|   |   |                                                                                    |
|--------|--------|-----------------------------------------------------------------------------------------|
| þ |   | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

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

|                                                                  |   |                                             |
|-----------------------------------------------------------------------|--------|--------------------------------------------------|
| Delaware(State or other jurisdiction ofincorporation or organization) |   | 36-2476480(I.R.S. EmployerIdentification Number) |

|                      |   |               |   |                                                                 |   |                             |
|---------------------------|--------|--------------------|--------|----------------------------------------------------------------------|--------|----------------------------------|
| Large accelerated filer o |   | Accelerated filero |   | Non-accelerated filer o(Do not check if a smaller reporting company) |   | Smaller reporting company þ |

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|                                 |   |                 |   |                                                                                                                                                                                     |   |   |   |   |
|--------------------------------------|--------|----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                 |   |                 |   |                                                                                                                                                                                     |   | PAGE   |
|                                 |   |                 |   |                                                                                                                                                                                     |   |   |   |   |
| PART I — FINANCIAL INFORMATION |   |                 | 2      |                                                                                                                                                                                     |
|                                 |   | Item 1 —  |   |  Financial Statements                                                                                                                                                               |   |   | 2      |   |
|                                 |   |                 |   |  Condensed Consolidated Balance Sheets at September 30, 2010 (Unaudited) and December 31, 2009                                                                                      |   |   | 3      |   |
|                                 |   |                 |   |  Condensed Consolidated Statements of Operations and Comprehensive Income  for the three months and nine months ended September 30, 2010 (Unaudited) and 2009 (Unaudited) |   |   | 4      |   |
|                                 |   |                 |   |  Consolidated Statement of Stockholders’ Equity for the nine months ended September 30, 2010 (Unaudited) and for the year ended December 31, 2009                             |   |   | 5      |   |
|                                 |   |                 |   |  Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 (Unaudited) and 2009  (Unaudited)                                           |   |   | 6-7    |   |
|                                 |   |                 |   |  Notes to Condensed Consolidated Financial Statements  (Unaudited)                                                                                                        |   |   | 8      |   |
|                                 |   | Item 2 —  |   |  Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                                        |   |   | 28     |   |
|                                 |   | Item 3 —  |   |  Quantitative and Qualitative Disclosures About Market Risk                                                                                                                         |   |   | 44     |   |
|                                 |   | Item 4—   |   |  Controls and Procedures                                                                                                                                                            |   |   | 44     |   |
|                                 |   |                 |   |                                                                                                                                                                                     |   |   |   |   |
| PART II — OTHER INFORMATION    |   |                 | 46     |                                                                                                                                                                                     |
|                                 |   | Item 1 —  |   | Legal Proceedings                                                                                                                                                                        |   |   | 46     |   |
|                                 |   | Item 1A — |   | Risk Factors                                                                                                                                                                             |   |   | 46     |   |
|                                 |   | Item 2 —       |   | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                              |   |   | 46     |   |
|                                 |   | Item 3 —       |   | Defaults Upon Senior Securities                                                                                                                                                          |   |   | 46     |   |
|                                 |   | Item 4 —  |   | Reserved                                                                                                                                                                                 |   |   | 46     |   |
|                                 |   | Item 5 —  |   | Other Information                                                                                                                                                                        |   |   | 46     |   |
|                                 |   | Item 6 —  |   | Exhibits                                                                                                                                                                                 |   |   | 46     |   |
| Signatures                           |   |                 | 46     |                                                                                                                                                                                     |
|  EXHIBIT 31(a)                  |
|  EXHIBIT 31(b)                  |
|  EXHIBIT 32                     |

----

----

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|  KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                                     |
|------------------------------------------------------------------------------------------------------|
| Condensed Consolidated Balance Sheets                                                                |   |   |
|                                                                                                 |   | September 30, |   |   | December 31, |   |
|                                                                                                 |   | 2010 |   |   | 2009 |   |
|                                                                                                 |   | (unaudited) |   |   |   |   |
|  Assets                                                                                         |   |   |   |   |   |   |
|  Short term investments                                                                         |   | $ | - |   |   | $ | 225,336 |   |
|  Fixed-maturity securities, held to maturity, at amortized cost (fair value of $121,295)        |   |   | 106,205 |   |   |   | - |   |
|  Fixed-maturity securities, available for sale, at fair value (amortized cost of $14,621,154    |   |   |   |   |   |   |   |   |
|  at September 30, 2010 and $12,676,867 at December 31, 2009)                                    |   |   | 15,213,163 |   |   |   | 12,791,080 |   |
|  Equity securities, available-for-sale, at fair value (cost of $2,852,670 at September 30, 2010 |   |   |   |   |   |   |   |   |
|  and $1,973,738 at December 31, 2009)                                                           |   |   | 3,151,399 |   |   |   | 2,186,926 |   |
|  Total investments                                                                              |   |   | 18,470,767 |   |   |   | 15,203,342 |   |
|  Cash and cash equivalents                                                                      |   |   | 762,035 |   |   |   | 625,320 |   |
|  Premiums receivable, net of provision for uncollectible amounts                                |   |   | 5,275,124 |   |   |   | 4,479,363 |   |
|  Receivables - reinsurance contracts                                                            |   |   | 1,579,897 |   |   |   | 564,408 |   |
|  Reinsurance receivables, net of of provision for uncollectible amounts                         |   |   | 20,881,949 |   |   |   | 20,849,621 |   |
|  Notes receivable-sale of business                                                              |   |   | 755,298 |   |   |   | 1,119,365 |   |
|  Deferred acquisition costs                                                                     |   |   | 3,595,153 |   |   |   | 2,917,984 |   |
|  Intangible assets, net                                                                         |   |   | 4,255,314 |   |   |   | 4,612,100 |   |
|  Property and equipment, net of accumulated depreciation                                        |   |   | 1,557,875 |   |   |   | 1,659,015 |   |
|  Equities in pools and associations                                                             |   |   | 220,708 |   |   |   | 220,708 |   |
|  Other assets                                                                                   |   |   | 480,306 |   |   |   | 392,527 |   |
|  Total assets                                                                                   |   | $ | 57,834,426 |   |   | $ | 52,643,753 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |
|  Liabilities                                                                                    |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                                              |   | $ | 17,138,236 |   |   | $ | 16,513,318 |   |
|  Unearned premiums                                                                              |   |   | 17,215,777 |   |   |   | 14,088,187 |   |
|  Advance premiums                                                                               |   |   | 521,938 |   |   |   | 411,676 |   |
|  Reinsurance balances payable                                                                   |   |   | 1,825,397 |   |   |   | 1,918,169 |   |
|  Deferred ceding commission revenue                                                             |   |   | 3,202,015 |   |   |   | 3,298,245 |   |
|  Notes payable (includes payable to related parties of $785,000 at September 30, 2010           |   |   |   |   |   |   |   |   |
|  and $585,000 at December 31, 2009)                                                             |   |   | 1,467,369 |   |   |   | 1,085,637 |   |
|  Accounts payable, accrued liabilities and other liabilities                                    |   |   | 1,934,157 |   |   |   | 2,446,558 |   |
|  Deferred income taxes                                                                          |   |   | 1,327,574 |   |   |   | 1,173,256 |   |
|  Mandatorily redeemable preferred stock                                                         |   |   | - |   |   |   | 1,299,231 |   |
|  Liabilities of discontinued operations                                                         |   |   | - |   |   |   | 26,000 |   |
|  Total liabilities                                                                              |   |   | 44,632,463 |   |   |   | 42,260,277 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |
|  Commitments and Contingencies                                                                  |   |   |   |   |   |   |   |   |
|                                                                                                 |   |   |   |   |   |   |   |   |
|  Stockholders' Equity                                                                           |   |   |   |   |   |   |   |   |
|  Common stock, $.01 par value; authorized 10,000,000 shares; issued 4,643,122 shares at         |   |   |   |   |   |   |   |   |
|  September 30, 2010 and 3,804,536 shares at December 31, 2009; outstanding 3,838,386            |   |   |   |   |   |   |   |   |
|  shares at September 30, 2010 and 2,988,511 shares at December 31, 2009                         |   |   | 46,432 |   |   |   | 38,046 |   |
|  Preferred stock, $.01 par value; authorized 1,000,000 shares; 0 shares issued and outstanding  |   |   | - |   |   |   | - |   |
|  Capital in excess of par                                                                       |   |   | 13,611,626 |   |   |   | 12,051,332 |   |
|  Accumulated other comprehensive income                                                         |   |   | 585,908 |   |   |   | 216,086 |   |
|  Retained earnings (accumulated deficit)                                                        |   |   | 121,255 |   |   |   | (701,606 | ) |
|                                                                                                 |   |   | 14,365,221 |   |   |   | 11,603,858 |   |
|  Treasury stock, at cost, 804,736 shares at September 30, 2010 and 816,025 shares               |   |   |   |   |   |   |   |   |
|  at December 31, 2009                                                                           |   |   | (1,163,258 | ) |   |   | (1,220,382 | ) |
|  Total stockholders' equity                                                                     |   |   | 13,201,963 |   |   |   | 10,383,476 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |
|  Total liabilities and stockholders' equity                                                     |   | $ | 57,834,426 |   |   | $ | 52,643,753 |   |

