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

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

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

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

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|                                 |   |                 |   |                                                                                                                                                                               |   |   |   |   |
|--------------------------------------|--------|----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                 |   |                 |   |                                                                                                                                                                               |   | PAGE   |
|                                 |   |                 |   |                                                                                                                                                                               |   |   |   |   |
| PART I — FINANCIAL INFORMATION |   |                 |   |                                                                                                                                                                               |
|                                 |   | Item 1 —  |   |  Financial Statements                                                                                                                                                         |   |   | 2      |   |
|                                 |   |                 |   |  Condensed Consolidated Balance Sheets at June 30, 2010 (Unaudited) and December 31, 2009                                                                                     |   |   | 3      |   |
|                                 |   |                 |   |  Condensed Consolidated Statements of Operations and Comprehensive Income  for the three months and six months ended June 30, 2010 (Unaudited) and 2009 (Unaudited) |   |   | 4      |   |
|                                 |   |                 |   |  Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2010 (Unaudited) and for the year ended December 31, 2009                             |   |   | 5      |   |
|                                 |   |                 |   |  Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2010 (Unaudited) and 2009  (Unaudited)                                           |   |   | 6-7    |   |
|                                 |   |                 |   |  Notes to Condensed Consolidated Financial Statements  (Unaudited)                                                                                                  |   |   | 8      |   |
|                                 |   | Item 2 —  |   |  Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                                  |   |   | 29     |   |
|                                 |   | Item 3 —  |   |  Quantitative and Qualitative Disclosures About Market Risk                                                                                                                   |   |   | 42     |   |
|                                 |   | Item 4T—  |   |  Controls and Procedures                                                                                                                                                      |   |   | 42     |   |
|                                 |   |                 |   |                                                                                                                                                                               |   |   |   |   |
| PART II — OTHER INFORMATION    |   |                 | 44     |                                                                                                                                                                               |
|                                 |   | Item 1 —  |   | Legal Proceedings                                                                                                                                                                  |   |   | 44     |   |
|                                 |   | Item 1A — |   | Risk Factors                                                                                                                                                                       |   |   | 44     |   |
|                                 |   | Item 2 —       |   | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                        |   |   | 44     |   |
|                                 |   | Item 3 —       |   | Defaults Upon Senior Securities                                                                                                                                                    |   |   | 44     |   |
|                                 |   | Item 4 —  |   | Reserved                                                                                                                                                                           |   |   | 44     |   |
|                                 |   | Item 5 —  |   | Other Information                                                                                                                                                                  |   |   | 44     |   |
|                                 |   | Item 6 —  |   | Exhibits                                                                                                                                                                           |   |   | 44     |   |
| Signatures                           |   |                 | 44     |                                                                                                                                                                               |
|  EXHIBIT 31(a)                  |
|  EXHIBIT 31(b)                  |
|  EXHIBIT 32                     |

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| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                                          |   |
|-----------------------------------------------------------------------------------------------------|--------|
| Condensed Consolidated Balance Sheets                                                               |   |   |   |   |   |   |
|                                                                                                |   | June 30, |   |   | December 31, |   |
|                                                                                                |   | 2010 |   |   | 2009 |   |
|                                                                                                |   | (unaudited) |   |   |   |   |
|  Assets                                                                                        |   |   |   |   |   |   |
|  Short term investments                                                                        |   | $ | - |   |   | $ | 225,336 |   |
|  Fixed-maturity securities, held to maturity, at amortized cost (fair value of $116,813)       |   |   | 106,205 |   |   |   | - |   |
|  Fixed-maturity securities, available for sale, at fair value (amortized cost of $14,294,969   |   |   |   |   |   |   |   |   |
|  at June 30, 2010 and $12,676,867 at December 31, 2009)                                        |   |   | 14,577,906 |   |   |   | 12,791,080 |   |
|  Equity securities, available-for-sale, at fair value (cost of $2,314,476 at June 30, 2010     |   |   |   |   |   |   |   |   |
|  and $1,973,738 at December 31, 2009)                                                          |   |   | 2,395,587 |   |   |   | 2,186,926 |   |
|  Total investments                                                                             |   |   | 17,079,698 |   |   |   | 15,203,342 |   |
|  Cash and cash equivalents                                                                     |   |   | 915,119 |   |   |   | 625,320 |   |
|  Investment income receivable                                                                  |   |   | 158,213 |   |   |   | 135,251 |   |
|  Premiums receivable, net of provision for uncollectible amounts                          |   |   | 5,590,914 |   |   |   | 4,479,363 |   |
|  Receivables - reinsurance contracts                                                           |   |   | 896,282 |   |   |   | 564,408 |   |
|  Reinsurance receivables, net of provision for uncollectible amounts                           |   |   | 20,568,206 |   |   |   | 20,849,621 |   |
|  Notes receivable-sale of business                                                             |   |   | 905,700 |   |   |   | 1,119,365 |   |
|  Deferred acquisition costs                                                                    |   |   | 3,445,620 |   |   |   | 2,917,984 |   |
|  Intangible assets, net                                                                        |   |   | 4,374,243 |   |   |   | 4,612,100 |   |
|  Property and equipment, net of accumulated depreciation                                       |   |   | 1,593,305 |   |   |   | 1,659,015 |   |
|  Equities in pools and associations                                                            |   |   | 220,708 |   |   |   | 220,708 |   |
|  Other assets                                                                                  |   |   | 236,202 |   |   |   | 257,276 |   |
|  Total assets                                                                                  |   | $ | 55,984,210 |   |   | $ | 52,643,753 |   |
|                                                                                                |   |   |   |   |   |   |   |   |
|  Liabilities                                                                                   |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                                             |   | $ | 16,323,276 |   |   | $ | 16,513,318 |   |
|  Unearned premiums                                                                             |   |   | 16,616,352 |   |   |   | 14,088,187 |   |
|  Advance premiums                                                                              |   |   | 449,759 |   |   |   | 411,676 |   |
|  Reinsurance balances payable                                                                  |   |   | 2,432,368 |   |   |   | 1,918,169 |   |
|  Deferred ceding commission revenue                                                            |   |   | 3,083,429 |   |   |   | 3,298,245 |   |
|  Notes payable (includes payable to related parties of $785,000 at June 30, 2010               |   |   |   |   |   |   |   |   |
|  and $585,000 at December 31, 2009)                                                            |   |   | 1,473,597 |   |   |   | 1,085,637 |   |
|  Accounts payable, accrued liabilities and other liabilities                                   |   |   | 1,924,280 |   |   |   | 2,446,558 |   |
|  Deferred income taxes                                                                         |   |   | 1,112,334 |   |   |   | 1,173,256 |   |
|  Mandatorily redeemable preferred stock                                                        |   |   | - |   |   |   | 1,299,231 |   |
|  Liabilities of discontinued operations                                                        |   |   | - |   |   |   | 26,000 |   |
|  Total liabilities                                                                             |   |   | 43,415,395 |   |   |   | 42,260,277 |   |
|                                                                                                |   |   |   |   |   |   |   |   |
|  Commitments                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                |   |   |   |   |   |   |   |   |
|  Stockholders' Equity                                                                          |   |   |   |   |   |   |   |   |
|  Common stock, $.01 par value; authorized 10,000,000 shares; issued 4,638,534 shares at        |   |   |   |   |   |   |   |   |
|  June 30, 2010 and 3,804,536 shares at December 31, 2009; outstanding 3,833,798                |   |   |   |   |   |   |   |   |
|  shares at June 30, 2010 and 2,988,511 shares at December 31, 2009                             |   |   | 46,386 |   |   |   | 38,046 |   |
|  Preferred stock, $.01 par value; authorized 1,000,000 shares; 0 shares issued and outstanding |   |   | - |   |   |   | - |   |
|  Capital in excess of par                                                                      |   |   | 13,556,307 |   |   |   | 12,051,332 |   |
|  Accumulated other comprehensive income                                                        |   |   | 240,273 |   |   |   | 216,086 |   |
|  Accumulated deficit                                                                           |   |   | (110,893 | ) |   |   | (701,606 | ) |
|                                                                                                |   |   | 13,732,073 |   |   |   | 11,603,858 |   |
|  Treasury stock, at cost, 804,736 shares at June 30, 2010 and 816,025 shares                   |   |   |   |   |   |   |   |   |
|  at December 31, 2009                                                                          |   |   | (1,163,258 | ) |   |   | (1,220,382 | ) |
|  Total stockholders' equity                                                                    |   |   | 12,568,815 |   |   |   | 10,383,476 |   |
|                                                                                                |   |   |   |   |   |   |   |   |
|  Total liabilities and stockholders' equity                                                    |   | $ | 55,984,210 |   |   | $ | 52,643,753 |   |
|                                                                                                |   |   |   |   |   |   |   |   |

