|   |   |                                                                                    |
|--------|--------|-----------------------------------------------------------------------------------------|
| 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 |

|                                 |   |           |   |                                                                                                                                                                 |   |   |   |   |
|--------------------------------------|--------|----------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                 |   |           |   |                                                                                                                                                                 |   | PAGE   |
|                                 |   |           |   |                                                                                                                                                                 |   |   |   |   |
| PART I — FINANCIAL INFORMATION |   |           | 2      |                                                                                                                                                                 |
|                                 |   | Item 1 -  |   |  Financial Statements                                                                                                                                           |   |   | 2      |   |
|                                 |   |           |   |  Condensed Consolidated Balance Sheets at March 31, 2010 (Unaudited) and December 31, 2009                                                                      |   |   | 3      |   |
|                                 |   |           |   |  Condensed Consolidated Statements of Operations and Comprehensive Income  for the three months ended March 31, 2010 (Unaudited) and 2009 (Unaudited) |   |   | 4      |   |
|                                 |   |           |   |  Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2010 (Unaudited) and for the year ended December 31, 2009            |   |   | 5      |   |
|                                 |   |           |   |  Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2010 (Unaudited) and 2009  (Unaudited)                          |   |   | 6      |   |
|                                 |   |           |   |  Notes to Condensed Consolidated Financial Statements  (Unaudited)                                                                                    |   |   | 7      |   |
|                                 |   | Item 2 -  |   |  Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                    |   |   | 24     |   |
|                                 |   | Item 3 -  |   |  Quantitative and Qualitative Disclosures About Market Risk                                                                                                     |   |   | 35     |   |
|                                 |   | Item 4T-  |   |  Controls and Procedures                                                                                                                                        |   |   | 35     |   |
|                                 |   |           |   |                                                                                                                                                                 |   |   |   |   |
| PART II — OTHER INFORMATION    |   |           | 36     |                                                                                                                                                                 |
|                                 |   | Item 1 -  |   | Legal Proceedings                                                                                                                                                    |   |   | 36     |   |
|                                 |   | Item 1A - |   | Risk Factors                                                                                                                                                         |   |   | 36     |   |
|                                 |   | Item 2 -       |   | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                          |   |   | 36     |   |
|                                 |   | Item 3 -       |   | Defaults Upon Senior Securities                                                                                                                                      |   |   | 36     |   |
|                                 |   | Item 4 -  |   | Reserved                                                                                                                                                             |   |   | 36     |   |
|                                 |   | Item 5 -  |   | Other Information                                                                                                                                                    |   |   | 36     |   |
|                                 |   | Item 6 -  |   | Exhibits                                                                                                                                                             |   |   | 36     |   |
| Signatures                           |   |           |   |                                                                                                                                                                 |
|  EXHIBIT 31(a)                  |
|  EXHIBIT 31(b)                  |
|  EXHIBIT 32                     |

|  KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                                  |   |
|---------------------------------------------------------------------------------------------------|--------|
| Condensed Consolidated Balance Sheets                                                             |   |   |   |   |   |   |
|                                                                                              |   | March 31, |   |   | December 31, |   |
|                                                                                              |   | 2010 |   |   | 2009 |   |
|                                                                                              |   | (unaudited) |   |   |   |   |
|  Assets                                                                                      |   |   |   |   |   |   |
|  Short term investments                                                                      |   | $ | 385,392 |   |   | $ | 225,336 |   |
|  Fixed-maturity securities, available for sale, at fair value (amortized cost of $12,926,257 |   |   |   |   |   |   |   |   |
|  at March 31, 2010 and $12,676,867 at December 31, 2009)                                     |   |   | 13,071,634 |   |   |   | 12,791,080 |   |
|  Equity securities, available-for-sale, at fair value (cost of $1,831,168 at March 31, 2010  |   |   |   |   |   |   |   |   |
|  and $1,973,738 at December 31, 2009)                                                        |   |   | 2,053,071 |   |   |   | 2,186,926 |   |
|  Total investments                                                                           |   |   | 15,510,097 |   |   |   | 15,203,342 |   |
|  Cash and cash equivalents                                                                   |   |   | 760,599 |   |   |   | 625,320 |   |
|  Investment income receivable                                                                |   |   | 173,374 |   |   |   | 135,251 |   |
|  Premiums receivable, net of of provision for uncollectible amounts                          |   |   | 4,840,077 |   |   |   | 4,479,363 |   |
|  Receivables - reinsurance contracts                                                         |   |   | 962,376 |   |   |   | 564,408 |   |
|  Reinsurance receivables, net of of provision for uncollectible amounts                      |   |   | 20,245,656 |   |   |   | 20,849,621 |   |
|  Notes receivable-sale of business                                                           |   |   | 1,051,596 |   |   |   | 1,119,365 |   |
|  Deferred acquisition costs                                                                  |   |   | 3,119,493 |   |   |   | 2,917,984 |   |
|  Intangible assets, net                                                                      |   |   | 4,493,171 |   |   |   | 4,612,100 |   |
|  Property and equipment, net of accumulated depreciation                                     |   |   | 1,622,735 |   |   |   | 1,659,015 |   |
|  Equities in pools and associations                                                          |   |   | 220,708 |   |   |   | 220,708 |   |
|  Other assets                                                                                |   |   | 320,134 |   |   |   | 257,276 |   |
|  Total assets                                                                                |   | $ | 53,320,016 |   |   | $ | 52,643,753 |   |
|                                                                                              |   |   |   |   |   |   |   |   |
|  Liabilities                                                                                 |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                                           |   | $ | 16,536,820 |   |   | $ | 16,513,318 |   |
|  Unearned premiums                                                                           |   |   | 14,976,136 |   |   |   | 14,088,187 |   |
|  Advance premiums                                                                            |   |   | 428,429 |   |   |   | 411,676 |   |
|  Reinsurance balances payable                                                                |   |   | 1,897,031 |   |   |   | 1,918,169 |   |
|  Deferred ceding commission revenue                                                          |   |   | 2,841,284 |   |   |   | 3,298,245 |   |
|  Notes payable (payable to related parties of $785,000 at March 31, 2010                     |   |   |   |   |   |   |   |   |
|  and $585,000 at December 31, 2009)                                                          |   |   | 1,479,685 |   |   |   | 1,085,637 |   |
|  Accounts payable, accrued liabilities and other liabilities                                 |   |   | 1,838,296 |   |   |   | 2,446,558 |   |
|  Deferred income taxes                                                                       |   |   | 1,173,779 |   |   |   | 1,173,256 |   |
|  Mandatorily redeemable preferred stock                                                      |   |   | 1,299,231 |   |   |   | 1,299,231 |   |
|  Liabilties of discontinued operations                                                       |   |   | 6,500 |   |   |   | 26,000 |   |
|  Total liabilities                                                                           |   |   | 42,477,191 |   |   |   | 42,260,277 |   |
|                                                                                              |   |   |   |   |   |   |   |   |
|  Commitments                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |
|  Stockholders' Equity:                                                                       |   |   |   |   |   |   |   |   |
|  Common stock, $.01 par value; authorized 10,000,000 shares; issued 3,854,536 shares at      |   |   |   |   |   |   |   |   |
|  March 31, 2010 and 3,804,536 shares at December 31, 2009; outstanding 3,038,511             |   |   |   |   |   |   |   |   |
|  shares at March 31, 2010 and 2,988,511 shares at December 31, 2009                          |   |   | 38,546 |   |   |   | 38,046 |   |
|  Preferred stock, $.01 par value; authorized                                                 |   |   |   |   |   |   |   |   |
|  1,000,000 shares; 0 shares issued and outstanding                                           |   |   | - |   |   |   | - |   |
|  Capital in excess of par                                                                    |   |   | 12,251,468 |   |   |   | 12,051,332 |   |
|  Accumulated other comprehensive income                                                      |   |   | 242,405 |   |   |   | 216,086 |   |
|  Accumulated deficit                                                                         |   |   | (469,212 | ) |   |   | (701,606 | ) |
|                                                                                              |   |   | 12,063,207 |   |   |   | 11,603,858 |   |
|  Treasury stock, at cost, 816,025 shares                                                     |   |   | (1,220,382 | ) |   |   | (1,220,382 | ) |
|  Total stockholders' equity                                                                  |   |   | 10,842,825 |   |   |   | 10,383,476 |   |
|                                                                                              |   |   |   |   |   |   |   |   |
|  Total liabilities and stockholders' equity                                                  |   | $ | 53,320,016 |   |   | $ | 52,643,753 |   |

