), provides comprehensive policy and claims outsourcing services to the
property and casualty ("P&C") insurance industry, with an emphasis on providing
these services to the flood insurance market.

The Company's outsourcing services, which are offered on either a
bundled or "a la carte" basis, include policy administration, claims
administration and information technology services. During 2000 and 2001, the
Company processed approximately 847,000 and 926,000 insurance policies,
respectively, including approximately 515,000 and 567,000 flood insurance
policies, respectively, making it a significant provider of flood insurance
outsourcing services. The Company currently provides flood outsourcing services
to approved write-your-own carriers including its affiliate, Bankers Insurance
Group, Inc. (together with its subsidiaries, "BIG"), Farmers Insurance Group,
Mobile USA Insurance Company, Inc. and AAA Auto Club South Insurance Company, as
well as to insurance companies that offer flood insurance utilizing BIG as their
private label servicing carrier, such as Armed Forces Insurance Corporation and
AMICA Mutual Insurance Company. In conjunction with BIG, the Company is able to
offer insurance companies the ability to create a turnkey private label flood
insurance product.

The Company is a 65.2% owned subsidiary of BIG, a holding company
chartered in Florida in 1976. BIG provides multiple lines of P&C insurance, most
notably flood, homeowners and automobile insurance, to individuals and
businesses throughout the United States. BIG's premiums totaled $351 million in
2001, an increase of 8.7% from premiums of $323 million in 2000. BIG is also the
Company's principal customer, accounting for approximately 60.2% of the
Company's total revenues and 82.6% of the Company's outsourcing revenues in 2000
and approximately 49.1% of the Company's total revenues and 67.9% of the
Company's outsourcing revenues in 2001.

Effective January 7, 1999, the Company acquired Colonial Claims
Corporation (formerly Colonial Catastrophe Claims Corporation) ("Colonial
Claims"), a Florida corporation. Colonial Claims contracts with P&C insurance
carriers to handle property and casualty claims on their behalf. Colonial Claims
has assembled a large network of independent claims adjusters who respond to
individually-reported loss assignments from Colonial Claims and are compensated
based upon a set claims fee schedule. Colonial Claims reviews and approves
claims settlements, assures consistency and quality of settlement practices, and
transmits claims information to the insurance carriers. The insurers, in turn,
approve and remit claims payments to the insureds. During 2000 and 2001,
Colonial Claims accounted for approximately $3.5 million and $11.3 million,
respectively, of the Company's outsourcing revenues.

On December 28, 2001, the Company sold all of the issued and
outstanding capital stock of Geotrac of America, Inc., a wholly-owned subsidiary
of the Company ("Geotrac"). See "Business--Geotrac Sale." Prior to the
consummation of such transaction, the Company, through its Geotrac subsidiary,
provided flood zone determinations to financial institutions, mortgage lenders
and insurance companies. During 2000 and 2001, Geotrac processed approximately
1.3 million and 2.5 million flood zone determinations, for over 1,880 and 2,316
customers, respectively.

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OVERVIEW OF THE FEDERAL FLOOD INSURANCE PROGRAM AND FLOOD INSURANCE MARKET

The U.S. flood insurance market is regulated by the Federal Emergency
Management Agency ("FEMA"), which launched the National Flood Insurance Program
(the "Flood Program") in 1968. FEMA created the Flood Program to provide
federally-backed flood insurance to residents in designated flood plain
communities, on the condition that such communities comply with the Flood
Program's flood plain management requirements. The Flood Program, as it exists
today, is administered by the Federal Insurance Administration ("FIA").

The Flood Program was launched in 1968, and in 1983, FIA opened the
flood insurance market to private insurance companies by establishing the
National Flood Insurance Write Your Own ("WYO") program. The WYO program permits
private insurance companies who meet FEMA requirements to sell flood insurance
underwritten by the federal government and subject to federal regulation.

In 1994, Congress passed the National Flood Insurance Reform Act of
1994 (the "1994 Reform Act"). The 1994 Reform Act clarified and strengthened the
obligations of mortgage lenders to oversee and ensure the purchase of flood
insurance by borrowers who obtain federally-insured residential mortgage loans
on properties located in federally designated high-risk flood zones. Under the
1994 Reform Act, mortgage lenders must notify borrowers when flood insurance is
required, require flood insurance as a condition to making certain loans, and
place flood insurance premiums in escrow when other payments are escrowed.
Lenders who fail to comply with the 1994 Reform Act are subject to substantial
monetary penalties.

From 1995 through 2000, the U.S. flood insurance market has grown from
$1.1 billion to $1.7 billion in total annual flood premiums, representing annual
growth rates of 8.5%, 15.0%, 15.1%, 4.2% and (0.1)%, respectively, and a
compound annual growth rate of 8.4%. From 1995 through 2001, the dollar amount
of annual flood premiums administered by the Company has grown from $80 million
in 1995 to $244 million in 2001, representing annual growth rates of 27.6%,
29.5%, 19.6%, 18.3%, 15.4% and 12.9%, respectively, and a compound annual growth
rate of 25.0%. Currently, almost 19,000 communities participate in the Flood
Program, and approximately 100 insurance companies are registered to offer WYO
flood insurance.

OUTSOURCING IN THE P&C INDUSTRY

The P&C industry provides financial protection for individuals,
businesses and others against losses of property or losses by third parties for
which the insured is liable. P&C insurers underwrite policies that cover various
types of risk, which can generally be divided into personal lines of insurance
covering individuals and commercial lines of insurance covering businesses.
Personal lines are comprised primarily of automobile and homeowners insurance.
Commercial lines cover a wide range of commercial risks that affect businesses.

According to A.M. Best, premium revenues in the P&C industry have
increased by an average of 2.2% annually since 1995. The P&C industry is highly
competitive, with insurance companies competing primarily on the basis of price,
consumer satisfaction and the ability to pay claims. According to A.M. Best, as
of December 31, 1999 (the latest period for which the Company has information),
there were approximately 3,300 P&C insurance companies in the United States.
These companies generated approximately $287 billion in annual P&C premium
revenues in 1999, of which more than one-half related to personal lines
automobile, homeowners and flood insurance business, the core markets serviced
by the Company. The Company believes there are a significant number of P&C
insurance companies for which outsourcing is a viable alternative to maintaining
in-house processing capabilities.

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Over the past decade, many P&C insurance companies have begun using
third-party vendors to provide certain policy and claims administration services
that were traditionally performed in-house. This outsourcing of services allows
insurers to focus on their core competencies, reduce costs and eliminate capital
expenditures for the development, installation, operation and maintenance of
information management and automation systems. The Company believes that
insurance companies may further increase their levels of outsourcing as they
determine that policy and claims administration and regulatory compliance are
complicated and too costly to perform efficiently in-house. Although it has had
only limited success to date, the Company believes it may have additional
opportunities to market its outsourcing services in the future for the following
reasons:

Consolidation and Drive for Cost Efficiencies. Providers of outsourcing
services are able to consolidate large volumes of business into automated and
effective processing systems, thereby creating significant cost efficiencies.
The Company believes insurance companies typically outsource administrative
services because outsourcing providers can provide better quality services at a
lower cost.

Technological Challenges and Complexities. The investment in the
specialized technical knowledge required to develop, install and operate
information systems necessary for P&C insurers to remain competitive is often
cost prohibitive, particularly for smaller companies and new entrants to the
market. Insurance companies can take advantage of the economies of technology
created by an outsource provider's investment in information systems.

Development of Internet-Based Solutions. The Company believes that, in
order to compete effectively, P&C companies will need to aggressively pursue
Internet solutions for their business either directly to consumers or through
their insurance agency (direct or independent) distribution channel. According
to The Conning Commentary, a principal need of independent insurance agents is
an effective electronic interface with insurance carriers. Until recently, most
insurance company web sites provided information content only; however, the
current trend is toward quoting, rating and issuing policies via the Internet.
The Company believes that there are a substantial number of P&C companies that
have targeted the Internet as their primary initiative in terms of providing a
mechanism for their producers to quote, rate and issue insurance policies, and
that many of these companies may need to outsource the development of an
Internet insurance transaction solution.

Changing Distribution Channels. The Company believes that the demand
for outsourcing services may increase as banks, credit unions and other
financial service companies continue to enter the P&C market. These entrants
were generally precluded from selling insurance until the U.S. Supreme Court
decision in Barnett Bank v. Nelson in 1996. Following this decision, and despite
continuing restrictions and pressure from state regulators, a number of banks
and other financial institutions have entered the P&C market, often forming
joint ventures and other alliances with certain insurers to sell P&C insurance.
The Company believes this trend may continue. Many new entrants lack the
technology, expertise or desire to perform policy and claims processing in-house
and may seek to outsource these functions to third-party vendors.

Regulatory Reporting Requirements. State insurance regulators closely
regulate the product offerings, claims processes and premium rate structures of
insurance companies. To comply with such regulations, companies must file annual
and other reports relating to their financial condition. Third-party vendors
with effective policy and claims administration systems can facilitate
compliance with many regulatory requirements by automating statutory reporting
and other compliance tasks.

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OPERATING STRATEGIES

The Company's current principal operating strategies are as follows:

Service Existing Outsourcing Customers. The Company intends to continue
to focus on providing high quality, cost effective services to its existing
outsourcing customer base. In instances where opportunities exist, the Company
may seek to cross-market additional outsourcing services to certain of these
existing customers.

E-Solutions Focus. Management believes that the Company's solution of
connecting legacy systems with Internet browser-based functionality is an
attractive alternative to P&C companies attempting to develop a solution using
their own resources. In 2000, the Company completed and fully integrated its
Internet solution for its flood and homeowners products.

Maximize Economies of Scale. The Company currently services over
900,000 insurance policies annually. As a result, it has developed a large
number of efficiencies in many aspects of its operations, from the receipt of
policy applications to billings and collections. By deploying internally
developed applications software, rating disks for applications input, lockbox
and cash office processing, automated voice response, computerized forms and
automated policy assembly, the Company has attained expense efficiencies that
management believes are characteristic of insurers processing substantially
greater policy volumes.

Generate Recurring Revenues/Sales and Marketing. The Company seeks to
generate recurring revenues by entering into contractual relationships
(typically three to five years) with its outsourcing customers and by offering
services that are structured to generate revenues based on events that occur
frequently in the normal course of a customer's business, such as claims,
mortgage applications and insurance policy renewals. Current sales and marketing
efforts are undertaken by senior management. It should be noted that during
2001, the Company eliminated its internal outsourcing sales force, thereby
reducing its overall sales and marketing expenses.

Focus on Expense Reductions. In 2001, the Company made significant
reductions in its workforce. In light of anticipated reductions in the amount of
services required by BIG, the Company's principal customer, the Company expects
to continue to focus on reducing its costs, including possible additional
staffing reductions. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations-Future Trends".

SERVICES

The Company's outsourcing services include policy administration,
claims administration and information technology services. The Company works
with each customer in an effort to ensure a seamless integration of the
customer's in-house and outsourced activities.

Policy administration describes the range of services the Company
offers customers that are considering outsourcing their policy administration
functions. When policy administration is outsourced, the customer retains all
financial risk and works with the Company to set underwriting and rating
guidelines. The Company typically receives a percentage of premiums for
performing policy administration services. The Company's policy administration
menu includes the following services: policy processing and related data entry;
policy issuance and acceptance; premium management and distribution; accounting,
billing and collections; customer service phone center for policyholders and
agents; and data collection, statutory reporting and regulatory compliance.

Claim administration describes the range of services the Company offers
in connection with the management of insurance claims. In reviewing a claim, the
Company performs a thorough claim analysis and, if warranted, prepares a check
for payment of the claim. The Company has a special investigative unit that
assists in detecting and deterring fraud in the claim review process. The
Company also offers a fully automated, stand-alone catastrophe claims operation
and is typically compensated for claims administration services on either a
percentage of earned premiums or claims-paid basis. The Company's claim
administration menu includes the

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following services: toll-free claim reporting; initial coverage confirmation
services; loss investigation and determination; review and appraisal of claims;
special investigation services, including fraud detection; adjustment of claims
and vendor management; litigation management; and settlement and payment of
claims.

Because the Company is affiliated with and provides comprehensive
outsourcing services to BIG, an approved WYO carrier under the Flood Program, it
emphasizes to prospective customers its ability to provide third-party
administration outsourcing for flood insurance. The Company offers its flood
outsourcing services, including software and processing functions, policy
administration, claim administration and statistical reporting, on either a
bundled or "a la carte" basis. New market entrants and certain other insurers
may prefer to purchase unbundled services, allowing them to retain in-house
control over specific aspects of their businesses. The Company makes available
virtually any combination of outsourcing services required by the customer.

The Company also offers flood outsourcing services to insurance
companies that seek to provide flood insurance, but do not want to become
certified WYO carriers. In this case, the services are provided in conjunction
with a proprietary flood product. An insurance company can establish a private
label insurance product written through BIG whereby the customer's name and logo
appear on the policy documents, while BIG acts as the servicing carrier. The
Company also intends to continue to market its outsourcing services to banks,
credit unions and other financial institutions as they become involved in the
sale of insurance.

The Company also offers a range of information technology services to
assist customers in operating, maintaining and enhancing information systems.
The Company integrates the customer's system platform with the Company's
processing platform, including the installation of all necessary hardware
components, depending on the customer's needs. This integration allows the
customer to administer its policies and claims internally by using the Company's
systems and software. The Company typically receives a percentage of premiums as
compensation, subject to a minimum fee. The Company's information technology
services include the following: information management via integrated, secure
computer systems; document imaging; Internet rating and underwriting services;
monetary systems services, including payment processing; automated printing,
packaging and distribution of documents; generation of agent commission
statements and production reports; security administration and access control;
software application enhancement and maintenance; problem resolution and
reporting; and data backup and disaster recovery functions. Beginning June 1,
2001, the Company sought to provide these services primarily through third-party
vendors, including BIG. As a result, the Company terminated 68 employees,
comprising substantially its entire Information Technology department. All of
these employees were, in turn, hired by BIG. Subsequently, the Company rehired
31 employees effective October 1, 2001 to once again provide its information
technology services directly rather than through third-party vendors. See "Item
13. Certain Relationships and Related Transactions."

CUSTOMER SUPPORT AND INSTALLATION

The Company's outsourcing services are provided from three separate
customer service centers in St. Petersburg, Florida, two for policy and claims
administration and one for catastrophic claims administration.

The policy administration center has approximately 160 employees, most
of whom are trained customer service representatives. Customer service
representatives are responsible for the timely handling and resolution of
incoming phone calls related to underwriting, rating, billing, policy status and
other policy administration matters. While most calls come from

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insurance agents, the phone center also handles calls from mortgage companies,
policyholders and insureds.

The claim administration customer service center is responsible
primarily for handling calls from claimants and insureds reporting property
losses. The center also handles calls from agents and others related to coverage
of existing claims. The center has approximately 140 employees, approximately
half of whom are licensed claims representatives responsible for the adjustment
of claims. Incoming calls are taken by customer service representatives, who are
trained to handle all types of insurance claims. Unlike many other claims
administration centers, the Company's service center is able to immediately
assign each claim to a licensed adjuster for processing. The claim
administration switchboard is open weekdays from 7:30 a.m. to 9:00 p.m. (Eastern
Time), and customer service representatives and licensed adjusters are available
24 hours a day, seven days a week, to handle emergency claims.

The Company's Colonial Claims subsidiary operates in its own location
and has a staff of approximately 10 employees.

SALES AND MARKETING

The Company seeks to market its outsourcing capabilities by leveraging
its existing expertise in flood insurance administration and by targeting
prospective customers, such as insurers with high expense ratios or limited
expertise in certain P&C lines. The Company's sales and marketing efforts are
overseen by its President, who works principally in concert with its reinsurance
brokers and reinsurer strategic partners to market its outsourcing services. The
Company also advertises in various trade publications and participates in
industry conventions and trade shows to enhance the penetration of its flood and
non-flood markets. In an effort to reduce expenses, the Company eliminated its
four-person marketing and sales division in February 2001.

INFORMATION SYSTEMS

The Company utilizes fully integrated, real-time processing systems at
its St. Petersburg, Florida facilities to provide many of its outsourcing
services. These systems, which run on an IBM AS/400 platform coupled with a
relational database, enable the Company to provide on-line ratings and
underwriting information, issue required insurance forms to policyholders and
agents, and produce renewal and non-renewal notices. The processing systems
interface with a disbursement system, which enables the Company to generate
checks automatically.

A separate IBM AS/400 is used to develop, enhance and test new and
existing systems. In the event of a power failure, the AS/400 site is supported
by a fully-functional backup system that provides additional processing time of
one hour under full load. Insurance policies and related documents are scanned
to optical disks, and are retrievable at most LAN workstations. The Company also
has an optical jukebox that can store approximately 10 million documents. The
Company's data center has controls to ensure security and a disaster recovery
plan, which is tested regularly.

The Company is capable of developing modifications or enhancements to
its licensed software to meet its outsourcing customers' particular needs.
Business analysts from the Company work with each customer to ensure that the
Company understands the customer's system requirements. Once the system
requirements have been documented, the Company dedicates a team of systems
analysts and/or contracts with a third-party provider to develop the appropriate
modifications or enhancements to its software system.

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CUSTOMERS

The Company currently provides outsourcing services to over 30
customers. The Company's largest customer, BIG, accounted for approximately 66%,
60% and 49% of the Company's total revenues and 80%, 83%, and 68% of the
Company's outsourcing revenues in 1999, 2000 and 2001 respectively.
Consequently, any material decrease in the outsourcing business from BIG would
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Risk Factors--Reliance on Key Customer." The
Company provides outsourcing services to other WYO carriers, including Farmers
Insurance Group, AAA Auto Club South Insurance Company and Mobile USA Insurance
Company, Inc. The Company also provides outsourcing services to various
insurance companies, such as Armed Forces Insurance Corporation and AMICA Mutual
Insurance Company, that utilize BIG as their servicing carrier.

COMPETITION

The Company competes principally in two markets: (1) the market for
flood insurance outsourcing services and (2) the market for other P&C insurance
outsourcing services. The markets for these services are highly competitive.

The market for flood insurance outsourcing services is dominated by the
Company and several principal competitors, including Fiserv, Inc. and Electronic
Data Systems, Inc. Over the past year, the number of competitors in the market
has been reduced due to several consolidating acquisitions by certain principal
competitors. The Company competes for these outsourcing customers largely on the
basis of price, customer service and responsiveness.

The market for other P&C insurance outsourcing services is fragmented.
In the policy administration services segment of this market, principal
competitors include Policy Management Services Corporation and Trumbull Services
Corporation. In this segment of the market, the Company competes for customers
largely on the basis of customer services, performance and price. The claim
administration services segment of the P&C outsourcing market also is highly
fragmented, with competition from a large number of claims administration
companies of varying size, as well as independent contractors. Competition in
this segment of the outsourcing market is principally price driven. Competitors
include Lindsey Morden Claim Services, Inc., Crawford & Company, Inc. and GAB
Robbins, Inc.

The Company believes, however, that its most significant competition
for P&C insurance outsourcing services comes from policy and claims
administration performed in-house by insurance companies. Insurers that fulfill
some or all of their policy and claims administration needs in-house typically
have made a significant investment in their information processing systems and
may be less likely to utilize the Company's services.

Certain of the Company's competitors in each of its markets have longer
operating histories and significantly greater financial, technical, marketing
and other resources than the Company, including name recognition with current
and potential customers. As a result, these competitors may devote more
resources to the development, promotion and sale of their services or products
than the Company and respond more quickly to emerging technologies and changes
in customer requirements. There can be no assurance that the Company will be
able to compete successfully against current and future competitors, or that
competitive pressure faced by the Company will not have a material adverse
effect on its business, financial condition and results of operations.

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EMPLOYEES

As of March 15, 2002 the Company had 406 full-time and 29 part-time
employees, consisting of 351 in customer service and support, 31 in technical
support, and 53 in management, administration and finance. None of the Company's
employees are subject to a collective bargaining agreement, and the Company
considers its relations with its employees generally to be good.

The Company's workforce has decreased by approximately 180 net
employees from the prior year. The majority of this decrease relates to the sale
of Geotrac, which employed approximately 140 employees. Additionally, during
2001, the Company eliminated an additional 53 jobs. The reductions, which
involved primarily sales and marketing, information technology, and claims
administration positions, occurred principally in areas where management
believed processes could be combined to reduce overall expenses.

GEOTRAC SALE

On December 28, 2001 the Company consummated the transactions
contemplated by a stock purchase agreement (as amended, the "Stock Purchase
Agreement"), dated as of September 20, 2001, by and among the Company, Geotrac
of America, Inc., Geotrac Holdings, Inc., Daniel J. White, the Daniel J. White
Trust, the Sandra A. White Trust, and, solely for purposes of a non-competition
covenant, BIG. The shareholders of the Company approved the Stock Purchase
Agreement and the transactions contemplated thereby in accordance with Florida
law at a Special Meeting of Shareholders held on December 26, 2001.

Pursuant to the Stock Purchase Agreement, Geotrac Holdings, Inc., a
Delaware corporation formed by Daniel J. White and his spouse, Sandra A. White,
purchased all the issued and outstanding capital stock (the "Shares") of Geotrac
of America, Inc., a wholly-owned subsidiary of the Company ("Geotrac"). Prior to
the consummation of the transactions contemplated by the Stock Purchase
Agreement, Mr. White served as a director of the Company and President, Chief
Executive Officer and a director of Geotrac. Mr. White resigned as a director of
the Company effective as of the consummation of the sale of the Shares.

The purchase price paid for the Shares was $19,000,000 in cash, plus
524,198 shares of Common Stock of the Company beneficially owned by Daniel J.
White and Sandra A. White. Pursuant to the Stock Purchase Agreement, certain of
the parties also entered into additional agreements as of the closing of such
sale, including a Flood Zone Determination Service Agreement pursuant to which
Geotrac will provide the Company with flood zone determination services for up
to ten years at pricing management of the Company currently considers to be
favorable.

RECENT DEVELOPMENTS

On January 30, 2002, the Board of Directors of the Company appointed a
Special Committee, consisting of the Company's five independent directors, to
evaluate possible strategic alternatives for the Company. The Special Committee
is chaired by John S. McMullen. The alternatives that the Special Committee may
consider include but are not limited to: the possible sale of the Company, the
possible sale of certain assets of the Company, a possible debt or equity
financing, and/or a possible going-private transaction. The Special Committee
has retained an independent legal advisor and an independent financial advisor
to assist the Special Committee in considering and reviewing such alternatives.

-8-

No assurances can be given, however, as to whether any of such alternatives will
be recommended or undertaken or, if so, upon what terms and conditions.

Effective February 1, 2002, Robert G. Menke resigned as a director of
IMSG to pursue personal interests. As a result of Mr. Menke's resignation, the
Company's Board of Directors presently consists of eight (8) members.

On August 14, 2001, the Company entered into a Credit and Security
Agreement (together with the related loan documentation, the "Credit Agreement")
with BIG, pursuant to which the Company established a short-term secured line of
credit in favor of BIG in the amount of up to $5.0 million (the "Line of
Credit"). The principal purpose of the Line of Credit is to assist BIG with
certain short-term working capital needs.

Pursuant to the Credit Agreement, all unpaid principal and interest
became due and payable in full on February 28, 2002. As of such date, BIG owed
the Company an aggregate of approximately $5.0 million under the Line of Credit.
On March 14, 2002, the Company and BIG amended the Credit Agreement to extend
the Line of Credit until May 31, 2002. This amendment to the Credit Agreement
was approved unanimously by the Audit Committee of the Board of Directors of the
Company at a special meeting held on March 8, 2002. In making this
determination, the Audit Committee considered, among other things, (i) the
Company's continued dependence on BIG as the Company's principal customer, (ii)
the Special Committee's ongoing consideration of various strategic alternatives
as described above, and (iii) the financial condition of BIG and the current
status of the collateral securing the Line of Credit.

Pursuant to the Credit Agreement, as amended, if all amounts owed the
Company by BIG under the Line of Credit are not paid on or before June 10, 2002,
BIG will be in default of its obligations under the terms of the Credit
Agreement.

The Company has been advised by BIG that it is considering various
methods of satisfying its obligations under the Line of Credit, including the
possible sale of certain of its assets. No assurances can be given, however,
that payment in full of all amounts due and owing under the Line of Credit will
be received on or before June 10, 2002. If payment in full is not received from
BIG on or before such date, the Audit Committee of the Board of Directors of the
Company will determine the appropriate course of action after considering all
factors it deems relevant or appropriate.

RISK FACTORS

The Company's financial condition and results of operations may be
impacted by a number of factors, including, but not limited to the following
risk factors, any of which could cause actual results to materially differ from
historical or anticipated future results.

RELIANCE ON KEY CUSTOMER. The Company derives a substantial portion of
its revenues from outsourcing services provided to its principal shareholder,
BIG. For the years ended December 31, 1999, 2000 and 2001, revenues from
services provided to BIG accounted for approximately 66%, 60% and 49% of the
Company's total revenues (including discontinued operations), respectively, and
approximately 80%, 83% and 68%, respectively, of the Company's revenues from
outsourcing services (for continuing operations). As a result of the sale of the
Company's Geotrac subsidiary in late December 2001, the importance of BIG as a
source of ongoing revenue will become even greater. Thus, the Company's future
financial condition and results of operations will depend to a significant
extent upon the commercial success of BIG and its continued willingness to
utilize the Company's services.

Over the past year, BIG has experienced several changes in its business
and operations, certain of which are expected to reduce the need for the
Company's services for the foreseeable future. In November 2001, BIG ceased
writing further workers compensation insurance altogether. Although the Company
will continue to provide services in connection with the run-off of this
business, such run-off business is not expected to generate material revenues
for the Company in 2002.

In addition, effective February 2002, BIG sold its Florida
wind-inclusive homeowners policies to an unaffiliated third party, and the
Company is no longer servicing these policies. While BIG has informed the
Company that it will continue to write wind-exclusive homeowners policies,
revenues from the processing of homeowners business on behalf of BIG is expected
to be reduced significantly for the foreseeable future. The Company anticipates
making further staffing and other related expense reductions in response to the
foregoing changes in BIG's business. Nevertheless, if the Company is unable to
replace these revenues or reduce its expenses accordingly, the loss or material
decrease in business from BIG could have a material adverse effect on the
Company's business, financial condition and results of operations. Also, if BIG
were to exit or sell off any additional lines of business, this could have a
material adverse effect on the Company's business, financial condition and
results of operations.

-9-

Likewise, any further significant downturn in the business of BIG or its
commitment to utilize the Company's services could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations."

DEPENDENCE ON ECONOMIC AND OTHER FACTORS; FLUCTUATIONS IN QUARTERLY
OPERATING RESULTS. The Company's business is dependent upon various factors,
such as general economic conditions and weather patterns, that are beyond its
control. For example, natural disasters such as hurricanes, tornadoes, and
floods, all of which are unpredictable, directly impact the demand for the
Company's outsourcing services. Fluctuations in weather patterns, general
economic conditions and various other factors will likely produce fluctuations
in the Company's quarterly earnings and operating results.

CLASS ACTION LITIGATION. On September 28, 2000, October 25, 2000 and
October 30, 2000, three alleged shareholders of the Company filed three nearly
identical lawsuits in the United States District Court for the Middle District
of Florida, each on behalf of a putative class of all persons who purchased
shares of the Company's Common Stock pursuant and/or traceable to the
registration statement for the Company's February 1999 initial public offering
(the "IPO"). The lawsuits were consolidated on December 1, 2000, and the
consolidated action's proceeding under Case No. 8:00-CV-2013-T-26MAP. The
plaintiff's Consolidated Amended Class Action Complaint, filed February 7, 2001,
names as defendants the following parties: the Company; BIG; Venture Capital
Corporation, a selling shareholder in the IPO; the five inside directors of the
Company at the time of the IPO; and Raymond James & Associates, Inc. and Keefe,
Bruyette & Woods, Inc., the underwriters for the IPO. The complaint alleges,
among other things, that the defendants violated Sections 11, 12(a)(2) and 15 of
the Securities Act of 1933, as amended, by making certain false and misleading
statements in the roadshow presentations, registration statement and prospectus
relating to the IPO. More specifically, the complaint alleges that, in
connection with the IPO, the defendants made various material misrepresentations
and/or omissions relating to (i) the Company's ability to integrate Geotrac's
flood zone determination business with the Company's own flood zone
determination business and with its insurance outsourcing services business;
(ii) actual and anticipated synergies between the Company's flood zone
determination and outsourcing services business lines; and (iii) the Company's
use of the IPO proceeds. The complaint seeks unspecified damages, including
interest, and equitable relief, including a rescission remedy. On March 26,
2001, the Company, BIG and the five inside director defendants filed a motion to
dismiss the plaintiffs' complaint for, among other things, failure to allege
material misstatements and/or omissions in the roadshow presentations,
registration statement and/or prospectus relating to the IPO. On July 11, 2001,
U.S. District Judge Richard A. Lazzara denied all of the defendants' motions to
dismiss the complaint.

The case has been set for trial during the trial term commencing May 5,
2003, and active discovery is proceeding. Management of the Company believes the
material allegations of the complaint are without merit and intends to
vigorously defend the lawsuit. No assurances can be given, however, with respect
to the outcome of the litigation, and an adverse result could have a material
adverse effect on the Company's business, financial condition and results of
operations.

-10-

REGULATORY MATTERS. Bankers Insurance Company ("BIC"), a subsidiary of
BIG, and Bankers Life Insurance Company ("BLIC") and Bankers Security Insurance
Company ("BSIC"), subsidiaries of BIC, have been subject to an investigation by
the Florida Department of Insurance (the "DOI"), the principal regulator of
insurance activities in the State of Florida, stemming from their use of a
private investigator to gather information on a DOI employee and the private
investigator's unauthorized use of illegal wiretaps in connection therewith. On
March 23, 2000, the Treasurer and Insurance Commissioner of the State of
Florida, as head of the DOI, filed an administrative complaint against BIC, BLIC
and BSIC based upon the results of such investigation. The administrative
complaint charged BIC, BLIC and BSIC with violating various provisions of the
Florida Insurance Code including, among other things, a provision requiring
insurance companies to have management, officers or directors that are, among
other things, trustworthy. The complaint further notified BIC, BLIC and BSIC
that the Insurance Commissioner intended to impose such penalties or take such
other administrative actions as may be proper or appropriate under applicable
law, including possibly entering an order suspending or revoking the
certificates of authority of BIC, BLIC and BSIC to conduct business as insurance
companies in the State of Florida. Effective February 6, 2002, BIC, BLIC and
BSIC entered into a Consent Order with the DOI pursuant to which the DOI's
administrative action against BIC, BLIC and BSIC was dismissed. Also pursuant to
this Consent Order, such entities were ordered to pay penalties totaling $1
million (consisting of a fine of $700,000 and reimbursement of attorneys' fees
of $300,000), Robert M. Menke was prohibited from acting as chairman or an
officer of any of such entities for a period of three years, another executive
officer of each of these entities was removed from such positions, and certain
other compliance-related requirements were imposed. BIG has advised the Company
that the terms of the Consent Order should not have a material adverse effect on
the business and/or operations of BIG, but no assurances can be given in this
regard.

On November 19, 1999, the United States, on behalf of the Federal
Emergency Management Agency ("FEMA"), filed a civil action against BIC in the
United States District Court for the District of Maryland stemming from FEMA's
investigation of certain cash management and claims processing practices of BIC
in connection with its participation in the National Flood Insurance Program
("NFIP"). The complaint alleges, among other things, that BIC knowingly failed
to report and pay interest income it had earned on NFIP funds to the United
States in violation of the False Claims Act. The complaint further alleges
various common law theories, including fraud, breach of contract, unjust
enrichment and negligent misrepresentation. The complaint seeks civil penalties
of $1.08 million and actual damages of approximately $1.1 million, as well as
treble, punitive and consequential damages, costs and interest. The suit is
currently stayed pending arbitration following a decision by the United States
Court of Appeals for the Fourth Circuit in favor of BIC on its motion to stay
the litigation pending arbitration. The government has not appealed the Fourth
Circuit Court of Appeal ruling requiring arbitration and the case is stayed
pending arbitration. By letter dated January 30, 2002, FEMA notified Bankers
that it intends to move forward with arbitration and set forth proposed
procedures. BIC has further informed the Company that it intends to vigorously
defend against the action, but no assurances can be given as to the outcome
thereof. However, BIG has advised the Company that an adverse judgment in this
action should not have a material adverse affect on the business and/or
operations of BIC, although no assurances can be given in this regard.