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| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                           |   |
|--------------------------------------------------------------------------------------|--------|
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) |   |
|                                                                                 |   | For the Three Months Ended |   |   | For the Six Months Ended |   |
|                                                                                 |   | June 30, |   |   | June 30, |   |
|                                                                                 |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|  Revenues                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                                                            |   | $ | 2,622,114 |   |   | $ | - |   |   | $ | 4,840,061 |   |   | $ | - |   |
|  Ceding commission revenue                                                      |   |   | 1,971,144 |   |   |   | - |   |   |   | 4,182,281 |   |   |   | - |   |
|  Net investment income                                                          |   |   | 148,923 |   |   |   | - |   |   |   | 281,203 |   |   |   | - |   |
|  Net realized gains on investments                                              |   |   | 110,089 |   |   |   | - |   |   |   | 144,749 |   |   |   | - |   |
|  Other income                                                                   |   |   | 228,381 |   |   |   | 245,359 |   |   |   | 449,485 |   |   |   | 357,396 |   |
|  Total revenues                                                                 |   |   | 5,080,651 |   |   |   | 245,359 |   |   |   | 9,897,779 |   |   |   | 357,396 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Expenses                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                              |   |   | 1,175,718 |   |   |   | - |   |   |   | 2,610,336 |   |   |   | - |   |
|  Commission expense                                                             |   |   | 1,223,484 |   |   |   | - |   |   |   | 2,360,103 |   |   |   | - |   |
|  Other underwriting expenses                                                    |   |   | 1,428,142 |   |   |   | - |   |   |   | 2,532,062 |   |   |   | - |   |
|  Other operating expenses                                                       |   |   | 377,188 |   |   |   | 384,983 |   |   |   | 916,807 |   |   |   | 666,896 |   |
|  Depreciation and amortization                                                  |   |   | 151,801 |   |   |   | 4,158 |   |   |   | 308,488 |   |   |   | 8,594 |   |
|  Interest expense                                                               |   |   | 47,100 |   |   |   | 53,084 |   |   |   | 92,302 |   |   |   | 133,351 |   |
|  Interest expense - mandatorily redeemable preferred stock                      |   |   | 37,353 |   |   |   | 32,952 |   |   |   | 74,706 |   |   |   | 52,452 |   |
|  Total expenses                                                                 |   |   | 4,440,786 |   |   |   | 475,177 |   |   |   | 8,894,804 |   |   |   | 861,293 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income (loss) from operations                                                  |   |   | 639,865 |   |   |   | (229,818 | ) |   |   | 1,002,975 |   |   |   | (503,897 | ) |
|  Interest income-CMIC note receivable                                           |   |   | - |   |   |   | 37,313 |   |   |   | - |   |   |   | 67,782 |   |
|  Income (loss) from continuing operations before taxes                          |   |   | 639,865 |   |   |   | (192,505 | ) |   |   | 1,002,975 |   |   |   | (436,115 | ) |
|  Income tax expense (benefit)                                                   |   |   | 291,546 |   |   |   | (121,977 | ) |   |   | 436,110 |   |   |   | (209,752 | ) |
|  Income (loss) from continuing operations                                       |   |   | 348,319 |   |   |   | (70,528 | ) |   |   | 566,865 |   |   |   | (226,363 | ) |
|  Income (loss) from discontinued operations, net of taxes                       |   |   | 10,000 |   |   |   | (168,094 | ) |   |   | 23,848 |   |   |   | (183,773 | ) |
|  Net income (loss)                                                              |   |   | 358,319 |   |   |   | (238,622 | ) |   |   | 590,713 |   |   |   | (410,136 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Gross unrealized investment holding (losses) gains                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  arising during period                                                          |   |   | (3,232 | ) |   |   | - |   |   |   | 36,647 |   |   |   | - |   |
|  Income tax benefit (expense) related to items of                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  other comprehensive income                                                     |   |   | 1,099 |   |   |   | - |   |   |   | (12,460 | ) |   |   | - |   |
|  Comprehensive income (loss)                                                    |   | $ | 356,186 |   |   | $ | (238,622 | ) |   | $ | 614,900 |   |   | $ | (410,136 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted earnings (loss) per common share:                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                                             |   | $ | 0.11 |   |   | $ | (0.02 | ) |   | $ | 0.19 |   |   | $ | (0.08 | ) |
| Income (loss) from discontinued operations                                           |   | $ | 0.00 |   |   | $ | (0.06 | ) |   | $ | 0.01 |   |   | $ | (0.06 | ) |
| Income (loss) per common share                                                       |   | $ | 0.11 |   |   | $ | (0.08 | ) |   | $ | 0.20 |   |   | $ | (0.14 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Number of weighted average common shares used in                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| computation of basic and diluted earnings (loss) per share                           |   |   | 3,079,451 |   |   |   | 2,972,746 |   |   |   | 3,016,830 |   |   |   | 2,972,746 |   |

