THE OFFERING

Series A Convertible Preferred Stock offered by
Birmingham Investment Group LLC (1)                                             2,950,000

Common stock offered by Birmingham
Investment Group,  LLC (1)                                                      5,900,000

Common stock to be outstanding after the offering(2)(3)                        24,825,832

Use of Proceeds                                                               Vesta Insurance Group, Inc. will not receive
                                                                              any proceeds from the sale of the shares
                                                                              offered. See "Use of Proceeds."

NYSE Symbol                                                                   VTA

(1)      Birmingham Investment Group LLC is registering for resale its Series A  Preferred Stock and the publicly
         traded common stock which  it may acquire by converting its shares of Series A Preferred Stock.


(2)      Based on the number of shares actually outstanding on September 30, 2000.


(3)      Assumes the Birmingham Investment Group converts all shares of Series A Preferred Stock into common
         stock, in which event the Birmingham Investment Group will no longer have any shares of Series A
         Preferred Stock to offer.  See, "Description of Series A Preferred Stock."

VESTA INSURANCE GROUP

        What We Do. We sell primarily personal lines insurance, which means we sell insurance products primarily to individuals covering their home and contents, their private passenger automobiles and potential liabilities attendant to their ownership of such property and term life and annuity products . We are licensed to sell these insurance products in 49 states, and we distribute these products primarily through independent agencies.

        Recent Decision to Focus on Personal Lines. During 1999, we decided to discontinue two business segments—reinsurance assumed and commercial lines insurance—which historically generated the majority of our premium volume. Reinsurance is essentially an agreement by one insurance company, the reinsurer, to assume specified risks of loss on insurance policies issued by another insurance company. Our commercial lines insurance products covered a variety of commercial assets and risks. During 1999, adjustments to our statutory capital and surplus and related downgrades in our ratings by A.M. Best Company dramatically impacted our ability to compete in the commercial insurance and reinsurance markets. Accordingly, we decided to discontinue our reinsurance and commercial lines business segments.

        During fiscal year 1999, we made a strategic decision to concentrate our efforts on Personal Lines insurance. Although our historical results of operations reflect significant premium volume in our reinsurance and commercial lines segments, we lost substantially all of this premium volume on a written basis during 1999.

RISK FACTORS

        You should carefully consider the risks described below before making an investment decision. The risks and uncertainties described below are not the only ones we may face. If any of the following risks actually occur, our business, financial condition or results of operations could be materially and adversely affected. In such case, the trading price of our Common stock could decline, and you may lose all or part of your investment.

BUSINESS RISKS

        We compete with dozens of property and casualty insurance companies, many of which are better capitalized than us and have higher A.M. Best ratings than us. We believe that the superior capitalization of many of our competitors enables them to withstand lower profit margins and, therefore, to offer lower rates. We believe that the superior capitalization of many of our competitors enables them to market their products more aggressively and to take advantage more quickly of new marketing opportunities, such as the internet. We also believe that our competition may become increasingly better capitalized in the future as the traditional barriers between insurance companies and banks and other financial institutions erode and as the property and casualty industry continues to consolidate. We believe that our ability to compete against our larger, better capitalized competitors depends on our ability to deliver superior service and our strong relationships with our independent agency force.

        We price our insurance based on estimated profit margins, and we do not expect to be able to significantly reduce our current estimated profit margins in the near future. Many of our competitors, however, are better capitalized than we are and may be able to withstand significant reductions in their estimated profit margins. If our competitors decided to target our customer base by offering lower priced insurance, we may not be able to respond competitively.

We Depend On Agents Who May Discontinue Sales of Our Policies at Any Time

        Our relationship with our independent agents is perhaps the most important component of our current competitive profile. If these independent agents find it easier to do business with our competitors, it would be difficult to renew our existing business or attract new business in our Personal Lines segment. Because we do business with approximately 2500 agencies in 42 states, we cannot rely on the independent agents’ loyalty to us. Although we believe we enjoy good relationships with our independent agents and are striving to make doing business with us as easy as possible, we cannot be sure that these agents will continue to sell our insurance to the individuals they represent.

        Because we do business with approximately 2,500 agents in 42 states, we must be able to offer these agents innovative solutions to their daily problems and be able to respond to their needs as quickly as possible to develop their loyalty. If our agency force finds it easier to do business with our competitors, we may not be able to retain their business.