-11-

additional claims under the False Claims Act and/or various common law and
equitable theories relating to such matters. In the event such continuing
investigation or any consequence thereof materially adversely affects the
business or operations of BIC, it could result in the loss of or material
decrease in the Company's business from BIC, which would have a material adverse
effect on the Company's business, financial condition and results of operations.

The Company is involved in various other legal proceedings arising in
the ordinary course of business. Management believes that the ultimate
resolution of these other proceedings will not have a material adverse effect on
the Company's financial position, results of operations, or liquidity, although
no assurances can be given in this regard.

GOVERNMENT REGULATION. As a provider of policy and claims processing to
the flood insurance industry, the Company is subject to extensive and
continuously changing guidelines of the Federal Insurance Administration. No
assurance can be given with respect to the extent to which the Company may
become subject to regulation in the future, the ability of the Company to comply
with any such regulation, the cost of compliance or an abrupt change in the
overall concept or delivery of the flood insurance product on behalf of the
federal government. Moreover, if the federal government were to curtail the
current federal flood program, it could have a material adverse effect on the
Company's business, financial condition and results of operations.

The P&C insurance industry is subject to extensive regulation by state
governments. Because the Company markets and sells its services to P&C insurers,
certain aspects of the Company's business are affected by such regulation. The
Company must continuously update its software to reflect changes in regulations.
In addition, changes in regulations that adversely affect the Company's existing
and potential customers could have a material adverse effect on the Company's
business, financial condition and results of operations. Although the Company's
services are not directly subject to insurance regulations in the states where
the Company currently provides such services, the Company's outsourcing services
may be subject to insurance regulations in states where the Company may do
business in the future. Such regulations could require the Company to obtain a
license as a managing general agent or third-party administrator. Failure to
perform in accordance with state regulations could result in the loss of
significant insurance clients. No assurance can be given with respect to the
extent to which the Company may become subject to regulation in the future, the
ability of the Company to comply with any such regulation, or the cost of
compliance.

CONTROL BY PRINCIPAL SHAREHOLDER; CONFLICTS OF INTEREST. BIG currently
owns approximately 65.2% of the outstanding shares of the Company's Common
Stock. As a result, BIG is able to elect the Company's directors and determine
the outcome of other matters requiring shareholder approval. BIG's ultimate
parent, Bankers International Financial Corporation, Ltd., is wholly owned by a
discretionary charitable trust. David K. Meehan, the Company's Chairman of the
Board, and Robert M. Menke, a director of the Company, presently serve on the
board of directors of a corporation that possesses discretionary power with
respect to this trust to (i) direct the trustee to appoint the trust fund to
another trust for the benefits of one or more of the beneficiaries of the trust
and (ii) remove the trustee and appoint one or more new trustees.

BIG's ownership of shares of Common Stock may discourage or prevent
unsolicited mergers, acquisitions, tender offers, proxy contests or changes of
incumbent management, even when shareholders other than BIG may consider a
transaction or event to be in their best interests. Accordingly, holders of
Common Stock may be deprived of an opportunity to sell their shares at a premium
over the trading price of the shares.

-12-

Certain officers and directors of the Company, including David K.
Meehan, the Company's Chairman of the Board, also serve as officers and
directors of BIG. Mr. Meehan serves as Vice Chairman of the Board of Directors
of BIG and Robert M. Menke serves as a Director of BIG. In addition, as
described below, the Company continues to have a variety of contractual
relationships with BIG. As the interests of the Company and BIG may differ,
Messrs. Meehan and Menke may face certain conflicts of interest.

The Company's relationship with BIG is governed by various agreements.
None of the foregoing agreements resulted from arm's-length negotiations.
Nevertheless, the Audit Committee of the Board of Directors has approved each of
such agreements, and management of the Company believes that the transactions
provided for therein are on terms no less favorable than those that could be
obtained on an arm's-length basis from independent third parties.

DEPENDENCE ON SENIOR MANAGEMENT. The success of the Company is largely
dependent upon the efforts, direction and guidance of its senior management and,
in particular, David M. Howard, the Company's President and Chief Executive
Officer. The Company's success depends in part on its ability to attract and
retain qualified managers, and on the ability of its executive officers and key
employees to manage its operations successfully. The loss of any of the
Company's senior management or key personnel, or the inability to attract and
retain key management personnel in the future, could have a material adverse
effect on the Company's business, financial condition and results of operations.

LIMITED OPERATING HISTORY IN THIRD-PARTY OUTSOURCING. As BIG's
outsourcing provider, the Company has become a significant provider of flood
insurance outsourcing services, however, to date it has not derived significant
revenue from unaffiliated third-party outsourcing customers. A key element of
the Company's strategy has been to leverage its experience and expertise in
servicing BIG's flood, homeowners and automobile business to market its
outsourcing capabilities in various P&C lines, including flood, homeowners and
automobile insurance, to other insurance companies and financial institutions.
To date, the Company has not been successful in implementing this strategy. In
an effort to reduce expenses, the Company eliminated its four-person marketing
and sales department in February 2001.

EXISTENCE OF WELL-POSITIONED COMPETITORS. The Company competes
principally in two markets: (1) the market for flood insurance outsourcing
services and (2) the market for other P&C insurance outsourcing services. The
markets for these services are highly competitive.

-13-

POTENTIAL LIABILITY TO CLIENTS. Many of the Company's contractual
engagements involved projects that are critical to the operations of its
clients' business and provide benefits that may be difficult to quantify. Any
failure in a client's system could result in a claim for substantial damages
against the Company, regardless of the Company's responsibility for such
failure. Although the Company may attempt to limit contractually its liability
for damages arising from negligent acts, errors, mistakes or omissions in
rendering its services, there can be no assurance that the limitations of
liability, if any, set forth in its service contracts will be enforceable in all
instances or would otherwise protect the Company from liability for damages.
Although the Company maintains general liability insurance coverage, including
coverage for errors or omissions, there can be no assurance that such coverage
will continue to be available on reasonable terms or in sufficient amounts to
cover one or more large claims, or that the insurer will not disclaim coverage
as to any future claim. The successful assertion of one or more large claims
against the Company that exceed available insurance coverage, or changes in the
Company's insurance policies, including premium increases or the imposition of
large deductible or co-insurance requirements, could have a material adverse
effect on the Company's business, financial condition and results of operations.

DEPENDENCE ON TREND TOWARD OUTSOURCING. The Company's business and
growth depend in large part on the insurance industry's trend toward outsourcing
administration and information technology services. There can be no assurance
that this trend will continue, as organizations may elect to perform such
services in-house. A significant change in the direction of this trend could
have a material adverse effect on the Company's business, financial condition
and results of operations.

VOLATILITY OF STOCK PRICE; IMPACT OF DE-LISTING. The Company believes
that various factors such as general economic conditions and changes or
volatility in the financial markets, changing market conditions, and quarterly
or annual variations in the Company's financial results, some of which are
unrelated to the Company's performance, could cause the market price of the
Common Stock to fluctuate substantially.

Effective the close of business on February 21, 2001, the Company's
Common Stock was de-listed from trading on the Nasdaq National Market due to the
Company's inability to remain in compliance with certain maintenance standards
required for continued listing on the Nasdaq National Market. Since that time,
the Common Stock has been eligible to trade on the OTC Bulletin Board. The
Common Stock does not now, and may never, meet the requirements for re-listing
on the Nasdaq National Market. The Company's inability to list its Common Stock
on the

-14-

Nasdaq National Market substantially reduces the liquidity of, and market for,
the Common Stock.

ITEM 2. PROPERTIES

The following table sets forth certain information with respect to the
principal facilities used in the Company's operations:

SQUARE
LOCATION FEET FUNCTIONS LEASE EXPIRATION
--------------------------- ------ -------------------------- ----------------

St. Petersburg, Florida (1) 44,030 Corporate Headquarters and December, 2003
Outsourcing Services
St. Petersburg, Florida (1) 4,650 Information Technology April, 2002 (2)
St. Petersburg, Florida 12,740 Outsourcing Services August, 2005 (2)
St. Petersburg, Florida 35,500 Outsourcing Services February, 2005 (2)
Dunedin, Florida 5,200 Outsourcing Services February, 2007

--------------

(1) Each of these facilities is leased from BIG.
(2) The Company has the option to renew each of these leases for an
additional period.

The Company believes that its existing facilities and additional or
alternate space available to it are adequate to meet its requirements for the
foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

On September 28, 2000, October 25, 2000 and October 30, 2000, three
alleged shareholders of the Company filed three nearly identical lawsuits in the
United States District Court for the Middle District of Florida, each on behalf
of a putative class of all persons who purchased shares of the Company's Common
Stock pursuant and/or traceable to the registration statement for the Company's
February 1999 initial public offering (the "IPO"). The lawsuits were
consolidated on December 1, 2000, and the consolidated action's proceeding under
Case No. 8:00-CV-2013-T-26MAP. The plaintiff's Consolidated Amended Class Action
Complaint, filed February 7, 2001, names as defendants the following parties:
the Company; BIG; Venture Capital Corporation, a selling shareholder in the IPO;
the five inside directors of the Company at the time of the IPO; and Raymond
James & Associates, Inc. and Keefe, Bruyette & Woods, Inc., the underwriters for
the IPO. The complaint alleges, among other things, that the defendants violated
Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, by
making certain false and misleading statements in the roadshow presentations,
registration statement and prospectus relating to the IPO. More specifically,
the complaint alleges that, in connection with the IPO, the defendants made
various material misrepresentations and/or omissions relating to (i) the
Company's ability to integrate Geotrac's flood zone determination business with
the Company's own flood zone determination business and with its insurance
outsourcing services business; (ii) actual and anticipated synergies between the
Company's flood zone determination and outsourcing services business lines; and
(iii) the Company's use of the IPO proceeds. The complaint seeks unspecified
damages, including interest, and equitable relief, including a rescission
remedy. On March 26, 2001, the Company, BIG and the five inside director
defendants filed a motion to dismiss the plaintiffs' complaint for, among other
things, failure to allege material misstatements and/or omissions in the
roadshow presentations, registration statement and/or prospectus relating to the
IPO. On July 11, 2001, U.S. District Judge Richard A. Lazzara denied all of the
defendants' motions to dismiss the complaint.

-15-

Bankers Insurance Company ("BIC"), a subsidiary of BIG, and Bankers
Life Insurance Company ("BLIC") and Bankers Security Insurance Company ("BSIC"),
subsidiaries of BIC, have been subject to an investigation by the Florida
Department of Insurance (the "DOI"), the principal regulator of insurance
activities in the State of Florida, stemming from their use of a private
investigator to gather information on a DOI employee and the private
investigator's unauthorized use of illegal wiretaps in connection therewith. On
March 23, 2000, the Treasurer and Insurance Commissioner of the State of
Florida, as head of the DOI, filed an administrative complaint against BIC, BLIC
and BSIC based upon the results of such investigation. The administrative
complaint charged BIC, BLIC and BSIC with violating various provisions of the
Florida Insurance Code including, among other things, a provision requiring
insurance companies to have management, officers or directors that are, among
other things, trustworthy. The complaint further notified BIC, BLIC and BSIC
that the Insurance Commissioner intended to impose such penalties or take such
other administrative actions as may be proper or appropriate under applicable
law, including possibly entering an order suspending or revoking the
certificates of authority of BIC, BLIC and BSIC to conduct business as insurance
companies in the State of Florida. Effective February 6, 2002, BIC, BLIC and
BSIC entered into a Consent Order with the DOI pursuant to which the DOI's
administrative action against BIC, BLIC and BSIC was dismissed. Also pursuant to
this Consent Order, such entities were ordered to pay penalties totaling
$1 million (consisting of a fine of $700,000 and reimbursement of attorneys'
fees of $300,000), Robert M. Menke was prohibited from acting as chairman or an
officer of any of such entities for a period of three (3) years, another
executive officer of each of these entities was removed from such positions, and
certain other compliance-related requirements were imposed. BIG has advised the
Company that the terms of the Consent Order should not have a material adverse
effect on the business and/or operations of BIG, but no assurances can be given
in this regard.

-16-

not have a material adverse affect on the business and/or operations of BIC,
although no assurances can be given in this regard.

FEMA's investigation of certain claims processing practices of BIC in
connection with its participation in the NFIP is continuing, and BIC has
produced documentation in connection therewith. If the parties are either unable
to reach agreement in these matters or resolve their disagreement in
arbitration, the United States could amend its complaint against BIC to add
additional claims under the False Claims Act and/or various common law and
equitable theories relating to such matters. In the event such continuing
investigation or any consequence thereof materially adversely affects the
business or operations of BIC, it could result in the loss of or material
decrease in the Company's business from BIC, which would have a material adverse
effect on the Company's business, financial condition and results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At a Special Meeting of Shareholders held on December 26, 2001, one
matter was submitted to a vote of shareholders. At such meeting, the Company's
shareholders approved the sale by the Company of all the issued and outstanding
shares of capital stock of its then wholly-owned subsidiary, Geotrac, pursuant
to the Stock Purchase Agreement. See "Item 1. Business - Geotrac Sale."

The following table sets forth certain information with respect to the vote
on such matter:

SHARES VOTED
SHARES VOTED FOR AGAINST ABSTENTIONS BROKER NON-VOTES
---------------- -------------------- ----------- ----------------

10,621,544 46,250 0 0

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

In February 1999, the Company completed an initial public offering of
its Common Stock. Until February 21, 2001, the Company's Common Stock was traded
on the Nasdaq National Market under the symbol "INMG." Effective the close of
business on February 21, 2001, the Company's Common Stock was de-listed from
trading on the Nasdaq National Market due to the Company's inability to remain
in compliance with certain maintenance standards required for continued listing
on the Nasdaq National Market. Since that time, the Common Stock has been
eligible to trade on the OTC Bulletin Board. The OTC Bulletin Board is operated
by the National Association of Securities Dealers, Inc. as a forum for
electronic trading and quotation.

-17-

The following table sets forth: (i) the high and low closing sales
prices per share as reported by the Nasdaq National Stock Market for the Common
Stock for the periods indicated through February 21, 2001; and (ii) the high and
low bid prices per share as reported by the OTC Bulletin Board for periods after
February 26, 2001. The over-the-counter market quotations reflect inter-dealer
prices, without retail markup, markdown or commission and may not necessarily
represent actual transactions.

(i) HIGH LOW
------ ------

YEAR ENDED DECEMBER 31, 2000
First quarter ended March 31, 2000 ............. $ 3.75 $ 2.00
Second quarter ended June 30, 2000 ............. 2.75 1.13
Third quarter ended September 30, 2000 ......... 1.94 1.16
Fourth quarter ended December 31, 2000 ......... 1.28 .41
YEAR ENDED DECEMBER 31, 2001
January 1, 2001 through February 21, 2001 ...... .94 .56
February 22, 2001 through March 31, 2001 ....... .78 .31
Second quarter ended June 30, 2001 ............. 1.44 .38
Third quarter ended September 30, 2001 ......... 2.37 1.35
Fourth quarter ended December 31, 2001 ......... 3.20 2.00

(ii) HIGH LOW
------ ------

YEAR ENDED DECEMBER 31, 2001
January 1, 2001 through February 21, 2001 $ .94 $ .56
February 26, 2001 through March 31, 2001 ....... .44 .32
Second quarter ended June 30, 2001 ............. 1.40 .37
Third quarter ended September 30, 2001 ......... 2.35 1.15
Fourth quarter ended December 31, 2001 ......... 3.25 2.01

As of March 18, 2002, there were 47 record holders of the Company's
Common Stock.

The Company did not pay any dividends in either 2000 or 2001. The
Company currently does not anticipate paying any dividends in the foreseeable
future, although no assurances can be given in this regard.

ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read in
conjunction with the Consolidated Financial Statements of the Company and Notes
thereto and "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations." The following selected consolidated financial data
of the Company as of and for the years ended December 31, 1997, 1998, 1999, 2000
and 2001 has been derived from the Company's audited consolidated financial
statements. The results of operations presented below are not necessarily
indicative of the results of operations that may be achieved in the future.

-18-

YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1997 1998 1999 2000 2001
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Statement of Operations Data:
Revenues
Outsourcing services .................. $ 30,974 $ 39,571 $ 52,805 $ 46,855 $ 57,114
-------- -------- -------- -------- --------
Total revenues .................. 30,974 39,571 52,805 46,855 57,114
Expenses
Cost of outsourcing services .......... 23,027 28,154 38,939 37,695 41,903
Selling, general and
administrative .................... 2,257 3,428 6,601 7,439 6,945

Management services from Parent
2,004 3,156 2,165 1,861 1,327
Deferred compensation
(non-recurring item) .............. -- 728 -- -- --
Depreciation and amortization ......... 394 2,237 3,230 3,024 2,973
-------- -------- -------- -------- --------
Total expenses .................. 27,682 37,703 50,935 50,019 53,148
-------- -------- -------- -------- --------
Operating income/(loss) .................. 3,292 1,868 1,870 (3,164) 3,966
Interest income .......................... -- 332 342 307 282
Interest expense (1) ..................... (300) (1,268) (255) (61) (6)
-------- -------- -------- -------- --------
Income/(loss) before income taxes and
discontinued operations ........... 2,992 932 1,957 (2,918) 4,242

Provision/(benefit) for income taxes .....
1,215 501 832 (731) 1,376
-------- -------- -------- -------- --------
Income/(loss) before
discontinued operations ........... 1,777 431 1,125 (2,187) 2,866
Income from operations of
discontinued operations, net ...... 1,633 3,422 2,070 1,678 2,413
of income tax
(Loss) on disposal of
discontinued operations, net ...... -- -- -- -- (2,826)
of income tax
-------- -------- -------- -------- --------
Net income/(loss) ........................ $ 3,410 $ 3,853 $ 3,195 $ (509) $ 2,453
======== ======== ======== ======== ========
Net income/(loss) per common share
$ .34 $ .38 $ .26 $ (.04) $ 0.19
======== ======== ======== ======== ========
Weighted average common shares
outstanding (2) ................... 10,000 10,264 12,448 12,794 12,795
======== ======== ======== ======== ========
Dividends declared on common stock
(3) ............................... $ 3,500 $ 1,100 $ -- $ -- $ --
======== ======== ======== ======== ========

DECEMBER 31,
----------------------------------------------------------------------------
1997 1998 1999 2000 2001
-------- -------- -------- -------- --------
(IN THOUSANDS)

BALANCE SHEET DATA:
Working capital/(deficiency) ............. $ (1,486) $ (9,129) $ 2,805 $ 3,293 $ 25,008
Total assets ............................. $ 12,728 $ 31,580 $ 37,462 $ 39,581 $ 40,999
Long-term debt, less current portion .....
$ 1,938 $ 1,428 $ 185 -- --
Notes payable-affiliates, less
current portion ................... -- $ 4,028 -- -- --
Total shareholders' equity ............ $ 170 $ 8,689 $ 32,885 $ 33,113 $ 34,410

(1) Dividends declared on Preferred Stock for the years ended December 31,
1997 and 1998 were $229,315 and $189,370, respectively, and are
included in interest expense.
(2) In February 1999, the Company completed an initial public offering
("IPO") of 3,350,000 shares of Common Stock at a price of $11.00 per
share. Of the 3,350,000 shares sold in the

-19-

IPO, 1,350,000 were sold by Venture Capital Corporation, a Cayman
Islands company, and the remaining 2,000,000 shares were sold by the
Company. The offering generated net proceeds to the Company of
$19,164,000, after deducting offering expenses of approximately
$1,296,000 paid by the Company.
(3) In December 1997 and June 1998, the Company paid dividends of $3.5
million and $1.1 million, respectively, to BIG. The Company currently
anticipates that all of its earnings will be retained for operating
purposes and does not anticipate declaring or paying any cash dividends
in the foreseeable future.

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

The following discussion and analysis should be read in conjunction
with the Company's Consolidated Financial Statements and the Notes thereto, as
well as the risk factors highlighted above in "Item 1. Business - Risk Factors".

OVERVIEW

Insurance Management Solutions Group, Inc. (together with its
subsidiaries, the "Company") is a holding company that was incorporated in the
State of Florida in December 1996 by Bankers Insurance Group, Inc. (together
with its subsidiaries, BIG), which contributed to the Company two of its
wholly-owned operating subsidiaries, Insurance Management Solutions, Inc.
("IMS") and Bankers Hazard Determination Services, Inc. ("BHDS") that were
previously formed in August 1991 and June 1988, respectively.

In July 1997, the Company acquired a 49% interest in Geotrac, Inc. and
in July 1998 acquired the remaining 51% interest. Geotrac was subsequently
merged into BHDS with the surviving company being known as Geotrac of America,
Inc ("Geotrac"). In January 1999, the Company acquired Colonial Claims. On
December 28, 2001, the Company sold Geotrac in exchange for $19 million in cash,
524,198 shares of the Company's Common Stock, and certain other contractual
considerations (see Item 1. Business - Geotrac Sale).

-20-

The Company provides outsourcing services to the property and casualty
("P&C") insurance industry with an emphasis on providing these services to the
flood insurance market. The Company's outsourcing services include policy and
claims administration (policy issuance, billing and collection functions, claims
adjusting and processing) as well as information technology services. BIG is the
Company's principal customer, accounting for approximately 60.2%, of the
Company's total revenues (including discontinued operations) and 82.6% of the
Company's outsourcing revenues from continuing operations in 2000 and
approximately 47.6% of the Company's total revenues and 67.0% of the Company's
outsourcing revenues in 2001. Big is a diversified group of P&C insurance
companies with premium writings in all 50 states. BIG's principal lines of
business include flood, homeowners and automobile insurance lines. From 1996 to
2001, BIG's total annual written premiums increased from $235 million to $351
million.

Prior to 1997, the Company's outsourcing services principally related
to information technology services provided to BIG on a cost reimbursement
basis. In 1997, the Company entered into service arrangements with BIG to
provide a broader menu of outsourcing services. These services primarily
consisted of policy and claims administration (including policy issuance,
billing and collection functions, claims adjusting and processing) and
information technology services provided for BIG's flood and homeowners
insurance lines of business. Revenues for these services were derived based on a
percentage of direct written premiums for policy administration services and
direct paid claims for claims administration services. The Company also provided
claims administration services for BIG's other insurance lines, excluding flood
and homeowners, on a cost reimbursement basis in 1997.

Effective January 1, 1998, the Company entered into a written service
agreement (collectively, the "Service Agreements") with each of BIC, BSIC and
FCIC, all direct or indirect subsidiaries of BIG. These service agreements
modified the existing arrangements to (i) expand the services provided by the
Company to include policy administration for certain automobile lines of
business, (ii) recognize claims outsourcing revenue based not on a cost
reimbursement basis, but rather on a percentage of earned premiums and, with
respect to certain types of claims, a percentage of incurred losses, and (iii)
implement a change in fee structure from a percentage of incurred loss to a
percentage of earned premiums with respect to homeowners claims services. These
changes were negotiated in order to effect more uniform revenue recognition. To
obtain BIG's agreement to such changes, the Company, in turn, agreed to the
revised fee structure with respect to homeowners claims services.

-21-

On April 13, 2001, the Company entered into a Letter Agreement with
BIG, BIC, BSIC, and FCIC (the "Letter Agreement"). Pursuant to the Letter
Agreement, the Service Agreements were amended effective June 1, 2001 to,
among other things, modify certain of the service fees payable thereunder and
eliminate data and technical support services from the administrative services
to be provided by the Company thereunder. If the amendments to the Service
Agreements had been in effect for the fiscal year ended December 31, 2000, the
Company's affiliated outsourcing revenues, which totaled approximately $38
million on an actual basis, would have been approximately $30 million on a pro
forma basis. See "Certain Relationships and Related Transactions - Letter
Agreements".

Effective as of October 1, 2001, the Company entered into a new service
agreement with BIC, BSIC and FCIC (the "New Service Agreement"). The New Service
Agreement replaced the Service Agreements, as amended by the Letter Agreement.
See "Future Trends" below and "Item 13. Certain Relationships and Related
Transactions-New Service Agreement".

Outsourcing service revenues are principally derived from written and
earned insurance premiums. Such premiums are affected by seasonal fluctuations
in volume of new and renewal policies received. Outsourcing service revenues
generated from the flood and homeowners lines of business increased in the late
second quarter and peaked during the third quarter in conjunction with home
sales. In the Company's experience, increased levels of flood insurance
purchases occur in the Southeastern United States during the second and third
quarters in anticipation of the onset of the hurricane season.

Federal residential flood insurance rates are set by FEMA and are the
same for all flood insurance carriers. Consequently, policyholder retention is
typically dependent upon the quality of customer service being offered. Higher
retention or renewal rates provide more consistent recurring revenues. Flood
insurance carriers often utilize independent agents to sell their product.
Competing flood insurance carriers offering more attractive commissions to such
agents pose a significant risk for declines in business.

During periods of peak demand for flood and homeowners insurance, the
number of policies waiting to be issued increases. This backlog represents
future service fee income to be earned, generally within one month.

The cost of outsourcing services primarily includes wages and related
benefits associated with personnel who perform policy and claims administration
services, as well as postage and telephone charges, data processing and other
direct costs associated with providing service to customers.

Selling, general and administrative expenses include the wages and
related benefits of sales and marketing, executive, finance and accounting
personnel, as well as other general operating costs. In addition, wages and
related benefits of the management staff of each processing department (i.e.
Customer Service, Claims, and Information Services) are included in selling,
general and administrative expenses.

Management services from Parent were previously charged to the Company
under an administration agreement with BIG for common costs that were incurred
by BIG. These common costs included human resources, legal, corporate planning
and communications, cash management, certain executive management and rent. On
April 13, 2001, the Company and BIG entered into the Letter Agreement. Pursuant
to the Letter Agreement, the administration agreement was terminated effective
April 1, 2001.

During the year ended December 31, 2001, the Company's outsourcing
services business segment generated operating income of approximately $4.0
million. This operating income was primarily due to an increase in revenue from
the impact of Tropical Storm Allison, which storm occurred in June 2001. In an
effort to improve the operating results of its outsourcing services

-22-

business segment, the Company reduced its workforce by approximately 50
employees in February 2001.

FUTURE TRENDS

Effective October 1, 2001, the Company entered into the New Service
Agreement with BIC, BSIC and FCIC. The New Service Agreement replaced the
Service Agreements, as amended by the Letter Agreement. Pursuant to the New
Service Agreement, the Company provides policy administration, claims
administration and data processing services to such entities in connection with
their flood, homeowners and automobile lines of business, and claims
administration and data processing services for all such entities' other
property and casualty lines of business.

Under the New Service Agreement, each entity pays the Company as
follows: (1) for its policy administration services a monthly fee based upon
direct written premiums for the flood, homeowners and automobile insurance
programs; (2) for its claims administration services a monthly fee based upon
direct earned premiums for the property, casualty, automobile property,
automobile casualty and flood insurance programs (in addition, a monthly fee
based upon direct incurred losses is charged for flood claims administration and
a reimbursement not to exceed 5% of direct incurred losses from a single event
in excess of $2 million is charged to property claims); (3) for its data
processing services, a monthly fee based upon direct written premiums for all
insurance programs; and (4) for certain customer services such as mailroom,
policy assembly, records management and cash office a monthly fee based upon
direct written premiums (except, if provided in connection with their flood,
homeowner and automobile insurance lines, where no such fees are imposed). The
New Service Agreement is for an initial term of five years, subject to
termination thereafter upon 90 days written notice. The New Service Agreement
further provides for the renegotiation of rates in good faith after the first
three years of the initial term.

The New Service Agreement modified the existing arrangements under the
Service Agreements by, among other things: (i) reducing the base fees charged
for certain lines of business; (ii) providing for tiered pricing based on the
volume of business processed electronically rather than manually; (iii)
providing for the pass-through to BIG of flood loss adjustment expenses for
outsourcing services; and (iv) providing for the pass-through to BIG of all
postage expenses and third-party information services incurred by the Company in
connection with its performance under the New Service Agreement. For financial
statement purposes these expense pass-throughs are considered revenues. If the
New Service Agreement had not been in effect, the Company's affiliated
outsourcing service fee and pass-through revenue for the fourth quarter of 2001,
which totaled approximately $5.9 and $1.1 million on an actual basis, would have
been approximately $6.5 and $-0- million under the previous agreement on a pro
forma basis. The Company believes that any anticipated reduction in affiliated
outsourcing service fee revenues resulting from the implementation of such
service fee changes under the New Service Agreement will be largely offset by
the corresponding increase in revenues from the pass-through (reimbursement) of
flood loss adjustment expenses, postage expenses and third-party information
services, although no assurances can be given in this regard. Moreover, as of
October 1, 2002, the Company will again become directly responsible for the
payment of postage expenses under the terms of the New Service Agreement. If the
New Service Agreement had not been in effect for the fourth quarter of 2001,
such postage expenses, which totaled $475,000 and were passed through to BIG,
would have been expenses borne by the Company.

-23-

The Company anticipates making further staffing and other related
expense reductions in response to the foregoing changes in BIG's business.
Nevertheless, if the Company is unable to replace these revenues or reduce its
expenses accordingly, the loss or material decrease in business from BIG could
have a material adverse effect on the Company's business, financial condition
and results of operations.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain
selected operating results of the Company as a percentage of total revenues:

-----------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------
1999 2000 2001
----- ----- -----

REVENUES
Outsourcing services ......................................... 100.0% 100.0% 100.0%
----- ----- -----
Total revenues ......................................... 100.0 100.0 100.0
----- ----- -----
EXPENSES
Cost of outsourcing services ................................. 73.7 80.5 73.4
Selling, general and administrative .......................... 12.6 15.8 12.2
Management services from Parent .............................. 4.1 4.0 2.3
Depreciation and amortization ................................ 6.1 6.5 5.2
----- ----- -----
Total expenses ......................................... 96.5 106.8 93.1
----- ----- -----
Operating income ................................................ 3.5 (6.8) 6.9
Interest income ................................................. 0.7 0.7 0.5
Interest expense ................................................ (0.5) (0.1) --
----- ----- -----
Income before income taxes and discontinued operations .......... 3.7 (6.2) 7.4
Provision/(Benefit) for income taxes ............................ 1.6 (1.6) 2.4
----- ----- -----
Income before discontinued operations ........................... 2.1 (4.6) 5.0
Income/(loss) from operations of discontinued operations ........ 3.9 3.6 4.2
Gain/(loss) on disposal of discontinued operations .............. -- -- (4.9)
----- ----- -----
Net income/(loss) ............................................... 6.0% (1.0)% 4.3%
===== ===== =====

COMPARISON OF THE YEARS-ENDED DECEMBER 31, 2001 AND 2000

CONTINUING OPERATIONS

Outsourcing Services Revenues. Outsourcing services revenues increased
21.7% to $57.1 million in 2001 from $46.9 million in 2000. The increase was
primarily attributable to the impact of Tropical Storm Allison, which storm
occurred during June 2001. The increase in revenue related to processing for
this storm was approximately $12.0 million, including an increase of $2.2
million in Affiliated Revenue and an increase of $9.8 million in Unaffiliated
Revenue (of which $7.8 million related to Colonial Claims, the Company's claims
catastrophe subsidiary). Additionally, revenues from the Company's automobile
line of business increased approximately $1.2 million in 2001 as compared to
2000 due principally to significant volume increases in new affiliated business
from its non-standard automobile line. The foregoing increases were partially
offset by a decrease in revenue from a third-party outsourcing customer for
which the Company has only been processing run-off business since the beginning
of 2001.