----

----

|  KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                     |
|--------------------------------------------------------------------------------------|
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) |   |   |   |   |
|                                                                                 |   | For the Three Months Ended |   |   | For the Nine Months Ended |   |
|                                                                                 |   | September 30, |   |   | September 30, |   |
|                                                                                 |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|  Revenues                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                                                            |   | $ | 3,065,289 |   |   | $ | 2,262,819 |   |   | $ | 7,905,350 |   |   | $ | 2,262,819 |   |
|  Ceding commission revenue                                                      |   |   | 2,231,493 |   |   |   | 1,483,249 |   |   |   | 6,413,774 |   |   |   | 1,483,249 |   |
|  Net investment income                                                          |   |   | 154,679 |   |   |   | 115,657 |   |   |   | 435,882 |   |   |   | 115,657 |   |
|  Net realized gains on investments                                              |   |   | 84,054 |   |   |   | 99,856 |   |   |   | 228,803 |   |   |   | 99,856 |   |
|  Other income                                                                   |   |   | 214,606 |   |   |   | 153,867 |   |   |   | 664,091 |   |   |   | 518,288 |   |
|  Total revenues                                                                 |   |   | 5,750,121 |   |   |   | 4,115,448 |   |   |   | 15,647,900 |   |   |   | 4,479,869 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Expenses                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                              |   |   | 1,907,917 |   |   |   | 1,087,276 |   |   |   | 4,518,253 |   |   |   | 1,087,276 |   |
|  Commission expense                                                             |   |   | 1,287,268 |   |   |   | 1,091,638 |   |   |   | 3,647,371 |   |   |   | 1,091,638 |   |
|  Other underwriting expenses                                                    |   |   | 1,580,827 |   |   |   | 1,077,318 |   |   |   | 4,112,889 |   |   |   | 1,077,318 |   |
|  Other operating expenses                                                       |   |   | 428,401 |   |   |   | 285,674 |   |   |   | 1,345,208 |   |   |   | 952,570 |   |
|  Depreciation and amortization                                                  |   |   | 155,258 |   |   |   | 94,519 |   |   |   | 463,746 |   |   |   | 103,113 |   |
|  Interest expense                                                               |   |   | 46,258 |   |   |   | 17,220 |   |   |   | 138,560 |   |   |   | 150,571 |   |
|  Interest expense - mandatorily redeemable preferred stock                      |   |   | - |   |   |   | 37,353 |   |   |   | 74,706 |   |   |   | 89,805 |   |
|  Total expenses                                                                 |   |   | 5,405,929 |   |   |   | 3,690,998 |   |   |   | 14,300,733 |   |   |   | 4,552,291 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income (loss) from operations                                                  |   |   | 344,192 |   |   |   | 424,450 |   |   |   | 1,347,167 |   |   |   | (72,422 | ) |
|  Gain on acquistion of Kingstone Insurance Company                              |   |   | - |   |   |   | 5,401,860 |   |   |   | - |   |   |   | 5,401,860 |   |
|  Interest income-CMIC note receivable                                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 60,757 |   |
|  Income from continuing operations before taxes                                 |   |   | 344,192 |   |   |   | 5,826,310 |   |   |   | 1,347,167 |   |   |   | 5,390,195 |   |
|  Income tax expense (benefit)                                                   |   |   | 128,278 |   |   |   | 184,162 |   |   |   | 564,388 |   |   |   | (25,590 | ) |
|  Income from continuing operations                                              |   |   | 215,914 |   |   |   | 5,642,148 |   |   |   | 782,779 |   |   |   | 5,415,785 |   |
|  Income (loss) from discontinued operations, net of taxes                       |   |   | 16,234 |   |   |   | (56,550 | ) |   |   | 40,082 |   |   |   | (240,323 | ) |
|  Net income                                                                     |   |   | 232,148 |   |   |   | 5,585,598 |   |   |   | 822,861 |   |   |   | 5,175,462 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Gross unrealized investment holding gains                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  arising during period                                                          |   |   | 523,690 |   |   |   | 329,522 |   |   |   | 560,337 |   |   |   | 329,522 |   |
|  Income tax expense related to items of                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  other comprehensive income                                                     |   |   | (178,055 | ) |   |   | (112,037 | ) |   |   | (190,515 | ) |   |   | (112,037 | ) |
|  Comprehensive income                                                           |   | $ | 577,783 |   |   | $ | 5,803,083 |   |   | $ | 1,192,683 |   |   | $ | 5,392,947 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic earnings per common share:                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations                                                    |   | $ | 0.06 |   |   | $ | 1.89 |   |   | $ | 0.24 |   |   | $ | 1.82 |   |
| Income (loss) from discontinued operations                                           |   | $ | - |   |   | $ | (0.02 | ) |   | $ | 0.01 |   |   | $ | (0.08 | ) |
| Income per common share                                                              |   | $ | 0.06 |   |   | $ | 1.87 |   |   | $ | 0.25 |   |   | $ | 1.74 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted earnings per common share:                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations                                                    |   | $ | 0.06 |   |   | $ | 1.56 |   |   | $ | 0.24 |   |   | $ | 1.82 |   |
| Income (loss) from discontinued operations                                           |   | $ | - |   |   | $ | (0.02 | ) |   | $ | 0.01 |   |   | $ | (0.08 | ) |
| Income per common share                                                              |   | $ | 0.06 |   |   | $ | 1.54 |   |   | $ | 0.25 |   |   | $ | 1.74 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                |   |   | 3,833,798 |   |   |   | 2,977,501 |   |   |   | 3,292,145 |   |   |   | 2,974,349 |   |
| Diluted                                                                              |   |   | 3,833,798 |   |   |   | 3,627,117 |   |   |   | 3,292,145 |   |   |   | 2,974,349 |   |

----

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| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                            |
|-----------------------------------------------------------------------|
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated Statement of Stockholders' Equity (Unaudited)            |   |
| Year ended December 31, 2009 and Nine Months Ended September 30, 2010 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   | Retained |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   | Capital |   |   | Other |   |   | Earnings |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | Common Stock |   |   | Preferred Stock |   |   | in Excess |   |   | Comprehensive |   |   | Accumulated |   |   | Treasury Stock |   |   |   |   |
|                                                                  |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | of Par |   |   | Income |   |   | (Deficit) |   |   | Shares |   |   | Amount |   |   | Total |   |
| Balance, December 31, 2008                                            |   |   | 3,788,771 |   |   | $ | 37,888 |   |   |   | - |   |   | $ | - |   |   | $ | 11,962,512 |   |   | $ | - |   |   | $ | (5,522,448 | ) |   |   | 816,025 |   |   | $ | (1,220,382 | ) |   | $ | 5,257,570 |   |
| Stock-based payments                                                  |   |   | 15,765 |   |   |   | 158 |   |   |   | - |   |   |   | - |   |   |   | 88,820 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 88,978 |   |
| Net income                                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | 4,820,842 |   |   |   | - |   |   |   | - |   |   |   | 4,820,842 |   |
| Net unrealized gains on securities                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| available for sale, net of income tax                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 216,086 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 216,086 |   |
| Balance, December 31, 2009                                            |   |   | 3,804,536 |   |   |   | 38,046 |   |   |   | - |   |   |   | - |   |   |   | 12,051,332 |   |   |   | 216,086 |   |   |   | (701,606 | ) |   |   | 816,025 |   |   |   | (1,220,382 | ) |   |   | 10,383,476 |   |
| Stock-based payments                                                  |   |   | 62,466 |   |   |   | 624 |   |   |   | - |   |   |   | - |   |   |   | 325,949 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 326,573 |   |
| Mandatorily redeemable preferred stock                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| exchanged for restricted common stock                                 |   |   | 787,409 |   |   |   | 7,874 |   |   |   | - |   |   |   | - |   |   |   | 1,291,357 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,299,231 |   |
| Retirement of treasury stock                                          |   |   | (11,289 | ) |   |   | (112 | ) |   |   |   |   |   |   |   |   |   |   | (57,012 | ) |   |   |   |   |   |   |   |   |   |   | (11,289 | ) |   |   | 57,124 |   |   |   | - |   |
| Net income                                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 822,861 |   |   |   | - |   |   |   | - |   |   |   | 822,861 |   |
| Net unrealized gains on securities                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available for sale, net of income tax                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 369,822 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 369,822 |   |
| Balance, September 30, 2010                                           |   |   | 4,643,122 |   |   | $ | 46,432 |   |   |   | - |   |   | $ | - |   |   | $ | 13,611,626 |   |   | $ | 585,908 |   |   | $ | 121,255 |   |   |   | 804,736 |   |   | $ | (1,163,258 | ) |   | $ | 13,201,963 |   |

----

----

| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                         |
|------------------------------------------------------------------------------------|
| Consolidated Statements of Cash Flows (Unaudited)                                  |   |   |   |   |   |   |
| Nine Months Ended September 30,                                                    |   | 2010 |   |   | 2009 |   |
|                                                                               |   |   |   |   |   |   |
|  Cash flows provided by operating activities:                                 |   |   |   |   |   |   |
|  Net income                                                                   |   | $ | 822,861 |   |   | $ | 5,175,462 |   |
|  Adjustments to reconcile net income to net cash provided by operations:      |   |   |   |   |   |   |   |   |
|  Gain on acquisition of Kingstone Insurance Company                           |   |   | - |   |   |   | (5,401,860 | ) |
|  Gain on sale of investments                                                  |   |   | (228,803 | ) |   |   | (99,856 | ) |
|  Depreciation and amortization                                                |   |   | 463,746 |   |   |   | 103,113 |   |
|  Amortization of bond premium, net                                            |   |   | 54,810 |   |   |   | 11,142 |   |
|  Stock-based payments                                                         |   |   | 326,573 |   |   |   | 51,326 |   |
|  Deferred income taxes                                                        |   |   | (36,197 | ) |   |   | (300,368 | ) |
|  (Increase) decrease in assets:                                               |   |   |   |   |   |   |   |   |
|  Short term investments                                                       |   |   | 225,336 |   |   |   | 373,430 |   |
|  Premiums receivable, net                                                     |   |   | (795,761 | ) |   |   | 94,856 |   |
|  Receivables - reinsurance contracts                                          |   |   | (1,015,489 | ) |   |   | (46,140 | ) |
|  Reinsurance receivables, net                                                 |   |   | (32,328 | ) |   |   | (1,038,873 | ) |
|  Deferred acquisition costs                                                   |   |   | (677,169 | ) |   |   | (134,643 | ) |
|  Other assets                                                                 |   |   | (142,388 | ) |   |   | 78,670 |   |
|  Increase (decrease) in liabilities:                                          |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                            |   |   | 624,918 |   |   |   | 1,001,485 |   |
|  Unearned premiums                                                            |   |   | 3,127,590 |   |   |   | 340,977 |   |
|  Advance premiums                                                             |   |   | 110,262 |   |   |   | - |   |
|  Reinsurance balances payable                                                 |   |   | (92,772 | ) |   |   | (15,988 | ) |
|  Deferred ceding commission revenue                                           |   |   | (96,230 | ) |   |   | 143,327 |   |
|  Accounts payable, accrued liabilities and other liabilities                  |   |   | (512,401 | ) |   |   | 122,789 |   |
|  Net cash provided by operating activities of continuing operations           |   |   | 2,126,557 |   |   |   | 458,849 |   |
|  Operating activities of discontinued operations                              |   |   | (26,000 | ) |   |   | 123,325 |   |
|  Net cash flows provided by operating activities                              |   |   | 2,100,557 |   |   |   | 582,174 |   |
|                                                                               |   |   |   |   |   |   |   |   |
|  Cash flows (used in) provided by investing activities:                       |   |   |   |   |   |   |   |   |
|  Purchase - fixed-maturity securities held to maturity                        |   |   | (106,205 | ) |   |   | (3,046,799 | ) |
|  Purchase - fixed-maturity securities available for sale                      |   |   | (4,449,040 | ) |   |   | - |   |
|  Purchase - equity securities                                                 |   |   | (1,968,273 | ) |   |   | (744,704 | ) |
|  Sale - fixed-maturity securities available for sale                          |   |   | 2,616,788 |   |   |   | 1,575,031 |   |
|  Sale - equity securities                                                     |   |   | 1,202,909 |   |   |   | 1,439,854 |   |
|  Cash acquired in acquisition                                                 |   |   | - |   |   |   | 1,327,057 |   |
|  Increase in notes receivable and accrued interest - Sale of businesses       |   |   | - |   |   |   | (118,766 | ) |
|  Collections of notes receivable and accrued interest - Sale of businesses    |   |   | 364,067 |   |   |   | 52,420 |   |
|  Other investing activities                                                   |   |   | (5,820 | ) |   |   | (62,560 | ) |
|  Net cash (used in) provided by investing activities of continuing operations |   |   | (2,345,574 | ) |   |   | 421,533 |   |
|  Investing activities of discontinued operations                              |   |   | - |   |   |   | 1,869,628 |   |
|  Net cash flows (used in) provided by investing activities                    |   |   | (2,345,574 | ) |   |   | 2,291,161 |   |
|                                                                               |   |   |   |   |   |   |   |   |
|  Cash flows provided by (used in) financing activities:                       |   |   |   |   |   |   |   |   |
|  Proceeds from long term debt (includes $200,000 from related parties in 2010 |   |   |   |   |   |   |   |   |
|  and $370,000 in 2009)                                                        |   |   | 400,000 |   |   |   | 750,000 |   |
|  Principal payments on long-term debt                                         |   |   | (18,268 | ) |   |   | (1,448,143 | ) |
|  Net cash provided by (used in) financing activities of continuing operations |   |   | 381,732 |   |   |   | (698,143 | ) |
|  Financing activities of discontinued operations                              |   |   | - |   |   |   | - |   |
|  Net cash flows provided by (used in) financing activities                    |   |   | 381,732 |   |   |   | (698,143 | ) |