----

|  KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                     |   |
|--------------------------------------------------------------------------------------|--------|
|                                                                                 |   |   |   |   |   |   |
| Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) |   |
| Three Months Ended March 31,                                                         |   | 2010 |   |   | 2009 |   |
|                                                                                 |   |   |   |   |   |   |
|  Revenues                                                                       |   |   |   |   |   |   |
|  Net premiums earned                                                            |   | $ | 2,217,947 |   |   | $ | - |   |
|  Ceding commission revenue                                                      |   |   | 1,809,593 |   |   |   | - |   |
|  Net investment income                                                          |   |   | 132,280 |   |   |   | - |   |
|  Net realized gains on investments                                              |   |   | 34,660 |   |   |   | - |   |
|  Other income                                                                   |   |   | 221,104 |   |   |   | 112,037 |   |
|  Total revenues                                                                 |   |   | 4,415,584 |   |   |   | 112,037 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|  Expenses                                                                       |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                              |   |   | 1,434,618 |   |   |   | - |   |
|  Commission expense                                                             |   |   | 1,136,619 |   |   |   | - |   |
|  Other underwriting expenses                                                    |   |   | 702,376 |   |   |   | - |   |
|  Other operating expenses                                                       |   |   | 539,619 |   |   |   | 281,913 |   |
|  Depreciation and amortization                                                  |   |   | 156,687 |   |   |   | 4,436 |   |
|  Interest expense                                                               |   |   | 45,202 |   |   |   | 80,267 |   |
|  Interest expense - mandatorily redeemable preferred stock                      |   |   | 37,353 |   |   |   | 19,500 |   |
|  Total expenses                                                                 |   |   | 4,052,474 |   |   |   | 386,116 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|  Income (loss) from operations                                                  |   |   | 363,110 |   |   |   | (274,079 | ) |
|  Interest income-CMIC note receivable                                           |   |   | - |   |   |   | 30,469 |   |
|  Income (loss) from continuing operations before taxes                          |   |   | 363,110 |   |   |   | (243,610 | ) |
|  Income tax expense (benefit)                                                   |   |   | 144,564 |   |   |   | (87,775 | ) |
|  Income (loss) from continuing operations                                       |   |   | 218,546 |   |   |   | (155,835 | ) |
|  Income (loss) from discontinued operations, net of taxes                       |   |   | 13,848 |   |   |   | (15,679 | ) |
|  Net income (loss)                                                              |   |   | 232,394 |   |   |   | (171,514 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |
|  Gross unrealized investment holding gains                                      |   |   |   |   |   |   |   |   |
|  arising during period                                                          |   |   | 39,879 |   |   |   | - |   |
|  Income tax expense related to items of                                         |   |   |   |   |   |   |   |   |
|  other comprehensive income                                                     |   |   | (13,559 | ) |   |   | - |   |
|  Comprehensive income (loss)                                                    |   | $ | 258,714 |   |   | $ | (171,514 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |
| Basic and diluted earnings (loss) per common share:                                  |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                                             |   | $ | 0.07 |   |   | $ | (0.05 | ) |
| Loss from discontinued operations                                                    |   | $ | 0.01 |   |   | $ | (0.01 | ) |
| Income (loss) per common share                                                       |   | $ | 0.08 |   |   | $ | (0.06 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |
| Number of weighted average common shares used in computation                         |   |   |   |   |   |   |   |   |
| of basic and diluted earnings (loss) per share                                       |   |   | 2,992,400 |   |   |   | 2,972,746 |   |
|                                                                                 |   |   |   |   |   |   |   |   |