-24-

Cost of Outsourcing Services. Cost of outsourcing services increased
11.1% to $41.9 million in 2001 from $37.7 million in 2000. As a percentage of
outsourcing services revenues, cost of outsourcing services decreased to 73.4%
in 2001 from 80.4% in 2000. The increase in the dollar amount of cost of
outsourcing services was primarily attributable to an increase in revenue from
the Company's claims catastrophe subsidiary, which pays approximately 70% of
each dollar of revenue received to the independent adjusters who adjust the
claims on such subsidiary's behalf. The increase also resulted from the addition
of a new document imaging system and the opening of a new document output center
in late 2000, with related new costs for equipment and services. The increase
was partially offset by a decrease of $3.8 million in payroll costs due to two
staff reductions completed in late 2000 and early 2001 and the reduction of the
Company's information technology staff in June 2001, coupled with a decrease in
contract labor/consulting costs of $779,000.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased 6.8% to $6.9 million in 2001 from $7.4 million
in 2000. This decrease of $500,000 was primarily attributable to a decrease in
payroll costs as a result of previously-noted staff reductions and the
completion of certain severance payment obligations, partially offset by the
continued assumption of certain administrative services that were previously
provided to the Company by BIG under a management service agreement and a
$200,000 provision recorded during the fourth quarter related to billing
adjustments under the New Service Agreement and already paid to the Company by
BIG.

Management Services from Parent. Management services from Parent
decreased 31.6% to $1.3 million in 2001 from $1.9 million in 2000. The decrease
was primarily related to the assumption of certain administrative services,
including human resources, which were previously provided to the Company by BIG
under a management service agreement.

Interest Expense. Interest expense decreased 90.2% to $6,000 in 2001
from $61,000 in 2000. This decrease resulted primarily from the payment of
substantially all of the Company's remaining outstanding debt obligations
during 2000 and 2001. The nominal amount booked for the period relates to
expenses for capital leases for information technology equipment; these leases
expired during the fourth quarter of 2001.

Provision/(Benefits) for Income Taxes. The Company's effective income
tax/(benefit) rates were 32.4% and (25.1%) in 2001 and 2000, respectively. The
effective tax/(benefit) rates reflect various non-deductible items, including
goodwill recognized in connection with the acquisition of Colonial Claims in
January 1999. For additional information on the reconciliation of the Company's
effective income tax rate to the federal statutory income tax rate, see "Note 10
- Income Taxes", in "the Notes to the Consolidated Financial Statements".

DISCONTINUED OPERATIONS

For selected financial information on discontinued operations, see
"Note 3. - Discontinued Operations", in the "Notes to Consolidated Financial
Statements".

Income from discontinued operations, net of income tax, increased 41.2%
to $2.4 million in 2001 from $1.7 million in 2000 and is comprised of the
following:

-25-

Flood Zone Determination Services Revenue. Flood zone determination
services revenue increased 28.1% to $21.9 million in 2001 from $17.1 million in
2000. The increase was primarily attributable to an increase in the number of
flood zone determinations processed by Geotrac during 2001 as compared to 2000.
The increase in the number of flood zone determinations processed was primarily
due to a continued low mortgage interest rate market. These attractive interest
rates resulted in a corresponding increase in mortgage refinancing activity and
loan originations, which historically drive the demand for flood zone
determinations.

Cost of Flood Zone Determination Services. Cost of flood zone
determination services increased 18.2% to $9.1 million in 2001 from $7.7 million
in 2000. As a percentage of flood zone determination services revenues, cost of
flood zone determination services decreased to 41.6% for 2001 from 45.0% in
2000. The increase in the dollar amount of cost of flood zone determination
services was primarily attributable to corresponding increases in revenues
related to flood zone determinations.

The cost of flood zone determination services is exclusive of a fourth
quarter of 2001 write-off of capitalized software of approximately $1.3 million.
Principally during the fourth quarter of 2001, Geotrac's management, with
Geotrac's Board approval, decided to abandon further development of many
components of a new software system that had been in process since 1999. The
decision was based on various factors including funding limitations, other
available strategies, and technical difficulties.

COMPARISON OF THE YEARS ENDED DECEMBER 31, 2000 AND 1999

CONTINUING OPERATIONS

Outsourcing Services Revenues. Outsourcing services revenues decreased
11.2% to $46.9 million in 2000 from $52.8 million in 1999. The decrease was
attributable in part to the fact that revenue generated under an affiliated
technical support services arrangement decreased to $0 in 2000 from $1.3 million
in 1999. The decrease in outsourcing services revenues also was attributable to
the expiration as of December 31, 1999 of certain minimum service fee
arrangements established effective April 1, 1999 with affiliated insurers to
compensate the Company for maintaining an infrastructure to process certain
lines of business of affiliated insurers that had not grown as rapidly as
originally anticipated. If such minimum service fee requirements with respect to
said lines of business had not been implemented as of April 1, 1999, aggregate
affiliated outsourcing services revenues, which totaled $41.5 million in 1999,
would have been $39.7 million in accordance with the terms of the affiliated
service agreements as in effect prior to April 1, 1999.

The decrease in outsourcing services revenues was also due to a
decrease in the volume of flood and wind damage claims administered by the
Company's outsourcing operations during the year 2000 as compared to 1999.
During 2000, the Company recognized revenues of approximately $4.6 million
primarily from the administration of property damage claims resulting from a
tropical depression that caused extensive flooding, which storm occurred during
the fourth quarter of 2000. In comparison, the Company recognized revenues
totaling approximately $9.6 million during 1999 from the administration of
property damage claims resulting from Hurricane Georges, which storm occurred in
September 1998, and from Hurricanes Floyd and Irene, which storms occurred
during the fourth quarter of 1999. Additionally, a decline in the volume of
automobile premium processed on behalf of the Company's affiliated customers
contributed to the decrease in outsourcing services revenues during 2000. These
decreases in outsourcing services revenues were partially offset by (i) an
increase in outsourcing services revenues generated under an automobile claims
processing agreement, entered into April, 2000, with an unaffiliated customer,
(ii) an increase in flood premium processed on behalf of the Company's
unaffiliated customers,

-26-

and (iii) an increase in flood, homeowners and commercial premium processed on
behalf of the Company's affiliated customers.

Cost of Outsourcing Services. Cost of outsourcing services decreased
3.1% to $37.7 million in 2000 from $38.9 million in 1999. As a percentage of
outsourcing services revenues, however, cost of outsourcing services increased
to 80.4% in 2000 from 73.7% for the corresponding period in 1999 primarily as a
result of the decrease in the dollar amount of outsourcing services revenues in
2000 as compared to 1999. The decrease in the dollar amount of cost of
outsourcing services was primarily attributable to a decrease in revenue from
the Company's claims catastrophe subsidiary, which pays approximately 70% of
each dollar of revenue received to the independent adjusters who adjust the
claims on such subsidiary's behalf. The decrease in the dollar amount of
expenses from the Company's claims catastrophe subsidiary was partially offset
by (i) increases in the Company's personnel costs due to staff additions and the
use of contract programmers to develop and staff new unaffiliated programs and
(ii) an increase in facilities costs due to the occupancy of the Company's new
operating and call center facility.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 12.1% to $7.4 million in 2000 from $6.6
million in 1999. The increase in selling, general and administrative expenses
was primarily attributable to (i) the continued assumption of certain
administrative services, including human resource, agency accounting, cash
management and legal services that were previously provided to the Company under
the management service agreement with BIG, and (ii) the recognition of $338,000
in additional compensation expense (of which approximately $102,000 relates to
1999) resulting from the vesting of benefits payable to certain current and
former officers and directors of the Company under the Amended and Completely
Restated Phantom Stock Plan (the "BFC Plan") of Bankers Financial Corporation
("BFC"), the parent corporation of BIG, and the Amended and Restated Phantom
Stock Plan (the "VCC Plan") of Venture Capital Corporation ("VCC"). The
foregoing compensation charge is a non-recurring, non-cash item to the Company,
as all such benefits under such plans were fully vested as of September 30, 2000
and constitute the respective obligations of BFC and VCC, not the Company. In
addition, the offset to such compensation expense is an increase to additional
paid-in capital, since the ultimate cash obligations under these plans are that
of BFC and VCC, respectively, and not of the Company.

Management Services from Parent. Management services from Parent
decreased 13.6% to $1.9 million in 2000 from $2.2 million in 1999. This decrease
was primarily related to the continued assumption by the Company of certain
administrative services, including human resources, agency accounting, cash
management and legal services, that were previously provided to the Company
under the management service agreement with BIG. Such decrease was partially
offset by both an increase in rent expense from BIG as a result of an annual
rent escalation and an increase in the square footage being leased.

Interest Expense. Interest expense decreased 76.1% to $61,000 in 2000
from $255,000 in 1999. This decrease was primarily related to the early
repayment of most of the Company's debt obligations during 1999 from the net
proceeds received by the Company from its initial public offering in February
1999.

Provision for Income Taxes. The Company's effective income
tax rates were 25.1% and 42.5% in 2000 and 1999, respectively. The decrease in
the effective tax rate during 2000 reflects lower pretax income as well as
various non-deductible items, including goodwill recognized in connection with
the acquisition of Colonial Claims in January 1999.

-27-

DISCONTINUED OPERATIONS

Income from Discontinued Operations, net of income tax, decreased 19.0%
to $1.7 million in 2000 from $2.1 million in 1999, related to the following:

Flood Zone Determination Services Revenues. Flood zone determination
services revenues decreased 10.9% to $17.1 million in 2000 from $19.0 million in
1999. This decrease was primarily attributable to the termination of the
Company's "life-of-loan" insurance policy, effective April 1, 1999, under which,
prior to the termination of the policy, the Company was compensated for
performing flood zone re-determinations for certain existing customers. Prior to
the termination of the life-of-loan policy, the Company paid an insurance
premium for every flood zone determination issued which required life-of-loan
tracking. In exchange for the premium, the Company received a fixed amount for
every flood zone determination that had to be reissued as a result of a change
in the underlying flood zone classification of a property. Additionally, a
decrease in the average selling price per flood zone determination, resulting
from (i) increased pricing pressures and (ii) an increase in the number of
automated flood zone determinations processed by the Company on behalf of other
flood zone vendors at reduced rates, contributed to the decrease in flood zone
determination services revenues during 2000. These decreases in flood zone
determination services revenues were partially offset by an increase in number
of flood zone determinations processed during 2000 as compared to 1999.

Cost of Flood Zone Determination Services. Flood zone determination
services decreased 4.9% to $7.7 million in 2000 from $8.1 million in 1999. As a
percentage of Flood zone determination services revenues, cost of Flood zone
determination services increased to 45.0% in 2000 from 42.2% in 1999. The
increase resulted primarily from the decrease in the dollar amount of flood zone
determination services revenues during 2000 as compared to 1999, partially
offset by (i) various production workflow changes made during 1999 that enabled
the Company to increase employee productivity and reduce operating expenses,
primarily personnel related costs, and (ii) increased utilization of a flood
zone determination vendor, located in India, which has been able to perform
manual flood zone determinations at costs significantly below U.S. market rates.

LIQUIDITY AND CAPITAL RESOURCES

During 2001, the Company's principal sources of liquidity consisted of
cash on-hand, cash flows from operations, and cash proceeds from the sale of the
Company's Geotrac subsidiary in late December 2001. Prior to 2001, the Company
funded its operations through cash generated from operations, receipt of service
fees advanced from BIG and available borrowings under the Company's revolving
line of credit (which line of credit was terminated by the bank in December
2000). Bank borrowings were used to finance fixed asset purchases.

The Company received net cash proceeds of approximately $18.2 million
as a result of the sale of its Geotrac subsidiary in late December 2001. Prior
to the consummation of the sale of Geotrac, the Company was party to a
Corporate Governance Agreement, dated July 31, 1998, with Geotrac and Daniel J.
White ("Mr. White"), setting forth certain terms and conditions pertaining to
the operation of Geotrac. Pursuant to this Corporate Governance Agreement, Mr.
White could impede the Company's ability to access excess cash balances
retained by its Geotrac subsidiary.

On April 13, 2001, the Company entered into a Commitment Letter to
advance service fee payments (the "Commitment Letter") with BIG pursuant to
which BIG has agreed to advance to the Company, beginning June 1, 2001, up to
$1.5 million per month as a prepayment of service fees due by BIG and its
affiliates under the Service Agreements. Such advances are available to the
Company beginning June 1, 2001 continuing through December 1, 2002 and shall be
payable upon demand by the Company. Any funds advanced by BIG to the Company
under the Commitment Letter shall constitute a prepayment of, and shall be
credited toward, the service fees charged to BIG by the Company during the month
following such advance.

-28-

On August 14, 2001, the Company entered into a Credit and Security
Agreement with BIG (together with the related loan documentation, the "Credit
Agreement"), pursuant to which the Company established a short-term, secured
line of credit in favor of BIG in the amount of up to $5.0 million (the "Line of
Credit"). The principal purpose of the Line of Credit is to assist BIG, the
Company's principal customer and shareholder, with certain short-term working
capital needs. Pursuant to the Credit Agreement, all unpaid principal and
interest became due and payable in full on February 28, 2002. As of such date,
BIG owed the Company an aggregate of approximately $5.0 million under the Line
of Credit. On March 14, 2002, the Company and BIG amended the Credit Agreement
(the "Amended Credit Agreement") to extend the Line of Credit until May 31,
2002. Pursuant to the Amended Credit Agreement, interest is payable monthly on
amounts outstanding under the Line of Credit at an annual rate equal to the
Prime Rate (4.75% at December 31, 2001) as defined in the Amended Credit
Agreement, plus 1.5%. As of March 31, 2001, the aggregate principal amount
outstanding under the Line of Credit was $5.0 million.

The Line of Credit is secured by (i) a first lien security interest in
all accounts and contract rights of Bankers Underwriters, Inc., a wholly-owned
subsidiary of BIG ("BUI"), with insurance agents (including but not limited to
general agents with respect to the sale of federal flood insurance)
(collectively, the "Flood Book"), and (ii) an option (the "Option") to purchase
from BIG the outstanding capital stock, consisting of 10,898 shares (the "Option
Shares") of common stock $318 par value per share, of FCIC, a New York insurance
company licensed in all fifty states. As of March 31, 2002, management of the
Company believes the fair market value of the Flood Book exceeds the aggregate
principal amount of the Line of Credit.

The Company has been advised by BIG that it is considering various
methods of satisfying its obligations under the Line of Credit, including the
possible sale of certain of its assets. No assurances can be given, however,
that payment in full of all amounts due and owing under the Line of Credit will
be received on a timely basis. See "Item 13. Certain Relationships and Related
Transactions-Secured Line of Credit".

The Company believes that cash on-hand (including the net cash
proceeds from the Geotrac sale) and cash flows from operations will be
sufficient to support the Line of Credit and to satisfy the Company's currently
anticipated working capital requirements for the foreseeable future. See "Recent
Trends" above.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has not entered into any transactions using derivative
financial instruments or derivative commodity instruments and believes that its
exposure to market risk associated with other financial instruments (such as
variable rate debt) is not material.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following financial statements of the Company and its independent
certified public accountants' report are set forth on pages F-1 through F-45 of
this report:

Report of Independent Certified Public Accountants

Consolidated Balance Sheets as of December 31, 2000 and 2001

Consolidated Statements of Income for the years ended December 31,
1999, 2000 and 2001

Consolidated Statement of Shareholders' Equity for the years ended
December 31, 1999, 2000 and 2001

Consolidated Statements of Cash Flows for the years ended December 31,
1999, 2000 and 2001

Notes to Consolidated Financial Statements

Report of Independent Certified Public Accountants on Schedule I

Schedule I -- Condensed Financial Information of Registrant

Notes to Condensed Financial Information of Registrant

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

The Company's Board of Directors consists of eight members divided into
three classes, with the members of each class serving three-year terms expiring
at the third annual meeting of shareholders. The following table sets forth
information, as of March 18, 2002, regarding the directors and executive
officers of the Company.

TERM AS
DIRECTOR
NAME AGE POSITION EXPIRES
---- --- -------- --------

David M. Howard 40 President, Chief Executive Officer and Director 2001*
David K. Meehan 55 Chairman of the Board 2002
Anthony R. Marando 44 Chief Financial Officer and Secretary N/A
Robert G. Gantley 46 Senior Vice President and Chief Operating Officer N/A
Robert M. Menke 68 Director 2003
John A. Grant, Jr. 58 Director 2002
William D. Hussey 68 Director 2003
E. Ray Solomon 72 Director 2003
Alejandro M. Sanchez 43 Director 2001*
John S. McMullen 58 Director 2001*

------------

*The Company did not hold an annual meeting of shareholders in 2001.
Thus, each director whose term was to expire in 2001 will remain as a director
until his successor is duly elected and qualified and will stand for reelection
at the next annual meeting of shareholders of the Company.

DAVID M. HOWARD has served as a Director of the Company since June
2000, as President of the Company since August 1999, and as Chief Executive
Officer of the Company since January 2000. Prior to joining the Company, he
spent eleven years with BIG. From October 31, 1998 until assuming his duties
with the Company, Mr. Howard served as Senior Vice President of each of BIG's
insurance subsidiaries, namely Bankers Insurance Company ("BIC"), Bankers Life
Insurance Company ("BLIC"), Bankers Security Insurance Company ("BSIC") and
First Community Insurance Company ("FCIC"). From October 1996 until assuming his
duties with the Company, he also served as Senior Vice President of BIG and
President of Bankers Insurance Services, Inc., a subsidiary of BIG. Mr. Howard
served as President of Bankers Hazard Determination Services, Inc., the flood
zone determination services subsidiary of the Company that was merged with
Geotrac, from October 1995 to July 1998, and as Executive Vice President of
Bankers Insurance Services, Inc. from December 1991 to October 1996. He also
served as a director of Geotrac from July 1998 to December 2001. Prior to
joining BIG, Mr. Howard spent several years as an officer in the United States
military. He is active in industry organizations and is a member of the Council
of Company Executive Officers.

DAVID K. MEEHAN has served as the Chairman of the Board of Directors
and as a Director of the Company since December 1996. He also served as
President and Chief Executive Officer of the Company from December 1996 to
August 1999 and January 2000, respectively. Mr. Meehan joined BIG in 1976 as
Corporate Secretary. He was appointed President of BIG in 1979 and served in
such capacity until February 1999. He is currently Vice Chairman of the Board of

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BIG. Mr. Meehan is also Vice Chairman of various direct and indirect
subsidiaries of BIG including BIC, BSIC, FCIC and BLIC. Mr. Meehan has served on
the Board of Governors of each of the Florida Joint Underwriting Association,
the Florida Property and Casualty Joint Underwriting Association and the Florida
Residential Property and Casualty Joint Underwriting Association. Mr. Meehan is
past Director/Vice Chairman of the Florida Insurance Council and past Chairman
and President of the Florida Association of Domestic Insurance Companies.

ANTHONY R. MARANDO has served as Chief Financial Officer of the Company
since May 2001 and as Secretary of the Company since November 2001. Prior to
joining the Company, Mr. Marando served as Chief Operating Officer of the
e-Insurance Division of Selectica, Inc., a software development and e-commerce
company, from August 2000 to March 2001. Mr. Marando also served as Director of
U.S. Financial Reporting for Canada Life Assurance Company from May 1999 to May
2000 and, prior to that time, served in various financial and administrative
capacities with MetLife, Inc. from 1986 to December 1998, most recently as
Assistant Vice President in MetLife's Corporate Controller's Department.

ROBERT G. GANTLEY has served as Chief Operating Officer and Senior Vice
President of the Company since January 2000. Prior to that time, Mr. Gantley
served as Vice President - Claims of Insurance Management Solutions, Inc.
("IMS"), the Company's principal outsourcing subsidiary, from August 1997 to
January 2000. From August 1997 to June 1998, he also served as Vice President -
Claims of the Company. Mr. Gantley joined BIG in October 1996 and served as Vice
President - Claims of BIC until February 1999. Prior to joining BIG, he was
Assistant Director of the Massachusetts State Lottery from 1993 to 1996 and
spent over fifteen years with Allstate Insurance Group, most recently as a
Territorial Claims Manager from 1989 to 1993. Mr. Gantley has almost twenty
years experience in the insurance industry.

ROBERT M. MENKE has served as a Director of the Company since December
1996. Mr. Menke founded BIG, a holding company chartered in Florida and the
Company's principal shareholder, in 1976 and served as its Chairman of the Board
from 1979 until December 2000. He was honored as "Insurance Man Of The Year" in
1986 by the Florida Association of Domestic Insurance Companies. Mr. Menke is
also a member of the Florida Insurance Council. Mr. Menke was previously
Chairman of the Board for BIG and Bankers International Financial Corporation,
an indirect parent company of BIG. He also served as Chairman of the Board of
each of BIC, BSIC, FCIC and BLIC until February 2002. Mr. Menke is a director of
the Florida Windstorm Association and First Community Bank of America.

JOHN A. GRANT, JR. has been a Director of the Company since December
1996. Since September 2001, Mr. Grant has served as Executive Vice President of
Liquidmetal Technologies, a leading developer of products made from amorphous
alloys. Mr. Grant was formerly a partner with the law firm of Harris, Barrett,
Mann and Dew, retiring in 2000. Mr. Grant was managing partner of the Tampa
office and specialized in business and real property law. From 1986 to 2000 he
was a member of the Florida State Senate, where he served as Chairman of the
Judiciary Committee and where he previously served as the Chairman of the
Banking and Insurance, Commerce, Criminal Justice, Education, and Government
Reform committees. Mr. Grant has been listed in Who's Who in America and served
as an advisor in the United States Department of Education, during the Reagan
administration. Mr. Grant has also served on the Advisory Board of the United
States Small Business Administration.

WILLIAM D. HUSSEY has served as a Director of the Company since
December 1996. Mr. Hussey is a retired President and Chief Executive Officer of
the Florida League of Financial Institutions and is a former advisor for the
Florida Bankers Association.

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E. RAY SOLOMON, Ph.D., CLU, has served as a Director of the Company
since December 1996. Dr. Solomon is a retired Professor and the former Dean of
the College of Business at Florida State University.

ALEJANDRO M. SANCHEZ has served as a Director of the Company since July
1998. Mr. Sanchez is also Chief Executive Officer of the Florida Bankers
Association and has served in such capacity since February 1998. From November
1993 to January 1998, he served as Vice President for Government Affairs of the
Florida Bankers Association. He previously served as Senior Corporate Attorney
for GTE Information Services in Tampa, Florida. Most recently, President George
W. Bush nominated Mr. Sanchez to be a member of the Federal Retirement Thrift
Investment Board. This appointment is pending U.S. Senate confirmation.

JOHN S. MCMULLEN has served as a Director of the Company since January
2001. Mr. McMullen is a retired President and Chief Executive Officer of Florida
Bank of Tampa (including its predecessor, First National Bank of Tampa (f/k/a
Enterprise National Bank of Tampa)), having served in such capacity from 1992
until 1999. He also served as a director of Florida Banks, Inc., a
publicly-traded bank holding company and the parent company of Florida Bank of
Tampa, from August 1998 to March 1999. Prior to joining First National Bank of
Tampa in 1992, Mr. McMullen spent 22 years with First Florida Bank, N.A. serving
in various capacities, including Senior Vice President/Hillsborough Commercial
Banking Group from 1990 to 1992 and Area Executive Vice President/Pinellas
County from 1985 to 1990. Since October 2001, Mr. McMullen has served as
Vice-Chairman of the Board of PowerCerv Corporation, a publicly-owned
Tampa-based company. Mr. McMullen is also Treasurer and a Director of Merchants
Association of Florida, Inc.

Messrs. Robert M. Menke and David K. Meehan are also members of the
respective Boards of Directors of various direct and indirect subsidiaries of
BIG including BIC, BSIC, FCIC and BLIC, which are all wholly-owned direct or
indirect subsidiaries of BIG.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

To the Company's knowledge, during the year ended December 31, 2001,
the executive officers and directors of the Company and all persons who own more
than ten percent (10%) of the Company's Common Stock filed with the Securities
and Exchange Commission on a timely basis all required reports relating to
transactions involving equity securities of the Company beneficially owned by
them. The Company has relied on written representations of its executive
officers and directors and copies of reports furnished to the Company in
providing this information.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth certain information concerning
compensation paid to or earned by the Company's Chief Executive Officer and each
of the Company's five other current or former executive officers for the years
ended December 31, 2001, 2000 and 1999.

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Annual Compensation (1)
----------------------------------------------------------------------
Other Other
Annual Compensation
Name and Principal Position Year Salary Bonus Compensation (2) (3)
--------------------------- ---- --------- -------- ---------------- ------------

David M. Howard ........................... 2001 $ 225,646 $ 70,765 -- $ 6,800
President and Chief Executive Officer (4) 2000 $ 229,678 -- -- $ 8,436
1999 $ 71,094 $ 50,000 -- $ 2,659

David K. Meehan ........................... 2001 $ 75,292 -- -- $ 3,570
Chairman of the Board (5) 2000 $ 75,292 -- -- $ 3,570
1999 $ 148,893 $ 32,000 -- $ 6,587

Christopher P. Breakiron .................. 2001 $ 154,483 -- -- $ 2,315
Chief Financial Officer, Secretary and 2000 $ 149,519 -- -- $ 5,942
Treasurer (6) 1999 $ 97,806 $ 15,000 -- $ 4,512

Anthony R. Marando ........................ 2001 $ 121,730 -- -- $ 1,579
Chief Financial Officer and Secretary (7) 2000 -- -- -- --
1999 -- -- -- --

Robert G. Gantley ......................... 2001 $ 165,009 -- -- $ 6,093
Senior Vice President and Chief 2000 $ 149,424 -- -- $ 5,839
Operating Officer (8) 1999 -- -- -- --

Daniel J. White ........................... 2001 $ 148,356 $ 2,769
President and Chief Executive Officer of 2000 $ 150,000 -- -- $ 4,154
Geotrac (9) 1999 $ 150,000 -- -- $ 5,714

-----------

(1) During the years ended December 31, 1999, 2000 and 2001, certain of the
executive officers of the Company were also executive officers or
employees of BIG, and, in certain instances, BIG paid a portion of
their respective compensation. The amounts reflected in the table above
were all paid to the respective executive officers by the Company.
During the years ended December 31, 1999, 2000 and 2001, all of the
executive officers of the Company spent substantially all of their time
on the Company's business and were compensated solely by the Company,
except that subsequent to August 19, 1999, Mr. Meehan spent 70% of his
time on BIG's business and was paid $96,312, $151,847 and $151,847 by
BIG for his service as an executive officer of BIG during the years
ended December 31, 1999, 2000 and 2001, respectively.

(2) Does not include the value of the perquisites provided to certain of
the named executive officers, which in the aggregate did not exceed 10%
of such officer's salary and bonus. Also excludes benefits, if any,
accrued to Messrs. Howard, Meehan, and Gantley under the Executive
Phantom Stock Plans of Bankers Financial Corporation, the parent of
BIG, and Venture Capital Corporation. No officers or directors of the
Company (with the exception of Robert M. Menke) are eligible to receive
additional grants under such Phantom Stock Plans.

(3) Reflects matching amounts paid by the Company under its 401(k) plan for
the year indicated.

(4) Mr. Howard became the President of the Company on August 19, 1999, and
the amounts listed for 1999 include compensation only from such time.

(5) Effective August 19, 1999, Mr. Meehan was succeeded by Mr. Howard as
President of the Company. Prior to such time, Mr. Meehan's annual base
salary pursuant to his Employment

-34-

Agreement was $258,000. Effective August 19, 1999 his annual base
salary was reduced to $75,000 for his services as Chairman of the
Board.

(6) Mr. Breakiron became the Chief Financial Officer, Secretary and
Treasurer of the Company on August 24, 1999. Prior to such time Mr.
Breakiron served as Vice President and Controller. Accordingly, the
amounts shown include all compensation received from the Company for
the year ended December 31, 1999. Effective April 17, 2001, Mr.
Breakiron resigned as Chief Financial Officer, Vice President,
Secretary and Treasurer of the Company. On April 12, 2001, the Company
and Mr. Breakiron entered into a Release and Separation Agreement and a
Consulting Agreement pursuant to which, among other things, Mr.
Breakiron served as a consultant to the Company through May 15, 2001.
See "Executive Compensation--Employment Agreements."

(7) Mr. Marando joined the Company effective April 1, 2001, and became the
Chief Financial Officer of the Company effective May 7, 2001. On
November 20, 2001, Mr. Marando was also appointed Corporate Secretary.
The amounts listed for 2001 include compensation from April 1, 2001
through year end.

(8) Mr. Gantley became the Chief Operating Officer of the Company on
January 18, 2000. Prior to such time, Mr. Gantley served as Vice
President of Claims. Accordingly, the amounts shown include all
compensation received from the Company for the year ended December 31,
2000.

(9) Upon the consummation of the sale of Geotrac on December 28, 2001, Mr.
White ceased to be an executive officer of the Company. Accordingly,
the amounts listed for 2001 include compensation only through such
date.

OPTION/SAR GRANTS IN PRIOR FISCAL YEAR

No stock options or SARs were issued to any of the executive officers
named in the Summary Compensation Table above during the year ended December 31,
2001.

The following table sets forth information with respect to aggregate
stock option exercises by the executive officers named in the Summary
Compensation Table during 2001 and the year-end value of unexercised options
held by such executive officers.

AGGREGATED OPTION/SAR EXERCISES IN CURRENT FISCAL YEAR
AND FY-END OPTIONS/SAR VALUE TABLE

VALUE OF UNEXERCISED
NUMBER OF NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS/SARS AT FY-END (#) OPTIONS/SARS AT FY-END ($)*
ACQUIRED ON REALIZED ------------------------------- ------------------------------
NAME EXERCISE ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------- ----------- -------- ----------- ------------- ----------- -------------

David M. Howard -- -- -- 60,000 -- --
David K. Meehan -- -- -- 25,000 -- --
Anthony R. Marando -- -- -- -- -- --
Robert S. Gantley -- -- -- 35,000 -- --

* The exercise prices per share of all options held by the named
executive officers exceeded the closing bid price per share of Common Stock (as
reported by the OTC Bulletin Board) as of December 31, 2001.

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EMPLOYMENT AGREEMENTS

Effective as of the completion of its initial public offering in
February 1999, the Company entered into an employment agreement with Mr. Meehan
pursuant to which he was originally paid an annual base salary of $258,000.
Effective August 19, 1999, Mr. Meehan resigned as President of the Company and
his annual base salary was reduced to $75,000 for his services as Chief
Executive Officer and Chairman of the Board. (In January 2000, he also resigned
as Chief Executive Officer of the Company.) The initial term of Mr. Meehan's
employment agreement expired in February 2002, but the agreement is subject to
automatic continuation until terminated by either party. Mr. Meehan's employment
agreement further provides that, if terminated by the Company without cause (as
defined therein), he shall be entitled to severance payments, payable in
accordance with the Company's usual payroll practices, equal to his then current
annual base salary. In the event Mr. Meehan secures employment during the twelve
months following termination, then the Company shall be entitled to a credit
against its obligation to make severance payments in the amount of 75% of the
base salary paid to him by his new employer during the twelve-month period
following termination by the Company.

Mr. Meehan's employment agreement provides that he shall be provided
benefits, such as health, life and disability insurance, on the same basis as
the Company's other employees. In addition, to the extent authorized by the
Board of Directors, Mr. Meehan also shall be entitled to participate in the
Company's bonus, stock option and other plans, if any. Mr. Meehan's agreement
further provides that, during the term of the agreement and for a period of two
years thereafter, Mr. Meehan will not, directly or indirectly, compete with the
Company by engaging in certain proscribed activities.

Effective June 19, 1998, the Company entered into an employment
agreement with Mr. Gantley pursuant to which he is currently paid an annual base
salary of $150,000. The initial term of Mr. Gantley's employment agreement
expired in June 2001, but the agreement is subject to automatic continuation
until terminated by either party. Mr. Gantley's employment agreement further
provides that, if he is terminated by the Company without cause (as defined
therein), he shall be entitled to severance payments, payable in accordance with
the Company's usual payroll practices, equal to his then current annual base
salary. In the event Mr. Gantley secures employment during the twelve months
following termination, then the Company shall be entitled to a credit against
its obligation to make severance payments in the amount of 75% of the base
salary paid to him by his new employer during the twelve-month period following
termination by the Company.