----

----

|  KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                            |
|-----------------------------------------------------------------------------|
| Consolidated Statements of Cash Flows (Unaudited)                           |   |   |   |   |   |   |
| Nine Months Ended September 30,                                             |   | 2010 |   |   | 2009 |   |
|                                                                        |   |   |   |   |   |   |
|  Increase in cash and cash equivalents                                 |   | $ | 136,715 |   |   | $ | 2,175,192 |   |
|  Cash and cash equivalents, beginning of period                        |   |   | 625,320 |   |   |   | 142,949 |   |
|  Cash and cash equivalents, end of period                              |   | $ | 762,035 |   |   | $ | 2,318,141 |   |
|                                                                        |   |   |   |   |   |   |   |   |
|  Supplemental Schedule of Non-Cash Investing and Finacing Activities:  |   |   |   |   |   |   |   |   |
|  Mandatorily redeemable preferred stock exchanged for common stock     |   | $ | 1,299,231 |   |   | $ | - |   |
|  Exchange of notes receivable as consideration paid for acquisition of |   |   |   |   |   |   |   |   |
|  Kingstone Insurance Company                                           |   | $ | - |   |   | $ | 5,996,461 |   |
|  Notes receivable issued in connection with sale of business           |   | $ | - |   |   | $ | 1,047,573 |   |
|  Notes payable exchanged for mandatorily redeemable preferred stock    |   | $ | - |   |   | $ | 519,231 |   |

----

----

----

----

----

|                              |   | September 30, 2010 |
|-----------------------------------|--------|--------------------|
|                         |   | Cost or            |   |   | Gross |   |   | Gross Unrealized Losses |   |   |   |   |   | Unrealized |   |
|                              |   | Amortized          |   |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Gains/ |   |
|  Category                    |   | Cost (a)           |   |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | (Losses) |   |
|                              |   | (unaudited)        |
| Fixed-Maturity Securities:        |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities and      |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations of U.S. government    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| corporations and agencies (b)     |   | $                  | 1,471,367 |   |   | $ | 70,580 |   |   | $ | (20,192 | ) |   | $ | - |   |   | $ | 1,521,755 |   |   | $ | 50,388 |   |
|                              |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of States, |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Territories and Possessions       |   |               | 6,901,104 |   |   |   | 235,417 |   |   |   | (17,024 | ) |   |   | - |   |   |   | 7,119,497 |   |   |   | 218,393 |   |
|                              |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other bonds         |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Industrial and miscellaneous      |   |               | 6,251,683 |   |   |   | 321,096 |   |   |   | (868 | ) |   |   | - |   |   |   | 6,571,911 |   |   |   | 320,228 |   |
| Total fixed-maturity securities   |   |               | 14,624,154 |   |   |   | 627,093 |   |   |   | (38,084 | ) |   |   | - |   |   |   | 15,213,163 |   |   |   | 589,009 |   |
|                              |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities:                |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks                  |   |               | 781,235 |   |   |   | 60,388 |   |   |   | (103 | ) |   |   | - |   |   |   | 841,520 |   |   |   | 60,285 |   |
| Common stocks                     |   |               | 2,071,435 |   |   |   | 240,735 |   |   |   | (2,291 | ) |   |   | - |   |   |   | 2,309,879 |   |   |   | 238,444 |   |
| Total equity securities           |   |               | 2,852,670 |   |   |   | 301,123 |   |   |   | (2,394 | ) |   |   | - |   |   |   | 3,151,399 |   |   |   | 298,729 |   |
|                              |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short term investments            |   |               | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                              |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                             |   | $                  | 17,476,824 |   |   | $ | 928,216 |   |   | $ | (40,478 | ) |   | $ | - |   |   | $ | 18,364,562 |   |   | $ | 887,738 |   |

----

|                                |   | December 31, 2009 |
|-------------------------------------|--------|-------------------|
|                           |   | Cost or           |   |   | Gross |   |   | Gross Unrealized Losses |   |   |   |   |   | Unrealized |   |
|                                |   | Amortized         |   |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Gains/ |   |
|  Category                      |   | Cost (a)          |   |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | (Losses) |   |
|                                |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-Maturity Securities:          |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities and        |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations of U.S. government      |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  corporations and agencies (b) |   | $                 | 3,549,616 |   |   | $ | 38,790 |   |   | $ | (23,929 | ) |   | $ | - |   |   | $ | 3,564,477 |   |   | $ | 14,861 |   |
|                                |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of States,   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Territories and Possessions         |   |              | 5,751,979 |   |   |   | 82,480 |   |   |   | (12,356 | ) |   |   | - |   |   |   | 5,822,103 |   |   |   | 70,124 |   |
|                                |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other bonds           |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Industrial and miscellaneous        |   |              | 3,375,272 |   |   |   | 54,384 |   |   |   | (25,156 | ) |   |   | - |   |   |   | 3,404,500 |   |   |   | 29,228 |   |
| Total fixed-maturity securities     |   |              | 12,676,867 |   |   |   | 175,654 |   |   |   | (61,441 | ) |   |   | - |   |   |   | 12,791,080 |   |   |   | 114,213 |   |
|                                |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities:                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks                    |   |              | 716,903 |   |   |   | 33,661 |   |   |   | (5,564 | ) |   |   | - |   |   |   | 745,000 |   |   |   | 28,097 |   |
| Common stocks                       |   |              | 1,256,835 |   |   |   | 191,075 |   |   |   | (5,984 | ) |   |   | - |   |   |   | 1,441,926 |   |   |   | 185,091 |   |
| Total equity securities             |   |              | 1,973,738 |   |   |   | 224,736 |   |   |   | (11,548 | ) |   |   | - |   |   |   | 2,186,926 |   |   |   | 213,188 |   |
|                                |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short term investments              |   |              | 225,336 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 225,336 |   |   |   | - |   |
|                                |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                               |   | $                 | 14,875,941 |   |   | $ | 400,390 |   |   | $ | (72,989 | ) |   | $ | - |   |   | $ | 15,203,342 |   |   | $ | 327,401 |   |

|                             |   | September 30, 2010 |       |   | December 31, 2009 |   |
|----------------------------------|--------|--------------------|------------|--------|-------------------|--------|
|                             |   | Amortized          |       |   |              |   |   | Amortized |   |   |   |   |
|  Remaining Time to Maturity |   | Cost               |       |   | Fair Value        |   |   | Cost |   |   | Fair Value |   |
|                             |   | (unaudited)        |       |   |              |   |   |   |   |
|  Less than one year         |   | $                  | 884,855    |   |              | $      | 857,065 |   |   | $ | 1,190,319 |   |   | $ | 1,176,050 |   |
|  One to five years          |   |               | 4,750,514  |   |              |   | 4,891,792 |   |   |   | 5,202,936 |   |   |   | 5,260,443 |   |
|  Five to ten years          |   |               | 7,070,982  |   |              |   | 7,465,591 |   |   |   | 4,945,787 |   |   |   | 4,986,236 |   |
|  More than 10 years    |   |               | 1,917,803  |   |              |   | 1,998,715 |   |   |   | 1,337,825 |   |   |   | 1,368,351 |   |
|  Total                      |   | $                  | 14,624,154 |   |              | $      | 15,213,163 |   |   | $ | 12,676,867 |   |   | $ | 12,791,080 |   |

----

|                           |   | September 30, 2010 |
|--------------------------------|--------|--------------------|
|                      |   | Cost or            |   |   | Gross |   |   | Gross Unrealized Losses |   |   |   |   |   | Unrealized |   |
|                           |   | Amortized          |   | Unrealized |   | Less than 12 |   | More than 12 |   | Fair |   |   | Gains/ |   |
|  Category                 |   | Cost (a)           |   |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | (Losses) |   |
|                           |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities |   | $                  | 106,205 |   |   | $ | 15,090 |   |   | $ | - |   |   | $ | - |   |   | $ | 121,295 |   |   | $ | 15,090 |   |

|                            |   | Three months ended |    |   | Nine months ended |
|---------------------------------|--------|--------------------|---------|--------|-------------------|
|                            |   | September 30,      |    |   | September 30,     |
|                            |   | 2010               |    |   | 2009              |   |   | 2010 |   |   | 2009 |   |
|                            |   | (unaudited)        |    |   | (unaudited)       |   |
|  Income                    |   |               |    |   |              |   |   |   |   |   |   |   |
|  Fixed-maturity securities |   | $                  | 140,953 |   |              | $ | 105,300 |   |   | $ | 395,676 |   |   | $ | 105,300 |   |
|  Equity securities         |   |               | 41,176  |   |              |   | 23,130 |   |   |   | 100,702 |   |   |   | 23,130 |   |
|  Cash and cash equivalents |   |               | 61      |   |              |   | 18,791 |   |   |   | 4,878 |   |   |   | 18,791 |   |
|  Other                     |   |               | 13      |   |              |   | 60 |   |   |   | 34 |   |   |   | 60 |   |
|  Total                     |   |               | 182,203 |   |              |   | 147,281 |   |   |   | 501,290 |   |   |   | 147,281 |   |
|  Expenses                  |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Investment expenses       |   |               | 27,524  |   |              |   | 31,624 |   |   |   | 65,408 |   |   |   | 31,624 |   |
|  Net investment income     |   | $                  | 154,679 |   |              | $ | 115,657 |   |   | $ | 435,882 |   |   | $ | 115,657 |   |

|                            |   | Three months ended |    |   | Nine months ended |
|---------------------------------|--------|--------------------|---------|--------|-------------------|
|                            |   | September 30,      |    |   | September 30,     |
|                            |   | 2010               |    |   | 2009              |   |   | 2010 |   |   | 2009 |   |
|                            |   | (unaudited)        |    |   | (unaudited)       |   |
|  Fixed-maturity securities |   |               |    |   |              |   |   |   |   |   |   |   |
|  Gross realized gains      |   | $                  | 37,601  |   |              | $ | 7,433 |   |   | $ | 133,598 |   |   | $ | 7,433 |   |
|  Gross realized losses     |   |               | -       |   |              |   | (1,446 | ) |   |   | (18,562 | ) |   |   | (1,446 | ) |
|                            |   |               | 37,601  |   |              |   | 5,987 |   |   |   | 115,036 |   |   |   | 5,987 |   |
|                            |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Equity securities         |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Gross realized gains      |   |               | 64,210  |   |              |   | 93,869 |   |   |   | 148,462 |   |   |   | 93,869 |   |
|  Gross realized losses     |   |               | (17,757 | )      |              |   | - |   |   |   | (34,695 | ) |   |   | - |   |
|                            |   |               | 46,453  |   |              |   | 93,869 |   |   |   | 113,767 |   |   |   | 93,869 |   |
|                            |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Net realized gains        |   | $                  | 84,054  |   |              | $ | 99,856 |   |   | $ | 228,803 |   |   | $ | 99,856 |   |