        The growth of our Personal Lines segment depends upon increasing new policy applications. During 1999, we experienced a significant decline in new policy applications as compared to 1998. Although we believe that this reflects a temporary uncertainty about our financial condition and results of operations that may dissipate as we move forward, we cannot predict whether new policy applications will return to past levels. If new policy application levels do not rise in the near future, we may not be able to generate sufficient premium volume to achieve our financial performance goals.

        Our ability to retain our existing business or to attract new business in our insurance operations depends largely on our rating by A.M. Best Company. During 1999, downgrades in our A.M. Best ratings to “B” necessitated the discontinuation of our Reinsurance and Commercial Lines segments. Such downgrades also impacted our Personal Lines segment, although we can not quantify such impact. Although A.M. Best Company upgraded our rating to “B+” on February 25, 2000, we believe we must further improve our rating in order to more effectively compete in the highly competitive property and casualty insurance market. Although we intend to work towards a higher rating, A.M. Best Company has ultimate discretion over its rating assignments. If we are unable to achieve a higher A.M. Best rating, we may not be able to grow our premium volume sufficient to attain our financial performance goals. If A.M. Best were to downgrade our rating, we could lose significant premium volume.

Our Acquisition Strategy May Require Us to Make Significant Capital Infusions, Be Dilutive to Our Existing Shareholders, and Result in Difficulties in Assimilating and Integrating the Operations, Personnel, Technologies, Products And Information Systems of Acquired Companies.

        We have announced a strategy to maximize our returns through strategic investments, including entry into banking and non-standard automobile coverage, and we plan to pursue acquisition opportunities in the future. Acquisitions may require significant capital infusions, typically entail many risks and could result in difficulties in assimilating and integrating the operations, personnel, technologies, products and information systems of the acquired company. We may also encounter unanticipated expenditures, changing relationships with customers, suppliers and strategic partners, or contractual, intellectual property or employment issues. In addition, the key personnel of the acquired company may decide not to work for us. The acquisition of another company or its products and technologies may also require us to enter into a geographic or business market in which we have little or no prior experience. These challenges could disrupt our ongoing business, distract our management and employees and increase our expenses. In addition, acquisitions may materially and adversely affect our results of operations because they may require large one-time write-offs, increased debt and contingent liabilities, substantial depreciation or deferred compensation charges or the amortization of expenses related to goodwill and other intangible assets. We may seek to account for acquisitions under the pooling-of-interests accounting method, but that method may not be available. Any of these events could cause the price of our common stock to decline. Furthermore, if we issue equity or convertible debt securities to pay for an acquisition, the issuance may be dilutive to our existing shareholders. In addition, the equity or debt securities that we may issue could have rights, preferences or privileges senior to those of the holders of our Common Stock.

        We cannot assure you that we will be able to consummate any of our acquisitions or that we will realize the benefits anticipated from these acquisitions. In the future, we may not be able to find other suitable acquisition opportunities. Even if we do find suitable acquisition opportunities, we may not be able to consummate the acquisitions on commercially acceptable terms. Moreover, due to our limited acquisition experience, it may be difficult for us to successfully integrate any acquired businesses, products, technologies or personnel, which could materially and adversely affect our business, financial condition and results of operations.

FINANCIAL RISKS

We Are Currently Defending Class Action Litigation Seeking Unspecified but Potentially Significant Damages

        As discussed in our public filings,we are currently defending a class action lawsuit alleging, among other things, violations of the federal securities laws. As of September 30, 2000, this class action was still in its preliminary stages and there had been no discovery conducted. However, the damages or settlement costs incurred by us in disposition of this proceeding could be substantial. Although we have procured a multi-tiered package of directors and officers liability insurance to cover such damages or settlement costs, the issuer of the primary $25 million policy, the Cincinnati Insurance Company, has attempted to rescind its policy. We cannot guarantee that insurance coverage will ultimately be available for any damages or settlements costs incurred. If the damages or settlement costs incurred in connection with this class action are ultimately determined to not be covered by our directors’ and officers’ insurance policies for any reason, we may incur a significant loss during the period in which such determination is made.

We Face a Risk of Non-Collection of Reinsurance Recoverables Involving Substantial Amounts

        Although we reinsure a significant portion of potential losses on the policies which we issue, we initially pay all claims and seek to recover the reinsured losses from our reinsurers. Although we report as assets the amount of claims paid which we expect to recover from reinsurers, we can never be certain that we will be able to collect those amounts. Sometimes the reinsurer is unable to pay, and other times the reinsurer may dispute our calculation of the amounts recoverable. Approximately $54.4 million of our reinsurance recoverables as of September 30, 2000 was attributable to one reinsurance treaty. Although we believe this amount is properly recoverable under the terms of such treaty, the various treaty participants have disputed our calculation. If the amount recoverable under such treaty is ultimately determined to be materially less than $54.5 million as of September 30, 2000, we may incur a significant loss during the period in which such determination is made.