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| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                      |   |
|-----------------------------------------------------------------|--------|
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated Statement of Stockholders' Equity (Unaudited)      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year ended December 31, 2009 and Six Months Ended June 30, 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                                            |   |   | 57,878 |   |   |   | 578 |   |   |   | - |   |   |   | - |   |   |   | 270,630 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 271,208 |   |
| Mandatorily redeemable preferred stock                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| exchanged for common stock                                      |   |   | 787,409 |   |   |   | 7,874 |   |   |   | - |   |   |   | - |   |   |   | 1,291,357 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,299,231 |   |
| Retirement of treasury stock                                    |   |   | (11,289 | ) |   |   | (112 | ) |   |   |   |   |   |   |   |   |   |   | (57,012 | ) |   |   |   |   |   |   |   |   |   |   | (11,289 | ) |   |   | 57,124 |   |   |   | - |   |
| Net income                                                      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 590,713 |   |   |   | - |   |   |   | - |   |   |   | 590,713 |   |
| Net unrealized gains on securities                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available for sale, net of income tax                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 24,187 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 24,187 |   |
| Balance, June 30, 2010                                          |   |   | 4,638,534 |   |   | $ | 46,386 |   |   |   | - |   |   | $ | - |   |   | $ | 13,556,307 |   |   | $ | 240,273 |   |   | $ | (110,893 | ) |   |   | 804,736 |   |   | $ | (1,163,258 | ) |   | $ | 12,568,815 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                               |   |
|------------------------------------------------------------------------------------------|--------|
| Consolidated Statements of Cash Flows (Unaudited)                                        |   |   |   |   |   |   |
| Six Months Ended June 30,                                                                |   | 2010 |   |   | 2009 |   |
|                                                                                     |   |   |   |   |   |   |
|  Cash flows provided by (used in) operating activities:                             |   |   |   |   |   |   |
|  Net income (loss)                                                                  |   | $ | 590,713 |   |   | $ | (410,136 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operations: |   |   |   |   |   |
|  Gain on sale of investments                                                        |   |   | (144,749 | ) |   |   | - |   |
|  Depreciation and amortization                                                      |   |   | 308,488 |   |   |   | 8,594 |   |
|  Amortization of bond premium (discount), net                                       |   |   | 34,605 |   |   |   | - |   |
|  Stock-based payments                                                               |   |   | 271,208 |   |   |   | 13,510 |   |
|  Deferred income taxes                                                              |   |   | (73,382 | ) |   |   | (226,000 | ) |
|  (Increase) decrease in assets:                                                     |   |   |   |   |   |   |   |   |
|  Short term investments                                                             |   |   | 225,336 |   |   |   | - |   |
|  Premiums receivable, net                                                           |   |   | (1,111,551 | ) |   |   | - |   |
|  Receivables - reinsurance contracts                                                |   |   | (331,874 | ) |   |   | - |   |
|  Reinsurance receivables, net                                                       |   |   | 281,415 |   |   |   | - |   |
|  Deferred acquisition costs                                                         |   |   | (527,636 | ) |   |   | - |   |
|  Other assets                                                                       |   |   | (27,068 | ) |   |   | 3,714 |   |
|  Increase (decrease) in liabilities:                                                |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                                  |   |   | (190,042 | ) |   |   | - |   |
|  Unearned premiums                                                                  |   |   | 2,528,165 |   |   |   | - |   |
|  Advance premiums                                                                   |   |   | 38,083 |   |   |   | - |   |
|  Reinsurance balances payable                                                       |   |   | 514,199 |   |   |   | - |   |
|  Deferred ceding commission revenue                                                 |   |   | (214,816 | ) |   |   | - |   |
|  Accounts payable, accrued liabilities and other liabilities                        |   |   | (522,278 | ) |   |   | (283,330 | ) |
|  Net cash provided by (used in) operating activities of continuing operations       |   |   | 1,648,816 |   |   |   | (893,648 | ) |
|  Operating activities of discontinued operations                                    |   |   | (26,000 | ) |   |   | 109,851 |   |
|  Net cash flows provided by (used in) operating activities                          |   |   | 1,622,816 |   |   |   | (783,797 | ) |
|                                                                                     |   |   |   |   |   |   |   |   |
|  Cash flows (used in) provided by investing activities:                             |   |   |   |   |   |   |   |   |
|  Purchase - fixed-maturity securities held to maturity                              |   |   | (106,205 | ) |   |   | - |   |
|  Purchase - fixed-maturity securities available for sale                            |   |   | (3,116,725 | ) |   |   | - |   |
|  Purchase - equity securities                                                       |   |   | (877,639 | ) |   |   | - |   |
|  Sale - fixed-maturity securities available for sale                                |   |   | 1,566,632 |   |   |   | - |   |
|  Sale - equity securities                                                           |   |   | 604,217 |   |   |   | - |   |
|  Increase in accrued interest - Commercial Mutual Insurance Company                 |   |   | - |   |   |   | (60,757 | ) |
|  Increase in notes receivable and accrued interest - Sale of businesses             |   |   | - |   |   |   | (106,926 | ) |
|  Collections of notes receivable and accrued interest - Sale of businesses          |   |   | 213,665 |   |   |   | 50,000 |   |
|  Other investing activities                                                         |   |   | (4,921 | ) |   |   | (806 | ) |
|  Net cash used in investing activities of continuing operations                     |   |   | (1,720,976 | ) |   |   | (118,489 | ) |
|  Investing activities of discontinued operations                                    |   |   | - |   |   |   | 1,869,628 |   |
|  Net cash flows (used in) provided by investing activities                          |   |   | (1,720,976 | ) |   |   | 1,751,139 |   |
|                                                                                     |   |   |   |   |   |   |   |   |
|  Cash flows provided by (used in) financing activities:                             |   |   |   |   |   |   |   |   |
|  Proceeds from long term debt (includes $200,000 from related parties in 2010       |   |   |   |   |   |   |   |   |
|  and $120,000 in 2009)                                                              |   |   | 400,000 |   |   |   | 500,000 |   |
|  Principal payments on long-term debt                                               |   |   | (12,040 | ) |   |   | (1,442,456 | ) |
|  Net cash provided by (used in) financing activities of continuing operations       |   |   | 387,960 |   |   |   | (942,456 | ) |
|  Financing activities of discontinued operations                                    |   |   | - |   |   |   | - |   |
|  Net cash flows provided by (used in) financing activities                          |   |   | 387,960 |   |   |   | (942,456 | ) |

----

----

| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                 |   |
|----------------------------------------------------------------------------|--------|
| Consolidated Statements of Cash Flows (Unaudited)                          |   |   |   |   |   |   |
| Six Months Ended June 30,                                                  |   | 2010 |   |   | 2009 |   |
|                                                                       |   |   |   |   |   |   |
|  Increase in cash and cash equivalents                                |   | $ | 289,799 |   |   | $ | 24,886 |   |
|  Cash and cash equivalents, beginning of period                       |   |   | 625,320 |   |   |   | 142,949 |   |
|  Cash and cash equivalents, end of period                             |   | $ | 915,119 |   |   | $ | 167,835 |   |
|                                                                       |   |   |   |   |   |   |   |   |
|  Supplemental Schedule of Non-Cash Investing and Finacing Activities: |   |   |   |   |   |   |   |   |
|  Mandatorily redeemable preferred stock exchanged for common stock    |   | $ | 1,299,231 |   |   | $ | - |   |
|  Notes receivable issued in connection with sale of business          |   | $ | - |   |   | $ | 1,047,573 |   |
|  Notes payable exchanged for mandatorily redeemable preferred stock   |   | $ | - |   |   | $ | 519,231 |   |