Mr. Gantley's employment agreement provides that he shall be provided
benefits, such as health, life and disability insurance, on the same basis as
the Company's other employees. In addition, to the extent authorized by the
Board of Directors, Mr. Gantley also shall be entitled to participate in the
Company's bonus, stock option and other plans, if any. Mr. Gantley's agreement
further provides that, during the term of the agreement and for a period of two
years thereafter, Mr. Gantley will not, directly or indirectly, compete with the
Company by engaging in certain proscribed activities.

Effective April 1, 2001, the Company entered into an employment
agreement with Mr. Marando pursuant to which he was paid a salary at a rate of
$171,080 annually. This employment agreement provided for a term of six months,
commencing April 9, 2001.

Effective as of October 1, 2001, the Company entered into a new
employment agreement with Mr. Marando pursuant to which he is currently paid a
salary at a rate of $171,080 annually. Mr. Marando's employment agreement
provides for a term of three years. Mr. Marando's

-36-

employment agreement further provides that, if he is terminated by the Company
without cause (as defined therein), he shall be entitled to severance payments,
payable in accordance with the Company's usual payroll practices, equal to his
then current salary for a period of twelve months. In the event Mr. Marando
secures employment during the twelve months following termination, then the
Company's obligation to make further severance payments will cease, except that
Mr. Marando shall be entitled to receive a minimum of six months severance.

Mr. Marando's employment agreement provides that he shall be provided
benefits, such as health, life and disability insurance, on the same basis as
other employees of the Company. In addition, to the extent authorized by the
Board of Directors, Mr. Marando also shall be entitled to participate in the
Company's bonus, stock option and other plans, if any. Mr. Marando's agreement
further provides that, during the term of the agreement and for a period of two
years immediately following termination of the agreement, Mr. Marando will not,
directly or indirectly, compete with the Company by engaging in certain
proscribed activities.

On April 12, 2001, the Company entered into a Release and Separation
Agreement with Mr. Breakiron, which provided for his resignation as Vice
President, Chief Financial Officer, Secretary and Treasurer, effective April 17,
2001. The Release and Separation Agreement also provided for severance payments
of up to $112,500 to be paid over a nine-month period commencing on May 16,
2001. Additionally, on April 12, 2001, the Company entered into a Consulting
Agreement with Mr. Breakiron, pursuant to which he provided various consulting
services to the Company from the date of his resignation through May 15, 2001.
The Company paid Mr. Breakiron an aggregate of $11,538 for services provided
under the Consulting Agreement.

STOCK OPTION PLANS

The Company currently maintains four stock option plans to attract,
motivate and retain key employees and members of the Board of Directors who are
not employees of the Company.

LONG TERM INCENTIVE PLAN. The Company currently maintains a Long Term
Incentive Plan (the "1999 Incentive Plan"). The 1999 Incentive Plan was created
to attract, retain and motivate participating employees of the Company and its
subsidiaries through awards of shares of Common Stock, options to purchase
shares of Common Stock and stock appreciation rights ("SARs"). The 1999
Incentive Plan has been approved by the Company's Board of Directors and
shareholders.

Pursuant to the 1999 Incentive Plan, all employees of the Company as a
group, including executive officers, have been granted options to purchase a
total of 570,000 shares of Common Stock at a weighted average price of $9.18 per
share. All of such options expire on the seventh anniversary of the date of
grant. All such options shall become exercisable 60% after three years, 20%
after four years and 20% after five years from the date of grant. The 1999
Incentive Plan is administered by the Compensation Committee of the Board of
Directors. Effective as of October 2000, no further grants of any kind may be
made under the 1999 Incentive Plan.

2000 STOCK INCENTIVE PLAN. In October 2000, the Company's Board of
Directors adopted the 2000 Stock Incentive Plan (the "2000 Incentive Plan"),
subject to shareholder approval. The 2000 Incentive Plan provides for the grant
of incentive or nonqualified stock options, SARs, and other stock-based awards.
No more than 1,000,000 shares of Common Stock, plus up to an additional 750,000
shares from the 1999 Incentive Plan that may become available as a result of
canceled, forfeited or expired awards under such plan, may be issued under the
2000 Incentive Plan. Awards may be issued to employees of the Company and its
subsidiaries, and consultants, advisors and others who perform services for the
Company or a subsidiary thereof. All options

-37-

and SARs are to be issued at the greater of the fair market value or "Net
Tangible Book Value Per Share" (as defined) and will expire on the tenth
anniversary of the date of grant or such earlier date(s) as the Compensation
Committee determines. As of December 31, 2001, there were no options outstanding
under the 2000 Incentive Plan. The 2000 Incentive Plan is administered by the
Compensation Committee of the Board of Directors.

NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN. The Company also maintains a
Non-Employee Directors' Stock Option Plan (the "1999 Director Plan") to secure
for the Company and its shareholders the benefits of the incentive inherent in
increased Common Stock ownership by the members of the Company's Board of
Directors who are not employees of the Company. The 1999 Director Plan has been
approved by the Company's Board of Directors and shareholders.

The 1999 Director Plan provides for the grant of nonqualified stock
options to purchase up to 7,200 shares of Common Stock in any three-year period
to members of the Board of Directors who are not employees of the Company. A
total of 200,000 shares of Common Stock may be issued pursuant to this plan. In
February 1999, each non-employee director was granted options to purchase 6,000
shares of Common Stock at $11.00 per share. Non-employee directors receiving
such options will become vested in options for the purchase of 800 shares of
Common Stock after the adjournment of each annual meeting of shareholders of the
Company, to the extent he or she has been granted options that have not yet
vested, and provided that he or she is then a non-employee director of the
Company. In addition, each non-employee director shall become vested in options
for the purchase of 400 shares of Common Stock upon the adjournment of each
regularly scheduled quarterly meeting of the Board of Directors (other than
following the annual meeting of shareholders), to the extent he or she has been
granted options that have not yet vested, and provided that he or she is then a
non-employee director of the Company. Notwithstanding the foregoing, Robert M.
Menke is not eligible to receive any option grants under the 1999 Director Plan.
In addition, no further grants shall be made under the 1999 Director Plan. All
options granted will have an exercise price equal to the fair market value of
the Common Stock as of the date of grant, will become exercisable upon vesting,
and will expire on the sixth anniversary of the date of grant. The 1999 Director
Plan is a formula plan and accordingly is intended to be self-governing. To the
extent questions of interpretation arise, they will be resolved by the Board of
Directors.

2000 NON-EMPLOYEE DIRECTOR STOCK PLAN. In October 2000, the Company's
Board of Directors adopted the 2000 Non-Employee Director Stock Plan (the "2000
Director Plan"), subject to shareholder approval. The 2000 Director Plan
provides for the automatic grant of nonqualified stock options to purchase up to
5,000 shares of Common Stock for each non-employee director who is elected,
re-elected or retained, commencing on the date of the Company's next annual
meeting of shareholders, and continuing annually thereafter on the date of each
succeeding annual meeting of shareholders. A total of 250,000 shares are
reserved for issuance pursuant to this plan. The 2000 Director Plan also permits
the Board of Directors to make additional discretionary grants of stock-based
awards to the non-employee directors, provided that only 100,000 of the total
reserved shares may be issued pursuant to discretionary awards. All options are
to be issued at an exercise price per share equal to the greater of the
Company's fair market value per share of Common Stock or "Net Tangible Book
Value Per Share" (as defined). The annual option grants vest on the first
anniversary following the date of grant, and expire on the tenth anniversary of
the date of grant unless terminated earlier pursuant to the provision of the
2000 Director Plan. The discretionary grants will be subject to such terms and
conditions as determined by the Board of Directors. As of December 31, 2001,
there were no options outstanding under the 2000 Director Plan. The 2000
Director Plan is intended to be

-38-

self-governing with respect to the annual option grants. With respect to the
discretionary grants, the 2000 Director Plan is administered by the Board of
Directors.

NON-QUALIFIED STOCK OPTION GRANTS. The Company's Board of Directors and
shareholders also have adopted a Non-Qualified Stock Option Plan (the
"Non-Qualified Plan"), pursuant to which non-qualified stock options to purchase
125,000 shares of Common Stock at a price per share of $11.00 were granted in
conjunction with the February 1999 initial public offering to certain then
executive officers of BIG, including options to purchase 25,000 shares each to
Robert M. Menke, a director of the Company, Robert G. Menke, a former director
of the Company, and David M. Howard, President, Chief Executive Officer and a
director of the Company. (The options granted to Mr. Howard were voluntarily
forfeited at the time Mr. Howard became President of the Company.) All of such
options expire on February 10, 2006, the seventh anniversary of the date of
grant. Options shall become exercisable 60% after three years, 20% after four
years and 20% after five years. The Non-Qualified Plan is administered by the
Compensation Committee of the Board of Directors of the Company.

DIRECTOR COMPENSATION

Directors who are executive officers of the Company receive no
compensation for service as members of either the Board of Directors or
committees thereof. Directors who are not executive officers of the Company
receive a quarterly retainer of $3,750, $1,000 for each Board of Directors
meeting attended and $150 ($200 in the case of a committee chairperson) for each
committee meeting attended, plus reimbursement of reasonable expenses. The
outside directors are also eligible to receive options to purchase Common Stock
under the 2000 Director Plan. See "Executive Compensation - Stock Option Plans."

COMMITTEES OF THE BOARD

The Board of Directors has established committees whose
responsibilities are summarized as follows:

AUDIT COMMITTEE. The Audit Committee is comprised of Messrs. Solomon
(Chairman), Hussey (Vice Chairman), Grant, Sanchez and McMullen and is
responsible for reviewing the independence, qualifications and activities of the
Company's independent certified public accountants and the Company's financial
policies, control procedures and accounting staff. The Audit Committee
recommends to the Board of Directors the appointment of the independent
certified public accountants and reviews and approves the Company's financial
statements. The Audit Committee is also responsible for the review of
transactions between the Company and any Company officer, director or entity in
which a Company officer or director has a material interest.

COMPENSATION COMMITTEE. The Compensation Committee is comprised of
Messrs. Solomon (Chairman), Hussey (Vice Chairman), Grant, Sanchez and McMullen
and is responsible for establishing the compensation of the Company's directors,
officers and other managerial personnel, including salaries, bonuses,
termination arrangements, and other executive officer benefits. In addition, the
Compensation Committee is responsible for the administration of the Company's
1999 Incentive Plan and 2000 Incentive Plan, including the recipients, amounts
and terms of stock option grants thereunder, and the Company's Non-Qualified
Stock Option Plan.

EXECUTIVE COMMITTEE. The Executive Committee is comprised of Messrs.
Meehan (Chairman), Howard (Vice Chairman), Menke, Grant, and McMullen. The
Executive Committee, to the fullest extent allowed by the Florida Business
Corporation Act (the "FBCA"), and subject to the powers and authority delegated
to the Audit Committee, the Compensation

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Committee and the Special Committee, has and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Company during intervals between meetings of the Board of
Directors. Pursuant to the FBCA, the Executive Committee shall not have the
authority to, among other things: approve actions requiring shareholder
approval, such as the sale of all or substantially all of the Company's assets;
fill vacancies on the Board of Directors or any committee thereof; adopt, repeal
or amend the Company's Bylaws; or, subject to certain exceptions, reacquire or
issue shares of the Company's capital stock.

SPECIAL COMMITTEE. A Special Committee of the Board of Directors was
appointed on January 30, 2002. The Special Committee is comprised of Messrs.
McMullen (Chairman), Grant, Hussey, Sanchez and Solomon, the Company's five
independent directors. The Special Committee was formed to evaluate possible
strategic alternatives for the Company. The alternatives that the Special
Committee may consider include but are not limited to: the possible sale of the
Company, the possible sale of certain assets of the Company, a possible debt or
equity financing, and/or a possible going-private transaction. The Special
Committee has retained an independent legal advisor and an independent financial
advisor to assist the Special Committee in considering and reviewing such
alternatives. No assurances can be given, however, as to whether any of such
alternatives will be recommended or undertaken or, if so, upon what terms and
conditions.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Compensation Committee was established in connection with
the Company's initial public offering in February 1999. The members of the
Compensation Committee are Messrs. Solomon (Chairman), Hussey (Vice Chairman),
Grant, and Sanchez. No member of the Compensation Committee is currently or was
formerly an officer or an employee of the Company or its subsidiaries. During
the year ended December 31, 2001, none of the executive officers of the Company
served on the board of directors or compensation committee of any other entity,
one of whose executive officers served either on the Board of Directors or on
the Compensation Committee of the Company.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

INTRODUCTION

Under the rules of the Commission, the Company is required to provide
certain information concerning compensation provided to the Company's chief
executive officer and its executive officers reported for the year ended
December 31, 2001. The disclosure requirements for the executive officers
include the use of tables and a report of the Committee responsible for
compensation decisions for the named executive officers, explaining the
rationale and considerations that led to those compensation decisions. The
Compensation Committee of the Board of Directors was formed in connection with
the Company's initial public offering in February 1999. Prior to such time, the
Board of Directors was responsible for these decisions.

COMPENSATION COMMITTEE ROLE

The Compensation Committee of the Board of Directors is currently
responsible for the Company's compensation program for its executive officers,
including the named executive officers. The Compensation Committee is
responsible for establishing the compensation of the Company's directors,
officers and other managerial personnel, including salaries, bonuses,
termination arrangements, and other executive officer benefits. The Compensation
Committee is responsible for the administration of the Company's 1999 Incentive
Plan and 2000 Incentive

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Plan, including the recipients, amounts and terms of stock option grants
thereunder, and the Non-Qualified Plan. Prior to the formation of the
Compensation Committee in connection with the Company's initial public offering
in February 1999, the entire Board of Directors performed most of these
functions.

COMPENSATION PHILOSOPHY

The compensation philosophy for executive officers conforms generally
to the compensation philosophy followed for all of the Company's employees. The
Company's compensation is designed to maintain executive compensation programs
and policies that enable the Company to attract and retain the services of
highly qualified executives. In addition to base salaries, executive
compensation programs and policies consisting of discretionary cash bonuses and
periodic grants of stock options are designed to reward and provide incentives
for individual contributions as well as overall Company performance.

The Compensation Committee monitors the operation of the Company's
executive compensation policies. Key elements of the Company's compensation
program include base salary, discretionary annual cash bonuses and periodic
grants of stock options. The Company's policies with respect to these elements,
including the basis for the compensation awarded the Company's chief executive
officer, are discussed below. While the elements of compensation described below
are considered separately, the Compensation Committee takes into account the
full compensation package offered by the Company to the individual, including
healthcare and other insurance benefits.

BASE SALARIES

The Company has established competitive annual base salaries for all
executive officers, including the named executive officers. Effective as of the
initial public offering, the Company entered into employment agreements with
each of its then executive officers. The only executive officers that currently
have employment agreements are David K. Meehan, Anthony R. Marando and Robert G.
Gantley. See "Executive Compensation--Employment Agreements." The annual base
salaries for each of the Company's executive officers, including the Company's
chief executive officer, reflect the subjective judgment of the Board of
Directors based on the consideration of the executive officer's position and
tenure with the Company, the Company's needs, and the executive officer's
individual performance, achievements and contributions to the growth of the
Company. Mr. Howard currently serves as Chief Executive Officer of the Company
at an annual base salary of $225,638. The Board of Directors and Compensation
Committee believe that this annual base salary is consistent with the salary
range established for this position based on the factors noted above and Mr.
Howard's prior experience and managerial expertise, his knowledge of the
Company's operations and the industry in which it operates.

ANNUAL BONUS

The Company's executive officers are eligible for discretionary annual
cash bonuses. In recognition of Mr. Howard's contributions to the Company,
including his work related to the sale of Geotrac, a bonus of approximately
$71,000 was paid to Mr. Howard for the year ended December 31, 2001. This bonus
was paid in the form of the forgiveness of certain indebtedness owed the Company
by Mr. Howard (grossed-up to reimburse Mr. Howard for associated income taxes).

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STOCK OPTIONS

Under the Company's 1999 and 2000 Incentive Plans, stock options may be
granted to key employees, including executive officers of the Company. The 1999
and 2000 Incentive Plans are administered by the Compensation Committee in
accordance with the requirements of Rule 16b-3. The Compensation Committee also
administers the Company's Non-Qualified Plan. During the year ended December 31,
2001, no options were granted to Mr. Howard under either of these plans.

SECTION 162(M) LIMITATIONS

Under Section 162(m) of the Code, a tax deduction by corporate
taxpayers, such as the Company, is limited with respect to the compensation of
certain executive officers unless such compensation is based upon performance
objectives meeting certain regulatory criteria or is otherwise excluded from the
limitation. Based upon the Compensation Committee's commitment to link
compensation with performance as described in this report, the Compensation
Committee currently intends to qualify compensation paid to the Company's
executive officers for deductibility by the Company under Section 162(m).

COMPENSATION COMMITTEE

E. RAY SOLOMON (CHAIRMAN)
WILLIAM D. HUSSEY (VICE CHAIRMAN)
JOHN A. GRANT, JR.
JACK S. MCMULLEN
ALEJANDRO M. SANCHEZ

MARCH 27, 2002

The report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this annual report on Form 10-K into any filing under the Securities Act of 1933
or under the Securities Exchange Act of 1934 (together, the "Acts"), except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.

PERFORMANCE GRAPH

The following line graph compares the Company's cumulative total
shareholder return with the cumulative total shareholder return of the S&P 500
Index and the NASDAQ Computer and Data Processing Index since the Company's
initial public offering in February 1999, assuming in each case an initial
investment of $100 on February 11, 1999. The stock price performance shown below
is not necessarily indicative of future price performance.

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COMPARISON OF 34 MONTH CUMULATIVE TOTAL RETURN*
AMONG INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
THE S&P 500 INDEX AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX

Cumulative Total Return
--------------------------------------------------------------------------------------------------
2/11/1999 3/99 6/99 9/99 12/99 3/00 6/00 9/00 12/00 3/01 6/01 9/01 12/01

INSURANCE MANAGEMENT
SOLUTIONS GROUP, INC. 100.00 81.82 77.27 27.27 22.73 21.31 15.91 12.50 7.39 4.16 11.36 21.55 23.18
S & P 500 100.00 100.77 107.87 101.14 116.19 118.85 115.69 114.57 105.61 93.09 98.53 84.07 93.06
NASDAQ COMPUTER & DATA
PROCESSING 100.00 99.76 103.76 108.05 181.81 179.55 146.56 135.57 83.71 61.08 79.52 48.64 67.43

* $100 invested on 2/11/99 in stock or index - including reinvestment of
dividends. Fiscal year ending December 31.

The stock price performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this annual report
on Form 10-K into any filing under the Acts, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under the Acts.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of March 18, 2002, with respect to: (i)
each of the Company's directors; (ii) each of the Company's executive officers
named in the Summary Compensation Table above; (iii) all directors and executive
officers of the Company as a group; and (iv) each person known by the Company to
own beneficially more than 5% of the Common Stock. Except as otherwise
indicated, each of the shareholders listed below has sole voting and investment
power over the shares beneficially owned.

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SHARES
BENEFICIALLY OWNED
------------------------
NAME SHARES PERCENT
---- --------- -------

Bankers Insurance Group, Inc.(1) .......................................... 8,349,884 65.2%
Western International Insurance Company (2) ............................... 700,000 *
David M. Howard ........................................................... 13,000 *
David K. Meehan ........................................................... 2,200 *
Anthony R. Marando ........................................................ -- *
Robert S. Gantley (3) .................................................... 1,700 *
Robert M. Menke (4) ....................................................... 162,200 *
John A. Grant, Jr. (5) ................................................... 41,000 *
William D. Hussey ........................................................ 3,000 *
E. Ray Solomon ........................................................... 5,500 *
Alejandro M. Sanchez ..................................................... 1,000 *
John S. McMullen (6) ..................................................... 354,300 2.8%
All directors and executive officers as a group (10 persons) (3)(5) ....... 587,500 4.6%

----------------
* Less than 1%

(1) Includes 3,528,455 shares held by Bankers Insurance Corporation ("BIC")
and 4,821,429 shares held by Bankers Security Insurance Company
("BSIC"). The business addresses of Bankers Insurance Group, Inc.
("BIG"), BIC and BSIC are all 360 Central Avenue, St. Petersburg,
Florida 33701. BIG is an indirect subsidiary of Bankers International
Financial Corporation, Ltd. ("BIFC"), a Cayman Islands corporation
wholly owned by Bankers International Financial Corporation II Trust, a
discretionary charitable trust. The sole trustee of this trust is
Ansbacher (Cayman) Limited, a Cayman Island corporation unaffiliated
with BIG, the Company or their respective officers or directors.
Pursuant to the trust's declaration of trust, Independent Foundation
for the Pursuit of Charitable Endeavors, Ltd., a not for profit Cayman
Islands corporation ("IFPCE"), possesses the discretionary power to (i)
direct the trustee to appoint the trust fund to another trust for the
benefits of one or more of the beneficiaries of the trust and (ii)
remove the trustee and appoint one or more new trustees outside the
Cayman Islands. A majority vote of the directors of IFPCE is required
to take either of these actions. The Articles of Association of IFPCE
provide that the Board of Directors shall consist of seven members,
three of whom shall be the top three executives of Bankers
International Financial Corporation, a Florida corporation and
subsidiary of BIFC, three of whom shall be Mr. Robert M. Menke and his
lineal descendants, and one of whom shall be a director elected by a
majority vote of the remaining six directors (or, if they cannot agree,
appointed by a court of competent jurisdiction). Until his death or
adjudication of incompetency, Robert M. Menke shall have five votes and
all other directors shall have one vote, and Robert M. Menke's presence
at a meeting shall be required for a quorum. As of March 18, 2002,
the directors of IFPCE included David K. Meehan and Robert M. Menke.

(2) Western International Insurance Company ("WIIC") is a wholly-owned
subsidiary of Venture Capital Company ("VCC"). The business address of
VCC and WIIC is Bank America Building, Fort Street, Georgetown, Grand
Cayman, British West Indies. VCC is a Cayman Island corporation wholly
owned by Venture II Trust, a discretionary charitable trust. The sole
trustee of this trust is Cayman National Trust Company Limited, a
Cayman bank unaffiliated with BIG, the Company or their respective
officers or directors. Pursuant to the trust's declaration of trust,
IFPCE possesses the same discretionary powers as described in note (1)
above.

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(3) Includes 700 shares held directly by Mr. Gantley and 1,000 shares held
jointly with his spouse.

(4) Excludes 3,528,455 shares held by BIC, 4,821,429 shares held by BSIC
and 700,000 shares held by WIIC. See Notes (1) and (2) above. All
shares are held by Robert M. Menke Trust U/A dated 5/17/95, a revocable
trust pursuant to which Robert M. Menke is the sole trustee and
lifetime beneficiary.

(5) Includes 15,000 shares held directly by Mr. Grant and 26,000 shares
held directly by his spouse.

(6) Includes 154,300 shares held directly by Mr. McMullen, 110,000 shares
held by Andros Associates, Inc., 45,000 shares held by the Kenneth S.
McMullen Family Trust and 45,000 shares held by the Gertrude B.
McMullen Family Trust. Mr. McMullen owns 99% of the outstanding equity
securities of Andros Associates, Inc., is the sole trustee and sole
beneficiary of the Kenneth S. McMullen Trust, and is the sole trustee
and sole beneficiary of the Gertrude B. McMullen Trust.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ADMINISTRATION SERVICES AGREEMENT

Effective as of January 1, 1998, the Company and BIG entered into an
Administrative Services Agreement (the "Administration Agreement") pursuant to
which BIG provided the Company with various administrative and support services,
such as human resources and benefits administration, accounting, legal, cash
management and investment services, requested by the Company from time to time
and reasonably necessary in the conduct of its operations. Under the
Administration Agreement, as originally in effect, the Company was charged for
these services generally based upon a contractually agreed-upon quarterly fee of
$396,250. Effective as of January 1, 1999, the Administration Agreement was
amended to eliminate certain accounting and internal audit service functions and
to reduce the quarterly fee payable by the Company to BIG (including one-fourth
of the annual fee for legal services) to $258,750, subject to renegotiation by
either party. In addition, the Company paid BIG, through the year ended December
31, 1999, an annual fee of $120,000 for routine legal services provided. Legal
services provided with respect to non-routine matters are to be billed to the
Company at negotiated prices. Effective January 1, 2000, the annual fee for
routine legal services was reduced to $60,000 from $120,000. Effective April 1,
2000, the portion of the fee attributable to human resources and benefits
administration services, excluding training services (approximately $393,000),
was eliminated as the Company began to perform such services at such date. On
December 31, 2000, the Administration Agreement was renewed by the Company for
an additional one-year term.

Pursuant to the Letter Agreement described below, the Administration
Agreement was terminated effective April 1, 2001. See "Letter Agreements" below.

SERVICE AGREEMENTS

-45-

homeowners and automobile lines of business, and claims administration and data
processing services for all such entities' other property and casualty lines of
business.

Under the Service Agreements, as originally in effect, each entity paid
the Company as follows: (1) for its policy administration services a monthly fee
based upon direct written premiums for the flood, homeowners and automobile
insurance programs; (2) for its claims administration services a monthly fee
based upon direct earned premiums for the property, casualty, automobile
property, automobile casualty and flood insurance programs (in addition, a
monthly fee based upon direct incurred losses is charged for flood claims
administration and a reimbursement not to exceed 5% of direct incurred losses
from a single event in excess of $2 million is charged to property claims); (3)
for its data processing services, a monthly fee based upon direct written
premiums for all insurance programs; and (4) for certain customer services such
as mailroom, policy assembly, records management and cash office a monthly fee
based upon direct written premiums (except, if provided in connection with their
flood, homeowners and automobile insurance lines, where no such fees are
imposed). The total service fees charged to BIC, BSIC and FCIC under these
Service Agreements during the year ended December 31, 1998 totaled $36.1
million.

Effective January 1, 1999, these Service Agreements were modified to
provide for tiered pricing based on the volume of business processed, and to
change the fee for data processing services, which was previously charged as a
percentage of direct written premium, to a fixed monthly fee. The total service
fees charged to BIC, BSIC and FCIC under these Service Agreements, as amended,
during the years ended December 31, 1999 and 2000 totaled $41.5 million and
$37.9 million, respectively. These modifications resulted in a reduction in the
base fees charged for certain lines of business and increases in base fees
charged for other lines of business to better reflect the services provided and
competitive market rates for such services. The term of each Service Agreement
was to expire on June 1, 2001, provided that it was thereafter to be
automatically extended until terminated upon 90 days prior notice by either
party.

Effective April 1, 1999, the Company further amended its existing
Service Agreements with affiliated insurers to provide for minimum aggregate
quarterly service fee payments through December 31, 1999 with respect to certain
lines of business, provided that certain key tasks are performed timely. If such
minimum service fee requirements with respect to said lines of business under
the agreements had not been implemented as of April 1, 1999, aggregate
affiliated outsourcing services revenues, which totaled $41.5 million for the
year ended December 31, 1999, would have been $39.7 million in accordance with
the terms of the affiliated service agreements as in effect prior to April 1,
1999. Additionally, for the year ended December 31, 1999, the Company did not
recognize approximately $500,000 of additional affiliated service fees under the
minimum service fee arrangement, as the Company did not meet certain specified
milestones on a timely basis. Such minimums were established to compensate the
Company for maintaining an infrastructure to process certain lines of business
of affiliated insurers that have not grown as rapidly as originally forecasted.

Pursuant to the Letter Agreement described below, the Service
Agreements were amended effective June 1, 2001 to, among other things, modify
certain of the service fees payable

-46-

thereunder and eliminate data and technical support services from the
administrative services to be provided by the Company thereunder. See "Letter
Agreements" below.

Effective as of October 1, 2001, the Company entered into the New
Service Agreement with BIC, BSIC and FCIC, as described below. The New Service
Agreement replaced the Service Agreements, as amended by the Letter Agreement.
See "New Service Agreement" below.

Effective December 1, 1998, the Company entered into a service
agreement with BLIC, a subsidiary of BIG, pursuant to which the Company provided
certain administrative services and allowed BLIC to make use of certain of the
Company's property, equipment and facilities in connection with BLIC's
day-to-day operations. Under this service agreement, as amended, BLIC agreed to
pay the Company predetermined fees on a quarterly basis. The term of this
service agreement with BLIC expired on June 1, 2001, and was not renewed or
replaced. No services were provided and no fees were ever charged or paid under
this service agreement.

In addition, the Company administers an AYO Claims Agreement between
BIG and Florida Windstorm Underwriting Association, which agreement BIG assigned
to BIC on December 15, 1998. On October 17, 1999, the Company and BIG entered
into an agreement designating the Company to be the administrator and perform
the services of BIC under the AYO Claims Agreement. The Company processes and
adjusts all claims made under the AYO Claims Agreement. The administrative fee
(equal to a percentage of each loss paid) is allocated between BIC and the
Company (such fees are paid directly to BIC and then disbursed to the Company).
During the years ended December 31, 2000 and December 31, 2001, the Company
received service fees of approximately $88,000 and $126,000, respectively, under
this arrangement.

Effective November 14, 2000, the Company entered into a separate
Insurance Administration Services Agreement with BIG (the "WC Agreement")
pursuant to which the Company provides policy administration, system hosting and
support, and claims administration services to BIG and its affiliate BIC in
connection with BIC's workers compensation line of business. Under the WC
Agreement, the Company is paid for its services as follows: (1) for its policy
administration, system hosting and support services, a monthly fee based upon
direct written premiums for BIG's workers compensation program; and (2) for its
claims administration services, a monthly fee based upon direct earned premiums
relating to such program. For the period November 14, 2000 through December 31,
2000 and the year ended December 31, 2001, the total service fees charged to BIG
under the WC Agreement were $26,650 and $1.23 million, respectively. As set
forth under "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations-Future Trends". BIG ceased writing workers
compensation insurance in November 2001. Consequently, the Company does not
expect to generate significant additional revenues under the WC Agreement during
the year ending December 31, 2002.

TECHNICAL SUPPORT SERVICES AGREEMENT

In April, 1999, the Company entered into a Technical Support Services
Agreement (the "Support Agreement") with BIG pursuant to which the Company
provided BIG with certain system development services. Under the Support
Agreement, such services were charged to BIG on a time and materials basis.
Pursuant to the Letter Agreement described below, the Support Agreement was
terminated effective April 1, 2001. The total service fees charged to BIG under
the Support Agreement during the years ended December 31, 1999 and 2000 and the
period January 1, 2001 through March 31, 2001 totaled $1.3 million, $0 and $0,
respectively. The Support Agreement was to be replaced, effective June 1, 2001,
with a new Technical Support Services Agreement, pursuant to which BIG would
provide certain technical support services to the Company. A new Technical
Support Services Agreement has not been, and is no longer expected to be,
executed. BIG did not provide any technical support services to the Company
after April 1, 2001 as contemplated thereby. See "Letter Agreements" and "New
Service Agreement" below.

-47-

LETTER AGREEMENTS

On April 13, 2001, the Company entered into a Letter Agreement with
BIG, BIC, BSIC and FCIC (the "Letter Agreement") pursuant to which the various
contractual arrangements between the Company and such affiliated entities were
significantly altered as described below.

With respect to the Administration Agreement, the Letter Agreement
provided that the existing Administration Agreement was terminated effective as
of April 1, 2001 and would be replaced, effective June 1, 2001, with a new
Corporate Services Agreement, pursuant to which BIG would provide the Company
with various corporate marketing (including graphic design and web-site
development) and corporate training services requested by the Company from time
to time at fixed hourly rates ranging from $40 to $100 per hour, depending on
the service being provided.

The Letter Agreement provided that the parties would negotiate in good
faith to execute and deliver the Corporate Services Agreement incorporating
these terms on or before June 1, 2001; provided, however, that in the event such
agreement was not executed and delivered by that date, BIG would provide such
services at the rates specified in the Letter Agreement. The Letter Agreement
further provided that the Support Agreement was terminated effective April 1,
2001 and would be replaced, effective June 1, 2001, with a new technical support
services agreement pursuant to which BIG would provide the Company with certain
technical support, computer programming and systems analysis services at
specified rates (except for software development services, which would be
provided on a time and materials basis).