----

|                       |   | September 30, 2010  |
|----------------------------|--------|---------------------|
|                       |   | Less than 12 months |   |   | 12 months or more |   |   | Total |
|                  |   |                |   |   |   |   |   | No. of |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                       |   | Fair                |   |   | Unrealized |   |   | Positions |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|  Category             |   | Value               |   |   | Losses |   |   | Held |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |
|                       |   | (unaudited)         |   |
| Fixed-Maturity Securities: |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and obligations of U.S.    |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| government corporations    |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and agencies               |   | $                   | 450,675 |   |   | $ | (20,192 | ) |   |   | 1 |   |   | $ | - |   |   | $ | - |   |   | $ | 450,675 |   |   | $ | (20,192 | ) |
|                       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of  |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| States, Territories and    |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Possessions                |   |                | 1,074,175 |   |   |   | (17,024 | ) |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | 1,074,175 |   |   |   | (17,024 | ) |
|                       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| bonds industrial and       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| miscellaneous              |   |                | 499,319 |   |   |   | (868 | ) |   |   | 5 |   |   |   | - |   |   |   | - |   |   |   | 499,319 |   |   |   | (868 | ) |
|                       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total fixed-maturity       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| securities                 |   | $                   | 2,024,169 |   |   | $ | (38,084 | ) |   |   | 9 |   |   | $ | - |   |   | $ | - |   |   | $ | 2,024,169 |   |   | $ | (38,084 | ) |
|                       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities:         |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks           |   | $                   | 12,810 |   |   | $ | (103 | ) |   |   | 1 |   |   | $ | - |   |   | $ | - |   |   | $ | 12,810 |   |   | $ | (103 | ) |
| Common stocks              |   |                | 2,291 |   |   |   | (2,291 | ) |   |   | 4 |   |   |   | - |   |   |   | - |   |   |   | 2,291 |   |   |   | (2,291 | ) |
|                       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total equity securities    |   | $                   | 15,101 |   |   | $ | (2,394 | ) |   |   | 5 |   |   | $ | - |   |   | $ | - |   |   | $ | 15,101 |   |   | $ | (2,394 | ) |
|                       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                      |   | $                   | 2,039,270 |   |   | $ | (40,478 | ) |   |   | 14 |   |   | $ | - |   |   | $ | - |   |   | $ | 2,039,270 |   |   | $ | (40,478 | ) |

----

----

|                                                |   | September 30, 2010 |
|-----------------------------------------------------|--------|--------------------|
|  ($ in thousands)                              |   | Level 1            |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                                                |   | (unaudited)        |   |
|                                                |   |               |   |   |   |   |   |   |   |   |   |   |
|  Fixed-maturity investments held to maturity   |   |               |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities                      |   | $                  | 121 |   |   | $ | - |   |   | $ | - |   |   | $ | 121 |   |
|                                                |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Fixed-maturity investments available for sale |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities                      |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and obligations of U.S.                       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  government corporations                       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and agencies                                  |   |               | 1,522 |   |   |   | - |   |   |   | - |   |   |   | 1,522 |   |
|                                                |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of                     |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  States, Territories and                       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Possessions                                   |   |               | 7,119 |   |   |   | - |   |   |   | - |   |   |   | 7,119 |   |
|                                                |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and                                 |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  other bonds                                   |   |               | 6,572 |   |   |   | - |   |   |   | - |   |   |   | 6,572 |   |
|                                                |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total fixed maturities                        |   |               | 15,334 |   |   |   | - |   |   |   | - |   |   |   | 15,334 |   |
|  Equity investments                            |   |               | 3,151 |   |   |   | - |   |   |   | - |   |   |   | 3,151 |   |
|  Short term investments                        |   |               | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|  Total investments                             |   | $                  | 18,485 |   |   | $ | - |   |   | $ | - |   |   | $ | 18,485 |   |

|                             |   | December 31, 2009 |
|----------------------------------|--------|-------------------|
|  ($ in thousands)           |   | Level 1           |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                             |   |              |   |   |   |   |   |   |   |   |   |   |
|  Fixed-maturity investments |   |              |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities   |   |              |   |   |   |   |   |   |   |   |   |   |
|  and obligations of U.S.    |   |              |   |   |   |   |   |   |   |   |   |   |
|  government corporations    |   |              |   |   |   |   |   |   |   |   |   |   |
|  and agencies               |   | $                 | 3,564 |   |   | $ | - |   |   | $ | - |   |   | $ | 3,564 |   |
|                             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  States, Territories and    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Possessions                |   |              | 5,822 |   |   |   | - |   |   |   | - |   |   |   | 5,822 |   |
|                             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  other bonds                |   |              | 3,405 |   |   |   | - |   |   |   | - |   |   |   | 3,405 |   |
|                             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total fixed maturities     |   |              | 12,791 |   |   |   | - |   |   |   | - |   |   |   | 12,791 |   |
|  Equity investments         |   |              | 2,187 |   |   |   | - |   |   |   | - |   |   |   | 2,187 |   |
|  Short term investments     |   |              | 225 |   |   |   | - |   |   |   | - |   |   |   | 225 |   |
|  Total investments          |   | $                 | 15,203 |   |   | $ | - |   |   | $ | - |   |   | $ | 15,203 |   |
|                             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                     |   | September 30, 2010 |       |   | December 31, 2009 |
|--------------------------------------------------------------------------|--------|--------------------|------------|--------|-------------------|
|                                                                     |   | Carrying Value     |       |   | Fair Value        |   |   | Carrying Value |   |   | Fair Value |   |
|                                                                     |   | (unaudited)        |       |   |              |   |   |   |   |
|  Cash, cash equivalents, and short-term investments                 |   | $                  | 762,035    |   |              | $ | 762,035 |   |   | $ | 850,656 |   |   | $ | 850,656 |   |
|  Premiums receivable                                                |   |               | 5,275,124  |   |              |   | 5,275,124 |   |   |   | 4,479,363 |   |   |   | 4,479,363 |   |
|  Receivables - reinsurance contracts                                |   |               | 1,579,897  |   |              |   | 1,579,897 |   |   |   | 564,408 |   |   |   | 564,408 |   |
|  Reinsurance receivables                                            |   |               | 20,881,949 |   |              |   | 20,881,949 |   |   |   | 20,849,621 |   |   |   | 20,849,621 |   |
|  Notes receivable-sale of business                                  |   |               | 755,298    |   |              |   | 755,298 |   |   |   | 1,119,365 |   |   |   | 1,119,365 |   |
|  Real estate, net of                                                |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  accumulated depreciation                                           |   |               | 1,444,133  |   |              |   | 1,510,000 |   |   |   | 1,547,629 |   |   |   | 1,510,000 |   |
|  Reinsurance balances payable                                       |   |               | 1,825,397  |   |              |   | 1,825,397 |   |   |   | 1,918,169 |   |   |   | 1,918,169 |   |
|  Notes payable (including related parties)                          |   |               | 1,467,369  |   |              |   | 1,467,369 |   |   |   | 1,085,637 |   |   |   | 1,085,637 |   |
|  Mandatorily redeemable preferred stock (including related parties) |   |               | -          |   |              |   | - |   |   |   | 1,299,231 |   |   |   | 1,299,231 |   |

----

|  Balance at January 1, 2010    |   | $      | 16,513,318  |   |
|-------------------------------------|--------|--------|-------------|--------|
|  Less reinsurance recoverables |   |   | (10,512,203 | )      |
|                           |   |   | 6,001,115   |   |
|                                |   |   |        |   |
|  Incurred related to:          |   |   |        |   |
|  Current year                  |   |   | 4,211,203   |   |
|  Prior years                   |   |   | 307,050     |   |
|  Total incurred                |   |   | 4,518,253   |   |
|                                |   |   |        |   |
|  Paid related to:              |   |   |        |   |
|  Current year                  |   |   | 1,960,235   |   |
|  Prior years                   |   |   | 1,725,204   |   |
|  Total paid                    |   |   | 3,685,439   |   |
|                           |   |   |        |   |
|  Net balance at end of period  |   |   | 6,833,929   |   |
|  Add reinsurance recoverables  |   |   | 10,304,307  |   |
|  Balance at September 30, 2010 |   | $      | 17,138,236  |   |

----

|              |   | September 30, 2010 |      |   | December 31, 2009 |
|-------------------|--------|--------------------|-----------|--------|-------------------|
|              |   | (unaudited)        |      |   |              |   |   |   |   |   |   |   |
|              |   |               |      |   | Less              |   |   |   |   |   |   |   |   | Less |   |   |   |   |
|              |   | Total              |      |   | Current           |   |   | Long-Term |   |   | Total |   |   | Current |   |   | Long-Term |   |
|              |   | Debt               |      |   | Maturities        |   |   | Debt |   |   | Debt |   |   | Maturities |   |   | Debt |   |
| Capitalized lease |   | $                  | 17,369    |   |              | $ | 17,369 |   |   | $ | - |   |   | $ | 35,637 |   |   | $ | 24,466 |   |   | $ | 11,171 |   |
| Notes payable     |   |               | 1,450,000 |   |              |   | 1,450,000 |   |   |   | - |   |   |   | 1,050,000 |   |   |   | - |   |   |   | 1,050,000 |   |
|              |   | $                  | 1,467,369 |   |              | $ | 1,467,369 |   |   | $ | - |   |   | $ | 1,085,637 |   |   | $ | 24,466 |   |   | $ | 1,061,171 |   |

----

|  Years ended December 31, |   |
|--------------------------------|--------|
|                           |   | (unaudited) |   |
| 2010 (three months)            |   | $ | 6,198 |   |
| 2011                           |   |   | 1,461,171 |   |
|                           |   | $ | 1,467,369 |   |

----

----

|                          |   | Nine Months Ended  |   |   | Nine Months Ended  |   |
|-------------------------------|--------|--------------------|--------|--------|--------------------|--------|
|                          |   | September 30, 2010 |   |   | September 30, 2009 |   |
|  Grant                   |   | Shares             |   |   | Fair Value         |   |   | Shares |   |   | Fair Value |   |
|  Chief Executive Officer |   |               | 50,000 |   |               | $      | 112,000 |   |   |   | - |   |   | $ | - |   |
|  Directors               |   |               | 12,466 |   |               |   | 31,129 |   |   |   | 6,836 |   |   |   | 16,200 |   |
|                          |   |               | 62,466 |   |               | $      | 143,129 |   |   |   | 6,836 |   |   | $ | 16,200 |   |

|   | Dividend Yield          | 0.00%   |
|--------|-------------------------|---------|
|   | Volatility              | 101.25% |
|   | Risk-Free Interest Rate | 2.62%   |
|   | Expected Life           | 5 years |