----

----

----

----

----

|                              |   | June 30, 2010 |       |
|-----------------------------------|--------|---------------|------------|
|                         |   | Cost or       |       |   | Gross |   |   | Gross Unrealized Losses |   |   | Unrealized |   |
|                              |   | Amortized     |       |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Gains/ |   |
|  Category                    |   | Cost (a)      |       |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | (Losses) |   |
|                              |   | (unaudited)   |       |
| Fixed-Maturity Securities:        |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities and      |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations of U.S. government    |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| corporations and agencies (b)     |   | $             | 2,474,497  |   |   | $ | 85,905 |   |   | $ | (15,635 | ) |   | $ | - |   |   | $ | 2,544,767 |   |   | $ | 70,270 |   |
|                              |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of States, |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Territories and Possessions       |   |          | 6,901,104  |   |   |   | 103,377 |   |   |   | (10,918 | ) |   |   | - |   |   |   | 6,993,563 |   |   |   | 92,459 |   |
|                              |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other bonds         |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Industrial and miscellaneous      |   |          | 4,919,368  |   |   |   | 128,013 |   |   |   | (7,805 | ) |   |   | - |   |   |   | 5,039,576 |   |   |   | 120,208 |   |
| Total fixed-maturity securities   |   |          | 14,294,969 |   |   |   | 317,295 |   |   |   | (34,358 | ) |   |   | - |   |   |   | 14,577,906 |   |   |   | 282,937 |   |
|                              |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities:                |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks                  |   |          | 840,283    |   |   |   | 37,143 |   |   |   | (9,161 | ) |   |   | - |   |   |   | 868,265 |   |   |   | 27,982 |   |
| Common stocks                     |   |          | 1,474,193  |   |   |   | 82,073 |   |   |   | (28,944 | ) |   |   | - |   |   |   | 1,527,322 |   |   |   | 53,129 |   |
| Total equity securities           |   |          | 2,314,476  |   |   |   | 119,216 |   |   |   | (38,105 | ) |   |   | - |   |   |   | 2,395,587 |   |   |   | 81,111 |   |
|                              |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short term investments            |   |          | -          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                              |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                             |   | $             | 16,609,445 |   |   | $ | 436,511 |   |   | $ | (72,463 | ) |   | $ | - |   |   | $ | 16,973,493 |   |   | $ | 364,048 |   |
|                              |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                  |   | 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 |   |

|                             |   | June 30, 2010 |       |   | December 31, 2009 |   |
|----------------------------------|--------|---------------|------------|--------|-------------------|--------|
|                             |   | Amortized     |       |   |              |   |   | Amortized |   |   |   |   |
|  Remaining Time to Maturity |   | Cost          |       |   | Fair Value        |   |   | Cost |   |   | Fair Value |   |
|                             |   | (unaudited)   |       |   |              |   |   |   |   |
|  Less than one year         |   | $             | 621,757    |   |              | $      | 606,626 |   |   | $ | 1,190,319 |   |   | $ | 1,176,050 |   |
|  One to five years          |   |          | 5,793,942  |   |              |   | 5,896,883 |   |   |   | 5,202,936 |   |   |   | 5,260,443 |   |
|  Five to ten years          |   |          | 5,898,877  |   |              |   | 6,078,432 |   |   |   | 4,945,787 |   |   |   | 4,986,236 |   |
|  More than 10 years    |   |          | 1,980,393  |   |              |   | 1,995,965 |   |   |   | 1,337,825 |   |   |   | 1,368,351 |   |
|  Total                      |   | $             | 14,294,969 |   |              | $      | 14,577,906 |   |   | $ | 12,676,867 |   |   | $ | 12,791,080 |   |

----

|                           | June 30, 2010                                      |
|--------------------------------|----------------------------------------------------|
|                      |  Cost or                                      |   |  Gross |   |  Gross Unrealized Losses |   |   |  Unrealized |
|                           |  Amortized                                    |  Unrealized |  Less than 12 |  More than 12 |  Fair |  Gains/ |
|  Category                 |  Cost (a)                                     |   |  Gains |   |  Months |   |  Months |   |  Value |  (Losses) |
|                           |                                               |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities |  $      106,205 |   |  $        10,608 |   |  $                  - |   |  $                  - |   |  $      116,813 |  $        10,608 |

|                             |   | June 30, 2010 |    |   | December 31, 2009 |   |
|----------------------------------|--------|---------------|---------|--------|-------------------|--------|
|                             |   | Amortized     |    |   |              |   |   | Amortized |   |   |   |   |
|  Remaining Time to Maturity |   | Cost          |    |   | Fair Value        |   |   | Cost |   |   | Fair Value |   |
|                             |   | (unaudited)   |    |   |              |   |   |   |   |
|  Less than one year         |   | $             | -       |   |              | $      | - |   |   | $ | - |   |   | $ | - |   |
|  One to five years          |   |          | -       |   |              |   | - |   |   |   | - |   |   |   | - |   |
|  Five to ten years          |   |          | -       |   |              |   | - |   |   |   | - |   |   |   | - |   |
|  More than 10 years    |   |          | 106,205 |   |              |   | 116,813 |   |   |   | - |   |   |   | - |   |
|  Total                      |   | $             | 106,205 |   |              | $      | 116,813 |   |   | $ | - |   |   | $ | - |   |

|                            |   | Three months ended |    |   | Six months ended |   |
|---------------------------------|--------|--------------------|---------|--------|------------------|--------|
|                            |   | June 30,           |    |   | June 30,         |   |
|                            |   | 2010               |    |   | 2009             |   |   | 2010 |   |   | 2009 |   |
|                            |   | (unaudited)        |    |   | (unaudited)      |
|  Income                    |   |               |    |   |             |   |   |   |   |   |   |   |
|  Fixed-maturity securities |   | $                  | 125,616 |   |             | $      | - |   |   | $ | 254,723 |   |   | $ | - |   |
|  Equity securities         |   |               | 32,225  |   |             |   | - |   |   |   | 59,526 |   |   |   | - |   |
|  Cash and cash equivalents |   |               | 2,967   |   |             |   | - |   |   |   | 4,817 |   |   |   | - |   |
|  Other                     |   |               | 6       |   |             |   | - |   |   |   | 21 |   |   |   | - |   |
|  Total                     |   |               | 160,814 |   |             |   | - |   |   |   | 319,087 |   |   |   | - |   |
|  Expenses                  |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Investment expenses       |   |               | 11,891  |   |             |   | - |   |   |   | 37,884 |   |   |   | - |   |
|  Net investment income     |   | $                  | 148,923 |   |             | $      | - |   |   | $ | 281,203 |   |   | $ | - |   |