With respect to the Service Agreements, the Letter Agreement provided
that each of such agreements shall be amended, effective June 1, 2001, to (i)
postpone the expiration date of the agreement from June 1, 2001 until December
1, 2002, (ii) modify the service fees payable thereunder with respect to policy
and claim administration services to be provided in connection with certain
lines of business, (iii) eliminate data and technical support services from the
administrative services to be provided by the Company under the agreement, and
(iv) assess a fixed monthly fee for usage of the Company's AS 400 computer
system. With respect to the service fee modifications, under the Service
Agreements, as amended, each entity will pay the Company (1) a monthly fee based
upon direct written premiums for policy administration services relating to its
flood, homeowners and commercial lines of business and (2) a monthly fee based
upon net claims (after deductibles) for claims administration services relating
to its flood line of business. The service fees payable under the Service
Agreements with respect to (a) policy administration services relating to the
automobile line of business, and (b) claims administration services relating to
all lines of business other than flood, remained unchanged. If such amendments
to the Service Agreements had been in effect for the fiscal year ended December
31, 2000, the Company's affiliated outsourcing revenues, which totaled
approximately $38 million on an actual basis, would have been approximately $30
million on a pro forma basis.

-48-

NEW SERVICE AGREEMENT

Effective October 1, 2001, the Company entered into a new Insurance
Administration Services Agreement with BIC, BSIC and FCIC (the "New Service
Agreement"). The New Service Agreement replaced the Service Agreements, as
amended by the Letter Agreement. Pursuant to the New Service Agreement, the
Company provides policy administration, claims administration and data
processing services to such entities in connection with their flood, homeowners
and automobile lines of business, and claims administration and data processing
services for all such entities' other property and casualty lines of business.

Under the New Service Agreement, each entity pays the Company as
follows: (1) for its policy administration services a monthly fee based upon
direct written premiums for the flood, homeowners and automobile insurance
programs; (2) for its claims administration services a monthly fee based upon
direct earned premiums for the property, casualty, automobile property,
automobile casualty and flood insurance programs (in addition, a monthly fee
based upon direct incurred losses is charged for flood claims administration and
a reimbursement not to exceed 5% of direct incurred losses from a single event
in excess of $2 million is charged to property claims.); (3) for its data
processing services, a monthly fee based upon direct written premiums for all
insurance programs; and (4) for certain customer services such as mailroom,
policy assembly, records management and cash office a monthly fee based upon
direct written premiums (except, if provided in connection with their flood,
homeowner and automobile insurance lines, where no such fees are imposed). The
New Service Agreement is for an initial term of five years, subject to
termination thereafter upon 90 days written notice. The New Service Agreement
further provides for the renegotiation of rates in good faith after the first
three years of the initial term.

SECURED LINE OF CREDIT

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the Company's principal customer and shareholder, with certain short-term
working capital needs. Pursuant to the Credit Agreement, all unpaid principal
and interest became due and payable in full on February 28, 2002. As of such
date, BIG owed the Company an aggregate of approximately $5.0 million under the
Line of Credit. On March 14, 2002, the Company and BIG amended the Credit
Agreement (the "Amended Credit Agreement") to extend the Line of Credit until
May 31, 2002.

Pursuant to the Amended Credit Agreement, interest is payable monthly
on amounts outstanding under the Line of Credit at an annual rate equal to the
Prime Rate (as defined in the Amended Credit Agreement), plus 1.5%. The Amended
Credit Agreement further provides that the Line of Credit will expire on May 31,
2002, unless repaid in full prior to such time or otherwise terminated pursuant
to the terms of the Amended Credit Agreement. As of the date of this Report, the
aggregate principal amount outstanding under the Line of Credit is $5.0 million.

The Line of Credit is secured by (i) a first lien security interest in
all accounts and contract rights of Bankers Underwriters, Inc., a wholly-owned
subsidiary of BIG ("BUI"), with insurance agents (including but not limited to
general agents with respect to the sale of federal flood insurance)
(collectively, the "Flood Book"), and (ii) an option (the "Option") to purchase
from BIG the outstanding capital stock, consisting of 10,898 shares (the "Option
Shares") of common stock, $318 par value per share, of First Community Insurance
Company, a New York insurance company licensed in all fifty states ("FCIC"). BUI
currently is a Florida general insurance agent for FCIC and BIC, a Florida
insurance company licensed in approximately 30 states and a wholly-owned
subsidiary of BIG. As of the date of this Report, management of the Company
believes the fair market value of the Flood Book exceeds the aggregate principal
amount of the Line of Credit.

With respect to the Option, the aggregate exercise price for the Option
Shares is $108,980, or $10.00 per Option Share. The Option Shares are subject to
certain outstanding liens relating to certain indebtedness of BIG having an
aggregate outstanding balance, as of February 28, 2002, totaling approximately
$10.8 million. The Option will become exercisable only at such time as (i) there
shall be a default in the payment of any amounts due under the Amended Credit
Agreement for more than ten days after the date when they shall become due or
(ii) there shall be any other default under the Amended Credit Agreement if,
after notice thereof, such default has not been cured within thirty days of such
notice. In addition, any acquisition of the Option Shares by the Company
pursuant to the Option would require the prior approval of the New York
Department of Insurance. In the event the Option was to be exercised, no
assurances can be given that such approval could be obtained.

PROPERTY LEASES

The Company currently subleases from Bankers Financial Corporation
approximately 44,032 square feet of office space in St. Petersburg, Florida at a
monthly rate of approximately $56,000. The current term of this sublease expires
on December 31, 2003. The Company and Bankers Financial Corporation entered into
the sublease on December 31, 2001. The sublease agreement replaced a lease
agreement between BIC and the Company for the same property, which was
terminated effective as of December 31, 2001 in connection with a sale by BIC of
the property covered by the lease and its simultaneous lease by Bankers
Financial Corporation. The terms and conditions of the sublease agreement are
substantially identical to those of the lease agreement which it replaced, as
earlier amended. During the year ended December 31, 2001, the Company paid BIC
approximately $917,800 under the terminated lease agreement.

-50-

The Company currently leases from BLIC approximately 4,600 square feet
of office space in St. Petersburg, Florida at a monthly rate of approximately
$5,100. The current term of this lease expires on April 14, 2002. This lease
replaced, as of October 15, 2001, an existing lease between the Company and BLIC
for the same office space. During the year ended December 31, 2001, the Company
paid BLIC an aggregate of approximately $35,600 under the new lease and the
lease which it replaced.

SALES AND ASSIGNMENT AGREEMENT

In May, 1998, the Company entered into a sales and assignment agreement
with BIG and certain affiliated companies whereby certain assets were
transferred and assigned to the Company, effective retroactively to April, 1998,
for use in its business. The assets, including, but not limited to, telephone
equipment, computer hardware and software, and service marks were transferred at
their net book value as of the date of transfer. The Company paid consideration
consisting of $325,075 in cash and entered into two promissory notes amounting
to $2,802,175. The notes were repaid in full in February 2000 out of the net
proceeds to the Company from its initial public offering. In addition, the
Company assumed the existing leases with unaffiliated third parties relating to
various computer equipment.

SOFTWARE LICENSING AGREEMENT

Effective January 1, 1998, the Company entered into a non-exclusive
license agreement with BIG and BIC pursuant to which the Company licenses its
primary operating systems from BIG and BIC in exchange for a nominal fee. The
term of the license is perpetual. The license agreement provides that the
Company shall be solely responsible for maintaining and upgrading the systems
and shall have the authority to sell or license such systems to third parties.

TAX INDEMNITY AGREEMENT

As of July 31, 1998, BIG had sold a sufficient number of shares in the
Company such that the Company will no longer file its tax return with Bankers
International Financial Corporation ("BIFC") on a consolidated basis. Effective
as of July 31, 1998, the Company and BIFC entered into a Tax Indemnity Agreement
pursuant to which (i) BIFC agrees to indemnify the Company in the event the
Company incurs a tax liability as a result of taxable income of BIFC or one of
its subsidiaries, and (ii) the Company agrees to indemnify BIFC in the event
BIFC incurs a tax liability as a result of taxable income of the Company or one
of its subsidiaries. Each party also agrees to reimburse the other by certain
tax credits arising on or before July 31, 1998. Under the Tax Indemnity
Agreement, the parties terminated a previous tax allocation agreement that had
been in effect since October 1, 1993.

GEOTRAC TRANSACTIONS

DJWW Corp., an Ohio corporation, was formed in June 1987 by Daniel J.
White ("Mr. White"), the corporation's president and sole shareholder. In May
1991, the corporation changed its name to Geotrac, Inc. In August, 1994,
Geotrac, Inc. sold substantially all of its assets to SMS Geotrac, Inc., a
Delaware corporation ("SMS Geotrac"), for a purchase price of $1,000,000 in
cash, plus a contingent payment based on net profits after taxes for the Fiscal
year ended June 30, 1995. SMS Geotrac was a wholly-owned subsidiary of Strategic
Holdings USA, Inc. ("Strategic"). During the year ended June 30, 1996 and on
July 30, 1997, SMS Geotrac made payments of $932,222 and $1,700,000,
respectively to Mr. White in satisfaction of the contingent payment obligations
under the acquisition agreement. The amounts were recorded as an increase to
goodwill and an additional capital contribution to SMS Geotrac. In connection
with the sale of assets to SMS Geotrac, Mr. White became the president of SMS
Geotrac and received a four-

-51-

year employment contract at a base salary of $100,000 per year. In September
1994, Geotrac, Inc. changed its name to YoSystems, Inc. During the year ended
June 30, 1997, SMS Geotrac and Strategic agreed to treat all outstanding amounts
owed to the parent, $1,611,140, as an additional capital contribution. In
addition, Strategic contributed $500,000 to SMS Geotrac.

During the one-month period ended July 31, 1997, SMS Geotrac advanced
$797,000 to YoSystems, Inc. In July 1997, YoSystems acquired all of the issued
and outstanding shares of capital stock of SMS Geotrac from Strategic for $15
million in cash. The purchase price was funded through an $8.75 million loan
from Huntington National Bank to YoSystems ($8.25 million of which was used in
the purchase) plus $6.75 million in cash paid by the Company in connection with
its acquisition of a 49% interest in YoSystems, as described below. Thereafter,
the Company assumed the loan from Huntington National Bank, which loan has since
been repaid from proceeds received in the Company's initial public offering.

Neither YoSystems nor Mr. White, its president and sole shareholder,
had a preexisting right to acquire SMS Geotrac pursuant to the August, 1994
transaction. The purchase price of the SMS Geotrac stock was determined by arm's
length negotiations. After the stock purchase transaction, SMS Geotrac merged
into YoSystems, with YoSystems being the surviving entity and changing its name
back to Geotrac, Inc. Concurrent with the acquisition of SMS Geotrac by
YoSystems, the Company, through a subsidiary, Bankers Hazard Determination
Services, Inc. ("BHDS"), purchased a 49% interest in YoSystems for $6.75 million
in cash. At that time, the Company did not contemplate acquiring the remaining
51% of YoSystems, Inc.

In connection with the Company's purchase of a 49% interest in
YoSystems, BHDS issued 675,000 shares of non-cumulative 8% preferred stock to
Heritage Hotel Holding Company ("Heritage"), a corporation owned by Richard M.
Brubaker, the half brother of Robert M. Menke, a director of the Company. The
preferred stock of BHDS issued to Heritage had a par value of $10 per share and
was subject to redemption at the option of the board of directors of BHDS. The
preferred stock could be redeemed at any time at a price equal to 108% of the
original consideration paid for the stock by the shareholder plus the amount of
the dividends declared and unpaid on the redemption date Heritage funded the
preferred stock purchase by entering into a note agreement with a commercial
bank for $6.75 million, with the preferred stock serving as collateral. On May
8, 1998, the Company purchased the outstanding preferred stock of BHDS in
exchange for a note to Heritage in the principal amount of $6.75 million. The
note was repaid in full in February, 2000 out of the net proceeds to the Company
from its initial public offering. After May 8, 1998, the preferred stock of BHDS
held by the Company was exchanged for 675,000 shares or 8.5% cumulative
preferred stock of BHDS. The shares of non-cumulative 8% preferred stock were
then retired. Dividends declared on the preferred stock for l997 and 1998 were
$229,315 and $189,370, respectively.

In July 1998, the Company acquired the remaining 51% equity interest in
Geotrac, Inc. (formerly YoSystems) pursuant to the merger of Geotrac, Inc. with
and into BHDS, with the surviving entity being known as "Geotrac of America,
Inc." ("Geotrac"). The Company acquired the remaining 51% interest from Mr.
White and his wife and certain minority shareholders in exchange for (i) 524,198
shares of Common Stock, (ii) a promissory note in the principal amount of
$1,500,000 bearing interest at a rate of 8.5%, and (iii) cash in the amount of
$728,069 (paid in December, 1998), for a total purchase price of $7,994,000. In
addition, the Company assumed the loan in the original principal amount of
$8,750,000 from Huntington National Bank made to YoSystems in July 1997. As
described above, the loan from Huntington Bank was repaid from proceeds received
in the Company's initial public offering. In connection with this transaction,
Geotrac entered into an employment agreement with Mr. White pursuant to which
Mr. White served as the President and Chief Executive Officer of Geotrac. In
addition,

-52-

the Company entered into a Corporate Governance Agreement with Mr. White and
Geotrac setting forth certain terms and conditions upon which Geotrac continued
to operate following the merger.

On December 28, 2001 the Company consummated the transactions
contemplated by a stock purchase agreement (as amended, the "Stock Purchase
Agreement"), dated as of September 20, 2001, by and among the Company, Geotrac,
Geotrac Holdings, Inc., Mr. White, the Daniel J. White Trust, the Sandra A.
White Trust, and, solely for purposes of a non-competition covenant, BIG. The
shareholders of the Company approved the Stock Purchase Agreement and the
transactions contemplated thereby in accordance with Florida law at a Special
Meeting of Shareholders held on December 26, 2001.

Pursuant to the Stock Purchase Agreement, Geotrac Holdings, Inc., a
Delaware corporation formed by Mr. White and his spouse, Sandra A. White,
purchased all the issued and outstanding capital stock (the "Shares") of
Geotrac. Prior to the consummation of the transactions contemplated by the Stock
Purchase Agreement, Mr. White served as a director of the Company and President,
Chief Executive Officer and a director of Geotrac. Mr. White resigned as a
director of the Company effective as of the consummation of the sale of the
Shares.

The purchase price paid for the Shares was $19 million in cash, plus
524,198 shares of Common Stock of the Company beneficially owned by Mr. White
and his spouse. Pursuant to the Stock Purchase Agreement, certain of the parties
also entered into additional agreements as of the closing of such sale,
including a Flood Zone Determination Service Agreement pursuant to which Geotrac
will provide the Company with flood zone determination services for up to ten
years at pricing management of the Company currently considers to be favorable.

Geotrac leased a 12,400 square-foot facility in Norwalk, Ohio from
DanYo LLC, a limited liability company wholly owned by Mr. White and his spouse.
This lease, which was renewed effective September 1, 1999, was for a term of
five years, expiring on August 31, 2004, and provided for monthly rental
payments of approximately $10,448, plus payment of utilities, real estate taxes
and assessments, insurance, repairs and similar expenses.

During the year ended December 31, 2000 and for the period from January
1, 2001 through December 27, 2001, Geotrac paid fees of $339,345 and $1.0
million, respectively, to SLK Software Services Private Limited ("SLK") for
various consulting services. Mr. White had an equity interest of approximately
46% in SLK at December 28, 2001, the closing date of the date of Geotrac. Mr.
White was neither a director nor an officer of SLK and did not have the ability
to exercise control or make management decisions. At December 27, 2001 and
December 31, 2000, Geotrac owed SLK $68,600 and $15,200, respectively.

During the year ended December 31, 2000 and the period from January 1,
2001 through December 27, 2001, Geotrac paid $396,200 and $946,000 in flood zone
determination costs and $611,200 and $439,000 in digitizing costs and other
miscellaneous, respectively, to JDI Software Services Private Limited ("JDI").
On January 9, 2001, Mr. White purchased 100,550 shares of JDI, representing
approximately a 48% ownership interest in JDI. Mr. White was neither a director
nor an officer of JDI and did not have the ability to exercise control nor make
management decisions. At December 27, 2001 and December 31, 2000, Geotrac owed
JDI $62,000 and $85,300, respectively. Additionally, JDI owed Geotrac $100,000
at December 31, 2000 for the sale of Geotrac's National GIS Flood Coverage.

PHANTOM STOCK PLANS

-53-

Effective September 30, 2000, the BFC and VCC Plans were amended to
provide for, among other things, immediate vesting of benefits payable
thereunder to certain current and former officers and directors of the Company.
Accordingly, as of September 30, 2000, the total discounted and non-discounted
benefits payable under these plans, which have accrued since February 11, 1999,
the date of the Company's initial public offering (the "IPO Date"), totaled
$327,000 and $894,000, respectively, for the BFC Plan and $12,000 and $43,000,
respectively, for the VCC Plan. Benefits under each of such plans generally are
payable in 120 equal installments beginning at age 60. Although resulting in a
compensation expense (on a discounted basis) to the Company, all of such
benefits under such plans were granted on or before the IPO Date and constitute
the respective obligations of BFC and VCC, not the Company. The benefits
described herein exclude amounts vested prior to the IPO Date and/or allocable
to services provided to BIG or its affiliated entities (other than the Company
or its subsidiaries) since the IPO Date.

The aggregate amount (on a non-discounted basis) in benefits payable to
each of the Company's current and former executive officers and directors of the
Company under the BFC Plan and the VCC Plan, respectively, and which have
accrued from the IPO Date through September 30, 2000, are as follows: David K.
Meehan, $0 and $0; David M. Howard, $247,515 and $25,523; Robert G. Gantley,
$217,583 and $0; Christopher P. Breakiron, $0 and $0; Daniel J. White, $0 and
$0; Kathleen M. Batson, $43,348 and $6,160; John A. Grant, Jr., $154,100 and
$9,210; William D. Hussey, $100,000 and $0; E. Ray Solomon, $100,000 and $0; and
Alejandro M. Sanchez, $0 and $0. The foregoing benefits exclude amounts vested
prior to the IPO Date and/or allocable to services provided to BIG or its
affiliated entities (other than the Company or its subsidiaries) since the IPO
Date.

Except as set forth below, since the IPO Date, no officers or directors
of the Company have been eligible to receive additional grants under such
phantom stock plans or have been subject to future allocations of profits or
losses with respect thereto. In addition, except as set forth below, all current
officers and directors of the Company were fully vested, as of September 30,
2000, in all benefits under such plans. Notwithstanding the foregoing, Robert G.
Menke, a director of the Company, and David K. Meehan, Chairman of the Board of
the Company, will continue to be eligible to receive grants, vest in benefits
received and share in profits and losses under such plans in their capacity as
officers and directors of BIG and its affiliated entities.

MISCELLANEOUS

In February 1999, Western International Insurance Company, a
wholly-owned subsidiary of VCC and presently a more than 5% shareholder of the
Company, loaned $12.0 million to BIG in exchange for a subordinated note. This
loan was funded by using a portion of the net proceeds received by VCC in the
Company's initial public offering. BIG, in turn, used a portion of such loan
proceeds to satisfy a note payable (including accrued interest) to the Company
which totaled $5,322,455. The balance of the loan proceeds were intended to
provide BIG with additional capital to repay other outstanding indebtedness and
expand its operations. The Company, in turn, used the funds received from BIG,
together with a portion of the net proceeds from its initial public offering, to
satisfy $7,054,996 in accounts, income taxes and notes payable (including
accrued interest) payable to BIG.

-54-

In 1998, BIG made a loan of $55,000 to David M. Howard. Interest on the
loan was payable at a rate of 8.5% annually and the loan was to be repaid in
equal bi-weekly installments with a balloon payment due on March 31, 2000.
Subsequently, the note was extended indefinitely with Mr. Howard continuing to
make bi-weekly payments. In early 2000, after Mr. Howard joined the Company as a
director and executive officer, the loan was transferred to the Company. In
December 2001, the Company paid Mr. Howard a bonus of approximately $71,000 in
the form of the forgiveness of such indebtedness (grossed up to cover associated
taxes). See "Item 11. Executive Compensation--Compensation Committee Report on
Executive Compensation."

The Audit Committee of the Board of Directors is responsible for
reviewing all future transactions between the Company and any officer or
director of the Company or any entity in which an officer of director has a
material interest. Any such transactions must be on terms no less favorable than
those that could be obtained on an arm's-length basis from independent third
parties.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

List of documents filed as part of this report:

(1) Financial Statements

Insurance Management Solutions Group, Inc. Consolidated Financial Statements

Report of Independent Certified Public Accountants

Consolidated Balance Sheets as of December 31, 2000 and 2001

Consolidated Statements of Income for the years ended December 31, 1999, 2000
and 2001

Consolidated Statement of Shareholders' Equity for the years ended December 31,
1999, 2000 and 2001

Consolidated Statements of Cash Flows for the years ended December 31, 1999,
2000 and 2001

Notes to Consolidated Financial Statements

(2) Financial Statement Schedules

Report of Independent Certified Public Accountants on Schedule 1

Schedule 1--Condensed Financial Information of Registrant

Notes to Condensed Financial Information of Registrant.

(3) Exhibits

EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------

3.1 Amended and Restated Articles of Incorporation of Insurance Management Solutions
Group, Inc.*

3.2 Amended and Restated Bylaws of Insurance Management Solutions Group, Inc.*

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EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------

4.1 Specimen certificate for the Common Stock of Insurance Management Solutions Group,
Inc.*

10.1 Employment Agreement, dated August 10, 1998, between David K. Meehan and Insurance
Management Solutions Group, Inc.*

10.2 Insurance Management Solutions Group, Inc. Long Term Incentive Plan.*

10.3 Insurance Management Solutions Group, Inc. Non-Employee Directors' Stock Option
Plan.*

10.4 Snell Arcade Building Lease, dated May 15, 1996, between Snell Arcade Limited Company
and Bankers Insurance Group, Inc., as revised and assigned to Insurance Management
Solutions Group, Inc., effective January 1, 1998.*

10.5 Lease Agreement for 10051 5th Street North, dated October 15, 2001, between Bankers Life
Insurance Company and Insurance Management Solutions Group, Inc.

10.6 Bankers Financial Center Lease Agreement, dated January 1, 1997, between Bankers
Insurance Company and Insurance Management Solutions Group, Inc.*

10.7 Administration Services Agreement, dated January 1, 1998, between Bankers Insurance
Group, Inc. and Insurance Management Solutions Group, Inc., including Addendum to
Administration Services Agreement, dated December 2, 1998 and effective January 1,
1998, and Addendum to Administration Services Agreement, effective January 1, 1999.*

10.8 Service Agreement, dated January 1, 1998, between Insurance Management Solutions,
Inc. and Bankers Insurance Company, including Addendum dated April 1, 1998 and form
of Addendum to Service Agreements effective January 1, 1999.*

10.9 Service Agreement dated January 1, 1998 between Insurance Management Solutions, Inc.
and Bankers Security Insurance Company, including form of Addendum to Service
Agreements effective January 1, 1999. *

10.10 Service Agreement dated January 1, 1998 between Insurance Management Solutions, Inc.
and First Community Insurance Company, including form of Addendum to Service
Agreements effective January 1, 1999. *

10.11 Insurance Administration Services Agreement, effective September 30, 2001, between Insurance
Management Solutions, Inc. and each of Mobile USA Insurance Company and Philadelphia
Indemnity Insurance Company.

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EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------

10.12 Insurance Administration Services Agreement, effective October 1, 2001, between Insurance
Management Solutions, Inc. and Auto Club South Insurance Company.

10.13 Flood Insurance Program Services Agreement by and among Insurance Management
Information Services, Inc., American Alternative Insurance Corporation, and Corporate
Insurance Agency Services.*

10.14 Agreement and Plan of Merger, dated May 12, 1998, by and among Geotrac, Inc.,
Insurance Management Solutions, Inc., Daniel J. and Sandra White, Bankers Insurance
Group, Inc. and Bankers Hazard Determination Services, Inc.*

10.15 Term Lease Master Agreement, dated August 6, 1996, between IBM Credit Corporation and
Bankers Insurance Company, assigned by Bankers Insurance Company to Insurance
Management Solutions, Inc., effective April 1, 1998, pursuant to Sales and Assignment
Agreement, dated May 6, 1998.*

10.16 Sales and Assignment Agreement, dated May 6, 1998, by and between Insurance
Management Solutions Group, Inc., Insurance Management Solutions, Inc., Bankers
Insurance Group, Inc., Bankers Insurance Services, Inc., Bankers Life Insurance
Company, Southern Rental & Leasing Corporation, Bankers Insurance Company and
Insurance Management Information Services, Inc.*

10.17 Tax Indemnity Agreement dated July 31, 1998 between Bankers Insurance Group, Inc.,
Insurance Management Solutions Group, Inc. and Daniel J. and Sandra White.*

10.18 Flood Insurance Agreement, dated January 6, 1998, between First Community Insurance
Company and Keystone Insurance Company.*

10.19 Marketing Agreement, dated November 14, 1997, between First Community Insurance
Company and Nobel Insurance Company.*

10.20 Flood Insurance Agreement, dated February 11, 1998, between First Community Insurance
Company and Horace Mann Insurance Company.*

10.21 Flood Insurance Agreement, dated February 17, 1995, between First Community Insurance
Company and Armed Forces Insurance Exchange, as amended.*

10.22 Flood Insurance Agreement, dated November 17, 1995, between First Community Insurance
Company and Amica Mutual Insurance Company, as amended.*

10.23 Non-Qualified Stock Option Plan.*

10.24 Funding Agreement, dated June 19, 1998, by and between Bankers Insurance Group, Inc.
and Insurance Management Solutions Group, Inc.*

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EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------

10.25 Assignment of Registered Service Mark ("Floodwriter"), dated May 7, 1998, from
Bankers Insurance Company to Insurance Management Solutions, Inc.*

10.26 Assignment of Registered Service Mark ("Undercurrents"), dated May 7, 1998, from
Bankers Insurance Company to Insurance Management Solutions, Inc.*

10.27 Software License Agreement, effective January 1, 1998, between Insurance Management
Solutions, Inc., Bankers Insurance Group, Inc. and Bankers Insurance Company.*

10.28 Tax Indemnity Agreement dated July 31, 1998 between Insurance Management Solutions
Group, Inc., Insurance Management Solutions, Inc. and Geotrac of America, Inc.,
including Addendum dated July 31, 1998.*

10.29 Tax Allocation Agreement dated July 31, 1998 between Insurance Management Solutions
Group, Inc., Insurance Management Solutions, Inc. and Geotrac of America, Inc.,
including Addendum dated July 31, 1998.*

10.30 Service Agreement dated December 1, 1998 between Insurance Management Solutions, Inc.
and Bankers Life Insurance Company, including Addendum to Service Agreements dated
December 11, 1998 and effective January 1, 1999*

10.31 AYO Claims Agreement between Florida Windstorm Underwriting Association and Bankers
Insurance Group, Inc., dated February, 1998.*

10.32 Assignment of AYO Claims Agreement among Bankers Insurance Group, Inc., Bankers
Insurance Company and Florida Windstorm Underwriting Association dated December 15,
1998.*

10.33 Software Transfer Agreement dated September 1, 1998 by and among Bankers Insurance
Group, Inc., Bankers Insurance Company, Insurance Management Solutions, Inc., and
First Community Insurance Company.*

10.34 Registration Rights Agreement dated January, 1999, between Insurance Management
Solutions Group, Inc. and J. Douglas Branham and Felicia A. Rivas.*

10.35 Stock Purchase Agreement dated December 10, 1998 between Colonial Catastrophe Claims
Corporation, J. Douglas Branham, Felicia A. Rivas, and Insurance Management Solutions
Group, Inc., including Addenda thereto.*

10.36 Loan Agreement dated December 16, 1998 between Bankers Insurance Group, Inc. and
Western International Insurance Company.*

10.37 Promissory Note of Bankers Insurance Group, Inc. in favor of Western International
Insurance Company*

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EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------

10.38 Agreement for Satisfaction of Debt and Capitalization of Subsidiary dated
December 16, 1998 between Venture Capital Corporation and Western International
Insurance Company.*

10.39 Plan of Merger dated January 7, 1999 and effective January 15, 1999 between IMS
Colonial, Inc. and Colonial Catastrophe Claims Corporation.*

10.40 Flood Insurance Services Agreement, dated January 14, 1999, by and between Insurance
Management Solutions Group, Inc. and Farmers Services Corporation.*

10.41 Funding Agreement, dated February 16, 1999, by and between Bankers Insurance Group,
Inc., Bankers Insurance Company, Venture Capital Corporation and Western
International Insurance Company.**

10.42 Insurance Administration Services Agreement, dated October 17, 2001, by and between
Insurance Management Solutions, Inc. and Middlesex Mutual Assurance Company.

10.43 Flood Insurance Services Agreement, effective January 13, 1999, by and between
Insurance Management Solutions, Inc. and Island Insurance Companies, Ltd.**

10.44 Lease Agreement, dated February 1, 1999, by and between Colonial Real Estate of
Dunedin, Inc. and Colonial Claims Corporation.**

10.45 Second Addendum to Service Agreements, effective as of April 1, 1999, by and between
Insurance Management Solutions, Inc. and each of Bankers Insurance Company, First
Community Insurance Company and Bankers Security Insurance Company.***

10.46 Technical Support Services Agreement, dated April 1, 1999, by and between Insurance
Management Solutions, Inc. and Bankers Insurance Group, Inc. and its subsidiaries.***

10.47 Lease Agreement, dated September 27, 1999, by and between Koger Equity, Inc. and
Insurance Management Solutions Group, Inc.****

10.48 Insurance Administration Services Agreement, effective as of May 3, 2000, by and
between Insurance Management Solutions, Inc. and Reliance Insurance Company.*****

10.49 Insurance Administration Services Agreement, effective as of June 30, 2000, by and
between Insurance Management Solutions, Inc. and Instant Insurance Holding, Inc.*****

10.50 Development Services Agreement, effective as of June 30, 2000, by and between
Insurance Management Solutions, Inc. and Instant Insurance Holding, Inc.*****

10.51 Insurance Administration Services Agreement (Interim), effective as of June 22, 2000,
by and between Insurance Management Solutions, Inc. and Instant Insurance Holding,
Inc.*****

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EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------

10.52 Insurance Administration Services Agreement Termination and Interim Services Addendum,
effective as of August 1, 2000, by and between Insurance Management Solutions, Inc.,
International Catastrophe Insurance Managers, LLC and Clarendon National Insurance
Company, including all schedules and exhibits thereto.******

10.53 Insurance Management Solutions Group, Inc. 2000 Stock Incentive Plan*******

10.54 Insurance Management Solutions Group, Inc. 2000 Non-Employee Director Stock
Plan*******

10.55 Employment Agreement, dated August 19, 1998, between Robert G. Gantley and Insurance
Management Solutions, Inc.*******

10.56 Release and Separation Agreement, dated April 12, 2001, between Christopher P.
Breakiron and Insurance Management Solutions Group, Inc.*******

10.57 Consulting Agreement, dated April 12, 2001, between Christopher P. Breakiron and
Insurance Management Solutions Group, Inc.*******

10.58 Asset Purchase Agreement, including Indemnification Agreement, Bill of Sale and
Assignment of Flood Monitoring Agreement, effective July 31, 2000, between IMS
Direct, Inc. and Bankers Insurance Services, Inc.*******

10.59 Letter Agreement, dated April 13, 2001, by and between Insurance Management
Solutions, Inc., Bankers Insurance Group, Inc., Bankers Insurance Company, First
Community Insurance Company and Bankers Security Insurance Company.*******

10.60 Settlement Agreement, dated February 20, 2001, by and between Instant Insurance
Holdings, Instant Auto Insurance Company and Insurance Management Solutions,
Inc.*******

10.61 Commitment Letter to advance service fee payments, dated April 13, 2001, between
Insurance Management Solutions, Inc. and Bankers Insurance Group, Inc.*******

10.62 Credit and Security Agreement, dated August 14, 2001, between Insurance Management
Solutions Group, Inc. and Bankers Insurance Group, Inc.********

10.63 Collateral Assignment of Flood Book, dated August 14, 2001, by Bankers Underwriters,
Inc. ********

10.64 Stock Option Agreement, dated August 14, 2001, between Bankers Insurance Group, Inc.
and Insurance Management Solutions Group, Inc.********

10.65 Employment Agreement, dated October 4, 2001 and effective October 1, 2001, between
Insurance Management Solutions Group, Inc. and Anthony R. Marando.*********

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EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------

10.66 Stock Purchase Agreement, dated as of September 20, 2001 (the "Stock Purchase
Agreement"), by and among Insurance Management Solutions Group, Inc., Geotrac of
America, Inc., Geotrac Holdings, Inc., Daniel J. White, the Daniel J. White Trust,
the Sandra A. White Trust and, solely for purposes of Section 7.2, Bankers Insurance
Group, Inc. (including the Exhibits thereto).**********

10.67 Amendment to the Stock Purchase Agreement, dated December 28, 2001.**********

10.68 Master Promissory Note, dated August 14, 2001, by Bankers Insurance Group,
Inc.***********

10.69 Amendment No. 1 to Credit and Security Agreement, dated March 14, 2002, between
Insurance Management Solutions Group, Inc. and Bankers Insurance Group,
Inc.***********

10.70 Amendment to Tax Allocation Agreement, dated September 20, 2001, between Insurance
Management Solutions Group, Inc., Geotrac of America, Inc., IMS Direct, Inc. and
Insurance Management Solutions, Inc.