----

| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                          |   |
|---------------------------------------------------------------------|--------|
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated Statement of Stockholders' Equity (Unaudited)          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year ended Decemeber 31, 2009 and Three Months Ended March 31, 2010 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   | Capital |   |   | Other |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   | 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                                                |   |   | 50,000 |   |   |   | 500 |   |   |   | - |   |   |   | - |   |   |   | 200,136 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 200,636 |   |
| Net income                                                          |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 232,394 |   |   |   | - |   |   |   | - |   |   |   | 232,394 |   |
| Net unrealized gains on securities                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available for sale, net of income tax                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 26,319 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 26,319 |   |
| Balance, March 31, 2010                                             |   |   | 3,854,536 |   |   | $ | 38,546 |   |   |   | - |   |   | $ | - |   |   | $ | 12,251,468 |   |   | $ | 242,405 |   |   | $ | (469,212 | ) |   |   | 816,025 |   |   | $ | (1,220,382 | ) |   | $ | 10,842,825 |   |
|                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|  KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                         |   |
|------------------------------------------------------------------------------------------|--------|
| Consolidated Statements of Cash Flows (Unaudited)                                        |   |   |   |   |   |   |
| Three Months Ended March 31,                                                             |   | 2010 |   |   | 2009 |   |
|                                                                                     |   |   |   |   |   |   |
|  Cash flows provided by (used in) operating activities:                             |   |   |   |   |   |   |
|  Net income (loss)                                                                  |   | $ | 232,394 |   |   | $ | (171,514 | ) |
| Adjustments to reconcile net income (loss) to net cash (used in) provided by operations: |   |   |   |   |   |
|  Gain on sale of investments                                                        |   |   | (34,660 | ) |   |   | - |   |
|  Depreciation and amortization                                                      |   |   | 156,687 |   |   |   | 4,436 |   |
|  Stock-based payments                                                               |   |   | 200,636 |   |   |   | 6,792 |   |
|  Deferred income taxes                                                              |   |   | (13,036 | ) |   |   | (94,000 | ) |
|  (Increase) decrease in assets:                                                     |   |   |   |   |   |   |   |   |
|  Short term investments                                                             |   |   | (160,056 | ) |   |   | - |   |
|  Premiums receivable, net                                                           |   |   | (360,714 | ) |   |   | - |   |
|  Receivables - reinsurance contracts                                                |   |   | (397,968 | ) |   |   | - |   |
|  Reinsurance receivables, net                                                       |   |   | 603,965 |   |   |   | - |   |
|  Deferred acquisition costs                                                         |   |   | (201,509 | ) |   |   | - |   |
|  Other assets                                                                       |   |   | (100,784 | ) |   |   | (11,361 | ) |
|  Increase (decrease) in liabilities:                                                |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                                  |   |   | 23,502 |   |   |   | - |   |
|  Unearned premiums                                                                  |   |   | 887,949 |   |   |   | - |   |
|  Advance premiums                                                                   |   |   | 16,753 |   |   |   | - |   |
|  Reinsurance balances payable                                                       |   |   | (21,138 | ) |   |   | - |   |
|  Deferred ceding commission revenue                                                 |   |   | (456,961 | ) |   |   | - |   |
|  Accounts payable, accrued liabilities and other liabilities                        |   |   | (608,262 | ) |   |   | 76,742 |   |
|  Net cash used in operating activities of continuing operations                     |   |   | (233,202 | ) |   |   | (188,905 | ) |
|  Operating activities of discontinued operations                                    |   |   | (19,500 | ) |   |   | 249,849 |   |
|  Net cash flows (used in) provided by operations                                    |   |   | (252,702 | ) |   |   | 60,944 |   |
|                                                                                     |   |   |   |   |   |   |   |   |
|  Cash flows used in investing activities:                                           |   |   |   |   |   |   |   |   |
|  Purchase - fixed-maturity securities                                               |   |   | (249,390 | ) |   |   | - |   |
|  Purchase - equity securities                                                       |   |   | (233,135 | ) |   |   | - |   |
|  Sale - equity securities                                                           |   |   | 410,167 |   |   |   | - |   |
|  Increase in accrued interest - Commercial Mutual Insurance Company                 |   |   | - |   |   |   | (30,468 | ) |
|  Collections of notes receivable and accrued interest - Sale of businesses          |   |   | 67,769 |   |   |   | - |   |
|  Other investing activities                                                         |   |   | (1,478 | ) |   |   | - |   |
|  Net cash used in investing activities of continuing operations                     |   |   | (6,067 | ) |   |   | (30,468 | ) |
|  Investing activities of discontinued operations                                    |   |   | - |   |   |   | (745 | ) |
|  Net cash flows used in investing activities                                        |   |   | (6,067 | ) |   |   | (31,213 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |
|  Cash flows provided by (used in) financing activities:                             |   |   |   |   |   |   |   |   |
|  Proceeds from long term debt (includes $200,000 from related parties)              |   |   | 400,000 |   |   |   | - |   |
|  Principal payments on long-term debt                                               |   |   | (5,952 | ) |   |   | (17,798 | ) |
|  Net cash used in (provided by) financing activities of continuing operations       |   |   | 394,048 |   |   |   | (17,798 | ) |
|  Financing activities of discontinued operations                                    |   |   | - |   |   |   | - |   |
|  Net cash flows provided by (used in) financing activities                          |   |   | 394,048 |   |   |   | (17,798 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |
|  Increase in cash and cash equivalents                                              |   |   | 135,279 |   |   |   | 11,933 |   |
|  Cash and cash equivalents, beginning of period                                     |   |   | 625,320 |   |   |   | 142,949 |   |
|  Cash and cash equivalents, end of period                                           |   | $ | 760,599 |   |   | $ | 154,882 |   |
|                                                                                     |   |   |   |   |   |   |   |   |

----

|                                  |   | March 31, 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)   |   | $              | 3,549,616  |   |   | $ | 43,430 |   |   | $ | (28,218 | ) |   | $ | - |   |   | $ | 3,564,828 |   |   | $ | 15,212 |   |
|                                  |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of States,     |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Territories and Possessions     |   |           | 5,751,979  |   |   |   | 62,034 |   |   |   | (12,728 | ) |   |   | - |   |   |   | 5,801,285 |   |   |   | 49,306 |   |
|                                  |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds       |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Industrial and miscellaneous    |   |           | 3,624,662  |   |   |   | 90,837 |   |   |   | (9,978 | ) |   |   | - |   |   |   | 3,705,521 |   |   |   | 80,859 |   |
|  Total fixed-maturity securities |   |           | 12,926,257 |   |   |   | 196,301 |   |   |   | (50,924 | ) |   |   | - |   |   |   | 13,071,634 |   |   |   | 145,377 |   |
|                                  |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Equity Securities:              |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Preferred stocks                |   |           | 742,747    |   |   |   | 47,436 |   |   |   | (3,688 | ) |   |   | - |   |   |   | 786,495 |   |   |   | 43,748 |   |
|  Common stocks                   |   |           | 1,088,421  |   |   |   | 178,509 |   |   |   | (354 | ) |   |   | - |   |   |   | 1,266,576 |   |   |   | 178,155 |   |
|  Total equity securities         |   |           | 1,831,168  |   |   |   | 225,945 |   |   |   | (4,042 | ) |   |   | - |   |   |   | 2,053,071 |   |   |   | 221,903 |   |
|                                  |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Short term investments          |   |           | 385,392    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 385,392 |   |   |   | - |   |
|                                  |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total                           |   | $              | 15,142,817 |   |   | $ | 422,246 |   |   | $ | (54,966 | ) |   | $ | - |   |   | $ | 15,510,097 |   |   | $ | 367,280 |   |