        We maintain reserves to cover our estimated ultimate liability for losses and related expenses with respect to reported and unreported claims incurred. To the extent that reserves prove to be inadequate in the future, we would have to increase our reserves and incur a charge to earnings in the period such reserves are increased, which could have a material adverse effect on our financial condition and results of operations. The establishment of appropriate reserves is an inherently uncertain process, and we can not be sure that ultimate losses and related expenses will not materially exceed our reserves. Reserves are estimates involving actuarial and statistical projections at a given time of what we expect to be the cost of the ultimate settlement and administration of claims based on facts and circumstances then known, estimates of future trends in claims severity and other variable factors such as inflation.

Substantial Sales of Our Common Stock by Our Large Stockholders Could Cause Our Stock Price to Fall.

        We have a limited number of stockholders that hold a large portion of our common stock. To the extent our large stockholders sell substantial amounts of our common stock in the public market, the market price of our common stock could fall.

Stockholders

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

        The Securities Exchange Commission allows us to “incorporate by reference” information that we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this Prospectus, and information that we file later with the Commission will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we will make with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities and Exchange Act of 1934:

         (a)      our Annual Report on Form 10-K for the fiscal year ended December 31, 1999 filed March 30,
                  2000, as amended by Form 10K/A filed November 29, 2000;

         (b)      our definitive proxy materials dated April 11, 2000 for the annual meeting of stockholders held
                  May 18, 2000;

         (c)      our Quarterly Reports on Form 10-Q for the quarter ended September 30, 2000, June 30, 2000 and
                  March 31, 2000;


         (d)      our Current Reports on Form 8-K, dated  July 14, 2000, June 21, 2000 and January 13, 2000 and
                  our amended current report on  Form 8K/A filed September 12, 2000;

We will provide without charge to each person to whom this Prospectus is delivered, on the written or oral request of any such person, a copy of any or all documents incorporated herein by reference (other than the exhibits to such documents unless such exhibits are specifically incorporated by reference). Such requests should be directed to John McCullough, Vice President, Vesta Insurance Group, Inc., 3760 River Run Drive, Birmingham, Alabama 35243.

USE OF PROCEEDS

        These shares being offered for sale by this prospectus to this prospectus are being offered for sale by Birmingham Investment Group, LLC. We will not receive any proceeds from the sale of these shares.

DESCRIPTION OF CAPITAL STOCK

Authorized Capital Stock

Common stock

        At the close of business on September 30, 2000, there were 18,825,832 shares of our common stock outstanding. The holders of our common stock are entitled to one vote for each share on all matters voted on by shareholders, including elections of directors. Except as otherwise required by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders of our common stock will possess exclusive voting power. Our Certificate of Incorporation does not provide for cumulative voting in the election of directors. Subject to any preferential rights of any outstanding series of preferred stock created by our board of directors from time to time, the holders of common stock will be entitled to such dividends as may be declared from time to time by our board of directors , and upon liquidation will be entitled to receive pro rata all assets available for distribution to such holders of common stock.

Shareholder Rights Plan

        On ‘June 15, 2000, our board of directors adopted a stockholder rights plan which provides for the payment of a dividend of one Series B Preferred Stock purchase right to be attached to each outstanding share of our common stock. Generally, each right, if and when it becomes exercisable, will entitle the registered holder to purchase from us one one-hundredth (1/100) of a share of our Series B Junior Participating Series A Preferred Stock at an exercise a price of $30.00 per one one-hundredth of a share. The value one one-hundredth of a share of Series B preferred stock should, because of its dividend, liquidation and voting rights, equal the value of one share of our common stock.

        The rights become exercisable when any person acquires in excess of 10% of our outstanding common stock. If any person ever crosses this ownership threshold, then each holder of a right would be able to elect to receive, in lieu of the one-one-hundredth of a share of Series B preferred stock and upon payment of the exercise price of the right, a number of shares of our common stock having a then current market value of two times the exercise price. In the event we did not have a sufficient number of shares of common stock available for issuance at that time, we could issue an economically equivalent security, such as the Series B preferred stock, in satisfaction of the exercise of the right. Importantly, the person who acquired in excess of 10% of our common stock would not be entitled to exercise its rights, and its interest in us would be substantially diluted after giving effect to the exercise of all other rights. For purposes of determining whether any person has acquired in excess of 10% of our outstanding common stock, the common stock issuable upon conversion of the Series A Convertible Preferred Stock originally issued to Birmingham Investment Group, LLC is deemed to be outstanding.