10.71 Insurance Administration Services Agreement, effective October 1, 2001, by and between
Insurance Management Solutions, Inc. and each of Bankers Insurance Company, Bankers
Security Insurance Company and First Community Insurance Company.

10.72 Run Off Claim Administration Services Agreement, effective June 7, 2001, between
Insurance Management Solutions, Inc. and each of Bankers Insurance Company and First
Community Insurance Company.

10.73 Claims Administration Agreement, dated November 26, 2001, between International
Catastrophe Insurance Managers, LLC, Insurance Management Solutions, Inc. and AXA RE
America Insurance Company.

10.74 Insurance Administration Services Agreement, effective September 1, 2001, between
Insurance Management Solutions, Inc. and Cooperativa de Seguros Multiples de Puerto
Rico.

10.75 Runoff Claim Administration Services Agreement, effective January 1, 2001, between
Insurance Management Solutions, Inc., Instant Insurance Holdings, Inc. and Instant
Auto Insurance Company.

10.76 Insurance Administration Services Agreement, effective March 1, 2001, between
Insurance Management Solutions, Inc. and Residence Mutual Insurance Company.

10.77 [intentionally omitted]

10.78 First Amendment of Lease, dated August 1, 2001, between Bankers Insurance
Company and Insurance Management Solutions Group, Inc.

10.79 Termination of Lease Agreement, dated December 31, 2001, between Bankers Insurance
Company and Insurance Management Solutions Group, Inc.

10.80 Sublease Agreement, dated December 31, 2001, between Bankers Financial Corporation and
Insurance Management Solutions Group, Inc.

10.81 Appointment of Administrator, dated October 7, 2001, between Bankers Insurance Group,
Inc. and Insurance Management Solutions, Inc.

21.1 List of subsidiaries of Insurance Management Solutions Group, Inc.
---------------
* Previously filed as part of the Company's Form S-1 Registration Statement (Reg.
No. 333-57747) originally filed on June 28, 1998, as amended, and incorporated
by reference herein.

** Previously filed as part of the Company's Annual Report on Form 10-K for the year
ended December 31, 1998, and incorporated by reference herein.

*** Previously filed as part of the Company's Form 10-Q for the quarter ended June 30,
1999, and incorporated by reference herein.

**** Previously filed as part of the Company's Form 10-K for the year ended
December 31, 1999, and incorporated by reference herein.

***** Previously filed as part of the Company's Form 10-Q for the quarter ended June 30,
2000, and incorporated by reference herein. ****** Previously filed as part of
the Company's Form 10-Q for the quarter ended September 30, 2000, and
incorporated by reference herein

******* Previously filed as part of the Company's Annual Report on Form 10-K for the year
ended December 31, 2000, and incorporated by reference herein.

******** Previously filed as part of the Company's Form 10-Q for the quarter ended June 30,
2001, and incorporated by reference herein.

********* Previously filed as part of the Company's Form 10-Q for the quarter ended September
30, 2001, and incorporated by reference herein.

********** Previously filed as part of the Company's Current Report on Form 8-K filed
on January 14, 2002

Exhibits 10.1, 10.2, 10.3, 10.23, 10.53, 10.54, 10.55, 10.56, 10.57 and
10.65 represent management contracts and compensatory plans.

(b) Reports on Form 8-K.

The Company did not file any reports on Form 8-K during the three
months ended December 31, 2001.

-61-

INDEX TO FINANCIAL STATEMENTS

PAGE
----

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Certified Public Accountants F2
Consolidated Balance Sheets as of December 31, 2000 and 2001 F3
Consolidated Statements of Operations for the years ended
December 31, 1999, 2000 and 2001 F4
Consolidated Statement of Shareholders' Equity for the years ended
December 31, 1999, 2000 and 2001 F5
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 2000 and 2001 F6
Notes to Consolidated Financial Statements F7
Report of Independent Certified Public Accountants on Schedule I F40
Schedule I - Condensed Financial Information of Registrant F41
Notes to Condensed Financial Information of Registrant F44

F-1

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of
Insurance Management Solutions Group, Inc.

We have audited the accompanying consolidated balance sheets of Insurance
Management Solutions Group, Inc. and subsidiaries as of December 31, 2000 and
2001, and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the three years in the period ended December
31, 2001. 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 auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about 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. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Insurance Management Solutions Group, Inc. and subsidiaries as of December 31,
2000 and 2001, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States of
America.

/s/ GRANT THORNTON LLP

Tampa, Florida
March 21, 2002

F-2

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31,
-------------------------------
2000 2001
---------- -----------

ASSETS
CURRENT ASSETS
Cash and cash equivalents................................... $2,391,103 $20,095,808
Accounts receivable, trade - affiliates .................... 2,615,699 4,716,172
Accounts receivable, trade - Geotrac........................ 1,079,353 --
Accounts receivable, trade - net ........................... 1,799,440 875,297
Prepaid expenses and other assets........................... 1,235,874 883,729
Note receivable - affiliate................................. -- 5,026,541
Note receivable............................................. 639,658 --
---------- -----------
Total current assets................................... 9,761,127 31,597,547
PROPERTY AND EQUIPMENT, net.................................... 4,519,732 3,942,712
OTHER ASSETS
Note receivable............................................. 559,271 --
Goodwill, net............................................... 2,382,786 2,250,409
Service contracts, net...................................... -- 2,189,090
Capitalized software costs, net............................. 1,044,846 564,793
Deferred tax assets......................................... 447,449 429,329
Other....................................................... 300,839 25,600
Net assets of discontinued operations....................... 20,564,751 --
---------- -----------
Total assets.......................................... $39,580,801 $40,999,480
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, trade - Geotrac........................... $1,017,163 $ --
Accounts payable, trade..................................... 1,895,219 1,272,921
Employee related accrued expenses........................... 1,326,349 1,546,078
Other accrued expenses...................................... 2,019,385 2,352,487
Capital lease payable....................................... 185,289 --
Income taxes payable........................................ 24,808 1,418,415
---------- -----------
Total current liabilities............................. 6,468,213 6,589,901
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred Stock, $.01 par value; 20,000,000 shares
authorized, no shares issued and outstanding.............. -- --
Common Stock, $.01 par value; 100,000,000 shares
authorized, 12,800,261 and 12,276,063 shares issued and
outstanding at December 31, 2000 and 2001, respectively... 128,002 122,760
Additional paid-in capital.................................. 27,545,901 26,394,438
Retained earnings........................................... 5,438,685 7,892,381
---------- -----------
Total shareholders' equity............................ 33,112,588 34,409,579
---------- -----------
Total liabilities and shareholders' equity............ $39,580,801 $40,999,480
=========== ===========

The accompanying notes are an integral part of these consolidated
statements.

F-3

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31,
------------------------------------------------
1999 2000 2001
------------ ------------ ------------

REVENUES
Outsourcing services - affiliated ............ $ 42,102,818 $ 38,881,502 $ 38,799,105
Outsourcing services ......................... 10,702,732 7,973,652 18,315,309
------------ ------------ ------------
Total revenues ......................... 52,805,550 46,855,154 57,114,414
------------ ------------ ------------
EXPENSES
Cost of outsourcing services ................. 38,939,215 37,695,043 41,902,799
Selling, general and administrative .......... 6,600,819 7,438,712 6,945,378
Management services from Parent .............. 2,165,250 1,860,760 1,327,553
Depreciation and amortization ................ 3,229,839 3,024,573 2,973,454
------------ ------------ ------------
Total expenses ......................... 50,935,123 50,019,088 53,149,184
------------ ------------ ------------
OPERATING INCOME/(LOSS) ......................... 1,870,427 (3,163,934) 3,965,230
------------ ------------ ------------
OTHER INCOME/(EXPENSE):
Interest income .............................. 342,074 306,906 282,601
Interest expense ............................. (255,393) (60,905) (5,736)
------------ ------------ ------------
Total other income/(expense) ........... 86,681 246,001 276,865
------------ ------------ ------------
INCOME/(LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND DISCONTINUED OPERATIONS . 1,957,108 (2,917,933) 4,242,095
PROVISION/(BENEFIT) FOR INCOME TAXES ............ 832,447 (730,988) 1,375,968
------------ ------------ ------------
INCOME/(LOSS) FROM CONTINUING
OPERATIONS BEFORE DISCONTINUED
OPERATIONS ................................... 1,124,661 (2,186,945) 2,866,127
INCOME FROM OPERATIONS OF
DISCONTINUED OPERATIONS, NET OF
INCOME TAXES ................................. 2,070,399 1,677,580 2,413,338
GAIN/(LOSS) ON DISPOSAL OF
DISCONTINUED OPERATIONS, NET OF
INCOME TAXES ................................. -- -- (2,825,769)
------------ ------------ ------------
NET INCOME/(LOSS) ............................... $ 3,195,060 $ (509,365) $ 2,453,696
============ ============ ============

Earnings/(loss) per Common Share:
Income/(loss) from continuing operations ...... $ .09 $ (.17) $ .22
Income/(loss) from discontinued operations .... .17 .13 (.03)
------------ ------------ ------------

NET INCOME/(LOSS) PER COMMON SHARE .............. $ .26 $ (.04) $ .19
------------ ------------ ------------
Weighted average common shares outstanding ...... 12,448,183 12,793,953 12,794,516
============ ============ ============

The accompanying notes are an integral part of these
consolidated statements.

F-4

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Additional
Common Paid-In Retained
Stock Capital Earnings Total
--------- ------------ ----------- ------------

Balance at December 31, 1998 .......................... $ 105,242 $ 5,830,930 $ 2,752,991 $ 8,689,163
Issuance of Common Stock as partial
consideration for the acquisition of Colonial
Claims ........................................... 1,545 1,698,455 -- 1,700,000
Initial public offering of Common Stock, net of
offering costs ................................... 20,000 19,143,897 -- 19,163,897
Compensation expense related to stock options
issued to non-employees .......................... -- 137,000 -- 137,000
Net income ......................................... -- -- 3,195,060 3,195,060
--------- ------------ ----------- ------------
Balance at December 31, 1999 .......................... 126,787 26,810,282 5,948,051 32,885,120
Issuance of Common Stock in connection with
earn-out computation for Colonial Claims
acquisition ...................................... 1,215 298,785 -- 300,000
Non-cash compensation expense related to
phantom stock plans .............................. -- 338,200 -- 338,200
Compensation expense related to stock options
issued to non-employees .......................... -- 98,634 -- 98,634
Net loss ........................................... -- -- (509,366) (509,366)
--------- ------------ ----------- ------------
Balance at December 31, 2000 .......................... 128,002 27,545,901 5,438,685 33,112,588
Compensation expense related to stock options
issued to non-employees .......................... -- 180,000 -- 180,000
Common stock reacquired/retired related to
Geotrac sale ..................................... (5,242) (1,331,463) -- (1,336,705)
Net income ......................................... -- -- 2,453,696 2,453,696
--------- ------------ ----------- ------------
Balance at December 31, 2001 .......................... $ 122,760 $ 26,394,438 $ 7,892,381 $ 34,409,579
========= ============ =========== ============

The accompanying notes are an integral part of these consolidated
statements.

F-5

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31
--------------------------------------------------
1999 2000 2001
----------- ------------ ----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Income/(loss) from continuing operations.................. $ 1,124,661 $ (2,186,945) $2,866,195
Adjustments to reconcile net income/(loss) to net cash
provided by operating activities:
Depreciation and amortization........................... 3,237,634 3,022,383 2,984,912
Provision for billing adjustments....................... -- -- 200,000
Loss on disposal of property and equipment.............. 165,307 174,674 19,334
Compensation expense related to non-employee stock
options............................................... 137,000 98,634 180,000
Non-cash compensation expense related to phantom
stock plans........................................... -- 338,200 --
Deferred income taxes, net.............................. (333,403) 208,612 18,120
Changes in assets and liabilities:
Accounts receivable, trade............................ (45,572) (592,812) 924,143
Accounts receivable, trade - Geotrac.................. (18,525) (952,785) 1,079,353
Accounts receivable, trade - affiliate................ (2,350,404) 304,844 (2,300,473)
Income taxes recoverable.............................. 427,698 536,300 --
Prepaid expenses and other current assets............. (318,852) 177,985 229,290
Other assets.......................................... (123,970) (587,071) (63,265)
Accounts payable, trade............................... 344,406 915,231 (622,298)
Accounts payable, trade - Geotrac..................... (2,106,700) 721,893 (1,017,163)
Accounts payable, trade - affiliate................... (1,735,676) (12,833) --
Employee related accrued expenses..................... 517,592 (525,284) 219,729
Other accrued expenses (less transaction costs
related to sale of Geotrac)......................... 1,262,259 994,983 (440,379)
Income taxes payable (less tax items related to
Geotrac and other).................................. (506,418) 424,854 (406,455)
----------- ------------ ----------
Net cash provided by/(used in) operating activities. (322,963) 3,060,863 3,871,043
----------- ------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment....................... (2,063,984) (3,004,083) (1,763,031)
Payment of acquisition debt............................... (500,000) -- --
Issuance of notes receivable.............................. -- (500,000) --
Issuance of notes receivable - affiliated................. -- -- (5,026,541)
Collection of notes receivable............................ 321,406 90,406 409,594
Dividend received from Geotrac............................ -- -- 200,000
Net proceeds from sale of Geotrac......................... -- -- 19,000,000
Collection of notes receivable from discontinued
operations.............................................. 757,501 2,993,570 1,198,929
Acquisition of Colonial Claims, net of cash acquired...... (1,698,908) -- --
Payment of dividend to prior Colonial Claims
shareholders............................................ (670,000) -- --
----------- ------------ ----------
Net cash provided by/(used in) investing activities. (3,853,985) (420,107) 14,018,951
----------- ------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds received from initial public offering........ 19,163,897 -- --
Repayment of debt......................................... (2,366,855) (249,653) (185,289)
Repayment of affiliated notes and accrued interest........ (13,208,420) -- --
----------- ------------ ----------
Net cash (used in) financing activities............. 3,588,622 (249,653) (185,289)
----------- ------------ ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............. (588,326) 2,391,103 17,704,705

CASH AND CASH EQUIVALENTS, beginning of period............... 588,326 -- 2,391,103
----------- ------------ ----------
CASH AND CASH EQUIVALENTS, end of period..................... $ -- $ 2,391,103 $20,095,808
=========== ============ ==========

The accompanying notes are an integral part of these consolidated statements.

F-6

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS

Insurance Management Solutions Group, Inc. ("IMSG/The Company") is a holding
company that was incorporated in the State of Florida in December 1996 by its
Parent, Bankers Insurance Group ("BIG" or the "Parent").

The Company has operated in two major business segments: providing outsourcing
services to the property and casualty insurance industry with an emphasis on
flood insurance; and providing flood zone determinations primarily to insurance
companies and financial institutions. The Company's outsourcing services, which
are provided by its wholly owned subsidiaries Insurance Management Solutions,
Inc. (IMS) and Colonial Claims Corporation (Colonial), include for IMS - policy
and claims administration (policy issuance, billing and collection function) and
information technology services and for Colonial - claims adjusting and
processing. The Company's flood zone determination services had been provided by
Geotrac of America, Inc. (Geotrac), a wholly owned subsidiary until December 28,
2001, when it was sold. With the disposition of Geotrac, which is reported as
discontinued operations herein, Colonial became a separate reportable segment
for financial statement reporting purposes (see Note 14).

The Company is substantially dependent on the business of its affiliated
insurance companies under the common control of BIG as the Company derives a
substantial portion of its revenue from outsourcing services provided to these
affiliated companies and BIG.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Insurance
Management Solutions Group, Inc. and its wholly owned subsidiaries and all
significant intercompany accounts and transactions have been eliminated in
consolidation.

DISCONTINUED OPERATIONS

Geotrac represents discontinued operations and, accordingly, the discontinued
segment's net assets are presented separately at December 31, 2000. Likewise,
the Geotrac results of operations are excluded from continuing operations for
all years presented (see Note 3).

F-7

USE OF ESTIMATES

The preparation of the Company's financial statements conforms to generally
accepted accounting principles in the United States of America and require
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates and assumptions.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. At December 31, 1999, 2000 and
2001, cash equivalents consisted of overnight repurchase agreements.

ACCOUNTS RECEIVABLE TRADE AND CONCENTRATION OF CREDIT RISK

Accounts receivable, trade represents amounts due from insurance companies and
financial institutions related to claims adjusting services performed. Credit is
granted to customers based on management's assessment of their credit worthiness
and customer deposits are required in certain instances. The allowance for
doubtful accounts totaled approximately $88,000 and $57,000 as of December 31,
2000 and 2001, respectively. Net bad debt expense totaled $101,100, $167,965 and
$7,273 during the years ended December 31, 1999, 2000, 2001 and respectively.

At December 31, 2001 the Company established a $200,000 provision representing
potential disputed billings with its affiliates under the service agreement,
which has been effective since October 1, 2001 (see Note 12).

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are provided for using the
straight-line method over the assets' estimated service lives. Accelerated
methods are used for tax purposes.

GOODWILL

Goodwill associated with the acquisition of Colonial is amortized using the
straight-line method over twenty years. The amortization period was determined
based on various factors including the nature of the product or service
provided, the Company's market position and historical and projected operating
results. Accumulated amortization at December 31, 2000 and 2001 was $248,965 and
$381,342, respectively.

CAPITALIZED SOFTWARE COSTS

In accordance with Statement of Position 98-1 "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"), the
Company capitalizes certain qualifying software development costs incurred
during the application development stage. Amortization is recorded using the
straight-line method over the service life of the software or

F-8

the term of the customer contract to which the software relates, which ranges
from one to five years. Accumulated amortization at December 31, 2000 and 2001
was $518,055 and $1,049,873, respectively.

SERVICE CONTRACT

In conjunction with the Geotrac sale (see Note 3), the Company obtained a
favorable long-term service contract with Geotrac for flood zone determinations,
which has been recorded at its estimated fair value of $2,189,090 at December
27, 2001. The contract will be amortized over the 10-year contract period using
a method that approximates the projected annual requirements of flood zone
determinations.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company evaluates the recoverability of its long-lived assets (including
goodwill) in accordance with Statement of Financial Accounting Standards No.
121, ("SFAS No. 121"), "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of". SFAS No. 121 requires long-lived
assets to be reviewed for impairment whenever circumstances indicate that the
carrying amount of an asset may not be recoverable. Factors considered include
current operating results, trends, and anticipated undiscounted future cash
flows. An impairment loss is recognized to the extent the sum of discounted
(using the Company's incremental borrowing rate) estimated future cash flows
(over a period of less than 20 years) expected to result from the use of the
asset is less than the carrying value. No impairment exists for all periods
presented (see Note 3 related to discontinued operations).

OUTSOURCING SERVICES REVENUES

Revenue generated from outsourcing services is recognized as earned when
services are provided. See Note 12 for description of service agreements with
affiliates.

F-9

Effective October 1, 2001, under the New Service Agreement with BIG,
pass-through expenses (postage, Allocated Loss Adjustment Expenses (expenses for
outsourcing services including but not limited to, expenses related to outside
counsel, outside adjusters, and field investigations) and third-party
information services (expenses from companies that provide services including
but not limited to, motor vehicle registration inquiries and credit score
reporting)) are charged to BIG, on a cost reimbursement basis. Amounts
reimbursed are recorded as revenues.

INCOME TAXES

The Company accounts for income taxes on the liability method, as provided by
SFAS No. 109, "Accounting for Income Taxes." Deferred tax assets and liabilities
are determined based on the difference between the financial statement and tax
bases of assets and liabilities as measured by the enacted tax rates which will
be in effect when these differences reverse. An allowance is recognized when it
is more likely than not that any or all of a deferred tax asset will not be
realized. Deferred tax expense is the result of changes in deferred tax assets
and liabilities.

NET INCOME/(LOSS) PER COMMON SHARE

Net income/(loss) per common share, which represents both basic and diluted
earnings per share ("EPS") since no dilutive securities were outstanding for all
periods presented, is computed by dividing net income/(loss) by the weighted
average common shares outstanding. The following table reconciles the numerator
and denominator of the basic and dilutive EPS computation:

YEAR ENDED DECEMBER 31,
-----------------------------------------------
Numerator 1999 2000 2001
----------- ------------ -----------

Net income/(loss) ................................. $ 3,195,060 $ (509,365) $ 2,453,696
=========== ============ ===========
Denominator:
Weighted average number of Common Shares
used in basic EPS ........................... 12,448,183 12,793,953 12,794,516
Diluted stock options ............................ -- -- --
----------- ------------ -----------
Weighted average number of Common Shares
and diluted potential Common Shares used
in diluted EPS ............................. 12,448,183 12,793,953 12,794,516
=========== ============ ===========

As of December 31, 1999, 2000 and 2001, options to purchase 453,500, 594,000 and
543,750 shares, respectively, of Common Stock were outstanding but were not
included in the computation of diluted earnings per share as the inclusion of
such shares would have an anti-dilutive effect.

F-10

STOCK BASED COMPENSATION

The Company accounts for stock based compensation awards to its employees
pursuant to Accounting Principles Board Opinion No. 25, "Accounting For Stock
Issued to Employees", and its related interpretations which prescribe the use of
the intrinsic value based method. However, the Company has adopted the
disclosure requirements of SFAS No. 123, "Accounting for Stock Based
Compensation."

For awards for other-than employees, the Company accounts for stock based
compensation awards pursuant to the fair value based method of SFAS No. 123.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of the Company's financial instruments, which include cash
and cash equivalents, accounts receivable, due from affiliates, accounts
payable, and due to affiliates approximate fair value due to the short maturity
of those instruments.

RECLASSIFICATION

Exclusive of the separate presentation of continuing and discontinued
operations, certain reclassifications have been made to the 2000 financial
statements to conform to the December 31, 2001 presentation. Also see Note 15.

RECENT ACCOUNTING PRONOUNCEMENTS

On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 141, Business Combinations,
and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is effective for all
business combinations completed after June 30, 2001. SFAS 142 is effective for
the year beginning January 1, 2002; however certain provisions of that Statement
apply to goodwill and other intangible assets acquired between July 1, 2001 and
the effective date of SFAS 142.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long Lived Assets. This statement addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and supersedes
FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposal Of. The provisions of the statement are
effective for financial statements issued for fiscal years beginning after
December 15, 2001.

The Company is evaluating the impact of the adoption of these standards and has
not yet determined the effect of adoption on its financial position and results
of operations.

F-11

NOTE 3. DISCONTINUED OPERATIONS

Effective December 28, 2001, with shareholder approval, the Company sold its
wholly owned subsidiary, Geotrac, pursuant to a Stock Purchase Agreement dated
September 30, 2001 to Geotrac Holdings, Inc. (Holdings). Holdings is a
corporation formed by Geotrac's President and his spouse. The consideration
included: $19,000,000 in cash and 524,198 shares of the Company's common stock
(valued at $1,336,705 based on a quoted market price of the Company's common
stock of $2.55 per share at December 27, 2001) beneficially held by Geotrac's
President and his spouse. In addition, the Company entered a Flood Zone
Determination Service Agreement with Geotrac for Geotrac to provide services for
up to ten years, at a pricing arrangement that management of the Company
believes is favorable. The Company valued the agreement at approximately
$2,189,090 as supported by an independent third party investment banking firm's
valuation.

The sale of Geotrac resulted in a pre-tax loss of approximately $1,025,769.
Because of the existence of non-deductible and unamortized goodwill of
$5,306,108 at December 27, 2001, the Company recognized income taxes of
approximately $1,800,000 on the sale, for a total loss on the disposal of
$2,825,769.

Prior to the sale of Geotrac in December 2001, a portion of the Company's
retained earnings were not available for dividend distribution because of the
effect of restrictions associated with Geotrac's Corporate Governance Agreement
dated July 31, 1998.

Geotrac's condensed statement of income follows:

Year Ended December 31,
-------------------------------------------------
1999 2000 2001
------------ ------------ -----------

Flood zone determination services $ 18,540,543 $ 16,137,943 $20,679,050
Flood zone determination services -
affiliated 620,320 929,004 1,159,415
------------ ------------ -----------
Total revenues 19,160,863 17,066,947 21,838,465
------------ ------------ -----------

Cost of flood zone determination services 8,102,234 7,664,052 9,092,967
Selling, general and administrative 4,382,005 3,775,622 4,439,399
Management services from Parent 90,560 24,264 52,871
Write-off of capitalized software costs -- -- 1,543,988
Depreciation and amortization 2,268,168 2,317,527 2,323,695
------------ ------------ -----------
Total expenses 14,842,967 13,781,465 17,452,920
------------ ------------ -----------

Operating Income 4,317,896 3,285,482 4,385,545
Other interest/(expense), net (546,384) (27,531) 27,136
Income taxes 1,701,113 1,580,371 1,999,343
------------ ------------ -----------

Income from discontinued operations $ 2,070,399 $ 1,677,580 $ 2,413,338
============ ============ ===========

Principally during the fourth quarter of 2001, Geotrac's management, with
Geotrac's Board approval and outside consultants' advisement, decided to abandon
further development of many components of a new software system that had been
in-process since 1999. The decision was based on various factors including
funding limitations, other available strategies, and technical difficulties.

F-12

Geotrac's condensed balance sheet follows:

December 31,
-------------
2000
-----------

Cash and cash equivalents $ 2,801,058
Accounts receivable, trade - net 1,989,848
Accounts receivable, trade - affiliates 1,017,163
Prepaid expenses and other assets 337,163
-----------
Total current assets 6,145,232
Property and equipment, net 4,596,820
Goodwill, net 12,969,215
Customer contracts, net 916,667
Other assets 417,009
-----------
$25,044,943
===========

Current portion of long-term debt $ 674,226
Accounts payable, trade 475,606
Accounts payable, trade - affiliates 1,079,353
Other accrued expenses 458,069
Income taxes payable 532,868
-----------
Total current liabilities 3,220,122
Long-term debt, less current portion 559,271
Deferred revenue 700,799
Net assets of discontinued operations 20,564,751
-----------
$25,044,943
===========

NOTE 4. ACQUISITION

Effective January 7, 1999, the Company, through a wholly owned subsidiary,
acquired all of the issued and outstanding capital stock of Colonial Catastrophe
Claims Corporation, a Florida corporation ("Colonial Catastrophe"), in exchange
for (i) 154,545 shares of Common Stock, (ii) cash in the amount of $500,000,
(iii) a promissory note in the principal amount of $500,000, and (iv) an
earn-out payment of $300,000, which was paid during February, 2000 in 121,518
shares of Common Stock, based upon achieving a target income before taxes of
Colonial Claims for the year ended December 31, 1999. On January 15, 1999,
Colonial Catastrophe was merged into the acquiring subsidiary and the name of
the acquiring subsidiary was changed to "Colonial Claims Corporation"
("Colonial"). The acquisition was accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16 "Business Combinations". The results
of operations of Colonial is included in the accompanying financial statements
since the date of acquisition. The total cost of the acquisition, including the
$300,000 earn-out payment made in February 2000, was $3.0 million, which
exceeded the fair value of the acquired net assets by $2.6 million. Such excess
is being amortized on a straight-line basis over twenty years.

NOTE 5. PROPERTY AND EQUIPMENT

LIFE DECEMBER 31,
---- -------------------------------
(YEARS) 2000 2001
------ ------------ -----------

Computer equipment and software 3-5 $ 8,529,637 $10,041,607
Office furniture and equipment 5 2,144,598 2,169,827
Leasehold improvements 5 794,621 828,773
------------ -----------
11,468,856 13,040,207
Less--accumulated depreciation and amortization (6,949,124) (9,097,495)
------------ -----------
Total $ 4,519,732 $ 3,942,712
============ ===========

F-13

At December 31, 2001, property and equipment included $1,145,076 of assets
($960,948 of accumulated amortization) recorded under capital leases which
became fully amortized in 2001. Depreciation and amortization expense was
$2,862,089, $2,352,849 and $2,309,257 in 1999, 2000 and 2001, respectively.

NOTE 6. OTHER ACCRUED EXPENSES

DECEMBER 31,
--------------------------
2000 2001
---------- ----------

Adjuster expenses payable $ 281,697 $ 313,241
Customer contract advance in dispute 800,000 800,000
Operating lease rebate 228,595 147,914
Accrued professional fees 265,000 552,927
Taxes payable other than income 164,600 161,000
Other accrued expenses 279,493 377,405
---------- ----------
$2,019,385 $2,352,487
========== ==========

NOTE 7. NOTES RECEIVABLE

SECURED LINE OF CREDIT WITH BIG

Pursuant to the Credit Agreement, interest is payable monthly on amounts
outstanding under the Line of Credit at an annual rate equal to the Prime Rate
(4.75% at December 31, 2001)(as defined in the Credit Agreement"), plus 1.5%.
The Credit Agreement further provides that the Line of Credit would expire on
February 28, 2002 (see paragraph below), unless repaid in full prior to such
time or otherwise terminated pursuant to the terms of the Credit Agreement.

The Line of Credit is secured by (i) a first lien security interest in all
accounts and contract rights of Bankers Underwriters, Inc., a wholly-owned
subsidiary of BIG ("BUI"), with insurance agents (including but not limited to
general agents with respect to the sale of federal flood insurance)
(collectively, the "Flood Book"), and (ii) an option (the "Option") to purchase
from BIG the outstanding capital stock, consisting of 10,898 shares (the "Option
Shares") of common stock, $318 par value per share, of First Community Insurance
Company, a New York insurance company licensed in all fifty states ("FCIC"). BUI
currently is a Florida general insurance agent for FCIC and BIC, a Florida
insurance company licensed in approximately 30 states and a wholly-owned
subsidiary of BIG. As of the date of this Report, management of the Company

F-14

believes the fair market value of the Flood Book well exceeds the aggregate
principal amount of the Line of Credit.

With respect to the Option, the aggregate exercise price for the Option Shares
is $108,980, or $10.00 per Option Share. The Option Shares are subject to
certain outstanding liens relating to certain indebtedness of BIG having an
aggregate outstanding balance, as of February 28, 2002, totaling approximately
$10.8 million (unaudited). The Option will become exercisable only at such time
as (i) there shall be a default in the payment of any amounts due under the
Credit Agreement for more than ten days after the date when they shall become
due or (ii) there shall be any other default under the Credit Agreement if,
after notice thereof, such default has not been cured within thirty days of such
notice. In addition, any acquisition of the Option Shares by the Company
pursuant to the Option would require the prior approval of the New York
Department of Insurance. In the event the Option was to be exercised, no
assurances can be given that such approval could be obtained.