|                                  |   | 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 |   |

|                             |   | March 31, 2010 |       |   | December 31, 2009 |   |
|----------------------------------|--------|----------------|------------|--------|-------------------|--------|
|                             |   | Amortized      |       |   |              |   |   | Amortized |   |   |   |   |
|  Remaining Time to Maturity |   | Cost           |       |   | Fair Value        |   |   | Cost |   |   | Fair Value |   |
|                             |   | (unaudited)    |       |   |              |   |   |   |   |
|  Less than one year         |   | $              | 1,190,320  |   |              | $      | 1,165,399 |   |   | $ | 1,190,319 |   |   | $ | 1,176,050 |   |
|  One to five years          |   |           | 5,202,936  |   |              |   | 5,275,823 |   |   |   | 5,202,936 |   |   |   | 5,260,443 |   |
|  Five to ten years          |   |           | 5,195,177  |   |              |   | 5,262,435 |   |   |   | 4,945,787 |   |   |   | 4,986,236 |   |
|  More than 10 years    |   |           | 1,337,824  |   |              |   | 1,367,977 |   |   |   | 1,337,825 |   |   |   | 1,368,351 |   |
|  Total                      |   | $              | 12,926,257 |   |              | $      | 13,071,634 |   |   | $ | 12,676,867 |   |   | $ | 12,791,080 |   |

|                            |   | Three months ended |    |
|---------------------------------|--------|--------------------|---------|
|                            |   | March 31,          |    |
|                            |   | 2010               |    |   | 2009 |   |
|                            |   | (unaudited)        |    |
|  Income                    |   |               |    |   |   |   |
|  Fixed-maturity securities |   | $                  | 129,107 |   |   | $ | - |   |
|  Equity securities         |   |               | 27,301  |   |   |   | - |   |
|  Cash and cash equivalents |   |               | 1,850   |   |   |   | - |   |
|  Other                     |   |               | 15      |   |   |   | - |   |
|  Total                     |   |               | 158,273 |   |   |   | - |   |
|  Expenses                  |   |               |    |   |   |   |   |   |
|  Investment expenses       |   |               | 25,993  |   |   |   | - |   |
|  Net investment income     |   | $                  | 132,280 |   |   | $ | - |   |

|                                   |   | Three months ended |    |
|----------------------------------------|--------|--------------------|---------|
|                                   |   | March 31,          |    |
|                                   |   | 2010               |    |   | 2009 |   |
|                                   |   | (unaudited)        |    |
|  Fixed-maturity securities        |   |               |    |   |   |   |
|  Gross realized gains             |   | $                  | -       |   |   | $ | - |   |
|  Gross realized losses            |   |               | -       |   |   |   | - |   |
|                                   |   |               | -       |   |   |   | - |   |
|                                   |   |               |    |   |   |   |   |   |
|  Equity securities                |   |               |    |   |   |   |   |   |
|  Gross realized gains             |   |               | 46,398  |   |   |   | - |   |
|  Gross realized losses            |   |               | (11,738 | ) |   |   | - |   |
|                                   |   |               | 34,660  |   |   |   | - |   |
|                                   |   |               |    |   |   |   |   |   |
| Other-than-temporary impairment losses |   |               |    |   |
|  Fixed-maturity securities        |   |               | -       |   |   |   | - |   |
|  Equity securities                |   |               | -       |   |   |   | - |   |
|                                   |   |               | -       |   |   |   | - |   |
|                                   |   |               |    |   |   |   |   |   |
|  Cash and short term investments  |   |               | -       |   |   |   | - |   |
|                                   |   |               |    |   |   |   |   |   |
|  Net realized gains               |   | $                  | 34,660  |   |   | $ | - |   |

|                                    |   | 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         |   | $                   | 1,411,089 |   |              | $      | (28,218 | )         |   |   | 4 |   |   | $ | - |   |   | $ | - |   |   | $ | 1,411,089 |   |   | $ | (28,218 | ) |
|                                    |   |                |      |   |              |   |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of States, |   |                |      |   |              |   |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Territories and Possessions       |   |                | 2,184,932 |   |              |   | (12,728 | )         |   |   | 7 |   |   |   | - |   |   |   | - |   |   |   | 2,184,932 |   |   |   | (12,728 | ) |
|                                    |   |                |      |   |              |   |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds         |   |                |      |   |              |   |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Industrial and miscellaneous      |   |                | 549,844   |   |              |   | (9,978  | )         |   |   | 2 |   |   |   | - |   |   |   | - |   |   |   | 549,844 |   |   |   | (9,978 | ) |
|  Total fixed-maturity securities   |   |                | 4,145,865 |   |              |   | (50,924 | )         |   |   | 13 |   |   |   | - |   |   |   | - |   |   |   | 4,145,865 |   |   |   | (50,924 | ) |
|                                    |   |                |      |   |              |   |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Equity Securities:                |   |                |      |   |              |   |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Preferred stocks                  |   | $                   | 44,484    |   |              | $      | (3,688  | )         |   |   | 2 |   |   | $ | - |   |   | $ | - |   |   | $ | 44,484 |   |   | $ | (3,688 | ) |
|  Common stocks                     |   |                | 1,388,128 |   |              |   | (354    | )         |   |   | 1 |   |   |   | - |   |   |   | - |   |   |   | 1,388,128 |   |   |   | (354 | ) |
|  Total equity securities           |   |                | 1,432,612 |   |              |   | (4,042  | )         |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | 1,432,612 |   |   |   | (4,042 | ) |
|                                    |   |                |      |   |              |   |    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total                             |   | $                   | 5,578,477 |   |              | $      | (54,966 | )         |   |   | 16 |   |   | $ | - |   |   | $ | - |   |   | $ | 5,578,477 |   |   | $ | (54,966 | ) |