        We have also agreed that, once a person crosses the 10% ownership threshold, we will not merge or otherwise combine with another entity, or sell 50% or more of our consolidated assets or earning power to another entity, unless adequate provision is made to ensure that each holder of a right will thereafter have the right to receive that number of shares of common stock of the acquiring company which, at the time of such transaction, will have a market value of two times the exercise price of the right.

Series A Preferred Stock-General

        We believe that the ability of our board to issue one or more series of preferred stock will provide us with flexibility in structuring possible future financings and acquisitions, and in meeting other corporate needs which might arise. The authorized shares of preferred stock, as well as shares of common stock, will be available for issuance without further action by our shareholders, unless such action is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded. The New York Stock Exchange currently requires shareholder approval as a prerequisite to listing shares in several instances, including where the present or potential issuance of shares could result in an increase in the number of shares of common stock, or in the amount of voting securities, outstanding of at least 20%. If the approval of our stockholders is not required for the issuance of shares of preferred stock or common stock, our board may determine not to seek stockholder approval.

        On September 30, 1999, we issued 2,950,000 shares of Series A Convertible Preferred Stock to Birmingham Investment Group, LLC. The following summarizes the terms of the Series A Preferred Stock.

        Dividends. Dividends accrue on the Series A Preferred Stock at the rate of 9% per annum and will be payable semi-annually in arrears on each January 1 and July 1, beginning January 1, 2000. If any dividend on the Series A Preferred Stock shall for any reason not be paid at the time such dividend becomes due, then dividends shall continue to accrue on a cumulative basis. In the event that any dividends remain accrued but unpaid at the time of any conversion of any of the Series A Preferred Stock , such accrued but unpaid dividends shall remain payable, notwithstanding the conversion.

        General Voting Rights. The holder of each share of Series A Preferred Stock shall have the right to cast one vote for each share of common stock issuable on conversion, or two votes per share of Series A Preferred Stock. As of September 30, 2000, there were 18,825,832 shares of common stock outstanding, each entitled to one vote. The Series A Preferred Stock is entitled to 5,900,000 votes. Assuming the number of shares of common stock outstanding stays constant, the total number of votes which could be cast generally would be 24,725,832, of which 5,900,000, or approximately 24%, could be cast by the holders of the Series A Preferred Stock. In connection with these general voting rights, the Series A Preferred Stock will vote with the common stock as a single class, and the holders of the Series A Preferred Stock shall have voting rights and powers equal to the voting rights and powers of the holders of common stock.

        Special Voting Rights -- Directors. The holders of our Series A Preferred Stock, voting as a separate class, have the right to elect a number of members on our board of directors, depending upon the size of our board and the number of shares of Series A Preferred Stock outstanding. The following table indicates the number of directors which the holders of the Series A Preferred Stock are entitled to elect:(1)

        # of Shares of
   Series A Preferred Stock                                            Number of
         Outstanding                      Size of Full Board           Directors


     More than 1,976,500                      7 or less                  2
                                                 8-10                    3
                                                11-12                    4

 Between 973,000 and 1,976,500                 7 or less                 1
                                                 8-10                    2
                                                11-12                    3

       Less than 973,000                      No Directors          No Directors

                  2009              110%
                  2010              108%
                  2011              106%
                  2012              104%

         *        We issue any common stock, or other securities convertible into common stock,  at a price per
                  share less than the Conversion Price in effect on the date of issuance;

         *        We (i) declare a stock dividend or other distribution on our common stock in shares of common
                  stock, (ii) subdivide or reclassify the outstanding share of our common stock into a greater
                  number of shares, or (iii) combine or reclassify the outstanding shares of  common stock into a
                  smaller number of shares; or

         *        We distribute to all holders of shares of our common stock (i) any equity security other than
                  common stock, (ii) any debt instruments , (iii) any other assets excepting cash dividends or
                  distributions in shares of our common stock or (iv) other rights or warrants.

         *        sell, convey or otherwise dispose of all or substantially all of our property or business if
                  such transaction would adversely effect the rights of the holders of the Series A Preferred
                  Stock;

         *        merge into or consolidate with any other corporation or effect any transaction or series of
                  related transactions in which more than fifty percent of the voting power is disposed of if
                  such transaction would adversely effect the rights of the holders of the Series A Preferred
                  Stock;

         *        alter or change the rights, preferences or privileges of the Series A Preferred Stock as to
                  adversely affect such series;

         *        increase the authorized number of shares of  Series A Preferred Stock; or

         *        create any new class or series of stock having rights, preferences or privileges superior to
                  the  Series A Preferred Stock.