The foregoing description of the Line of Credit is qualified in its entirety by
reference to the Credit and Security Agreement, Master Promissory Note,
Collateral Assignment of Flood Book and Stock Option Agreement.

Pursuant to the Credit Agreement, all unpaid principal and interest became due
and payable in full on February 28, 2002. As of such date, BIG owed the Company
an aggregate of approximately $5 million under the Line of Credit. On March 14,
2002, the Company and BIG amended the Credit Agreement to extend the Line of
Credit until May 31, 2002. This amendment to the Credit Agreement was approved
unanimously by the Audit Committee of the Board of Directors of the Company at a
special meeting held on March 8, 2002. In making this determination the Audit
Committee considered, among other things, (i) the Company's continued dependence
on BIG (including certain of its subsidiaries) as the Company's principal
customer and, (ii) the financial condition of BIG and the current status of the
collateral securing the Line of Credit.

The Company has been advised by BIG that it is considering various methods of
satisfying its obligations under the Line of Credit, including the possible sale
of certain of its assets. No assurances can be given, however, that payment in
full of all amounts due and owing under the Line of Credit will be received on
or before June 10, 2002. If payment in full is not received from BIG on or
before such date, the Audit Committee of the Board of Directors of the Company
will determine the appropriate course of action after considering all factors it
deems relevant or appropriate.

The Company believes that cash on-hand (including the proceeds from the Geotrac
sale), cash flows from operations, and cash advances under the Commitment Letter
are sufficient to support the Line of Credit and to satisfy the Company's
currently anticipated working capital requirements. Given the significance of
BIG as the principal customer of the Company, management of the Company,
including the Audit Committee of the Board of Directors, determined that it was
in the best interests of the Company and its shareholders to extend the Line of
Credit.

F-15

UNAFFILIATED CUSTOMER LOAN

In August 2000, the Company loaned $500,000 to an unaffiliated customer in
connection with the termination of the outsourcing services agreement between
the Company and such unaffiliated customer and received in return a $500,000
promissory note from such entity. The note provides for monthly payments equal
to the greater of (a) ten thousand dollars ($10,000), or (b) one and one-half
percent (1 1/2%) of net written premium (as defined) issued by such customer on
or after August 1, 2000. In accordance with the terms of the note, ninety-two
and one-half percent (92 1/2%) of each monthly payment shall be applied to the
reduction of the outstanding principal balance and seven and one-half percent (7
1/2%) shall be interest under the note. The note is collateralized by all of the
borrower's assets. Full payment of the note was received on May 14, 2001.

NOTE 8. CAPITAL LEASE

The Company leased various computer related equipment under capital leases,
which expired in 2001. The outstanding balance under the capital leases as of
December 31, 2000 totaled $185,289.

NOTE 9. SHAREHOLDERS' EQUITY

INITIAL PUBLIC OFFERING

In February 1999, the Company completed an initial public offering ("IPO") of
3,350,000 shares of Common Stock at a price of $11.00 per share. Of the
3,350,000 shares sold in the IPO, 1,350,000 were sold by the Selling Shareholder
and the remaining 2,000,000 shares were sold by the Company. The offering
generated net proceeds to the Company of $19,164,000, after deducting offering
expenses of approximately $1,296,000 paid by the Company. Such offering expenses
were charged to additional paid-in capital against proceeds from the IPO.

PREFERRED STOCK

The Company is authorized to issue 20,000,000 shares of Preferred Stock, $.01
par value per share. The Board of Directors has the authority, without any
further vote or action by the Company's shareholders, to issue Preferred Stock
in one or more series and to fix the number of shares, designations, relative
rights (including voting rights), preferences, and limitations of those series
to the full extent now or hereafter permitted by Florida law. The Company did
not issue any Preferred Stock Shares in 2001 and has no current intention to
issue shares of Preferred Stock, although it may determine to do so in the
future.

COMPENSATION EXPENSE

During the year ended December 31, 2000, the Company recognized approximately
$338,000 in additional compensation expense (of which approximately $145,000
relates to 1999), resulting from the vesting of benefits payable to certain
current and former officers and directors of the Company under the Amended and
Completely Restated Phantom Stock Plan (the "BFC Plan") of Bankers Financial
Corporation ("BFC"), the parent corporation of BIG, and the Amended and

F-16

Restated Phantom Stock Plan (the "VCC Plan") of Venture Capital Corporation
("VCC"). The foregoing compensation charge is a non-recurring, non-cash item to
the Company, as all such benefits under such plans were fully vested as of
September 30, 2000 and constitute the respective obligations of BFC and VCC, not
the Company. In addition, the offset to such compensation expense is an increase
to additional paid-in capital, since the ultimate obligations under these plans
are that of BFC and VCC, respectively, and not of the Company.

LONG TERM INCENTIVE PLANS

The Long-Term Incentive Plan (the "1999 Incentive Plan"), approved by the
Company's Board of Directors and shareholders, provides for the grant of
incentive or nonqualified stock options to purchase up to 875,000 shares of
Common Stock. All such options are granted at fair market value or above and
expire on the tenth anniversary from the date of grant. Options shall become
exercisable 60% after three years, 20% after four years and 20% after five
years. As of December 31, 2001, options to purchase 419,750 shares are
outstanding under the 1999 Incentive Plan.

In October 2000, the Company's Board of Directors adopted the 2000 Stock
Incentive Plan, subject to shareholder approval. The 2000 Stock Incentive Plan
provides for the grant of incentive or nonqualified stock options, stock
appreciation rights, and other stock based awards. No more than 1,000,000 shares
of Common Stock, plus an additional 750,000 shares from the 1999 Incentive Plan
that become available as a result of canceled, forfeited or expired awards under
such plan may be issued under the 2000 Incentive Plan. All options are to be
issued at the greater of the fair market value or "Net Tangible Book Value Per
Share" (as defined) and expire on the tenth anniversary from the date of grant.
As of December 31, 2001, there were no options outstanding under the 2000 Stock
Incentive Plan.

NON-EMPLOYEE DIRECTORS' STOCK OPTION PLANS

The Non-Employee Directors' Stock Option Plan (the "1999 Non-Employee Director
Plan"), approved by the Company's Board of Directors and shareholders, provides
for the grant of nonqualified stock options to purchase up to 7,200 shares of
Common Stock in any three-year period to members of the Board of Directors who
are not employees of the Company. A total of 200,000 shares may be issued
pursuant to this plan. Non-employee directors receiving such options will become
vested in options for the purchase of 800 shares of Common Stock after the
adjournment of each annual meeting of shareholders of the Company, to the extent
he or she has been granted options that have not yet vested, and provided that
he or she is then a non-employee director of the Company. In addition, each
non-employee director shall become vested in options for the purchase of 400
shares of Common Stock upon the adjournment of each regularly scheduled
quarterly meeting of the Board of Directors (other than following the annual
meeting of shareholders), to the extent he or she has been granted options that
have not yet vested, and provided that he or she is then a non-employee director
of the Company. All options granted will have an exercise price equal to the
fair market value of the Common Stock as of the date of grant, will become
exercisable upon vesting, and will expire on the sixth anniversary of the date
of grant. As of December 31, 2001, options to purchase 24,000 shares are
outstanding under the 1999 Non-Employee Directors' Plan.

F-17

In October 2000, the Company's Board of Directors adopted the 2000 Non-Employee
Director Stock Plan, subject to shareholder approval. The 2000 Non-Employee
Director Stock Plan provides for the automatic grant of nonqualified stock
options to purchase up to 5,000 shares of Common Stock, commencing on the date
of the Company's 2001 annual meeting of shareholders, and continuing annually
thereafter on the date of each succeeding annual meeting of shareholders. A
total of 250,000 options may be issued pursuant to this plan. All options are to
be issued at the greater of the fair market value or "Net Tangible Book Value
Per Share" (as defined), vest on the first anniversary following the date of
grant, and expire on the tenth anniversary from the date of grant. As of
December 31, 2001, there were no options outstanding under the 2000 Non-Employee
Director Stock Plan.

NON-QUALIFIED STOCK OPTION PLAN

The Non-Qualified Stock Option Plan (the "Non-Qualified Plan"), approved by the
Company's Board of Directors and shareholders, provides for the grant of
non-qualified stock options to purchase up to 125,000 shares of Common Stock.
Options to purchase 125,000 shares of Common Stock at fair market value were
granted to certain executive officers of BIG. All of such options expire on the
tenth anniversary from the date of grant and shall become exercisable 60% after
three years, 20% after four years and 20% after five years. As of December 31,
2001, options to purchase 100,000 shares were outstanding under the
Non-Qualified Plan.

Under this plan, the Company will recognize aggregate compensation expense of
approximately $600,000 of which $137,000, $98,634 and $180,000 was recognized
during the years ended December 31, 1999, 2000 and 2001, respectively, and is
included in "Selling, general and administrative" expenses in the accompanying
consolidated statements of operations. The balance will be recognized ratably
over the remainder of the vesting period.

The following table summarizes option activity from December 31, 1999 through
December 31, 2001:

Options Number of Weighted
Available Options Average
For Grant Outstanding Exercise Price
--------- ----------- --------------

Balance at December 31, 1998 -- -- $ --
Options authorized 1,200,000 -- --
Options granted (794,500) 794,500 $ 10.76
Options cancelled 241,000 (241,000) $ 11.00
Options exercised -- -- --
----------- -------- ---------
Balance at December 31, 1999 646,500 553,500 $ 10.64
Options authorized 1,250,000 -- --
Options granted (297,750) 297,750 $ 7.70
Options cancelled 157,250 (157,250) $ 10.09
Options exercised -- -- --
----------- -------- ---------
Balance at December 31, 2000 1,756,000 694,000 $ 9.50
Options authorized -- -- --
Options granted -- -- --
Options cancelled 150,250 (150,250) $ 9.10
----------- -------- ---------
Balance at December 31, 2001 1,906,250 543,750 $ 9.61
=========== ======== =========

F-18

The range of exercise prices, shares, weighted average contractual life and
exercise price for the options outstanding as of December 31, 2001 are presented
below:

Weighted Weighted
Range of Number Average Average
Exercise Prices Of Shares Contractual Life Exercise Price
--------------- --------- ---------------- --------------

$5.00 - $ 7.69 146,750 4.87 years $ 6.73
$9.00 - $11.00 397,000 4.39 years $10.67
------- ---------- ------
$5.00 - $11.00 543,750 4.52 years $ 9.61
======= ========== ======

As of December 31, 2001, there were 24,000 options that were exercisable at a
weighted average exercise price of $11.00.

The per-share weighted-average fair value of stock options granted during 2000
was $1.16 using the Black-Scholes option-pricing model with the following
weighted-average assumptions: expected dividend yield of 0%; risk-free interest
rate of 5.75%; expected volatility of 65%; and an expected life of 5 years.
There were no stock options granted during 2001.

PRO FORMA RESULTS

The Company applies APB Opinion No. 25 in accounting for its Incentive Plan and
Non-Employee Director Plan and, accordingly, no compensation cost has been
recognized for its stock options in the consolidated financial statements. Had
the company determined compensation cost based on SFAS No. 123, the Company's
net income would have been as follows:

1999 2000 2001
------------------------ --------------------- -----------------------
NET DILUTED NET DILUTED NET DILUTED
INCOME EPS LOSS EPS INCOME EPS
---------- --------- ---------- ------- ---------- -------

As reported $3,195,060 $ .26 $(509,365) $(.04) $2,453,696 $ .19
Statement 123 compensation (net of tax) (617,500) (.05) $(441,000) $(.03) $ (305,699) $ (.02)
Pro forma disclosure $2,577,560 $ .21 $(950,365) $(.07) $2,147,997 $ .17

NOTE 10. INCOME TAXES

Year Ended December 31,
---------------------------------------------------
1999 2000 2001
----------- ----------- -----------

Current:
Federal $ 995,750 $ (757,300) $ 1,163,580
State 170,100 (182,300) 194,268
----------- ----------- -----------
1,165,850 (939,600) 1,357,848
----------- ----------- -----------

Deferred:
Federal (284,803) 149,012 44,720
State (48,600) 59,600 (26,600)
----------- ----------- -----------
(333,403) 208,612 18,120
----------- ----------- -----------

$ 832,447 $ (730,988) $ 1,375,968
=========== =========== ===========

F-19

Reconciliation of the federal statutory income tax rate of 34% to the effective
income tax rate is as follows:

Year Ended December 31,
---------------------------------------------
1999 2000 2001
-------- ---------- -----------

Federal income taxes at statutory rates $665,417 $ (992,097) $ 1,442,314
State taxes, net of federal benefit 70,688 (81,559) 107,022
Non-deductible compensation expense related to
stock plans -- 262,100 --
Non-deductible goodwill 42,963 48,979 48,318
Non-deductible meals and entertainment 45,975 30,939 24,525
Adjustments to prior year provision and allocations
with discontinued operations -- -- (243,373)
Other, net 7,404 650 (2,838)
-------- ---------- -----------
$832,447 $ (730,988) $ 1,375,968
======== ========== ===========

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the corresponding amounts used for income tax reporting purposes.
Significant components of the Company's deferred tax assets and liabilities are
as follows:

December 31,
---------------------------
2000 2001
--------- ---------

Deferred tax assets:
Vacation pay $ 189,900 $ 161,900
Depreciation and fixed asset bases differences 283,800 256,700
Allowance for doubtful accounts and other 33,200 96,829
Stock options expense -- 156,400
Other 32,700 --

Deferred tax liabilities
Capitalized software development costs (92,200) (212,500)
Other -- (30,000)
--------- ---------

Net deferred tax asset $ 447,400 $ 429,329
========= =========

NOTE 11. COMMITMENTS AND CONTINGENCIES

RISKS AND UNCERTAINTIES

The Company derives a substantial portion of its revenues from outsourcing
services provided to its principal shareholder, BIG. For the years ended
December 31, 1999, 2000 and 2001, revenues from services provided to BIG
accounted for approximately 66%, 60% and 49% of the Company's total revenues
(including discontinued operations), respectively, and approximately 80%, 83%
and 68%, respectively, of the Company's revenues from outsourcing services (for
Continuing Operations). As a result of the sale of the Company's Geotrac
subsidiary in late December 2001, the importance of BIG as a source of ongoing
revenue will become even greater. Thus, the Company's future financial condition
and results of operations will depend to a significant extent upon the
commercial success of BIG and its continued willingness to utilize the Company's
services. BIG has informed the Company that significant portions of its
homeowner and worker's compensation business outsourcing will be diminished in
2002. Homeowner business processing will be administered by another company as
part of an agreement that BIG negotiated for this business. BIG is exiting the
worker's compensation business and, consequently, this business will be
diminishing over the next 18 months. Any further significant downturn in the
business of BIG or its commitment to utilize the Company's services could have a
material adverse effect on the Company's business, financial condition and
results of operations.

F-20

The Company's business is dependent upon various factors, such as general
economic conditions and weather patterns, that are beyond its control. For
example, natural disasters such as hurricanes, tornadoes, and floods, all of
which are unpredictable, directly impact the demand for the Company's
outsourcing services. Fluctuations in weather patterns, general economic
conditions and various other factors will likely produce fluctuations in the
Company's quarterly earnings and operating results.

OPERATING LEASES

The Company leases property and equipment under operating leases, which expire
at various dates through 2007. Future minimum rental payments under
non-cancelable operating leases, exclusive of related party leases discussed in
Note 12, having initial or remaining terms in excess of one year as of December
31, 2001 are as follows:

YEAR ENDED DECEMBER 31, AMOUNT
----------------------- ----------

2002 $2,889,000
2003 2,596,000
2004 1,816,000
2005 718,000
2006 77,000
Thereafter 6,000
----------
Total future minimum rental payments $8,102,000
==========

Total rental expense, excluding amounts paid to BIG under the affiliated lease
agreements, totaled $688,000, $1,710,807 and $3,344,501 for the years ended
December 31, 1999, 2000 and 2001, respectively.

LEGAL PROCEEDINGS

F-21

own flood zone determination business and with its insurance outsourcing
services business; (ii) actual and anticipated synergies between the Company's
flood zone determination and outsourcing services business lines; and (iii) the
Company's use of the IPO proceeds. The complaint seeks unspecified damages,
including interest, and equitable relief, including a rescission remedy. On
March 26, 2001, the Company, BIG and the five inside director defendants filed a
motion to dismiss the plaintiffs' Consolidated Amended Class Action Complaint
for, among other things, failure to allege material misstatements and/or
omissions in the roadshow presentations, registration statement and/or
prospectus relating to the IPO. On July 11, 2001, U.S. District Judge Richard A.
Lazzara denied all of the defendants' motions to dismiss the Amended Complaint.

The case has been set for trial during the trial term commencing May 5, 2003,
and active discovery is proceeding. Management of the Company believes the
material allegations of the Amended Complaint are without merit and intends to
vigorously defend the lawsuit. No assurances can be given, however, with respect
to the outcome of the litigation, and an adverse result could have a material
adverse effect on the Company's business, financial condition and results of
operations.

Bankers Insurance Company ("BIC"), a subsidiary of BIG, and Bankers Life
Insurance Company ("BLIC") and Bankers Security Insurance Company ("BSIC"),
subsidiaries of BIC, have been subject to an investigation by the Florida
Department of Insurance (the "DOI"), the principal regulator of insurance
activities in the State of Florida, stemming from their use of a private
investigator to gather information on a DOI employee and the private
investigator's unauthorized use of illegal wiretaps in connection therewith. On
March 23, 2000, the Treasurer and Insurance Commissioner of the State of
Florida, as head of the DOI, filed an administrative complaint against BIC, BLIC
and BSIC based upon the results of such investigation. The administrative
complaint charged BIC, BLIC and BSIC with violating various provisions of the
Florida Insurance Code including, among other things, a provision requiring
insurance companies to have management, officers or directors that are, among
other things, trustworthy. The complaint further notified BIC, BLIC and BSIC
that the Insurance Commissioner intended to impose such penalties or take such
other administrative actions as may be proper or appropriate under applicable
law, including possibly entering an order suspending or revoking the
certificates of authority of BIC, BLIC and BSIC to conduct business as insurance
companies in the State of Florida. Effective February 6, 2002, BIC, BLIC and
BSIC entered into a Consent Order with the DOI pursuant to which the DOI's
administrative action against BIC, BLIC and BSIC was dismissed. Also pursuant to
this Consent Order, such entities were ordered to pay a $1 million penalty
(consisting of a fine of $700,000 and reimbursement of attorneys' fees of
$300,000), Robert M. Menke was prohibited from acting as chairman or an officer
of any of such entities for a period of three (3) years, another executive
officer of each of these entities was removed from such positions, and certain
other compliance-related requirements were imposed. BIG has advised the Company
that the terms of the Consent Order should not have a material adverse effect on
the business and/or operations of BIG, but no assurances can be given in this
regard.

On November 19, 1999, the United States, on behalf of the Federal Emergency
Management Agency ("FEMA"), filed a civil action against BIC in the United
States District Court for the

F-22

District of Maryland stemming from FEMA's investigation of certain cash
management and claims processing practices of BIC in connection with its
participation in the National Flood Insurance Program ("NFIP"). The complaint
alleges, among other things, that BIC knowingly failed to report and pay
interest income it had earned on NFIP funds to the United States in violation of
the False Claims Act. The complaint further alleges various common law theories,
including fraud, breach of contract, unjust enrichment and negligent
misrepresentation. The complaint seeks civil penalties of $1.08 million and
actual damages of approximately $1.1 million, as well as treble, punitive and
consequential damages, costs and interest. The suit is currently stayed pending
arbitration following a decision by the United States Court of Appeals for the
Fourth Circuit in favor of BIC on its motion to stay the litigation pending
arbitration. The government has not appealed the Fourth Circuit Court of Appeal
ruling requiring arbitration and the case is stayed pending arbitration. By
letter dated January 30, 2002, FEMA notified Bankers that it intends to move
forward with arbitration and set forth proposed procedures. BIC has further
informed the Company that it intends to vigorously defend against the action,
but no assurances can be given as to the outcome thereof. However, BIG has
advised the Company that an adverse judgment in this action should not have a
material adverse affect on the business and/or operations of BIC, although no
assurances can be given in this regard.

FEMA's investigation of certain claims processing practices of BIC in connection
with its participation in the NFIP is continuing, and BIC has produced
documentation in connection therewith. If the parties are either unable to reach
agreement in these matters or resolve their disagreement in arbitration, the
United States could amend its complaint against BIC to add additional claims
under the False Claims Act and/or various common law and equitable theories
relating to such matters. In the event such continuing investigation or any
consequence thereof materially adversely affects the business or operations of
BIC, it could result in the loss of or material decrease in the Company's
business from BIC, which would have a material adverse effect on the Company's
business, financial condition and results of operations. The Company is involved
in various other legal proceedings arising in the ordinary course of business.
Management believes that the ultimate resolution of these other proceedings will
not have a material adverse effect on the Company's financial position, results
of operations, or liquidity, although no assurances can be given in this regard.

EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with certain members of its
executive management team. The agreements provide for employment terms of three
years and shall continue indefinitely until terminated by either party pursuant
to the terms of the agreements. In the event an employment agreement is
terminated by the Company without cause, the employee shall be entitled to
earned, but unpaid benefits as well as a "Severance Payment" equal to the
employee's then current annual base salary, subject to adjustment as defined.
The agreements contain non-compete provisions, which prevent a terminated
employee from soliciting customers, prospective customers or employees of the
Company.

In connection with the acquisition of Geotrac, Inc., the Company entered into an
employment agreement with the president and chief executive officer of Geotrac,
Inc. ("Geotrac's President"). This agreement provides for an initial term of
four years and shall continue in effect thereafter

F-23

until terminated by either party upon 90 days prior written notice. The
agreement contains certain non-compete provisions, which prevent Geotrac's
President from engaging in the flood zone compliance business within a specified
area and soliciting or employing any Geotrac, Inc. employees. This agreement has
been terminated effective with the sale of the Company's Geotrac subsidiary as
of December 26, 2001.

NOTE 12. RELATED PARTY TRANSACTIONS

ADMINISTRATION SERVICES AGREEMENT

Pursuant to the Letter Agreement described below, the Administration Agreement
was terminated effective April 1, 2001 (see Letter Agreements).

SERVICE AGREEMENTS

Effective as of January 1, 1998, the Company entered into a separate Service
Agreement (each a "Service Agreement") with each of BIC, BSIC and FCIC, all
direct or indirect subsidiaries of BIG, pursuant to which the Company provides
policy administration, claims administration and data processing services to
such entities in connection with their flood, homeowners and automobile lines of
business, and claims administration and data processing services for all such
entities' other property and casualty lines of business.

F-24

property, automobile casualty and flood insurance programs (in addition, a
monthly fee based upon direct incurred losses is charged for flood claims
administration and a reimbursement not to exceed 5% of direct incurred losses
from a single event in excess of $2 million is charged to property claims); (3)
for its data processing services, a monthly fee based upon direct written
premiums for all insurance programs; and (4) for certain customer services such
as mailroom, policy assembly, records management and cash office a monthly fee
based upon direct written premiums (except, if provided in connection with their
flood, homeowners and automobile insurance lines, where no such fees are
imposed). The total service fees charged to BIC, BSIC and FCIC under these
Service Agreements during the year ended December 31, 1998 totaled $36.1
million.

Effective January 1, 1999, these Service Agreements were modified to provide for
tiered pricing based on the volume of business processed, and to change the fee
for data processing services, which was previously charged as a percentage of
direct written premium, to a fixed monthly fee. The total service fees charged
to BIC, BSIC and FCIC under these Service Agreements, as amended, during the
years ended December 31, 1999 and 2000 totaled $41.5 million and $37.9 million,
respectively. These modifications resulted in a reduction in the base fees
charged for certain lines of business and increases in base fees charged for
other lines of business to better reflect the services provided and competitive
market rates for such services. The term of each Service Agreement was to expire
on June 1, 2001, provided that it was thereafter to be automatically extended
until terminated upon 90 days prior notice by either party.

Effective April 1, 1999, the Company further amended its existing Service
Agreements with affiliated insurers to provide for minimum aggregate quarterly
service fee payments through December 31, 1999 with respect to certain lines of
business, provided that certain key tasks are performed timely. If such minimum
service fee requirements with respect to said lines of business under the
agreements had not been implemented as of April 1, 1999, aggregate affiliated
outsourcing services revenues, which totaled $41.5 million for the year ended
December 31, 1999, would have been $39.7 million in accordance with the terms of
the affiliated service agreements as in effect prior to April 1, 1999.
Additionally, for the year ended December 31, 1999, the Company did not
recognize approximately $500,000 of additional affiliated service fees under the
minimum service fee arrangement, as the Company did not meet certain specified
milestones on a timely basis. Such minimums were established to compensate the
Company for maintaining an infrastructure to process certain lines of business
of affiliated insurers that have not grown as rapidly as originally forecasted.

In addition, under the Service Agreement with BIC, the Company administers an
AYO Claims Agreement between BIG and Florida Windstorm Underwriting Association,
which agreement BIG assigned to BIC on December 15, 1998. The Company processes
and adjusts all claims made under the AYO Claims Agreement. The administrative
fee (equal to a percentage of each loss paid) is allocated between BIC and the
Company.

Pursuant to the Letter Agreement described below, the Service Agreements were
amended effective June 1, 2001 to, among other things, modify certain of the
service fees payable thereunder and eliminate data and technical support
services from the administrative services to

F-25

be provided by the Company thereunder (see Letter Agreements).

Effective as of October 1, 2001, the Company entered into the New Service
Agreement with BIC, BSIC and FCIC, as described below. The New Service Agreement
replaced the Service Agreements, as amended by the Letter Agreement (see New
Service Agreement).

Effective December 1, 1998, the Company entered into a service agreement with
BLIC, a subsidiary of BIG, pursuant to which the Company provided certain
administrative services and allowed BLIC to make use of certain of the Company's
property, equipment and facilities in connection with BLIC's day-to-day
operations. Under this service agreement, as amended, BLIC agreed to pay the
Company predetermined fees on a quarterly basis. The term of this service
agreement with BLIC expired on June 1, 2001, and was not renewed or replaced. No
services were provided and no fees were ever charged or paid under this service
agreement.

Effective November 14, 2000, the Company entered into a separate Insurance
Administration Services Agreement with BIG (the "WC Agreement") pursuant to
which the Company provides policy administration, system hosting and support,
and claims administration services to BIG and its affiliate BIC in connection
with BIC's workers compensation line of business. Under the WC Agreement, the
Company is paid for its services as follows: (1) for its policy administration,
system hosting and support services, a monthly fee based upon direct written
premiums for BIG's workers compensation program; and (2) for its claims
administration services, a monthly fee based upon direct earned premiums
relating to such program. For the period November 14, 2000 through December 31,
2000 and the year ended December 31, 2001, the total service fees charged to BIG
under the WC Agreement were $26,650 and $1.23 million, respectively. BIG ceased
writing workers compensation insurance in November 2001. Consequently, the
Company does not expect to generate significant additional revenues under the WC
Agreement during the year ending December 31, 2002.

TECHNICAL SUPPORT SERVICES AGREEMENT

In April, 1999, the Company entered into a Technical Support Services Agreement
(the "Support Agreement") with BIG pursuant to which the Company provided BIG
with certain system development services. Under the Support Agreement, such
services were charged to BIG on a time and materials basis. Pursuant to the
Letter Agreement described below, the Support Agreement was terminated effective
April 1, 2001. The total service fees charged to BIG under the Support Agreement
during the years ended December 31, 1999 and 2000 and the period January 1, 2001
through March 31, 2001 totaled $1.3 million, $0 and $0, respectively. The
Support Agreement was to be replaced, effective June 1, 2001, with a new
Technical Support Services Agreement, pursuant to which BIG would provide
certain technical support services to the Company. A new Technical Support
Services Agreement has not been, and is no longer expected to be, executed. The
Letter Agreement was terminated effective as of October 1, 2001, and BIG did not
provide any technical support services to the Company after April 1, 2001 as

F-26

contemplated thereby. See "Certain Relationships and Related Transactions--
Letter Agreements" and "--New Service Agreement."

LETTER AGREEMENTS

On April 13, 2001, the Company entered into a Letter Agreement with BIG, BIC,
BSIC and FCIC (the "Letter Agreement") pursuant to which the various contractual
arrangements between the Company and such affiliated entities were significantly
altered as described below.

With respect to the Administration Agreement, the Letter Agreement provided that
the existing Administration Agreement was terminated effective as of April 1,
2001 and would be replaced, effective June 1, 2001, with a new Corporate
Services Agreement, pursuant to which BIG would provide the Company with various
corporate marketing (including graphic design and web-site development) and
corporate training services requested by the Company from time to time at fixed
hourly rates ranging from $40 to $100 per hour, depending on the service being
provided.

The Letter Agreement provided that the parties would negotiate in good faith to
execute and deliver the Corporate Services Agreement incorporating these terms
on or before June 1, 2001; provided, however, that in the event such agreement
was not executed and delivered by that date, BIG would provide such services at
the rates specified in the Letter Agreement. The Letter Agreement further
provided that the Support Agreement was terminated effective April 1, 2001 and
would be replaced, effective June 1, 2001, with a new technical support services
agreement pursuant to which BIG would provide the Company with certain technical
support, computer programming and systems analysis services at specified rates
(except for software development services, which would be provided on a time and
materials basis).

With respect to the Service Agreements, the Letter Agreement provided that each
of such agreements shall be amended, effective June 1, 2001, to (i) postpone the
expiration date of the agreement from June 1, 2001 until December 1, 2002, (ii)
modify the service fees payable thereunder with respect to policy and claim
administration services to be provided in connection with certain lines of
business, (iii) eliminate data and technical support services from the
administrative services to be provided by the Company under the agreement, and
(iv) assess a fixed monthly fee for usage of the Company's AS 400 computer
system. With respect to the service fee modifications, under the Service
Agreements, as amended, each entity will pay the Company (1) a monthly fee based
upon direct written premiums for policy administration services relating to its
flood, homeowners and commercial lines of business and (2) a monthly fee based
upon net claims (after deductibles) for claims administration services relating
to its flood line of business. The service fees payable under the Service
Agreements with respect to (a) policy administration services relating to the
automobile line of business, and (b) claims administration services relating to
all lines of business other than flood, remained unchanged. If such amendments
to the Service Agreements had been in effect for the fiscal year ended December
31, 2000, the Company's affiliated outsourcing revenues, which totaled
approximately $38 million on an actual basis, would have been approximately $30
million on a pro forma basis.

F-27

On April 13, 2001, the Company entered into a Commitment Letter to advance
service fee payments (the "Commitment Letter") with BIG pursuant to which BIG
has agreed to advance to the Company up to $1.5 million per month as a
prepayment of service fees due by BIG and its affiliates under the Service
Agreements. Such advances are available to the Company beginning June 1, 2001
continuing through December 1, 2002 and shall be payable upon demand by the
Company. Any funds advanced by BIG to the Company under the Commitment Letter
shall constitute a prepayment of, and shall be credited toward, the service fees
charged to BIG by the Company during the month following such advance.

NEW SERVICE AGREEMENT

Under the New Service Agreement, each entity pays the Company as follows: (1)
for its policy administration services a monthly fee based upon direct written
premiums for the flood, homeowners and automobile insurance programs; (2) for
its claims administration services a monthly fee based upon direct earned
premiums for the property, casualty, automobile property, automobile casualty
and flood insurance programs (in addition, a monthly fee based upon direct
incurred losses is charged for flood claims administration and a reimbursement
not to exceed 5% of direct incurred losses from a single event in excess of $2
million is charged to property claims); (3) for its data processing services, a
monthly fee based upon direct written premiums for all insurance programs; and
(4) for certain customer services such as mailroom, policy assembly, records
management and cash office a monthly fee based upon direct written premiums
(except, if provided in connection with their flood, homeowner and automobile
insurance lines, where no such fees are imposed). The New Service Agreement is
for an initial term of five years, subject to termination thereafter upon 90
days written notice. The New Service Agreement further provides for the
renegotiation of rates in good faith after the first three years of the initial
term.