|                             |   | March 31, 2010 |   |
|----------------------------------|--------|----------------|--------|
|  ($ in thousands)           |   | Level 1        |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                             |   | (unaudited)    |   |
|  Fixed-maturity investments |   |           |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities   |   |           |   |   |   |   |   |   |   |   |   |   |
|  and obligations of U.S.    |   |           |   |   |   |   |   |   |   |   |   |   |
|  government corporations    |   |           |   |   |   |   |   |   |   |   |   |   |
|  and agencies               |   | $              | 3,565  |   |   | $ | - |   |   | $ | - |   |   | $ | 3,565 |   |
|                             |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of  |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  States, Territories and    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Possessions                |   |           | 5,801  |   |   |   | - |   |   |   | - |   |   |   | 5,801 |   |
|                             |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and              |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  other bonds                |   |           | 3,706  |   |   |   | - |   |   |   | - |   |   |   | 3,706 |   |
|                             |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total fixed maturities     |   |           | 13,072 |   |   |   | - |   |   |   | - |   |   |   | 13,072 |   |
|  Equity investments         |   |           | 2,053  |   |   |   | - |   |   |   | - |   |   |   | 2,053 |   |
|  Short term investments     |   |           | 385    |   |   |   | - |   |   |   | - |   |   |   | 385 |   |
|  Total investments          |   | $              | 15,510 |   |   | $ | - |   |   | $ | - |   |   | $ | 15,510 |   |

|                             |   | 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 |   |

|                                         |   | March 31, 2010 |       |   | December 31, 2009 |   |
|----------------------------------------------|--------|----------------|------------|--------|-------------------|--------|
|                                         |   | Carrying Value |       |   | Fair Value        |   |   | Carrying Value |   |   | Fair Value |   |
|                                         |   | (unaudited)    |       |   |              |   |   |   |   |
|  Cash and short-term investments        |   | $              | 1,145,991  |   |              | $      | 1,145,991 |   |   | $ | 850,656 |   |   | $ | 850,656 |   |
|  Premiums receivable                    |   |           | 4,840,077  |   |              |   | 4,840,077 |   |   |   | 4,479,363 |   |   |   | 4,479,363 |   |
|  Receivables - reinsurance contracts    |   |           | 962,376    |   |              |   | 962,376 |   |   |   | 564,408 |   |   |   | 564,408 |   |
|  Reinsurance receivables                |   |           | 20,245,656 |   |              |   | 20,245,656 |   |   |   | 20,849,621 |   |   |   | 20,849,621 |   |
|  Notes receivable-sale of business      |   |           | 1,051,596  |   |              |   | 1,051,596 |   |   |   | 1,119,365 |   |   |   | 1,119,365 |   |
|  Real estate, net of                    |   |           |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  accumulated depreciation               |   |           | 1,460,530  |   |              |   | 1,510,000 |   |   |   | 1,547,629 |   |   |   | 1,510,000 |   |
|  Reinsurance balances payable           |   |           | 1,897,031  |   |              |   | 1,897,031 |   |   |   | 1,918,169 |   |   |   | 1,918,169 |   |
|  Notes payable                          |   |           | 1,479,685  |   |              |   | 1,479,685 |   |   |   | 1,085,637 |   |   |   | 1,085,637 |   |
|  Mandatorily redeemable preferred stock |   |           | 1,299,231  |   |              |   | 1,299,231 |   |   |   | 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                  |   |   | 1,133,892   |   |
|  Prior years                   |   |   | 300,726     |   |
|  Total incurred                |   |   | 1,434,618   |   |
|                                |   |   |        |   |
|  Paid related to:              |   |   |        |   |
|  Current year                  |   |   | 407,338     |   |
|  Prior years                   |   |   | 848,472     |   |
|  Total paid                    |   |   | 1,255,810   |   |
|                           |   |   |        |   |
|  Net balance at end of period  |   |   | 6,179,923   |   |
|  Add reinsurance recoverables  |   |   | 10,356,897  |   |
|  Balance at March 31, 2010     |   | $      | 16,536,820  |   |

|              |   | March 31, 2010 |      |   | December 31, 2009 |   |
|-------------------|--------|----------------|-----------|--------|-------------------|--------|
|              |   | (unaudited)    |      |   |              |   |   |   |   |   |   |   |
|              |   |           |      |   | Less              |   |   |   |   |   |   |   |   | Less |   |   |   |   |
|              |   | Total          |      |   | Current           |   |   | Long-Term |   |   | Total |   |   | Current |   |   | Long-Term |   |
|              |   | Debt           |      |   | Maturities        |   |   | Debt |   |   | Debt |   |   | Maturities |   |   | Debt |   |
| Capitalized lease |   | $              | 29,685    |   |              | $      | 25,029 |   |   | $ | 4,656 |   |   | $ | 35,637 |   |   | $ | 24,466 |   |   | $ | 11,171 |   |
| Notes payable     |   |           | 1,450,000 |   |              |   | - |   |   |   | 1,450,000 |   |   |   | 1,050,000 |   |   |   | - |   |   |   | 1,050,000 |   |
|              |   | $              | 1,479,685 |   |              | $      | 25,029 |   |   | $ | 1,454,656 |   |   | $ | 1,085,637 |   |   | $ | 24,466 |   |   | $ | 1,061,171 |   |

|  Years ended December 31, |   |        |      |
|--------------------------------|--------|-------------|-----------|
|                           |   | (unaudited) |      |
| 2010 (nine months)             |   | $           | 18,515    |   |
| 2011                           |   |        | 1,461,170 |   |
|                           |   | $           | 1,479,685 |   |

| 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   |                                        |   |   | -                         |   |   | $ | 94,433 |   |
| Exercised                                |   |             | -       |   |                                      | $      | -      |                                        |   |   | -                         |   |   | $ | - |   |
| Forfeited                                |   |             | -       |   |                                      | $      | -      |                                        |   |   | -                         |   |   | $ | - |   |
|                                     |   |             |    |   |                                      |   |   |                                        |   |   |                      |   |   |   |   |   |
| Outstanding at March 31, 2010            |   |             | 413,865 |   |                                      | $      | 2.36   |                                        |   |   | 3.87                      |   |   | $ | 266,533 |   |
|                                     |   |             |    |   |                                      |   |   |                                        |   |   |                      |   |   |   |   |   |
| Vested and Exercisable at March 31, 2010 |   |             | 173,466 |   |                                      | $      | 2.31   |                                        |   |   | 3.03                      |   |   | $ | 122,033 |   |