----

| Stock Options                                |   | Number of Shares |    |   | Weighted Average Exercise Price per Share |   |   | Weighted Average Remaining Contractual Term |   |   | Aggregate Intrinsic Value |   |
|----------------------------------------------|--------|------------------|---------|--------|-------------------------------------------|--------|--------|---------------------------------------------|--------|--------|---------------------------|--------|
|                                         |   |             |    |   |                                      |   |   |                                        |   |   |                      |   |
| Outstanding at January 1, 2010               |   |             | 225,000 |   |                                      | $      | 2.24   |                                        |   |   | 3.17                      |   |   | $ | 67,550 |   |
|                                         |   |             |    |   |                                      |   |   |                                        |   |   |                      |   |   |   |   |   |
| Granted                                      |   |             | 188,865 |   |                                      | $      | 2.50   |                                        |   |   | -                         |   |   | $ | - |   |
| Exercised                                    |   |             | -       |   |                                      | $      | -      |                                        |   |   | -                         |   |   | $ | - |   |
| Forfeited                                    |   |             | -       |   |                                      | $      | -      |                                        |   |   | -                         |   |   | $ | - |   |
|                                         |   |             |    |   |                                      |   |   |                                        |   |   |                      |   |   |   |   |   |
| Outstanding at September 30, 2010            |   |             | 413,865 |   |                                      | $      | 2.36   |                                        |   |   | 3.36                      |   |   | $ | 53,200 |   |
|                                         |   |             |    |   |                                      |   |   |                                        |   |   |                      |   |   |   |   |   |
| Vested and Exercisable at September 30, 2010 |   |             | 224,716 |   |                                      | $      | 2.27   |                                        |   |   | 2.56                      |   |   | $ | 50,100 |   |

|  Type of NOL                                           |   | Amount |      | Expiration |
|-------------------------------------------------------------|--------|--------|-----------|------------|
|  Federal and State                                     |   | $      | 1,879,290 |       | December 31, 2028 |
|  Federal and State                                     |   |   | 1,086,031 |       | December 31, 2029 |
|  Total Federal and State                               |   | $      | 2,965,321 |       |   |
|  Additional NOL for State only                         |   | $      | 1,131,568 |       | December 31, 2027 |
|  Amount subject to Annual Limitation, Federal only (A) |   | $      | 150,000   |       | December 31, 2019 |

----

----

|  Weighted average number of shares outstanding           |                 2,977,501                 |
|---------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|
|  Effect of dilutive securities, common share equivalents |                    649,615 |
|                                                          |                                                                                                                      |
|  Weighted average number of shares outstanding,          |                                                                                                                      |
|  used for computing diluted earnings per share           |                 3,627,116                 |

|  Net income from continuing operations                    |  $             5,642,148                                       |
|----------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
|  Interest expense on dilutive convertible preferred stock |                      37,353 |
|                                                           |                                                                                                                                 |
|  Net income from continuing operations available          |                                                                                                                                 |
|  to common shareholders for diluted earnings per share    |  $             5,679,501                                       |

|  Net income                                               |  $             5,585,598                                       |
|----------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
|  Interest expense on dilutive convertible preferred stock |                      37,353 |
|                                                           |                                                                                                                                 |
|  Net income available to common shareholders for          |                                                                                                                                 |
|  diluted earnings per share                               |  $             5,622,951                                       |

----

----

|                                           |   | For the Three Months Ended |   |   | For the Nine Months Ended |   |
|------------------------------------------------|--------|----------------------------|--------|--------|---------------------------|--------|
|                                           |   | September 30,              |   |   | September 30,             |   |
|                                           |   | 2010                       |   |   | 2009                      |   |   | 2010 |   |   | 2009 |   |
|                                           |   | (unaudited)                |   |   | (unaudited)               |   |
| Total revenue                                  |   | $                          | -      |   |                      | $      | - |   |   | $ | - |   |   | $ | 1,242,628 |   |
|                                           |   |                       |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses:                            |   |                       |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses            |   |                       | -      |   |                      |   | 49,768 |   |   |   | - |   |   |   | 1,408,469 |   |
| Depreciation and amortization                  |   |                       | -      |   |                      |   | - |   |   |   | - |   |   |   | 61,542 |   |
| Interest expense                               |   |                       | -      |   |                      |   | 1,034 |   |   |   | - |   |   |   | 11,517 |   |
| Impairment of intangibles                      |   |                       | -      |   |                      |   | - |   |   |   | - |   |   |   | 49,470 |   |
| Total operating expenses                       |   |                       | -      |   |                      |   | 50,802 |   |   |   | - |   |   |   | 1,530,998 |   |
|                                           |   |                       |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                           |   |                       | -      |   |                      |   | (50,802 | ) |   |   | - |   |   |   | (288,370 | ) |
| Loss on sale of business                       |   |                       | -      |   |                      |   | (5,748 | ) |   |   | - |   |   |   | (28,452 | ) |
| Additional consideration on sale of businesses |   |                       | 16,234 |   |                      |   | - |   |   |   | 40,082 |   |   |   | - |   |
| Income (loss) before income taxes              |   |                       | 16,234 |   |                      |   | (56,550 | ) |   |   | 40,082 |   |   |   | (316,822 | ) |
| Benefit from income taxes                      |   |                       | -      |   |                      |   | - |   |   |   | - |   |   |   | (76,499 | ) |
|                                           |   |                       |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from discontinued operations,    |   |                       |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| net of benefit from income taxes               |   | $                          | 16,234 |   |                      | $      | (56,550 | ) |   | $ | 40,082 |   |   | $ | (240,323 | ) |

|                                  |   | September 30, |   |   | December 31, |   |
|---------------------------------------|--------|---------------|--------|--------|--------------|--------|
|                                  |   | 2010          |   |   | 2009         |   |
|                                  |   | (unaudited)   |   |   |         |   |
|                                  |   |          |   |   |         |   |
| Total assets                          |   | $             | -      |   |         | $      | - |   |
|                                  |   |          |   |   |         |   |   |   |
| Accounts payable and accrued expenses |   | $             | -      |   |         | $      | 26,000 |   |
| Total liabilities                     |   | $             | -      |   |         | $      | 26,000 |   |

----

| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
|---------|----------------------------------------------------------------------------------------------|

----

----

----

|                                                       |   | Nine months ended September 30, |
|------------------------------------------------------------|--------|---------------------------------|
| ($ in thousands)                                           |   | 2010                            |   |   | 2009 |   |   | Change |   |   | Percent |
|  Revenues                                             |   |                            |   |   |   |   |   |   |   |   |   |   |
|  Premiums earned                                      |   |                            |   |   |   |   |   |   |   |   |   |   |
|  Gross premiums earned                                |   | $                               | 21,851 |   |   | $ | 6,592 |   |   | $ | 15,259 |   |   | (A) |   |
|  Less: ceded premiums earned                          |   |                            | (13,946 | ) |   |   | (4,329 | ) |   |   | (9,616 | ) |   | (A) |   |
|  Net premiums earned                                  |   |                            | 7,905 |   |   |   | 2,263 |   |   |   | 5,642 |   |   | (A) |   |
|  Ceding commission revenue                            |   |                            | 6,414 |   |   |   | 1,483 |   |   |   | 4,931 |   |   | (A) |   |
|  Net investment income                                |   |                            | 436 |   |   |   | 115 |   |   |   | 321 |   |   | (A) |   |
|  Net realized gain on investments                     |   |                            | 229 |   |   |   | 100 |   |   |   | 129 |   |   | (A) |   |
|  Other income                                         |   |                            | 664 |   |   |   | 518 |   |   |   | 146 |   |   |   | 28.2 | % |
|  Total revenues                                       |   |                            | 15,648 |   |   |   | 4,479 |   |   |   | 11,169 |   |   |   | 249.4 | % |
|                                                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Expenses                                             |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Gross loss and loss adjustment expenses              |   |                            | 11,107 |   |   |   | 3,065 |   |   |   | 8,042 |   |   | (A) |   |
|  Less: ceded loss and loss adjustment expenses        |   |                            | (6,588 | ) |   |   | (1,977 | ) |   |   | (4,611 | ) |   | (A) |   |
|  Net loss and loss adjustment expenses                |   |                            | 4,518 |   |   |   | 1,087 |   |   |   | 3,431 |   |   | (A) |   |
|  Commission expense                                   |   |                            | 3,647 |   |   |   | 1,092 |   |   |   | 2,555 |   |   | (A) |   |
|  Other underwriting expenses                          |   |                            | 4,113 |   |   |   | 1,077 |   |   |   | 3,036 |   |   | (A) |   |
|  Other operating expenses                             |   |                            | 1,345 |   |   |   | 952 |   |   |   | 393 |   |   |   | 41.3 | % |
|  Depreciation and amortization                        |   |                            | 464 |   |   |   | 103 |   |   |   | 361 |   |   | (A) |   |
|  Interest expense                                     |   |                            | 139 |   |   |   | 151 |   |   |   | (12 | ) |   |   | (7.9 | )  % |
|  Interest expense - mandatorily                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  redeemable preferred stock                           |   |                            | 75 |   |   |   | 90 |   |   |   | (15 | ) |   |   | (16.7 | )  % |
|  Total expenses                                       |   |                            | 14,301 |   |   |   | 4,552 |   |   |   | 9,749 |   |   |   | 214.2 | % |
|                                                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income (loss) from operations                        |   |                            | 1,347 |   |   |   | (73 | ) |   |   | 1,420 |   |   |   | 1,937.9 | % |
|  Gain on acquisition of                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Kingstone Insurance Company                          |   |                            | - |   |   |   | 5,402 |   |   |   | (5,402 | ) |   |   | (100.0 | )  % |
|  Interest income-CMIC note receivable                 |   |                            | - |   |   |   | 61 |   |   |   | (61 | ) |   |   | (100.0 | )  % |
|  Income from continuing operations                    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  before taxes                                         |   |                            | 1,347 |   |   |   | 5,390 |   |   |   | (4,043 | ) |   |   | (75.0 | )% |
|  Provision for (benefit from) income tax              |   |                            | 564 |   |   |   | (25 | ) |   |   | 589 |   |   |   | 2,356.0 | % |
|  Income from continuing operations                    |   |                            | 783 |   |   |   | 5,415 |   |   |   | (4,632 | ) |   |   | (85.5 | )% |
|  Income (loss) from discontinued                      |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  operations, net of taxes                             |   |                            | 40 |   |   |   | (240 | ) |   |   | 280 |   |   |   | 116.7 | % |
|  Net income                                           |   | $                               | 823 |   |   | $ | 5,175 |   |   | $ | (4,352 | ) |   |   | (84.1 | )% |
|                                                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Percent of total revenues:                           |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                                  |   |                            | 50.5 | % |   |   | 50.5 | % |   |   |   |   |   |   |   |   |
|  Ceding commission revenue                            |   |                            | 41.0 | % |   |   | 33.1 | % |   |   |   |   |   |   |   |   |
|  Net investment income                                |   |                            | 2.8 | % |   |   | 2.6 | % |   |   |   |   |   |   |   |   |
|  Net realized gains on investments                    |   |                            | 1.5 | % |   |   | 2.2 | % |   |   |   |   |   |   |   |   |
|  Other income                                         |   |                            | 4.2 | % |   |   | 11.6 | % |   |   |   |   |   |   |   |   |
|                                                       |   |                            | 100.0 | % |   |   | 100.0 | % |   |   |   |   |   |   |   |   |
|                                                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Ceded premiums as a percent of gross premiums:       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Written                                              |   |                            | 58.2 | % |   |   | 66.9 | % |   |   |   |   |   |   |   |   |
|  Earned                                               |   |                            | 63.8 | % |   |   | 64.8 | % |   |   |   |   |   |   |   |   |
|                                                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Ceded loss and loss adjustment expenses as a percent |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  of gross loss and loss and loss adjustment expenses  |   |                            | 59.4 | % |   |   | 62.7 | % |   |   |   |   |   |   |   |   |