F-28

approximately $6.5 and $-0- million under the previous agreement on a pro forma
basis (unaudited). The Company believes that any anticipated reduction in
affiliated outsourcing service fee revenues resulting from the implementation of
such service fee changes under the New Service Agreement will be largely offset
by the corresponding increase in revenues from the pass-through (reimbursement)
of flood loss adjustment expenses, postage expenses and third-party information
services, although no assurances can be given in this regard. Moreover, as of
October 1, 2002, the Company will again become directly responsible for the
payment of postage expenses under the terms of the New Service Agreement. If the
New Service Agreement had not been in effect for the fourth quarter of 2001,
such postage expenses, which totaled $475,000 and were passed through to BIG,
would have been expenses borne by the Company.

SECURED LINE OF CREDIT

Pursuant to the Credit Agreement, interest is payable monthly on amounts
outstanding under the Line of Credit at an annual rate equal to the Prime Rate
(4.75% at December 31, 2001) as defined in the Credit Agreement, plus 1.5%. The
Credit Agreement further provides that the Line of Credit would expire on
February 28, 2002 (see paragraph below), unless repaid in full prior to such
time or otherwise terminated pursuant to the terms of the Credit Agreement.

The Line of Credit is secured by (i) a first lien security interest in all
accounts and contract rights of Bankers Underwriters, Inc., a wholly-owned
subsidiary of BIG ("BUI"), with insurance agents (including but not limited to
general agents with respect to the sale of federal flood insurance)
(collectively, the "Flood Book"), and (ii) an option (the "Option") to purchase
from BIG the outstanding capital stock, consisting of 10,898 shares (the "Option
Shares") of common stock, $318 par value per share, of First Community Insurance
Company, a New York insurance company licensed in all fifty states ("FCIC"). BUI
currently is a Florida general insurance agent for FCIC and BIC, a Florida
insurance company licensed in approximately 30 states and a wholly-owned
subsidiary of BIG. As of the date of this Report, management of the Company
believes the fair market value of the Flood Book will exceeds the aggregate
principal amount of the Line of Credit.

F-29

within thirty days of such notice. In addition, any acquisition of the Option
Shares by the Company pursuant to the Option would require the prior approval of
the New York Department of Insurance. In the event the Option was to be
exercised, no assurances can be given that such approval could be obtained.

Pursuant to the Credit Agreement, all unpaid principal and interest became due
and payable in full on February 28, 2002. As of such date, BIG owed the Company
an aggregate of approximately $5 million under the Line of Credit. On March 14,
2002, the Company and BIG amended the Credit Agreement to extend the Line of
Credit until May 31, 2002. This amendment to the Credit Agreement was approved
unanimously by the Audit Committee of the Board of Directors of the Company at a
special meeting held on March 8, 2002. In making this determination the Audit
Committee considered, among other things, (i) the Company's continued dependence
on BIG (including certain of its subsidiaries) as the Company's principal
customer and, (ii) the financial condition of BIG and the current status of the
collateral securing the Line of Credit.

The Company has been advised by BIG that it is considering various methods of
satisfying its obligations under the Line of Credit, including the possible sale
of certain of its assets. No assurances can be given, however, that payment in
full of all amounts due and owing under the Line of Credit will be received on
or before June 10, 2002. If payment in full is not received from BIG on or
before such date, the Audit Committee of the Board of Directors of the Company
will determine the appropriate course of action after considering all factors it
deems relevant or appropriate.

PROPERTY LEASES

The Company currently subleases from Bankers Financial Corporation approximately
44,032 square feet of office space in St. Petersburg, Florida at a monthly rate
of approximately $56,000. The current term of this sublease expires on December
31, 2003. The Company and Bankers Financial Corporation entered into the
sublease on December 31, 2001. The sublease agreement replaced a lease agreement
between BIC and the Company for the same property, which was terminated
effective as of December 31, 2001 in connection with a sale by BIC of the
property covered by the lease and its simultaneous lease by Bankers Financial
Corporation. The terms and conditions of the sublease agreement are identical to
those of the lease agreement which it

F-30

replaced, as earlier amended. During the year ended December 31, 2001, the
Company paid BIC approximately $917,800 under the terminated lease agreement.

The Company currently leases from BFIC approximately 4,600 square feet of office
space in St. Petersburg, Florida at a monthly rate of approximately $5,100. The
current term of this lease expires on April 14, 2002. This lease replaced, as of
October 15, 2001, an existing lease between the Company and BLIC for the same
office space. During the year ended December 31, 2001, the Company paid Bankers
Life Insurance Company an aggregate of approximately $35,600 under the new lease
and the lease which it replaced.

SALES AND ASSIGNMENT AGREEMENT

In May 1998, the Company entered into a sales and assignment agreement with BIG
and certain affiliated companies whereby certain assets were transferred and
assigned to the Company, effective retroactively to April, 1998, for use in its
business. The assets, including, but not limited to, telephone equipment,
computer hardware and software, and service marks were transferred at their net
book value as of the date of transfer. The Company paid consideration consisting
of $325,075 in cash and entered into two promissory notes amounting to
$2,802,175. The notes were repaid in full in February 2000 out of the net
proceeds to the Company from its initial public offering. In addition, the
Company assumed the existing leases with unaffiliated third parties relating to
various computer equipment.

SOFTWARE LICENSING AGREEMENT

Effective January 1, 1998, the Company entered into a non-exclusive license
agreement with BIG and BIC pursuant to which the Company licenses its primary
operating systems from BIG and BIC in exchange for a nominal fee. The term of
the license is perpetual. The license agreement provides that the Company shall
be solely responsible for maintaining and upgrading the systems and shall have
the authority to sell or license such systems to third parties.

F-31

GEOTRAC TRANSACTIONS

DJWW Corp., an Ohio corporation, was formed in June 1987 by Daniel J. White
("Mr. White"), the corporation's president and sole shareholder. In May 1991,
the corporation changed its name to Geotrac, Inc. In August, 1994, Geotrac, Inc.
sold substantially all of its assets to SMS Geotrac, Inc., a Delaware
corporation ("SMS Geotrac"), for a purchase price of $1,000,000 in cash, plus a
contingent payment based on net profits after taxes for the Fiscal year ended
June 30, 1995. SMS Geotrac was a wholly owned subsidiary of Strategic Holdings
USA, Inc. ("Strategic"). During the year ended June 30, 1996 and on July 30,
1997, SMS Geotrac made payments of $932,222 and $1,700,000, respectively to Mr.
White in satisfaction of the contingent payment obligations under the
acquisition agreement. The amounts were recorded as an increase to goodwill and
an additional capital contribution to SMS Geotrac. In connection with the sale
of assets to SMS Geotrac, Mr. White became the president of SMS Geotrac and
received a four-year employment contract at a base salary of $100,000 per year.
In September 1994, Geotrac, Inc. changed its name to YoSystems, Inc. During the
year ended June 30, 1997, SMS Geotrac and Strategic agreed to treat all
outstanding amounts owed to the parent, $1,611,140, as an additional capital
contribution. In addition, Strategic contributed $500,000 to SMS Geotrac.

During the one-month period ended July 31, 1997, SMS Geotrac advanced $797,000
to YoSystems, Inc. In July 1997, YoSystems acquired all of the issued and
outstanding shares of capital stock of SMS Geotrac from Strategic for
$15,000,000 in cash. The purchase price was funded through an $8.75 million loan
from Huntington National Bank to YoSystems ($8.25 million of which was used in
the purchase) plus $6.75 million in cash paid by the Company in connection with
its acquisition of a 49% interest in YoSystems, as described below. Thereafter,
the Company assumed the loan from Huntington National Bank, which loan has since
been repaid from proceeds received in the Company's initial public offering.

Neither YoSystems nor Mr. White, its president and sole shareholder, had a
preexisting right to acquire SMS Geotrac pursuant to the August, 1994
transaction. The purchase price of the SMS Geotrac stock was determined by arm's
length negotiations. After the stock purchase transaction, SMS Geotrac merged
into YoSystems, with YoSystems being the surviving entity and changing its name
back to Geotrac, Inc. Concurrent with the acquisition of SMS Geotrac by
YoSystems, the Company, through a subsidiary, Bankers Hazard Determination
Services, Inc. ("BHDS"), purchased a 49% interest in YoSystems for $6,750,000 in
cash. At that time, the Company did not contemplate acquiring the remaining 51%
of YoSystems, Inc.

In connection with the Company's purchase of a 49% interest in YoSystems, BHDS
issued 675,000 shares of non-cumulative 8% preferred stock to Heritage Hotel
Holding Company ("Heritage"), a corporation owned by Richard M. Brubaker, the
half brother of Robert M. Menke, a director of the Company. The preferred stock
of BHDS issued to Heritage had a par value of $10 per share and was subject to
redemption at the option of the board of directors of BHDS. The preferred stock
could be redeemed at any time at a price equal to 108% of the original
consideration paid for the stock by the shareholder plus the amount of the
dividends declared and unpaid on the redemption date Heritage funded the
preferred stock purchase by entering into a note agreement with a commercial
bank for $6,750,000, with the preferred stock serving as collateral. On May 8,
1998, the Company purchased the outstanding preferred stock of BHDS in exchange
for a note to Heritage in the principal amount of $6,750,000. The note was
repaid in full in February 2000 out of the net proceeds to the Company from its
initial public

F-32

offering. After May 8, 1998, the preferred stock of BHDS held by the Company was
exchanged for 675,000 shares or 8.5% cumulative preferred stock of BHDS. The
shares of non-cumulative 8% preferred stock were then retired. Dividends
declared on the preferred stock for l997 and 1998 were $229,315 and $189,370,
respectively.

In July 1998, the Company acquired the remaining 51% equity interest in Geotrac,
Inc. (formerly YoSystems) pursuant to the merger of Geotrac, Inc. with and into
BHDS, with the surviving entity being known as "Geotrac of America, Inc."
("Geotrac"). The Company acquired the remaining 51% interest from Mr. White and
his wife and certain minority shareholders in exchange for (i) 524,198 shares of
Common Stock, (ii) a promissory note in the principal amount of $1,500,000
bearing interest at a rate of 8.5%, and (iii) cash in the amount of $728,069
(paid in December, 1998), for a total purchase price of $7,994,000. In addition,
the Company assumed the loan in the original principal amount of $8,750,000 from
Huntington National Bank made to YoSystems in July 1997. As described above, the
loan from Huntington Bank was repaid from proceeds received in the Company's
initial public offering. In connection with this transaction, Geotrac entered
into an employment agreement with Mr. White pursuant to which Mr. White served
as the President and Chief Executive Officer of Geotrac. In addition, the
Company entered into a Corporate Governance Agreement with Mr. White and Geotrac
setting forth certain terms and conditions upon which Geotrac continued to
operate following the merger.

On December 28, 2001 the Company consummated the transactions contemplated by a
stock purchase agreement (as amended, the "Stock Purchase Agreement"), dated as
of September 20, 2001, by and among the Company, Geotrac, Geotrac Holdings,
Inc., Mr. White, the Daniel J. White Trust, the Sandra A. White Trust, and,
solely for purposes of a non-competition covenant, BIG. The shareholders of the
Company approved the Stock Purchase Agreement and the transactions contemplated
thereby in accordance with Florida law at a Special Meeting of Shareholders held
on December 26, 2001.

Pursuant to the Stock Purchase Agreement, Geotrac Holdings, Inc., a Delaware
corporation formed by Mr. White and his spouse, Sandra A. White, purchased all
the issued and outstanding capital stock (the "Shares") of Geotrac. Prior to the
consummation of the transactions contemplated by the Stock Purchase Agreement,
Mr. White served as a director of the Company and President, Chief Executive
Officer and a director of Geotrac. Mr. White resigned as a director of the
Company effective as of the consummation of the sale of the Shares.

The purchase price paid for the Shares was $19,000,000 in cash, plus 524,198
shares of Common Stock of the Company beneficially owned by Mr. White and his
spouse. Pursuant to the Stock Purchase Agreement, certain of the parties also
entered into additional agreements as of the closing of such sale, including a
Flood Zone Determination Service Agreement pursuant to which Geotrac will
provide the Company with flood zone determination services for up to ten years
at pricing management of the Company currently considers to be favorable.

F-33

provided for monthly rental payments of approximately $10,448, plus payment of
utilities, real estate taxes and assessments, insurance, repairs and similar
expenses.

During the year ended December 31, 2000 and for the period from January 1, 2001
through December 27, 2001, Geotrac paid fees of $339,345 and $1.0 million,
respectively, to SLK Software Services Private Limited ("SLK") for various
consulting services and recruiting fees. Mr. White had an equity interest of
approximately 46% in SLK at December 28, 2001, the closing date of the date of
Geotrac. Mr. White was neither a director nor an officer of SLK and did not have
the ability to exercise control or make management decisions. At December 27,
2001 and December 31, 2000, Geotrac owed SLK $68,600 and $15,200, respectively.

During the year ended December 31, 2000 and the period from January 1, 2001
through December 27, 2001, Geotrac paid $396,200 and $946,000 in flood zone
determination costs and $611,200 and $451,900 in digitizing costs and other
miscellaneous costs, respectively, to JDI Software Services Private Limited
("JDI"). On January 9, 2001, Mr. White purchased 100,550 shares of JDI,
representing approximately 48% ownership interest in JDI. Mr. White was neither
a director nor an officer of JDI and did not have the ability to exercise
control nor make management decisions. At December 27, 2001 and December 31,
2000, Geotrac owed JDI $62,000 and $85,300, respectively. Additionally, JDI owed
Geotrac $100,000 at December 31, 2000 for the sale of Geotrac's National GIS
Flood Coverage.

PHANTOM STOCK PLANS

During the year ended December 31, 2000, the Company recognized approximately
$338,000 in compensation expense (of which approximately $145,000 relates to
1999) resulting from the vesting of benefits payable to certain current and
former officers and directors of the Company under the Amended and Completely
Restated Phantom Stock Plan (the "BFC Plan") of Bankers Financial Corporation
("BFC"), the parent corporation of BIG, and the Amended and Restated Phantom
Stock Plan (the "VCC Plan") of Venture Capital Corporation ("VCC"). The
foregoing compensation charge is a non-recurring, non-cash item to the Company,
as all such benefits under such plans were fully vested as of September 30, 2000
and constitute the respective obligations of BFC and VCC, not the Company.

Effective September 30, 2000, the BFC and VCC Plans were amended to provide for,
among other things, immediate vesting of benefits payable there under to certain
current and former officers and directors of the Company. Accordingly, as of
September 30, 2000, the total discounted and non-discounted benefits payable
under these plans, which have accrued since February 11, 1999, the date of the
Company's initial public offering (the "IPO Date"), totaled $327,000 and
$894,000, respectively, for the BFC Plan and $12,000 and $43,000, respectively,
for the VCC Plan. Benefits under each of such plans generally are payable in 120
equal installments beginning at age 60. Although resulting in a compensation
expense (on a discounted basis) to the Company, all of such benefits under such
plans were granted on or before the IPO Date and constitute the respective
obligations of BFC and VCC, not the Company. The benefits described herein
exclude amounts vested prior to the IPO Date and/or allocable to services
provided to BIG or its affiliated entities (other than the Company or its
subsidiaries) since the IPO Date.

F-34

Robert G. Gantley, $217,583 and $0; Christopher P. Breakiron, $0 and $0; Daniel
J. White, $0 and $0; Kathleen M. Batson, $43,348 and $6,160; John A. Grant, Jr.,
$154,100 and $9,210; William D. Hussey, $100,000 and $0; E. Ray Solomon,
$100,000 and $0; and Alejandro M. Sanchez, $0 and $0. The foregoing benefits
exclude amounts vested prior to the IPO Date and/or allocable to services
provided to BIG or its affiliated entities (other than the Company or its
subsidiaries) since the IPO Date.

Except as set forth below, since the IPO Date, no officers or directors of the
Company have been eligible to receive additional grants under such phantom stock
plans or have been subject to future allocations of profits or losses with
respect thereto. In addition, except as set forth below, all current officers
and directors of the Company were fully vested, as of September 30, 2000, in all
benefits under such plans. Notwithstanding the foregoing, Robert G. Menke, a
director of the Company, and David K. Meehan, Chairman of the Board of the
Company, will continue to be eligible to receive grants, vest in benefits
received and share in profits and losses under such plans in their capacity as
officers and directors of BIG and its affiliated entities.

MISCELLANEOUS

In February 1999, Western International Insurance Company, a wholly owned
subsidiary of VCC and presently a more than 5% shareholder of the Company,
loaned $12.0 million to BIG in exchange for a subordinated note. This loan was
funded by using a portion of the net proceeds received by VCC in the Company's
initial public offering. BIG, in turn, used a portion of such loan proceeds to
satisfy a note payable (including accrued interest) to the Company which totaled
$5,322,455. The balance of the loan proceeds will provide BIG with additional
capital to repay other outstanding indebtedness and expand its operations. The
Company, in turn, used the funds received from BIG, together with a portion of
the net proceeds from its initial public offering, to satisfy $7,054,996 in
accounts, income taxes and notes payable (including accrued interest) payable to
BIG.

In 1998, BIG made a loan of $55,000 to David M. Howard. Interest on the loan was
payable at a rate of 8.5% annually and the loan was to be repaid in equal
bi-weekly installments with a balloon payment due on March 31, 2000.
Subsequently, the note was extended indefinitely with Mr. Howard continuing to
make bi-weekly payments. In early 2000, after Mr. Howard joined the Company as a
director and executive officer, the loan was transferred to the Company. In
December 2001, the Company paid Mr. Howard a bonus of approximately $71,000 in
the form of the forgiveness of such indebtedness (grossed up to cover associated
taxes).

The Audit Committee of the Board of Directors is responsible for reviewing all
future transactions between the Company and any officer or director of the
Company or any entity in which an officer of director has a material interest.
Any such transactions must be on terms no less favorable than those that could
be obtained on an arm's-length basis from independent third parties.

F-35

NOTE 13. EMPLOYEE BENEFITS PLANS

The Company's employees participate in its Parent company's 401(k) plan, which
covers substantially all employees. To participate in the plan, employees must
be at least 18 years old and have completed 90 days of service. The Company
makes matching contributions of up to 5% of each participant's deferral. The
Company's expense related to this plan was approximately $620,893, $650,700, and
$517,174 in 1999, 2000 and 2001, respectively.

In addition, the Company's employees (except for employees of Geotrac)
participate in self-insured medical and dental plans provided by the Parent. The
medical program provides for specific excess loss reinsurance for individual
claims greater than $60,000 for any one claimant and aggregate claims greater
than $1 million. The Company accrues the estimated liabilities for the ultimate
costs of both reported claims and incurred but not reported claims.

NOTE 14. SEGMENT INFORMATION

The Company primarily operates in two business segments within the United
States; providing policy and claims administration services and claims adjusting
services. Prior to 2000, Geotrac (now presented as discontinued operations) was
reported as a separate segment and claims adjusting services provided by
Colonial were combined with outsourcing in total, as it was not significant. No
unaffiliated customer accounted for more than 10% of the Company's total
revenues for the periods presented. The following table provides information
about these reportable segments as required by SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information".

Outsourcing Outsourcing Intercompany
Services - Services - Eliminations Consolidated
Administration Claims Adjusting And Other Totals
------------ --------- ------------ ------------

1999
Operating revenues-affiliated ..... $ 42,142,568 $ -- $ (39,750) $ 42,102,818
Operating revenues-unaffiliated ... 3,060,610 7,642,122 -- 10,702,732
Operating income .................. 1,065,981 804,446 -- 1,870,427
Interest expense .................. 248,708 6,685 -- 255,393
Depreciation and amortization ..... 3,104,862 124,977 -- 3,229,839
Identifiable assets ............... 35,992,432 4,907,893 (3,438,688) 37,461,637

2000
Operating revenues-affiliated ..... $ 38,904,502 $ -- $ (23,000) $ 38,881,502
Operating revenues-unaffiliated ... 4,449,930 3,523,722 -- 7,973,652
Operating income .................. (3,229,456) 65,522 -- (3,163,934)
Interest expense .................. 60,905 -- -- 60,905
Depreciation and amortization ..... 2,868,189 156,384 -- 3,024,573
Identifiable assets ............... 39,807,467 5,740,491 (5,967,157) 39,580,801

2001
Operating revenues-affiliated ..... $ 38,806,105 $ -- $ (7,000) $ 38,799,105
Operating revenues-unaffiliated ... 6,992,575 11,322,734 -- 18,315,309
Operating income .................. 2,687,189 1,278,041 -- 3,965,230
Interest expense .................. 5,736 -- -- 5,736
Depreciation and amortization ..... 2,801,316 172,138 -- 2,973,454
Identifiable assets ............... 40,130,292 5,796,430 (4,927,242) 40,999,480

Outsourcing Services - Administration. Identifiable assets in 1999 and 2000
include net assets of discontinued operations of $18,887,175 and $20,564,751.

F-36

NOTE 15. STATEMENTS OF CASH FLOWS

CONTINUING OPERATIONS

YEAR ENDED DECEMBER 31,
--------------------------------------------
1999 2000 2001
---------- -------- ----------

Cash paid for:
Interest ................ $ 258,982 $ 60,904 $ 5,736
Income taxes ............ $1,198,000 $172,808 $3,504,886

A summary of the consideration for the sale of Geotrac follows:

Consideration:
Cash $19,000,000
Non-cash items
524,198 shares of the Company's common stock 1,336,705
Service contract 2,189,090
-----------
$22,525,795
===========

The Company paid and/or accrued transaction costs of $773,451 that for financial
statement presentation purposes was considered a component of the loss on
disposal of discontinued operations. The current income taxes payable of
$1,320,700 associated with the sale are a component of the loss also, though the
payable is included in the Company's December 31, 2001 balance sheet.

During 1999, the Company acquired Colonial. In conjunction with this
acquisition, assets acquired and liabilities assumed were as follows:

YEAR ENDED
DECEMBER 31,
1999
----------

Common stock ..................................... $1,700,000
Common stock payable ............................. 300,000
Promissory note .................................. 500,000
Short-term obligation ............................ 500,000
----------
$3,000,000
==========
Fair value of assets acquired .................... $1,846,555
Liabilities assumed .............................. 1,478,306
----------
Net assets ....................................... 368,249
Goodwill ......................................... 2,631,751
----------
$3,000,000
==========

The statement of cash flows for 1999 and 2000 has been reclassified to present
changes in accounts receivable, trade and accounts payable, trade associated
with affiliates and Geotrac as operating activities instead of financing
activities.

F-37

DISCONTINUED OPERATIONS

Supplemental Disclosure of Cash Flow Information

Year Ended December 31,
---------------------------------------------------
1999 2000 2001
----------- ----------- -----------

Operating activities:
Net cash provided by $ 9,585,451 $ 3,615,914 $ 7,176,511

Investing activities:
Net cash used by (1,103,945) (2,845,608) (3,655,098)

Financing activities:
Net cash used by (4,736,635) (2,994,660) (1,011,708)
----------- ----------- -----------
Net increase/(decrease) in cash 3,744,871 (2,224,354) 2,509,705
Cash at beginning of period 1,280,541 5,025,412 2,801,058
----------- ----------- -----------
Cash at end of period before sale $ 5,025,412 $ 2,801,058 $ 5,310,763
=========== =========== ===========

F-38

NOTE 16. SUPPLEMENTAL SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Following is a summary of the quarterly results of operations for the quarterly
periods in 2000 and 2001:

QUARTER ENDED
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
------------ ------------ ------------ ------------

2000
Total revenues $ 10,966,881 $ 11,556,502 $ 11,701,426 $ 12,630,345
Operating income/(loss) (814,921) (942,501) (1,791,038) 384,526
Income/(loss) before discontinued
operations (472,999) (577,541) (1,277,086) 140,681
Income from discontinued operations 252,497 601,269 720,543 103,271
Net income/(loss) (220,502) 23,728 (556,543) 243,952
Net income/(loss) per common share (0.02) -- (0.04) 0.02

2001
Total revenues $ 10,801,497 $ 15,866,834 $ 19,879,637 $ 10,566,446
Operating income/(loss) (454,482) 4,116,806 2,020,067 (1,717,161)
Income/(loss) before discontinued
operations (276,561) 2,573,321 1,584,767 (1,015,400)
Income from discontinued operations 429,126 914,117 196,217 873,878
Loss on disposal of discontinued
operations -- -- -- (2,825,769)
Net income/(loss) 152,565 3,487,438 1,780,984 (2,967,291)
Net income/(loss) per common share 0.01 0.27 0.14 (0.23)

F-39

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON SCHEDULE I

To the Board of Directors of
Insurance Management Solutions Group, Inc.

In connection with our audit of the consolidated financial statements
of Insurance Management Solutions Group, Inc. and Subsidiaries referred to in
our report dated March 21, 2002, which is included in this Annual Report on form
10-K for the year ended December 31, 2001, we have also audited Schedule I for
each of the two years in the period ended December 31, 2000. In our opinion,
this schedule presents fairly, in all material respects, the information
required to be set forth therein.

/s/ GRANT THORNTON LLP

Tampa, Florida
March 21, 2002

F-40

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. (PARENT COMPANY)
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT

BALANCE SHEET
DECEMBER 31, 2000

ASSETS

Current Assets:
Cash and cash equivalents $ 2,922,342
Due from affiliates 8,686,359
Note and interest receivable - affiliate 1,198,930
-----------
Total current assets 12,807,631

Investment in subsidiaries 23,700,395
-----------

Total assets $36,508,026
===========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
Due to affiliates $ 3,379,762
Other current liabilities 15,676
-----------
Total current liabilities 3,395,438

Shareholders' Equity 33,112,588
-----------

Total liabilities and shareholders' equity $36,508,026
===========

The "Notes to Consolidated Financial Statements of Insurance Management
Solutions Group, Inc. and Subsidiaries" are an integral part of these
statements.

See accompanying "Notes to Condensed Financial Information of
Registrant".

F-41

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. (PARENT COMPANY)
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF OPERATIONS

Year Ended December 31,
-------------------------------
1999 2000
----------- -----------

Interest Income:
Affiliates $ 115,540 $ 262,825
Non-affiliates 173,617 35,364
----------- -----------
Total interest income 289,157 298,189

Expenses:
Selling, general and administrative 172,687 507,367
Interest expense - affiliates 100,156 --
Other expenses, net 23,651 59,644
----------- -----------
Total expenses 296,494 567,011
----------- -----------

Loss from continuing operations before
income taxes, equity in earnings/(losses) of
subsidiaries, and discontinued operations (7,337) (268,822)

Income Tax Benefit/(Provision) 4,704 (67,200)
----------- -----------

Loss from continuing operations before equity
in earnings/(losses) of subsidiaries and
discontinued operations (2,633) (336,022)

Equity in earnings/(losses) of subsidiaries 1,127,294 (2,044,713)
Income from discontinued operations 2,070,399 1,871,369
----------- -----------

Net income/(loss) $ 3,195,060 $ (509,366)
=========== ===========

The "Notes to Consolidated Financial Statements of Insurance Management
Solutions Group, Inc. and Subsidiaries" are an integral part of these
statements.

See accompanying "Notes to Condensed Financial Information of
Registrant".

F-42

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. (PARENT COMPANY)
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENTS OF CASH FLOWS

Year Ended December 31,
---------------------------------
1999 2000
------------ -----------

Cash Flows from Operating Activities:
Net income/(loss) $ 3,195,060 $ (509,366)
Adjustments to reconcile net income/(loss) to net cash provided by operating
activities:
Equity in (earnings)/losses of subsidiaries (1,127,294) 2,044,713
Income from discontinued operations (2,070,399) (1,871,369)
Compensation expense related to non-employee stock options 137,000 98,634
Non-cash compensation expense related to phantom stock plans -- 338,200
Changes in assets and liabilities:
Other current assets 32,969 41,468
Other assets (52,101) 51,600
Other current liabilities 28 15,647
------------ -----------
Net cash provided by operating activities 115,263 209,527

Cash Flows from Investing Activities:
Preferred stock dividend received from subsidiary 66,020 --
------------ -----------
Net cash provided by/(used in) investing activities 66,020 --

Cash Flows from Financing Activities:
Net proceeds received from initial public offering 19,163,897 --
Repayment of debt (5,128,234) --
Issuance of intercompany debt (4,500,000) --
Repayment of intercompany debt 307,501 2,993,569
Net advances to/(from) affiliates (10,439,639) (978,668)
------------ -----------
Net cash provided by/(used in) financing activities (596,475) 2,014,901

Increase (decrease) in Cash and Cash Equivalents (415,192) 2,224,428

Cash and Cash Equivalents, beginning of period 1,113,106 697,914
------------ -----------

Cash and Cash Equivalents, end of period $ 697,914 $ 2,922,342
============ ===========

The "Notes to Consolidated Financial Statements of Insurance Management
Solutions Group, Inc. and Subsidiaries" are an integral part of these
statements.

See accompanying "Notes to Condensed Financial Information of
Registrant".

F-43

INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. (PARENT COMPANY)
NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT

NOTE 1 - BASIS OF PRESENTATION

Pursuant to the rules and regulations of the Securities and Exchange
Commission, the Condensed Financial Statements of the Registrant do not include
all of the information and notes normally included with financial statements
prepared in accordance with generally accepted accounting principles. It is,
therefore, suggested that these Condensed Financial Statements be read in
conjunction with the Consolidated Financial Statements and Notes thereto include
in the Registrant's Annual Report as referenced in Form 10-K, Part II, Item 8.

The 1999 and 2000 financial information has been modified to reflect
discontinued operations. The 2001 financial statements have been omitted, as the
restricted net asset condition requiring these financial statements under the
Securities and Exchange Commission rules has been eliminated with the December
28, 2001 sale of the Company's subsidiary, Geotrac of America, Inc.

NOTE 2 - RESTRICTED NET ASSETS AND RETAINED EARNINGS

See Note 3 to the Consolidated Financial Statements of the Company.

NOTE 3 - DISPOSITION AND DISCONTINUED OPERATIONS

See Note 3 to the Consolidated Financial Statements of the Company.

F-44

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this amended report to be signed on
its behalf by the undersigned, thereunto duly authorized.

INSURANCE MANAGEMENT SOLUTIONS
GROUP, INC.

By: /s/ DAVID M. HOWARD
--------------------------
David M. Howard
President and Chief
Executive Officer

April 9, 2002

Pursuant to the requirements of the Securities and Exchange Act of 1934, this
amended report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on April 9, 2002.

Signature Title
--------- -----

* Chairman of the Board and Director
--------------------------------------
David K. Meehan

/s/ DAVID M. HOWARD President, Chief Executive Officer and Director
-------------------------------------- (Principal Executive Officer)
David M. Howard

* Chief Financial Officer and Secretary
-------------------------------------- (Principal Financial and Accounting Officer)
Anthony R. Marando

* Director
--------------------------------------
William D. Hussey

* Director
--------------------------------------
Robert M. Menke

* Director
--------------------------------------
John A. Grant, Jr.

* Director
--------------------------------------
E. Ray Solomon

* Director
--------------------------------------
Alejandro M. Sanchez

* Director
--------------------------------------
John S. McMullen

*By: /s/ DAVID M. HOWARD
----------------------------------
David M. Howard
Attorney-in-Fact

EXHIBIT INDEX
-------------

EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------

3.1 Amended and Restated Articles of Incorporation of Insurance Management Solutions Group,
Inc.*

3.2 Amended and Restated Bylaws of Insurance Management Solutions Group, Inc.*

4.1 Specimen certificate for the Common Stock of Insurance Management Solutions Group,
Inc.*

10.1 Employment Agreement, dated August 10, 1998, between David K. Meehan and Insurance
Management Solutions Group, Inc.*

10.2 Insurance Management Solutions Group, Inc. Long Term Incentive Plan.*

10.3 Insurance Management Solutions Group, Inc. Non-Employee Directors' Stock Option
Plan.*

10.5 Lease Agreement for 10051 5th Street North, dated October 15, 2001, between Bankers Life
Insurance Company and Insurance Management Solutions Group, Inc.

10.6 Bankers Financial Center Lease Agreement, dated January 1, 1997, between Bankers
Insurance Company and Insurance Management Solutions Group, Inc.*

E-1