----

|                            |   | Three months ended |    |   | Six months ended |   |
|---------------------------------|--------|--------------------|---------|--------|------------------|--------|
|                            |   | June 30,           |    |   | June 30,         |   |
|                            |   | 2010               |    |   | 2009             |   |   | 2010 |   |   | 2009 |   |
|                            |   | (unaudited)        |    |   | (unaudited)      |   |
|  Fixed-maturity securities |   |               |    |   |             |   |   |   |   |   |   |   |
|  Gross realized gains      |   | $                  | 95,997  |   |             | $      | - |   |   | $ | 95,997 |   |   | $ | - |   |
|  Gross realized losses     |   |               | (18,562 | )      |             |   | - |   |   |   | (18,562 | ) |   |   | - |   |
|                            |   |               | 77,435  |   |             |   | - |   |   |   | 77,435 |   |   |   | - |   |
|                            |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Equity securities         |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Gross realized gains      |   |               | 37,854  |   |             |   | - |   |   |   | 84,252 |   |   |   | - |   |
|  Gross realized losses     |   |               | (5,200  | )      |             |   | - |   |   |   | (16,938 | ) |   |   | - |   |
|                            |   |               | 32,654  |   |             |   | - |   |   |   | 67,314 |   |   |   | - |   |
|                            |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Net realized gains        |   | $                  | 110,089 |   |             | $      | - |   |   | $ | 144,749 |   |   | $ | - |   |

----

|                            |   | June 30, 2010       |      |
|---------------------------------|--------|---------------------|-----------|
|                            |   | Less than 12 months |      |   | 12 months or more |   |   | Total |   |
|                       |   |                |      |   |   |   |   | No. of |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                            |   | Fair                |      |   | Unrealized |   |   | Positions |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|  Category                  |   | Value               |      |   | Losses |   |   | Held |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |
|                            |   | (unaudited)         |      |
| Fixed-Maturity Securities:      |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities        |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and obligations of U.S.   |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| government corporations         |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and agencies              |   | $                   | 455,231   |   |   | $ | (15,635 | ) |   |   | 1 |   |   | $ | - |   |   | $ | - |   |   | $ | 455,231 |   |   | $ | (15,635 | ) |
|                            |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  States, Territories and   |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Possessions               |   |                | 1,807,922 |   |   |   | (10,918 | ) |   |   | 6 |   |   |   | - |   |   |   | - |   |   |   | 1,807,922 |   |   |   | (10,918 | ) |
|                            |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  bonds industrial and      |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  miscellaneous             |   |                | 1,426,766 |   |   |   | (7,805 | ) |   |   | 5 |   |   |   | - |   |   |   | - |   |   |   | 1,426,766 |   |   |   | (7,805 | ) |
|                            |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total fixed-maturity      |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  securities                |   |                | 3,689,919 |   |   |   | (34,358 | ) |   |   | 12 |   |   |   | - |   |   |   | - |   |   |   | 3,689,919 |   |   |   | (34,358 | ) |
|                            |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Equity Securities:        |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Preferred stocks          |   | $                   | 44,484    |   |   | $ | (9,161 | ) |   |   | 7 |   |   | $ | - |   |   | $ | - |   |   | $ | 44,484 |   |   | $ | (9,161 | ) |
|  Common stocks             |   |                | 1,388,128 |   |   |   | (28,944 | ) |   |   | 1 |   |   |   | - |   |   |   | - |   |   |   | 1,388,128 |   |   |   | (28,944 | ) |
|                            |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total equity securities   |   |                | 1,432,612 |   |   |   | (38,105 | ) |   |   | 8 |   |   |   | - |   |   |   | - |   |   |   | 1,432,612 |   |   |   | (38,105 | ) |
|                            |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total                     |   | $                   | 5,122,531 |   |   | $ | (72,463 | ) |   |   | 20 |   |   | $ | - |   |   | $ | - |   |   | $ | 5,122,531 |   |   | $ | (72,463 | ) |

----

|                                                |   | June 30, 2010 |   |
|-----------------------------------------------------|--------|---------------|--------|
|  ($ in thousands)                              |   | Level 1       |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                                                |   | (unaudited)   |   |
|                                                |   |          |   |   |   |   |   |   |   |   |   |   |
|  Fixed-maturity investments held to maturity   |   |          |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities                      |   | $             | 117    |   |  $ |  - |   |  $ |  - |   |   | $ | 117 |   |
|                                                |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
|  Fixed-maturity investments available for sale |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities                      |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
|  and obligations of U.S.                       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
|  government corporations                       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
|  and agencies                                  |   |          | 2,545  |   |   |   | - |   |   |   | - |   |   |   | 2,545 |   |
|                                                |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  States, Territories and                       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Possessions                                   |   |          | 6,994  |   |   |   | - |   |   |   | - |   |   |   | 6,994 |   |
|                                                |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and                                 |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  other bonds                                   |   |          | 5,040  |   |   |   | - |   |   |   | - |   |   |   | 5,040 |   |
|                                                |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total fixed maturities                        |   |          | 14,696 |   |   |   | - |   |   |   | - |   |   |   | 14,696 |   |
|  Equity investments                            |   |          | 2,396  |   |   |   | - |   |   |   | - |   |   |   | 2,396 |   |
|  Short term investments                        |   |          | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
|  Total investments                             |   | $             | 17,092 |   |   | $ | - |   |   | $ | - |   |   | $ | 17,092 |   |

----

|                             |   | 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 |   |

----

|                                                                     |   | June 30, 2010  |       |   | December 31, 2009 |   |
|--------------------------------------------------------------------------|--------|----------------|------------|--------|-------------------|--------|
|                                                                     |   | Carrying Value |       |   | Fair Value        |   |   | Carrying Value |   |   | Fair Value |   |
|                                                                     |   | (unaudited)    |       |   |              |   |   |   |   |
|  Cash, cash equivalents, and short-term investments                 |   | $              | 915,119    |   |              | $      | 915,119 |   |   | $ | 850,656 |   |   | $ | 850,656 |   |
|  Premiums receivable                                                |   |           | 5,569,055  |   |              |   | 5,569,055 |   |   |   | 4,479,363 |   |   |   | 4,479,363 |   |
|  Receivables - reinsurance contracts                                |   |           | 896,282    |   |              |   | 896,282 |   |   |   | 564,408 |   |   |   | 564,408 |   |
|  Reinsurance receivables                                            |   |           | 20,568,206 |   |              |   | 20,568,206 |   |   |   | 20,849,621 |   |   |   | 20,849,621 |   |
|  Notes receivable-sale of business                                  |   |           | 905,700    |   |              |   | 905,700 |   |   |   | 1,119,365 |   |   |   | 1,119,365 |   |
|  Real estate, net of                                                |   |           |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  accumulated depreciation                                           |   |           | 1,454,184  |   |              |   | 1,510,000 |   |   |   | 1,547,629 |   |   |   | 1,510,000 |   |
|  Reinsurance balances payable                                       |   |           | 2,432,368  |   |              |   | 2,432,368 |   |   |   | 1,918,169 |   |   |   | 1,918,169 |   |
|  Notes payable (including related parties)                          |   |           | 1,473,597  |   |              |   | 1,473,597 |   |   |   | 1,085,637 |   |   |   | 1,085,637 |   |
|  Mandatorily redeemable preferred stock (including related parties) |   |           | -          |   |              |   | - |   |   |   | 1,299,231 |   |   |   | 1,299,231 |   |