                                        RATIO OF EARNINGS TO COMBINED FIXED CHARGES

            For the last five years the consolidated ratio of earnings to combined  fixed charges  was:

                                                                                               Nine Months
                                                                                                  Ended
                                                              Ended December 31,              September 30,
                                                 1995    1996    1997    1998      1999           2000
  Earnings to Combined Fixed Charges(1)..........5.12    5.87    3.72   (6.62)(2)  2.53(3)        1.55

(1)      For purposes of these computations, earnings consist of earnings from continuing operations before taxes
         and minority interest, plus fixed charges. Fixed charges consist of  interest on indebtedness and
         insurance policies, plus deferred capital security interest, plus a portion of rental expense which is
         deemed to be representative of the interest factor thereon, but does not include the preferred stock
         dividend. Combined fixed charges consist of fixed charges plus the preferred stock dividend.

(2)      Included in earnings for 1998 was a nonrecurring loss of $65.5 million before income taxes relating to
         the write-down of goodwill as disclosed in Note B to the consolidated financial statements. If such
         write-down  had not occurred, the ratio of earnings to combined fixed charges would have been (3.80).

(3)      Included in earnings for 1999 was a nonrecurring gain of $19.8 million before income taxes relating to
         the sale of certain businesses as disclosed in Part 1 of the Form 10-K and in Note R to the consolidated
         financial statements. If such sales had not occurred, the ratio of earnings to combined fixed charges
         would have been 1.68.

                                                    SELLING STOCKHOLDER


          Birmingham Investment Group, LLC owns the shares offered for sale by this prospectus.  The following
table sets forth (i) the number and percent of shares offered  that  Birmingham Investment Group beneficially
owned prior to this offering; (ii) the number of shares that Birmingham Investment Group is offering for resale
by this prospectus; and (iii) the number and percent of shares to be held by  Birmingham Investment Group after
the offering (assuming all of the shares offered hereby are sold).

                                                  Beneficial Ownership        Number of       Beneficial Ownership
  Selling Stockholder(1)                               Prior to                Shares          After the Offering
                                                       --------                ------

                                                     Offering (2)             Offered(1)
                                                     ------------             ----------
                                                  Number of     Percent of                  Number of   Percent of
  Name and Address              Title of Class     Shares         Class                       Shares      Class
  ----------------              --------------     ------         -----                       ------      -----

Birmingham Investment Group,LLC

17 North 20th Street             Common stock      5,900,000      24%(3)      5,900,000       -0-          -0-
Birmingham, Alabama 35203


Birmingham Investment Group,LLC   Series A

17 North 20th Street             Convertible       2,950,000       100%       2,950,000       -0-          -0-
Birmingham, Alabama 35203         Preferred
                                    Stock

(1)      Based on a Schedule 13D filed October 12, 1999, no natural persons possess any voting and dispositive
         power over the offered shares. Mr. James A. Taylor Sr. serves as manager of the Birmingham Investment
         Group.


(2)      Birmingham Investment Group, LLC directly owns 2,950,000 shares of our Series A Convertible Preferred
         Stock.  These shares of preferred stock may be converted into 5,900,000 shares of our common stock,
         subject to adjustment in certain events.  See, "Description of capital stock-Series A Preferred Stock."
         The common stock indicated above will be issued only upon conversion of the preferred stock, in which
         case the converted preferred stock will no longer be offered for sale.


(3)      5,900,000 shares of common stock are deemed to be beneficially owned by  Birmingham Investment Group
         even though such shares are not actually outstanding.  These shares are deemed to be outstanding for the
         purpose of computing the Birmingham Investment Group's percentage ownership of common stock.

         *        ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

         *        block trades in which the broker-dealer will attempt to sell the shares as agent but may
                  position and resell a portion of the block as principal to facilitate the transaction;

         *        purchases by a broker-dealer as principal and resale by the broker-dealer for the broker
                  dealer's account;

         *        an exchange distribution in accordance with the rules of the applicable exchange;

         *        privately negotiated transactions;

         *        broker-dealers may agree with  Birmingham Investment Group  to sell a specified number of such
                  shares at a stipulated price per share;

         *        a combination of any such methods of sale; and

         *        any other method permitted by to applicable law.