----

----

|                                           |   | Nine months ended September 30, |
|------------------------------------------------|--------|---------------------------------|
| ($ in thousands)                               |   | 2010                            |   |   | 2009 |   |   | Change |   |   | Percent |
|                                           |   |                            |   |   |   |   |   |   |   |   |   |   |
| Total revenue                                  |   | $                               | - |   |   | $ | 1,242 |   |   | $ | (1,242 | ) |   |   | (100 | ) % |
|                                           |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses:                            |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses            |   |                            | - |   |   |   | 1,408 |   |   |   | (1,408 | ) |   |   | (100 | ) % |
| Depreciation and amortization                  |   |                            | - |   |   |   | 62 |   |   |   | (62 | ) |   |   | (100 | ) % |
| Interest expense                               |   |                            | - |   |   |   | 11 |   |   |   | (11 | ) |   |   | (100 | ) % |
| Impairment of intangibles                      |   |                            | - |   |   |   | 49 |   |   |   | (49 | ) |   |   | (100 | ) % |
| Total operating expenses                       |   |                            | - |   |   |   | 1,530 |   |   |   | (1,530 | ) |   |   | (100 | ) % |
|                                           |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                           |   |                            | - |   |   |   | (288 | ) |   |   | 288 |   |   |   | 100 | % |
| Loss on sale of business                       |   |                            |   |   |   |   | (28 | ) |   |   | 28 |   |   |   | 100 | % |
| Additional consideration on sale of business   |   |                            | 40 |   |   |   | - |   |   |   | 40 |   |   |   | n/a |   |
| Income (loss) before benefit from income taxes |   |                            | 40 |   |   |   | (316 | ) |   |   | 356 |   |   |   | 113 | % |
| Benefit from income taxes                      |   |                            | - |   |   |   | (76 | ) |   |   | 76 |   |   |   | n/a |   |
| Income (loss) from discontinued operations     |   | $                               | 40 |   |   | $ | (240 | ) |   | $ | 280 |   |   |   | 117 | % |

----

|                                                       |   | Three months ended September 30, |
|------------------------------------------------------------|--------|----------------------------------|
| ($ in thousands)                                           |   | 2010                             |   |   | 2009 |   |   | Change |   |   | Percent |
|  Revenues                                             |   |                             |   |   |   |   |   |   |   |   |   |   |
|  Premiums earned                                      |   |                             |   |   |   |   |   |   |   |   |   |   |
|  Gross premiums earned                                |   | $                                | 7,783 |   |   | $ | 6,592 |   |   | $ | 1,191 |   |   |   | 18.1 | % |
|  Less: ceded premiums earned                          |   |                             | (4,717 | ) |   |   | (4,329 | ) |   |   | (388 | ) |   |   | 9.0 | % |
|  Net premiums earned                                  |   |                             | 3,065 |   |   |   | 2,263 |   |   |   | 802 |   |   |   | 35.5 | % |
|  Ceding commission revenue                            |   |                             | 2,231 |   |   |   | 1,483 |   |   |   | 748 |   |   |   | 50.4 | % |
|  Net investment income                                |   |                             | 155 |   |   |   | 115 |   |   |   | 40 |   |   |   | 34.8 | % |
|  Net realized gain on investments                     |   |                             | 84 |   |   |   | 100 |   |   |   | (16 | ) |   |   | (16.0 | )  % |
|  Other income                                         |   |                             | 215 |   |   |   | 154 |   |   |   | 61 |   |   |   | 39.6 | % |
|  Total revenues                                       |   |                             | 5,750 |   |   |   | 4,115 |   |   |   | 1,635 |   |   |   | 39.7 | % |
|                                                       |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Expenses                                             |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                    |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Gross loss and loss adjustment expenses              |   |                             | 4,490 |   |   |   | 3,065 |   |   |   | 1,425 |   |   |   | 46.5 | % |
|  Less: ceded loss and loss adjustment expenses        |   |                             | (2,582 | ) |   |   | (1,977 | ) |   |   | (604 | ) |   |   | 30.6 | % |
|  Net loss and loss adjustment expenses                |   |                             | 1,908 |   |   |   | 1,087 |   |   |   | 821 |   |   |   | 75.5 | % |
|  Commission expense                                   |   |                             | 1,287 |   |   |   | 1,092 |   |   |   | 195 |   |   |   | 17.9 | % |
|  Other underwriting expenses                          |   |                             | 1,581 |   |   |   | 1,077 |   |   |   | 504 |   |   |   | 46.8 | % |
|  Other operating expenses                             |   |                             | 428 |   |   |   | 285 |   |   |   | 143 |   |   |   | 50.2 | % |
|  Depreciation and amortization                        |   |                             | 155 |   |   |   | 94 |   |   |   | 61 |   |   |   | 64.9 | % |
|  Interest expense                                     |   |                             | 47 |   |   |   | 18 |   |   |   | 29 |   |   |   | 161.1 | % |
|  Interest expense - mandatorily                       |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  redeemable preferred stock                           |   |                             | - |   |   |   | 38 |   |   |   | (38 | ) |   |   | (100.0 | )  % |
|  Total expenses                                       |   |                             | 5,406 |   |   |   | 3,691 |   |   |   | 1,715 |   |   |   | 46.5 | % |
|                                                       |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income (loss) from operations                        |   |                             | 344 |   |   |   | 424 |   |   |   | (79 | ) |   |   | (18.7 | )% |
|  Gain on acquisition of                               |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Kingstone Insurance Company                          |   |                             | - |   |   |   | 5,402 |   |   |   | (5,402 | ) |   |   | (100.0 | )  % |
|  Interest income-CMIC note receivable                 |   |                             | - |   |   |   | - |   |   |   | - |   |   |   | - | % |
|  Income from continuing operations                    |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  before taxes                                         |   |                             | 344 |   |   |   | 5,826 |   |   |   | (5,481 | ) |   |   | (94.1 | )  % |
|  Provision for (benefit from) income tax              |   |                             | 128 |   |   |   | 184 |   |   |   | (56 | ) |   |   | (30.4 | )% |
|  Income from continuing operations                    |   |                             | 216 |   |   |   | 5,642 |   |   |   | (5,425 | ) |   |   | (96.2 | )% |
|  Income (loss) from discontinued                      |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  operations, net of taxes                             |   |                             | 16 |   |   |   | (56 | ) |   |   | 72 |   |   |   | 128.6 | % |
|  Net income                                           |   | $                                | 232 |   |   | $ | 5,586 |   |   | $ | (5,353 | ) |   |   | (95.8 | )% |
|                                                       |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Percent of total revenues:                           |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                                  |   |                             | 53.3 | % |   |   | 55.0 | % |   |   |   |   |   |   |   |   |
|  Ceding commission revenue                            |   |                             | 38.8 | % |   |   | 36.0 | % |   |   |   |   |   |   |   |   |
|  Net investment income                                |   |                             | 2.7 | % |   |   | 2.8 | % |   |   |   |   |   |   |   |   |
|  Net realized gains on investments                    |   |                             | 1.5 | % |   |   | 2.4 | % |   |   |   |   |   |   |   |   |
|  Other income                                         |   |                             | 3.7 | % |   |   | 3.7 | % |   |   |   |   |   |   |   |   |
|                                                       |   |                             | 100.0 | % |   |   | 100.0 | % |   |   |   |   |   |   |   |   |
|                                                       |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Ceded premiums as a percent of gross premiums:       |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Written                                              |   |                             | 59.9 | % |   |   | 67.3 | % |   |   |   |   |   |   |   |   |
|  Earned                                               |   |                             | 60.6 | % |   |   | 65.7 | % |   |   |   |   |   |   |   |   |
|                                                       |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Ceded loss and loss adjustment expenses as a percent |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  of gross loss and loss and loss adjustment expenses  |   |                             | 57.6 | % |   |   | 64.6 | % |   |   |   |   |   |   |   |   |

----

----

|                                           |   | Three months ended September 30, |
|------------------------------------------------|--------|----------------------------------|
| ($ in thousands)                               |   | 2010                             |   |   | 2009 |   |   | Change |   |   | Percent |
|                                           |   |                             |   |   |   |   |   |   |   |   |   |   |
| Total revenue                                  |   | $                                | - |   |   | $ | - |   |   | $ | - |   |   |   | - | % |
|                                           |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses:                            |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses            |   |                             | - |   |   |   | 50 |   |   |   | (50 | ) |   |   | (100 | ) % |
| Depreciation and amortization                  |   |                             | - |   |   |   | - |   |   |   | - |   |   |   | - | % |
| Interest expense                               |   |                             | - |   |   |   | 1 |   |   |   | (1 | ) |   |   | (100 | ) % |
| Impairment of intangibles                      |   |                             | - |   |   |   | - |   |   |   | - |   |   |   | - | % |
| Total operating expenses                       |   |                             | - |   |   |   | 51 |   |   |   | (51 | ) |   |   | (100 | ) % |
|                                           |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                           |   |                             | - |   |   |   | (51 | ) |   |   | 51 |   |   |   | 100 | % |
| Loss on sale of business                       |   |                             | - |   |   |   | (6 | ) |   |   | 6 |   |   |   | 100 | % |
| Additional consideration on sale of business   |   |                             | 16 |   |   |   | - |   |   |   | 16 |   |   |   | n/a |   |
| Income (loss) before benefit from income taxes |   |                             | 16 |   |   |   | (57 | ) |   |   | 73 |   |   |   | 128 | % |
| Benefit from income taxes                      |   |                             | - |   |   |   | - |   |   |   | - |   |   |   | - | % |
| Income (loss) from discontinued operations     |   | $                                | 16 |   |   | $ | (57 | ) |   | $ | 73 |   |   |   | 128 | % |