|  Balance at January 1, 2010    |   | $      | 16,513,318  |   |
|-------------------------------------|--------|--------|-------------|--------|
|  Less reinsurance recoverables |   |   | (10,512,203 | )      |
|                           |   |   | 6,001,115   |   |
|                                |   |   |        |   |
|  Incurred related to:          |   |   |        |   |
|  Current year                  |   |   | 2,949,701   |   |
|  Prior years                   |   |   | (339,365    | )      |
|  Total incurred                |   |   | 2,610,336   |   |
|                                |   |   |        |   |
|  Paid related to:              |   |   |        |   |
|  Current year                  |   |   | 1,304,916   |   |
|  Prior years                   |   |   | 1,265,139   |   |
|  Total paid                    |   |   | 2,570,055   |   |
|                           |   |   |        |   |
|  Net balance at end of period  |   |   | 6,041,396   |   |
|  Add reinsurance recoverables  |   |   | 10,281,880  |   |
|  Balance at June 30, 2010      |   | $      | 16,323,276  |   |

----

|              |   | June 30, 2010 |      |   | December 31, 2009 |   |
|-------------------|--------|---------------|-----------|--------|-------------------|--------|
|              |   | (unaudited)   |      |   |              |   |   |   |   |   |   |   |
|              |   |          |      |   | Less              |   |   |   |   |   |   |   |   | Less |   |   |   |   |
|              |   | Total         |      |   | Current           |   |   | Long-Term |   |   | Total |   |   | Current |   |   | Long-Term |   |
|              |   | Debt          |      |   | Maturities        |   |   | Debt |   |   | Debt |   |   | Maturities |   |   | Debt |   |
| Capitalized lease |   | $             | 23,597    |   |              | $      | 23,597 |   |   | $ | - |   |   | $ | 35,637 |   |   | $ | 24,466 |   |   | $ | 11,171 |   |
| Notes payable     |   |          | 1,450,000 |   |              |   | - |   |   |   | 1,450,000 |   |   |   | 1,050,000 |   |   |   | - |   |   |   | 1,050,000 |   |
|              |   | $             | 1,473,597 |   |              | $      | 23,597 |   |   | $ | 1,450,000 |   |   | $ | 1,085,637 |   |   | $ | 24,466 |   |   | $ | 1,061,171 |   |

----

----

|  Years ended December 31, |   |        |      |
|--------------------------------|--------|-------------|-----------|
|                           |   | (unaudited) |      |
| 2010 (six months)              |   | $           | 23,597    |   |
| 2011                           |   |        | 1,450,000 |   |
|                           |   | $           | 1,473,597 |   |

----

|  Grant                   |   | Shares |   |   | Fair Value |   |
|-------------------------------|--------|--------|--------|--------|------------|--------|
|  Chief Executive Officer |   |   | 50,000 |   |       | $      | 112,000 |   |
|  Directors               |   |   | 7,878  |   |       |   | 21,129 |   |
|                          |   |   | 57,878 |   |       | $      | 133,129 |   |

----

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

| Stock Options                           |   | Number of Shares |    |   | Weighted Average Exercise Price per Share |   |   | Weighted Average Remaining Contractual Term |   |   | Aggregate Intrinsic Value |   |
|-----------------------------------------|--------|------------------|---------|--------|-------------------------------------------|--------|--------|---------------------------------------------|--------|--------|---------------------------|--------|
|                                    |   |             |    |   |                                      |   |   |                                        |   |   |                      |   |
| Outstanding at January 1, 2010          |   |             | 225,000 |   |                                      | $      | 2.24   |                                        |   |   | 3.17                      |   |   | $ | 67,550 |   |
|                                    |   |             |    |   |                                      |   |   |                                        |   |   |                      |   |   |   |   |   |
| Granted                                 |   |             | 188,865 |   |                                      | $      | 2.50   |                                        |   |   | -                         |   |   | $ | 73,657 |   |
| Exercised                               |   |             | -       |   |                                      | $      | -      |                                        |   |   | -                         |   |   | $ | - |   |
| Forfeited                               |   |             | -       |   |                                      | $      | -      |                                        |   |   | -                         |   |   | $ | - |   |
|                                    |   |             |    |   |                                      |   |   |                                        |   |   |                      |   |   |   |   |   |
| Outstanding at June 30, 2010            |   |             | 413,865 |   |                                      | $      | 2.36   |                                        |   |   | 3.62                      |   |   | $ | 223,207 |   |
|                                    |   |             |    |   |                                      |   |   |                                        |   |   |                      |   |   |   |   |   |
| Vested and Exercisable at June 30, 2010 |   |             | 173,466 |   |                                      | $      | 2.31   |                                        |   |   | 2.78                      |   |   | $ | 105,152 |   |

----

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

----

|                                                                 |   | June 30,    |       |   | December 31, |   |
|----------------------------------------------------------------------|--------|-------------|------------|--------|--------------|--------|
|                                                                 |   | 2010        |       |   | 2009         |   |
|                                                                 |   | (unaudited) |       |   |         |   |
|  Deferred tax asset:                                            |   |        |       |   |         |   |
|  Net operating loss carryovers                                  |   | $           | 1,190,965  |   |         | $      | 952,297 |   |
|  Claims reserve discount                                        |   |        | 156,989    |   |         |   | 152,951 |   |
|  Unearned premium                                               |   |        | 518,394    |   |         |   | 337,422 |   |
|  Loss and loss adjustment expenses                              |   |        | 39,100     |   |         |   | 78,200 |   |
|  Deferred ceding commission revenue                             |   |        | 1,048,366  |   |         |   | 1,121,403 |   |
|  Stock compensation expense                                     |   |        | 53,000     |   |         |   | - |   |
|  Loss from uninsured bank deposits                              |   |        | -          |   |         |   | 83,691 |   |
|  Other                                                          |   |        | 37,687     |   |         |   | 137,300 |   |
|  Total deferred tax assets                                      |   |        | 3,044,501  |   |         |   | 2,863,264 |   |
|                                                                 |   |        |       |   |         |   |   |   |
|  Deferred tax liability:                                        |   |        |       |   |         |   |   |   |
|  Investment in KICO                                             |   |        | 1,169,000  |   |         |   | 1,169,000 |   |
|  Deferred acquisition costs                                     |   |        | 1,171,511  |   |         |   | 992,115 |   |
|  Intangibles                                                    |   |        | 1,487,243  |   |         |   | 1,568,114 |   |
|  Depreciation and amortization                                  |   |        | 212,559    |   |         |   | 192,838 |   |
|  Net unrealized appreciation of securities - available for sale |   |        | 112,915    |   |         |   | 114,453 |   |
|  Net unrealized appreciation of securities - held to maturity   |   |        | 3,607      |   |         |   | - |   |
|  Total deferred tax liabilities                                 |   |        | 4,156,835  |   |         |   | 4,036,520 |   |
|                                                                 |   |        |       |   |         |   |   |   |
|  Net deferred income tax liability                              |   | $           | (1,112,334 | )      |         | $      | (1,173,256 | ) |