|                                                                                    |   | March 31,   |       |   | December 31, |   |
|-----------------------------------------------------------------------------------------|--------|-------------|------------|--------|--------------|--------|
|                                                                                    |   | 2010        |       |   | 2009         |   |
|                                                                                    |   | (unaudited) |       |   |         |   |
|  Deferred tax asset:                                                               |   |        |       |   |         |   |
|  Net operating loss carryovers subject to annual limitations                       |   | $           | 544,000    |   |         | $      | 544,000 |   |
|  Other net operating loss carryovers                                               |   |        | 1,120,068  |   |         |   | 901,297 |   |
|  Claims reserve discount                                                           |   |        | 162,538    |   |         |   | 152,951 |   |
|  Unearned premium                                                                  |   |        | 444,794    |   |         |   | 337,422 |   |
|  Loss and loss adjustment expenses                                                 |   |        | 39,100     |   |         |   | 78,200 |   |
|  Deferred ceding commission revenue                                                |   |        | 966,037    |   |         |   | 1,121,403 |   |
|  Stock compensation expense                                                        |   |        | 49,000     |   |         |   | - |   |
|  Loss from uninsured bank deposits                                                 |   |        | -          |   |         |   | 83,691 |   |
|  Other                                                                             |   |        | 49,113     |   |         |   | 137,300 |   |
|  Total deferred tax assets                                                         |   |        | 3,374,650  |   |         |   | 3,356,264 |   |
|                                                                                    |   |        |       |   |         |   |   |   |
|  Deferred tax liability:                                                           |   |        |       |   |         |   |   |   |
|  Investment in KICO                                                                |   |        | 1,169,000  |   |         |   | 1,169,000 |   |
|  Deferred acquisition costs                                                        |   |        | 1,060,628  |   |         |   | 992,115 |   |
|  Intangibles                                                                       |   |        | 1,527,678  |   |         |   | 1,568,114 |   |
|  Depreciation and amortization                                                     |   |        | 195,208    |   |         |   | 192,838 |   |
|  Net unrealized appreciation of securities                                         |   |        | 102,915    |   |         |   | 114,453 |   |
|  Total deferred tax liabilities                                                    |   |        | 4,055,429  |   |         |   | 4,036,520 |   |
|                                                                                    |   |        |       |   |         |   |   |   |
|  Net deferred tax (liabilty)/asset before valuation allowance                      |   |        | (680,779   | )      |         |   | (680,256 | ) |
|  Less valuation allowance due to Annual Limitation of net operating loss carryover |   |        | (493,000   | )      |         |   | (493,000 | ) |
|  Net deferred income tax liability                                                 |   | $           | (1,173,779 | )      |         | $      | (1,173,256 | ) |

| Three Months ended March 31,                   |   | 2010        |   |   | 2009   |   |
|------------------------------------------------|--------|-------------|--------|--------|--------|--------|
|                                           |   | (unaudited) |   |
| Total revenue                                  |   | $           | -      |   |   | $      | 936,713 |   |
|                                           |   |        |   |   |   |   |   |   |
| Operating Expenses:                            |   |        |   |   |   |   |   |   |
| General and administrative expenses            |   |        | -      |   |   |   | 895,135 |   |
| Depreciation and amortization                  |   |        | -      |   |   |   | 47,935 |   |
| Interest expense                               |   |        | -      |   |   |   | 9,322 |   |
| Total operating expenses                       |   |        | -      |   |   |   | 952,392 |   |
|                                           |   |        |   |   |   |   |   |   |
| Loss from operations                           |   |        | -      |   |   |   | (15,679 | ) |
| Additional consideration on sale of businesses |   |        | 13,848 |   |   |   | - |   |
| Income (loss) before income taxes              |   |        | 13,848 |   |   |   | (15,679 | ) |
| Provision for income taxes                     |   |        | -      |   |   |   | - |   |
|                                           |   |        |   |   |   |   |   |   |
| Income (loss) from discontinued operations,    |   |        |   |   |   |   |   |   |
| net of income taxes                            |   | $           | 13,848 |   |   | $      | (15,679 | ) |

|                                  |   | March 31,   |   |   | December 31, |   |
|---------------------------------------|--------|-------------|--------|--------|--------------|--------|
|                                  |   | 2010        |   |   | 2009         |   |
|                                  |   | (unaudited) |   |   |         |   |
|                                  |   |        |   |   |         |   |
| Total assets                          |   | $           | -      |   |         | $      | - |   |
|                                  |   |        |   |   |         |   |   |   |
| Accounts payable and accrued expenses |   | $           | 6,500  |   |         | $      | 26,000 |   |
| Total liabilities                     |   | $           | 6,500  |   |         | $      | 26,000 |   |

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

|                                           |   | Three months ended March 31, |   |
|------------------------------------------------|--------|------------------------------|--------|
| ($ in thousands)                               |   | 2010                         |   |   | 2009 |   |   | Change |   |   | Percent |   |
|  Revenues                                 |   |                         |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                      |   | $                            | 2,218  |   |   | $ | - |   |   | $ | 2,218 |   |   | (A) |   |
|  Ceding commission revenue                |   |                         | 1,809  |   |   |   | - |   |   |   | 1,809 |   |   | (A) |   |
|  Net investment income                    |   |                         | 132    |   |   |   | - |   |   |   | 132 |   |   | (A) |   |
|  Net realized gain on investments         |   |                         | 35     |   |   |   | - |   |   |   | 35 |   |   | (A) |   |
|  Other income                             |   |                         | 221    |   |   |   | 112 |   |   |   | 109 |   |   |   | 97.3 | % |
|  Total revenues                           |   |                         | 4,415  |   |   |   | 112 |   |   |   | 4,303 |   |   |   | 3,842.0 | % |
|                                           |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Expenses                                 |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses        |   |                         | 1,434  |   |   |   | - |   |   |   | 1,434 |   |   | (A) |   |
|  Commission expense                       |   |                         | 1,137  |   |   |   | - |   |   |   | 1,137 |   |   | (A) |   |
|  Other underwriting expenses              |   |                         | 702    |   |   |   | - |   |   |   | 702 |   |   | (A) |   |
|  Other operating expenses                 |   |                         | 540    |   |   |   | 282 |   |   |   | 258 |   |   |   | 91.5 | % |
|  Depreciation and amortization            |   |                         | 157    |   |   |   | 4 |   |   |   | 153 |   |   |   | 3,825.0 | % |
|  Interest expense                         |   |                         | 45     |   |   |   | 80 |   |   |   | (35 | ) |   |   | (43.8 | )  % |
|  Interest expense - mandatorily           |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  redeemable preferred stock               |   |                         | 37     |   |   |   | 20 |   |   |   | 17 |   |   |   | 85.0 | % |
|  Total expenses                           |   |                         | 4,052  |   |   |   | 386 |   |   |   | 3,666 |   |   |   | 949.7 | % |
|                                           |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income (loss) from operations            |   |                         | 363    |   |   |   | (274 | ) |   |   | 637 |   |   |   | (232.5 | )  % |
|  Interest income-CMIC note receivable     |   |                         | -      |   |   |   | 30 |   |   |   | (30 | ) |   |   | (100.0 | )  % |
|  Income (loss) from continuing operations |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  before taxes                             |   |                         | 363    |   |   |   | (244 | ) |   |   | 607 |   |   | (A) |   |
|  Provision for (benefit from) income tax  |   |                         | 145    |   |   |   | (88 | ) |   |   | 233 |   |   |   | (264.8 | )  % |
|  Income (loss) from continuing operations |   |                         | 218    |   |   |   | (156 | ) |   |   | 374 |   |   | (A) |   |
|  Income (loss) from discontinued          |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  operations, net of taxes                 |   |                         | 14     |   |   |   | (16 | ) |   |   | 30 |   |   |   | (187.5 | )  % |
|  Net income (loss)                        |   |                         | 232    |   |   |   | (172 | ) |   |   | 404 |   |   | (A) |   |
|                                           |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Percent of total revenues:               |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                      |   |                         | 50.2   | % |   |   | 0.0 | % |   |   |   |   |   |   |   |   |
|  Ceding commission revenue                |   |                         | 41.0   | % |   |   | 0.0 | % |   |   |   |   |   |   |   |   |
|  Net investment income                    |   |                         | 3.0    | % |   |   | 0.0 | % |   |   |   |   |   |   |   |   |
|  Net realized gains on investments        |   |                         | 0.8    | % |   |   | 0.0 | % |   |   |   |   |   |   |   |   |
|  Other income                             |   |                         | 5.0    | % |   |   | 100.0 | % |   |   |   |   |   |   |   |   |
|                                           |   |                         | 100.0  | % |   |   | 100.0 | % |   |   |   |   |   |   |   |   |