----

|                                    |   | Three Months       |      |   | Three Months       |   |      | Nine Months        |   |
|-----------------------------------------|--------|--------------------|-----------|--------|--------------------|--------|-----------|--------------------|--------|
|                                    |   | ended              |      |   | ended              |   |      | ended              |   |
|                                    |   | September 30, 2010 |      |   | September 30, 2009 |   |      | September 30, 2010 |   |
|                                    |   |               |      |   |               |   |      |               |   |
|  Revenues                          |   |               |      |   |               |   |      |               |   |
|  Net premiums earned               |   | $                  | 3,065,289 |   |               | $      | 2,262,819 |               |   | $ | 7,905,350 |   |
|  Ceding commission revenue         |   |               | 2,231,493 |   |               |   | 1,483,249 |               |   |   | 6,413,774 |   |
|  Net investment income             |   |               | 154,679   |   |               |   | 115,657   |               |   |   | 435,882 |   |
|  Net realized gain on investments  |   |               | 84,054    |   |               |   | 99,856    |               |   |   | 228,803 |   |
|  Other income                      |   |               | 82,498    |   |               |   | 40,623    |               |   |   | 244,666 |   |
|  Total revenues                    |   |               | 5,618,013 |   |               |   | 4,002,204 |               |   |   | 15,228,475 |   |
|                                    |   |               |      |   |               |   |      |               |   |   |   |   |
|  Expenses                          |   |               |      |   |               |   |      |               |   |   |   |   |
|  Loss and loss adjustment expenses |   |               | 1,907,917 |   |               |   | 1,087,276 |               |   |   | 4,518,253 |   |
|  Commission expense                |   |               | 1,287,268 |   |               |   | 1,091,638 |               |   |   | 3,647,371 |   |
|  Other underwriting expenses       |   |               | 1,580,827 |   |               |   | 1,077,318 |               |   |   | 4,112,889 |   |
|  Depreciation and amortization     |   |               | 154,475   |   |               |   | 90,761    |               |   |   | 461,076 |   |
|  Total expenses                    |   |               | 4,930,488 |   |               |   | 3,346,993 |               |   |   | 12,739,590 |   |
|                                    |   |               |      |   |               |   |      |               |   |   |   |   |
|  Income from operations            |   |               | 687,525   |   |               |   | 655,211   |               |   |   | 2,488,885 |   |
|  Income tax expense                |   |               | 209,426   |   |               |   | 241,205   |               |   |   | 820,036 |   |
|  Net income                        |   | $                  | 478,099   |   |               | $      | 414,006   |               |   | $ | 1,668,850 |   |

|                                    |   | Direct |       |   | Assumed |   |   | Ceded  |   |   | Net         |   |
|-----------------------------------------|--------|--------|------------|--------|---------|--------|--------|--------|--------|--------|-------------|--------|
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |
| Nine months ended September 30, 2010:   |   |   |       |   |    |   |   |   |   |   |
|  Written premiums                  |   | $      | 24,969,119 |   |    | $      | 9,572  |   |   | $      | (14,529,432 | )      |   | $ | 10,449,259 |   |
|  Unearned premiums                 |   |   | (3,126,232 | )      |    |   | (1,360 | )      |   |   | 583,683     |   |   |   | (2,543,909 | ) |
|  Earned premiums                   |   | $      | 21,842,887 |   |    | $      | 8,212  |   |   | $      | (13,945,749 | )      |   | $ | 7,905,350 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss and loss adjustment expenses |   | $      | 11,095,027 |   |    | $      | 11,543 |   |   | $      | (6,588,317  | )      |   | $ | 4,518,253 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss ratio                        |   |   | 50.8       | %      |    |   | 140.6  | %      |   |   | 47.2        | %      |   |   | 57.2 | % |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
| Three months ended September 30, 2010:  |   |   |       |   |    |   |   |   |   |   |        |   |   |
|  Written premiums                  |   | $      | 8,375,776  |   |    | $      | 6,436  |   |   | $      | (5,015,905  | )      |   | $ | 3,366,307 |   |
|  Unearned premiums                 |   |   | (595,995   | )      |    |   | (3,432 | )      |   |   | 298,409     |   |   |   | (301,018 | ) |
|  Earned premiums                   |   | $      | 7,779,781  |   |    | $      | 3,004  |   |   | $      | (4,717,496  | )      |   | $ | 3,065,289 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss and loss adjustment expenses |   | $      | 4,482,893  |   |    | $      | 6,825  |   |   | $      | (2,581,801  | )      |   | $ | 1,907,917 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss ratio                        |   |   | 57.6       | %      |    |   | 227.2  | %      |   |   | 54.7        | %      |   |   | 62.2 | % |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
| Three months ended September 30, 2009:  |   |   |       |   |    |   |   |   |   |   |        |   |   |
|  Written premiums                  |   | $      | 6,924,750  |   |    | $      | 8,378  |   |   | $      | (4,659,252  | )      |   | $ | 2,273,876 |   |
|  Unearned premiums                 |   |   | (335,551   | )      |    |   | (5,426 | )      |   |   | 329,920     |   |   |   | (11,057 | ) |
|  Earned premiums                   |   | $      | 6,589,199  |   |    | $      | 2,952  |   |   | $      | (4,329,332  | )      |   | $ | 2,262,819 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss and loss adjustment expenses |   | $      | 3,061,564  |   |    | $      | 3,154  |   |   | $      | (1,977,442  | )      |   | $ | 1,087,276 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss ratio                        |   |   | 46.5       | %      |    |   | 106.8  | %      |   |   | 45.7        | %      |   |   | 48.0 | % |

----

|  Net premiums earned                                    |   | $      | 7,905,350  |   |
|--------------------------------------------------------------|--------|--------|------------|--------|
|  Ceding commission revenue                              |   |   | 6,413,774  |   |
|  Other income                                           |   |   | 244,666    |   |
|                                                         |   |   |       |   |
|  Loss and loss adjustment expenses                      |   |   | 4,518,253  |   |
|                                                         |   |   |       |   |
|  Acquistion costs and other underwriting expenses:      |   |   |       |   |
|  Commission expense                                     |   |   | 3,647,371  |   |
|  Other underwriting expenses                            |   |   | 4,112,889  |   |
|  Total acquistion costs and other underwriting expenses |   |   | 7,760,260  |   |
|                                                         |   |   |       |   |
|  Underwriting income                                    |   | $      | 2,285,277  |   |
|                                                         |   |   |       |   |
|  Key Measures:                                          |   |   |       |   |
|  Net loss ratio                                         |   |   | 57.2       | %      |
|  Net underwriting expense ratio                         |   |   | 13.9       | %      |
|  Net combined ratio                                     |   |   | 71.1       | %      |
|                                                         |   |   |       |   |
|  Reconciliation of net underwriting expense ratio:      |   |   |       |   |
|  Acquisition costs and other underwriting expenses      |   | $      | 7,760,260  |   |
|  Less: Ceding commission revenue                        |   |   | (6,413,774 | )      |
|  Less: Other income                                     |   |   | (244,666   | )      |
|                                               |   | $      | 1,101,820  |   |
|                                                         |   |   |       |   |
|  Net earned premium                                     |   | $      | 7,905,350  |   |

----

|                                  |   | September 30, 2010 |
|---------------------------------------|--------|--------------------|
|                                  |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   | Cost or            |   |   | Gross |   |   | Gross Unrealized Losses |   |   |   |   |   | % of |   |
|                                  |   | Amortized          |   |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Fair |   |
|  Category                        |   | Cost               |   |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | Value |   |
|                                  |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities and    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations of U.S. government        |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  corporations and agencies       |   | $                  | 1,471,367 |   |   | $ | 70,580 |   |   | $ | (20,192 | ) |   | $ | - |   |   | $ | 1,521,755 |   |   |   | 8.3 | % |
|                                  |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of States,     |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Territories and Possessions     |   |               | 6,901,104 |   |   |   | 235,417 |   |   |   | (17,024 | ) |   |   | - |   |   |   | 7,119,497 |   |   |   | 38.8 | % |
|                                  |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Industrial and miscellaneous    |   |               | 6,251,683 |   |   |   | 321,096 |   |   |   | (868 | ) |   |   | - |   |   |   | 6,571,911 |   |   |   | 35.8 | % |
|  Total fixed-maturity securities |   |               | 14,624,154 |   |   |   | 627,093 |   |   |   | (38,084 | ) |   |   | - |   |   |   | 15,213,163 |   |   |   | 82.8 | % |
|  Equity Securities               |   |               | 2,852,670 |   |   |   | 301,123 |   |   |   | (2,394 | ) |   |   | - |   |   |   | 3,151,399 |   |   |   | 17.2 | % |
|  Short term investments          |   |               | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.0 | % |
|  Total                           |   | $                  | 17,476,824 |   |   | $ | 928,216 |   |   | $ | (40,478 | ) |   | $ | - |   |   | $ | 18,364,562 |   |   |   | 100.0 | % |

|                                    |   | December 31, 2009 |
|-----------------------------------------|--------|-------------------|
|                                    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   | Cost or           |   |   | Gross |   |   | Gross Unrealized Losses |   |   |   |   |   | % of |   |
|                                    |   | Amortized         |   |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Fair |   |
|  Category                          |   | Cost              |   |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | Value |   |
|                                    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities and      |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  obligations of U.S. government    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  corporations and agencies         |   | $                 | 3,549,616 |   |   | $ | 38,790 |   |   | $ | (23,929 | ) |   | $ | - |   |   | $ | 3,564,477 |   |   |   | 23.4 | % |
|                                    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of States, |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Territories and Possessions       |   |              | 5,751,979 |   |   |   | 82,480 |   |   |   | (12,356 | ) |   |   | - |   |   |   | 5,822,103 |   |   |   | 38.3 | % |
|                                    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds         |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Industrial and miscellaneous      |   |              | 3,375,272 |   |   |   | 54,384 |   |   |   | (25,156 | ) |   |   | - |   |   |   | 3,404,500 |   |   |   | 22.4 | % |
|  Total fixed-maturity securities   |   |              | 12,676,867 |   |   |   | 175,654 |   |   |   | (61,441 | ) |   |   | - |   |   |   | 12,791,080 |   |   |   | 84.1 | % |
|  Equity Securities                 |   |              | 1,973,738 |   |   |   | 224,736 |   |   |   | (11,548 | ) |   |   | - |   |   |   | 2,186,926 |   |   |   | 14.4 | % |
|  Short term investments            |   |              | 225,336 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 225,336 |   |   |   | 1.5 | % |
|  Total                             |   | $                 | 14,875,941 |   |   | $ | 400,390 |   |   | $ | (72,989 | ) |   | $ | - |   |   | $ | 15,203,342 |   |   |   | 100.0 | % |

|                           |   | September 30, 2010 |
|--------------------------------|--------|--------------------|
|                           |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   | Cost or            |   |   | Gross |   |   | Gross Unrealized Losses |   |   |   |   |   | % of |   |
|                           |   | Amortized          |   |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Fair |   |
|  Category                 |   | Cost               |   |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | Value |   |
|                           |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities |   | $                  | 106,205 |   |   | $ | 15,090 |   |   | $ | - |   |   | $ | - |   |   | $ | 121,295 |   |   |   | 100.0 | % |