----

----

----

|                                           |   | For the Three Months Ended |   |   | For the Six Months Ended |   |
|------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                                           |   | June 30,                   |   |   | June 30,                 |   |
|                                           |   | 2010                       |   |   | 2009                     |   |   | 2010 |   |   | 2009 |   |
|                                           |   | (unaudited)                |   |   | (unaudited)              |   |
| Total revenue                                  |   | $                          | -      |   |                     | $      | 305,915 |   |   | $ | - |   |   | $ | 1,242,628 |   |
|                                           |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses:                            |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses            |   |                       | -      |   |                     |   | 463,566 |   |   |   | - |   |   |   | 1,358,701 |   |
| Depreciation and amortization                  |   |                       | -      |   |                     |   | 13,607 |   |   |   | - |   |   |   | 61,542 |   |
| Interest expense                               |   |                       | -      |   |                     |   | 1,161 |   |   |   | - |   |   |   | 10,483 |   |
| Impairment of intangibles                      |   |                       | -      |   |                     |   | 49,470 |   |   |   | - |   |   |   | 49,470 |   |
| Total operating expenses                       |   |                       | -      |   |                     |   | 527,804 |   |   |   | - |   |   |   | 1,480,196 |   |
|                                           |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                           |   |                       | -      |   |                     |   | (221,889 | ) |   |   | - |   |   |   | (237,568 | ) |
| Loss on sale of business                       |   |                       | -      |   |                     |   | (22,704 | ) |   |   | - |   |   |   | (22,704 | ) |
| Additional consideration on sale of businesses |   |                       | 10,000 |   |                     |   | - |   |   |   | 23,848 |   |   |   | - |   |
| Income (loss) before income taxes              |   |                       | 10,000 |   |                     |   | (244,593 | ) |   |   | 23,848 |   |   |   | (260,272 | ) |
| Benefit from income taxes                      |   |                       | -      |   |                     |   | (76,499 | ) |   |   | - |   |   |   | (76,499 | ) |
|                                           |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from discontinued operations,    |   |                       |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| net of benefit from income taxes               |   | $                          | 10,000 |   |                     | $      | (168,094 | ) |   | $ | 23,848 |   |   | $ | (183,773 | ) |

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

----

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

----

----

|                                           |   | Six months ended June 30, |   |
|------------------------------------------------|--------|---------------------------|--------|
| ($ in thousands)                               |   | 2010                      |   |   | 2009 |   |   | Change |   |   | Percent |   |
|  Revenues                                 |   |                      |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                      |   | $                         | 4,840  |   |   | $ | - |   |   | $ | 4,840 |   |   | (A) |   |
|  Ceding commission revenue                |   |                      | 4,182  |   |   |   | - |   |   |   | 4,182 |   |   | (A) |   |
|  Net investment income                    |   |                      | 281    |   |   |   | - |   |   |   | 281 |   |   | (A) |   |
|  Net realized gain on investments         |   |                      | 145    |   |   |   | - |   |   |   | 145 |   |   | (A) |   |
|  Other income                             |   |                      | 449    |   |   |   | 357 |   |   |   | 92 |   |   |   | 25.8 | % |
|  Total revenues                           |   |                      | 9,897  |   |   |   | 357 |   |   |   | 9,540 |   |   |   | 2,672.3 | % |
|                                           |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Expenses                                 |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses        |   |                      | 2,610  |   |   |   | - |   |   |   | 2,610 |   |   | (A) |   |
|  Commission expense                       |   |                      | 2,360  |   |   |   | - |   |   |   | 2,360 |   |   | (A) |   |
|  Other underwriting expenses              |   |                      | 2,532  |   |   |   | - |   |   |   | 2,532 |   |   | (A) |   |
|  Other operating expenses                 |   |                      | 917    |   |   |   | 667 |   |   |   | 250 |   |   |   | 37.5 | % |
|  Depreciation and amortization            |   |                      | 308    |   |   |   | 9 |   |   |   | 299 |   |   |   | 3,322.2 | % |
|  Interest expense                         |   |                      | 92     |   |   |   | 133 |   |   |   | (41 | ) |   |   | (30.8 | )  % |
|  Interest expense - mandatorily           |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  redeemable preferred stock               |   |                      | 75     |   |   |   | 52 |   |   |   | 23 |   |   |   | 44.2 | % |
|  Total expenses                           |   |                      | 8,894  |   |   |   | 861 |   |   |   | 8,033 |   |   |   | 933.0 | % |
|                                           |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income (loss) from operations            |   |                      | 1,003  |   |   |   | (504 | ) |   |   | 1,507 |   |   |   | 299.0 | % |
|  Interest income-CMIC note receivable     |   |                      | -      |   |   |   | 68 |   |   |   | (68 | ) |   |   | (100.0 | )  % |
|  Income (loss) from continuing operations |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  before taxes                             |   |                      | 1,003  |   |   |   | (436 | ) |   |   | 1,439 |   |   |   | 330.0 | % |
|  Provision for (benefit from) income tax  |   |                      | 436    |   |   |   | (210 | ) |   |   | 646 |   |   |   | 307.6 | % |
|  Income (loss) from continuing operations |   |                      | 567    |   |   |   | (226 | ) |   |   | 793 |   |   |   | 350.9 | % |
|  Income (loss) from discontinued          |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  operations, net of taxes                 |   |                      | 24     |   |   |   | (184 | ) |   |   | 208 |   |   |   | 113.0 | % |
|  Net income (loss)                        |   |  $                   | 591    |   |   |  $ | (410 | ) |   |  $ | 1,001 |   |   |   | 244.1 | % |
|                                           |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Percent of total revenues:               |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                      |   |                      | 48.9   | % |   |   | 0.0 | % |   |   |   |   |   |   |   |   |
|  Ceding commission revenue                |   |                      | 42.3   | % |   |   | 0.0 | % |   |   |   |   |   |   |   |   |
|  Net investment income                    |   |                      | 2.8    | % |   |   | 0.0 | % |   |   |   |   |   |   |   |   |
|  Net realized gains on investments        |   |                      | 1.5    | % |   |   | 0.0 | % |   |   |   |   |   |   |   |   |
|  Other income                             |   |                      | 4.5    | % |   |   | 100.0 | % |   |   |   |   |   |   |   |   |
|                                           |   |                      | 100.0  | % |   |   | 100.0 | % |   |   |   |   |   |   |   |   |