|                                           |   | Three months ended March 31, |   |
|------------------------------------------------|--------|------------------------------|--------|
| ($ in thousands)                               |   | 2010                         |   |   | 2009 |   |   | Change |   |   | Percent |   |
|                                           |   |                         |   |   |   |   |   |   |   |   |   |   |
| Total revenue                                  |   | $                            | -      |   |   | $ | 937 |   |   | $ | (937 | ) |   |   | (100 | ) % |
|                                           |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses:                            |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses            |   |                         | -      |   |   |   | 896 |   |   |   | (896 | ) |   |   | (100 | ) % |
| Depreciation and amortization                  |   |                         | -      |   |   |   | 48 |   |   |   | (48 | ) |   |   | (100 | ) % |
| Interest expense                               |   |                         | -      |   |   |   | 9 |   |   |   | (9 | ) |   |   | (100 | ) % |
| Impairment of intangibles                      |   |                         | -      |   |   |   | - |   |   |   | - |   |   |   | n/a |   |
| Total operating expenses                       |   |                         | -      |   |   |   | 953 |   |   |   | (953 | ) |   |   | (100 | ) % |
|                                           |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                           |   |                         | -      |   |   |   | (16 | ) |   |   | 16 |   |   |   | (100 | ) % |
| Additional consideration on sale of business   |   |                         | 14     |   |   |   | - |   |   |   | 14 |   |   |   | n/a |   |
| Income (loss) before benefit from income taxes |   |                         | 14     |   |   |   | (16 | ) |   |   | 30 |   |   |   | (188 | ) % |
| Provision for income taxes                     |   |                         | -      |   |   |   | - |   |   |   | - |   |   |   | n/a |   |
| Income (loss) from discontinued operations     |   | $                            | 14     |   |   | $ | (16 | ) |   | $ | 30 |   |   |   | (188 | ) % |

|  Revenues                          |   |   |      |
|-----------------------------------------|--------|--------|-----------|
|  Net premiums earned               |   | $      | 2,217,947 |   |
|  Ceding commission revenue         |   |   | 1,809,593 |   |
|  Net investment income             |   |   | 132,280   |   |
|  Net realized gain on investments  |   |   | 34,660    |   |
|  Other income                      |   |   | 75,077    |   |
|  Total revenues                    |   |   | 4,269,557 |   |
|                                    |   |   |      |   |
|  Expenses                          |   |   |      |   |
|  Loss and loss adjustment expenses |   |   | 1,434,618 |   |
|  Commission expense                |   |   | 1,136,619 |   |
|  Other underwriting expenses       |   |   | 702,376   |   |
|  Depreciation and amortization     |   |   | 155,629   |   |
|  Total expenses                    |   |   | 3,429,242 |   |
|                                    |   |   |      |   |
|  Income from operations            |   |   | 840,315   |   |
|  Income tax expense                |   |   | 275,814   |   |
|  Net income                        |   | $      | 564,501   |   |

|  Net premiums earned                                    |   | $      | 2,217,947  |   |
|--------------------------------------------------------------|--------|--------|------------|--------|
|  Ceding commission revenue                              |   |   | 1,809,593  |   |
|  Other income                                           |   |   | 75,077     |   |
|                                                         |   |   |       |   |
|  Loss and loss adjustment expenses                      |   |   | 1,434,618  |   |
|                                                         |   |   |       |   |
|  Acquistion costs and other underwriting expenses:      |   |   |       |   |
|  Commission expense                                     |   |   | 1,136,619  |   |
|  Other underwriting expenses                            |   |   | 702,376    |   |
|  Total acquistion costs and other underwriting expenses |   |   | 1,838,995  |   |
|                                                         |   |   |       |   |
|  Underwriting income                                    |   | $      | 829,004    |   |
|                                                         |   |   |       |   |
|  Key Measures:                                          |   |   |       |   |
|  Net loss ratio                                         |   |   | 64.7       | %      |
|  Net underwriting expense ratio                         |   |   | -2.1       | %      |
|  Net combined ratio                                     |   |   | 62.6       | %      |
|                                                         |   |   |       |   |
|  Reconciliation of net underwriting expense ratio:      |   |   |       |   |
|  Acquisition costs and other underwriting expenses      |   | $      | 1,838,995  |   |
|  Less: Ceding commission revenue                        |   |   | (1,809,593 | )      |
|  Less: Other income                                     |   |   | (75,077    | )      |
|                                               |   | $      | (45,675    | )      |
|                                                         |   |   |       |   |
|  Net earned premium                                     |   | $      | 2,217,947  |   |