----

|                     |   | September 30, 2010 |       |   | December 31, 2009 |
|--------------------------|--------|--------------------|------------|--------|-------------------|
|                     |   |               |       |   | Percentage of     |   |   |   |   |   | Percentage of |   |
|                     |   | Fair Market        |       |   | Fair Market       |   |   | Fair Market |   |   | Fair Market |   |
|                     |   | Value              |       |   | Value             |   |   | Value |   |   | Value |   |
| Rating                   |   |               |       |   |              |   |   |   |   |   |   |   |
| U.S. Treasury securities |   | $                  | 1,521,755  |   |              |   | 10.0 | % |   | $ | 3,564,477 |   |   |   | 27.9 | % |
| AAA                      |   |               | 4,183,642  |   |              |   | 27.5 | % |   |   | 3,404,461 |   |   |   | 26.6 | % |
| AA                       |   |               | 3,834,474  |   |              |   | 25.2 | % |   |   | 2,564,302 |   |   |   | 20.0 | % |
| A                        |   |               |       |   | 4,130,265         |   |   |   | 27.1 | % |   |   | 2,808,145 |   |   |   | 22.0 | % |
| BBB                      |   |               | 1,543,027  |   |              |   | 10.1 | % |   |   | 449,695 |   |   |   | 3.5 | % |
| Total                    |   | $                  | 15,213,163 |   |              |   | 100.0 | % |   | $ | 12,791,080 |   |   |   | 100.0 | % |

|                                    |   | September 30, 2010 |   |   | December 31, 2009 |
|-----------------------------------------|--------|--------------------|--------|--------|-------------------|
|                                    |   |               |   |   | Weighted          |   |   |   |   |   | Weighted |   |
|                                    |   |               |   |   | Average           |   |   |   |   |   | Average |   |
|                                    |   | Average            |   |   | Duration in       |   |   | Average |   |   | Duration in |   |
|  Category                          |   | Yield %            |   |   | Years             |   |   | Yield % |   |   | Years |   |
|  U.S. Treasury securities and      |   |               |   |   |              |   |   |   |   |   |   |   |
|  obligations of U.S. government    |   |               |   |   |              |   |   |   |   |   |   |   |
|  corporations and agencies         |   |               | 2.87   | %      |              |   | 3.8 |   |   |   | 3.08 | % |   |   | 5.8 |   |
|                                    |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of States, |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Territories and Possessions       |   |               | 4.17   | %      |              |   | 6.7 |   |   |   | 4.09 | % |   |   | 6.0 |   |
|                                    |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds         |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Industrial and miscellaneous      |   |               | 5.16   | %      |              |   | 7.7 |   |   |   | 5.62 | % |   |   | 8.5 |   |

|                           | September 30, 2010 |   | December 31, 2009                                                                              |
|--------------------------------|--------------------|--------|------------------------------------------------------------------------------------------------|
|                           |               |   | Weighted                                                                                       |   |   |   | Weighted |
|                           |               |   |  Average                                                                                  |   |   |   |  Average |
|                           |  Average      |   |  Duration in                                                                              |   |  Average |   |  Duration in |
|  Category                 |  Yield %      |   |  Years                                                                                    |   |  Yield % |   |  Years |
|  U.S. Treasury securities | 4.38%              |   |                29.9 |   | n/a |   |  n/a |

----

|                            |   | September 30, 2010  |
|---------------------------------|--------|---------------------|
|                            |   | Less than 12 months |   |   | 12 months or more |   |   | Total |
|                       |   |                |   |   |   |   |   | No. of |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                            |   | Fair                |   |   | Unrealized |   |   | Positions |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|  Category                  |   | Value               |   |   | Losses |   |   | Held |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |
|                            |   | (unaudited)         |   |
| Fixed-Maturity Securities:      |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and obligations of U.S.   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| government corporations         |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and agencies              |   | $                   | 450,675 |   |   | $ | (20,192 | ) |   |   | 1 |   |   | $ | - |   |   | $ | - |   |   | $ | 450,675 |   |   | $ | (20,192 | ) |
|                            |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  States, Territories and   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Possessions               |   |                | 1,074,175 |   |   |   | (17,024 | ) |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | 1,074,175 |   |   |   | (17,024 | ) |
|                            |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  bonds industrial and      |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  miscellaneous             |   |                | 499,319 |   |   |   | (868 | ) |   |   | 5 |   |   |   | - |   |   |   | - |   |   |   | 499,319 |   |   |   | (868 | ) |
|                            |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total fixed-maturity      |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  securities                |   | $                   | 2,024,169 |   |   | $ | (38,084 | ) |   |   | 9 |   |   | $ | - |   |   | $ | - |   |   | $ | 2,024,169 |   |   | $ | (38,084 | ) |
|                            |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Equity Securities:        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Preferred stocks          |   | $                   | 12,810 |   |   | $ | (103 | ) |   |   | 1 |   |   | $ | - |   |   | $ | - |   |   | $ | 12,810 |   |   | $ | (103 | ) |
|  Common stocks             |   |                | 2,291 |   |   |   | (2,291 | ) |   |   | 4 |   |   |   | - |   |   |   | - |   |   |   | 2,291 |   |   |   | (2,291 | ) |
|                            |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total equity securities   |   | $                   | 15,101 |   |   | $ | (2,394 | ) |   |   | 5 |   |   | $ | - |   |   | $ | - |   |   | $ | 15,101 |   |   | $ | (2,394 | ) |
|                            |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total                     |   | $                   | 2,039,270 |   |   | $ | (40,478 | ) |   |   | 14 |   |   | $ | - |   |   | $ | - |   |   | $ | 2,039,270 |   |   | $ | (40,478 | ) |

----

|                            |   | December 31, 2009   |
|---------------------------------|--------|---------------------|
|                            |   | Less than 12 months |   |   | 12 months or more |   |   | Total |
|                       |   |                |   |   |   |   |   | No. of |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                            |   | Fair                |   |   | Unrealized |   |   | Positions |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|  Category                  |   | Value               |   |   | Losses |   |   | Held |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |
|                            |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-Maturity Securities:      |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and obligations of U.S.   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| government corporations         |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and agencies              |   | $                   | 1,715,062 |   |   | $ | (23,929 | ) |   |   | 6 |   |   | $ | - |   |   | $ | - |   |   | $ | 1,715,062 |   |   | $ | (23,929 | ) |
|                            |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  States, Territories and   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Possessions               |   |                | 1,357,203 |   |   |   | (12,356 | ) |   |   | 5 |   |   |   | - |   |   |   | - |   |   |   | 1,357,203 |   |   |   | (12,356 | ) |
|                            |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  bonds industrial and      |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  miscellaneous             |   |                | 1,376,516 |   |   |   | (25,156 | ) |   |   | 7 |   |   |   | - |   |   |   | - |   |   |   | 1,376,516 |   |   |   | (25,156 | ) |
|                            |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total fixed-maturity      |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  securities                |   | $                   | 4,448,781 |   |   | $ | (61,441 | ) |   |   | 18 |   |   | $ | - |   |   | $ | - |   |   | $ | 4,448,781 |   |   | $ | (61,441 | ) |
|                            |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Equity Securities:        |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Preferred stocks          |   | $                   | 144,900 |   |   | $ | (5,564 | ) |   |   | 3 |   |   | $ | - |   |   | $ | - |   |   | $ | 144,900 |   |   | $ | (5,564 | ) |
|  Common stocks             |   |                | 94,470 |   |   |   | (5,984 | ) |   |   | 5 |   |   |   | - |   |   |   | - |   |   |   | 94,470 |   |   |   | (5,984 | ) |
|  Total equity securities   |   | $                   | 239,370 |   |   | $ | (11,548 | ) |   |   | 8 |   |   | $ | - |   |   | $ | - |   |   | $ | 239,370 |   |   | $ | (11,548 | ) |
|                            |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total                     |   | $                   | 4,688,151 |   |   | $ | (72,989 | ) |   |   | 26 |   |   | $ | - |   |   | $ | - |   |   | $ | 4,688,151 |   |   | $ | (72,989 | ) |

----

| Nine Months Ended September 30,                      |   | 2010   |       | 2009   |
|------------------------------------------------------|--------|--------|------------|--------|
|                                                 |   |   |       |   |   |   |
|  Cash flows provided by (used in):              |   |   |       |   |   |   |
|  Operating activities                           |   | $      | 2,100,557  |   |   | $ | 582,174 |   |
|  Investing activities                           |   |   | (2,345,574 | )      |   |   | 2,291,161 |   |
|  Financing activities                           |   |   | 381,732    |   |   |   | (698,143 | ) |
|  Net increase in cash and cash equivalents      |   |   | 136,715    |   |   |   | 2,175,192 |   |
|  Cash and cash equivalents, beginning of period |   |   | 625,320    |   |   |   | 142,949 |   |
|  Cash and cash equivalents, end of period       |   | $      | 762,035    |   |   | $ | 2,318,141 |   |

----

----

----

|   | 2(a)   |   Asset Purchase Agreement, dated as of March 27, 2009, by and among NII BSA LLC, Barry Scott Agency, Inc., DCAP Accurate, Inc. and DCAP Group, Inc.1 |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                       |
|   | 2(b)   |   Stock Purchase Agreement, dated as of May 1, 2009, by and between Stuart Greenvald and Abraham Weinzimer and DCAP Group, Inc.2                      |
|   |   |                                                                                                                                                       |
|   | 2(c)   |   Stock Purchase Agreement, dated as of June 30, 2009, between Barry Lefkowitz and Blast Acquisition Corp.3                                           |
|   |   |                                                                                                                                                       |
|   | 3(a)   |   Restated Certificate of Incorporation4                                                                                                              |
|   |   |                                                                                                                                                       |
|   | 3(b)   |   Certificate of Amendment of Certificate of Incorporation filed July 1, 20095                                                                        |

----

  

  

  

  

  

  

----

|   |     |                                                                                                                                                                                 |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 3(c)     |   Certificate of Designation of Series A Preferred Stock6                                                                                                                       |
|   |     |                                                                                                                                                                                 |
|   | 3(d)     |   Certificate of Designation of Series B Preferred Stock7                                                                                                                       |
|   |     |                                                                                                                                                                                 |
|   | 3(e)     |   Certificate of Designation of Series C Preferred Stock8                                                                                                                       |
|   |     |                                                                                                                                                                                 |
|   | 3(f)     |   Certificate of Designation of Series D Preferred Stock9                                                                                                                       |
|   |     |                                                                                                                                                                                 |
|   | 3(g)     |   Certificate of Designation of Series E Preferred Stock10                                                                                                                      |
|   |     |                                                                                                                                                                                 |
|   | 3(h)     |   By-laws, as amended11                                                                                                                                                         |
|   |     |                                                                                                                                                                                 |
|   | 31(a)    |   Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                    |
|   |     |                                                                                                                                                                                 |
|   | 31(b)    |   Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                    |
|   |     |                                                                                                                                                                                 |
|   |  32 |   Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

----

    

  

  

  

  

  

----

|                                                                           | KINGSTONE COMPANIES, INC. |                        |
|--------------------------------------------------------------------------------|---------------------------|-----------------------------|
|                                                                           |                      |                        |   |
| Dated:  November 15, 2010                                            | By:                       | /s/ Barry B. Goldstein |   |
|                                                                           |                      | Barry B. Goldstein          |   |
|                                                                           |                      | President                   |   |
|               |                      |                        |         |
|                                                                           |                      |                        |   |
|                                                                           | By:                  | /s/ Victor Brodsky          |   |
|                                                                           |                      | Victor Brodsky              |   |
|                                                                           |                      | Chief Financial Officer     |   |