|                                    |   | March 31, 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         |   | $              | 3,549,616  |   |   | $ | 43,430 |   |   | $ | (28,218 | ) |   | $ | - |   |   | $ | 3,564,828 |   |   |   | 23.0 | % |
|                                    |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of States, |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Territories and Possessions       |   |           | 5,751,979  |   |   |   | 62,034 |   |   |   | (12,728 | ) |   |   | - |   |   |   | 5,801,285 |   |   |   | 37.4 | % |
|                                    |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds         |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Industrial and miscellaneous      |   |           | 3,624,662  |   |   |   | 90,837 |   |   |   | (9,978 | ) |   |   | - |   |   |   | 3,705,521 |   |   |   | 23.9 | % |
|  Total fixed-maturity securities   |   |           | 12,926,257 |   |   |   | 196,301 |   |   |   | (50,924 | ) |   |   | - |   |   |   | 13,071,634 |   |   |   | 84.3 | % |
|  Equity Securities                 |   |           | 1,831,168  |   |   |   | 225,945 |   |   |   | (4,042 | ) |   |   | - |   |   |   | 2,053,071 |   |   |   | 13.2 | % |
|  Short term investments            |   |           | 385,392    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 385,392 |   |   |   | 2.5 | % |
|  Total                             |   | $              | 15,142,817 |   |   | $ | 422,246 |   |   | $ | (54,966 | ) |   | $ | - |   |   | $ | 15,510,097 |   |   |   | 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 | % |

|                           |   | March 31, 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 |   | $              | 3,564,828  |   |              |   | 27.3 | % |   | $ | 3,564,477 |   |   |   | 27.9 | % |
|  AAA                      |   |           | 3,384,770  |   |              |   | 25.9 | % |   |   | 3,404,461 |   |   |   | 26.6 | % |
|  AA                       |   |           | 2,576,138  |   |              |   | 19.7 | % |   |   | 2,564,302 |   |   |   | 20.0 | % |
|  A                        |   |           | 3,089,139  |   |              |   | 23.6 | % |   |   | 2,808,145 |   |   |   | 22.0 | % |
|  BBB                      |   |           | 456,759    |   |              |   | 3.5 | % |   |   | 449,695 |   |   |   | 3.5 | % |
|  Total                    |   | $              | 13,071,634 |   |              |   | 100.0 | % |   | $ | 12,791,080 |   |   |   | 100.0 | % |

|                                    |   | March 31, 2010 |   |   | December 31, 2009 |   |
|-----------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                    |   |           |   |   | 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         |   |           | 3.08   | %      |              |   | 5.6 |   |   |   | 3.08 | % |   |   | 5.8 |   |
|                                    |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of States, |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Territories and Possessions       |   |           | 4.20   | %      |              |   | 5.7 |   |   |   | 4.09 | % |   |   | 6.0 |   |
|                                    |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds         |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Industrial and miscellaneous      |   |           | 5.52   | %      |              |   | 8.0 |   |   |   | 5.62 | % |   |   | 8.5 |   |

|                                    |   | March 31, 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 |   |
|                                    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Fixed-Maturity Securities:        |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities and      |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations of U.S. government          |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  corporations and agencies         |   | $                   | 1,411,089 |   |   | $ | (28,218 | ) |   |   | 4 |   |   | $ | - |   |   | $ | - |   |   | $ | 1,411,089 |   |   | $ | (28,218 | ) |
|                                    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of States, |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Territories and Possessions       |   |                | 2,184,932 |   |   |   | (12,728 | ) |   |   | 7 |   |   |   | - |   |   |   | - |   |   |   | 2,184,932 |   |   |   | (12,728 | ) |
|                                    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds         |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Industrial and miscellaneous      |   |                | 549,844   |   |   |   | (9,978 | ) |   |   | 2 |   |   |   | - |   |   |   | - |   |   |   | 549,844 |   |   |   | (9,978 | ) |
|  Total fixed-maturity securities   |   |                | 4,145,865 |   |   |   | (50,924 | ) |   |   | 13 |   |   |   | - |   |   |   | - |   |   |   | 4,145,865 |   |   |   | (50,924 | ) |
|                                    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Equity Securities:                |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Preferred stocks                  |   | $                   | 44,484    |   |   | $ | (3,688 | ) |   |   | 2 |   |   | $ | - |   |   | $ | - |   |   | $ | 44,484 |   |   | $ | (3,688 | ) |
|  Common stocks                     |   |                | 1,388,128 |   |   |   | (354 | ) |   |   | 1 |   |   |   | - |   |   |   | - |   |   |   | 1,388,128 |   |   |   | (354 | ) |
|  Total equity securities           |   |                | 1,432,612 |   |   |   | (4,042 | ) |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | 1,432,612 |   |   |   | (4,042 | ) |
|                                    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total                             |   | $                   | 5,578,477 |   |   | $ | (54,966 | ) |   |   | 16 |   |   | $ | - |   |   | $ | - |   |   | $ | 5,578,477 |   |   | $ | (54,966 | ) |

|                                    |   | 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 | ) |

| Three Months Ended March 31,                         |   | 2010   |     |   | 2009   |   |
|------------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                                 |   |   |     |   |   |   |
|  Cash flows provided by (used in):              |   |   |     |   |   |   |
|  Operating activities                           |   | $      | (252,702 | )      |   | $      | 60,944 |   |
|  Investing activities                           |   |   | (6,067   | )      |   |   | (31,213 | ) |
|  Financing activities                           |   |   | 394,048  |   |   |   | (17,798 | ) |
|  Net increase in cash and cash equivalents      |   |   | 135,279  |   |   |   | 11,933 |   |
|  Cash and cash equivalents, beginning of period |   |   | 625,320  |   |   |   | 142,949 |   |
|  Cash and cash equivalents, end of period       |   | $      | 760,599  |   |   | $      | 154,882 |   |

|   |  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 |

----

4 Denotes document filed as an exhibit to our Quarterly Report on Form 10-QSB for the period ended September 30, 2004 and incorporated herein by reference.

  

  

  

  

  

  

|                | KINGSTONE COMPANIES, INC. |                        |
|---------------------|---------------------------|-----------------------------|
|                |                      |                        |   |
| Dated: May 19, 2010 | By:                       | /s/ Barry B. Goldstein |   |
|                |                      | Barry B. Goldstein     |   |
|                |                      | President              |   |

|   |   |                    |   |
|--------|--------|-------------------------|--------|
|   | By:    | /s/ Victor Brodsky |   |
|   |   | Victor Brodsky          |   |
|   |   | Chief Financial Officer |   |
|   |   |                    |   |