----

|                                           |   | Six months ended June 30, |   |
|------------------------------------------------|--------|---------------------------|--------|
| ($ in thousands)                               |   | 2010                      |   |   | 2009 |   |   | Change |   |   | Percent |   |
|                                           |   |                      |   |   |   |   |   |   |   |   |   |   |
| Total revenue                                  |   | $                         | -      |   |   | $ | 1,242 |   |   | $ | (1,242 | ) |   |   | (100 | ) % |
|                                           |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses:                            |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses            |   |                      | -      |   |   |   | 1,359 |   |   |   | (1,359 | ) |   |   | (100 | ) % |
| Depreciation and amortization                  |   |                      | -      |   |   |   | 62 |   |   |   | (62 | ) |   |   | (100 | ) % |
| Interest expense                               |   |                      | -      |   |   |   | 10 |   |   |   | (10 | ) |   |   | (100 | ) % |
| Impairment of intangibles                      |   |                      | -      |   |   |   | 49 |   |   |   | (49 | ) |   |   | (100 | ) % |
| Total operating expenses                       |   |                      | -      |   |   |   | 1,480 |   |   |   | (1,480 | ) |   |   | (100 | ) % |
|                                           |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                           |   |                      | -      |   |   |   | (238 | ) |   |   | 238 |   |   |   | 100 | % |
| Loss on sale of business                       |   |                      |   |   |   |   | (22 | ) |   |   | 22 |   |   |   | 100 | % |
| Additional consideration on sale of business   |   |                      | 24     |   |   |   | - |   |   |   | 24 |   |   |   | n/a |   |
| Income (loss) before benefit from income taxes |   |                      | 24     |   |   |   | (260 | ) |   |   | 284 |   |   |   | 109 | % |
| Benefit from income taxes                      |   |                      | -      |   |   |   | (76 | ) |   |   | 76 |   |   |   | n/a |   |
| Income (loss) from discontinued operations     |   | $                         | 24     |   |   | $ | (184 | ) |   | $ | 208 |   |   |   | 113 | % |

----

|                                           |   | Three months ended June 30, |   |
|------------------------------------------------|--------|-----------------------------|--------|
| ($ in thousands)                               |   | 2010                        |   |   | 2009 |   |   | Change |   |   | Percent |   |
|  Revenues                                 |   |                        |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                      |   | $                           | 2,622  |   |   | $ | - |   |   | $ | 2,622 |   |   | (A) |   |
|  Ceding commission revenue                |   |                        | 1,971  |   |   |   | - |   |   |   | 1,971 |   |   | (A) |   |
|  Net investment income                    |   |                        | 149    |   |   |   | - |   |   |   | 149 |   |   | (A) |   |
|  Net realized gain on investments         |   |                        | 110    |   |   |   | - |   |   |   | 110 |   |   | (A) |   |
|  Other income                             |   |                        | 228    |   |   |   | 245 |   |   |   | (17 | ) |   |   | (6.9 | )  % |
|  Total revenues                           |   |                        | 5,080  |   |   |   | 245 |   |   |   | 4,835 |   |   |   | 1,973.5 | % |
|                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Expenses                                 |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses        |   |                        | 1,176  |   |   |   | - |   |   |   | 1,176 |   |   | (A) |   |
|  Commission expense                       |   |                        | 1,223  |   |   |   | - |   |   |   | 1,223 |   |   | (A) |   |
|  Other underwriting expenses              |   |                        | 1,428  |   |   |   | - |   |   |   | 1,428 |   |   | (A) |   |
|  Other operating expenses                 |   |                        | 377    |   |   |   | 385 |   |   |   | (8 | ) |   |   | (2.1 | )  % |
|  Depreciation and amortization            |   |                        | 151    |   |   |   | 5 |   |   |   | 146 |   |   |   | 2,920.0 | % |
|  Interest expense                         |   |                        | 47     |   |   |   | 53 |   |   |   | (6 | ) |   |   | (11.3 | )  % |
|  Interest expense - mandatorily           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  redeemable preferred stock               |   |                        | 38     |   |   |   | 32 |   |   |   | 6 |   |   |   | 18.8 | % |
|  Total expenses                           |   |                        | 4,440  |   |   |   | 475 |   |   |   | 3,965 |   |   |   | 834.7 | % |
|                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income (loss) from operations            |   |                        | 640    |   |   |   | (230 | ) |   |   | 870 |   |   |   | 378.3 | % |
|  Interest income-CMIC note receivable     |   |                        | -      |   |   |   | 37 |   |   |   | (37 | ) |   |   | (100.0 | )  % |
|  Income (loss) from continuing operations |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  before taxes                             |   |                        | 640    |   |   |   | (193 | ) |   |   | 833 |   |   |   | 431.6 | % |
|  Provision for (benefit from) income tax  |   |                        | 292    |   |   |   | (122 | ) |   |   | 414 |   |   |   | 339.3 | % |
|  Income (loss) from continuing operations |   |                        | 348    |   |   |   | (71 | ) |   |   | 419 |   |   |   | 590.1 | % |
|  Income (loss) from discontinued          |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  operations, net of taxes                 |   |                        | 10     |   |   |   | (168 | ) |   |   | 178 |   |   |   | 106.0 | % |
|  Net income (loss)                        |   |  $                     | 358    |   |   |  $ | (239 | ) |   |  $ | 597 |   |   |   | 249.8 | % |
|                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Percent of total revenues:               |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                      |   |                        | 51.6   | % |   |   | 0.0 | % |   |   |   |   |   |   |   |   |
|  Ceding commission revenue                |   |                        | 38.8   | % |   |   | 0.0 | % |   |   |   |   |   |   |   |   |
|  Net investment income                    |   |                        | 2.9    | % |   |   | 0.0 | % |   |   |   |   |   |   |   |   |
|  Net realized gains on investments        |   |                        | 2.2    | % |   |   | 0.0 | % |   |   |   |   |   |   |   |   |
|  Other income                             |   |                        | 4.5    | % |   |   | 100.0 | % |   |   |   |   |   |   |   |   |
|                                           |   |                        | 100.0  | % |   |   | 100.0 | % |   |   |   |   |   |   |   |   |
|                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                           |   | Three months ended June 30, |   |
|------------------------------------------------|--------|-----------------------------|--------|
| ($ in thousands)                               |   | 2010                        |   |   | 2009 |   |   | Change |   |   | Percent |   |
|                                           |   |                        |   |   |   |   |   |   |   |   |   |   |
| Total revenue                                  |   | $                           | -      |   |   | $ | 305 |   |   | $ | (305 | ) |   |   | (100 | ) % |
|                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses:                            |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses            |   |                        | -      |   |   |   | 463 |   |   |   | (463 | ) |   |   | (100 | ) % |
| Depreciation and amortization                  |   |                        | -      |   |   |   | 14 |   |   |   | (14 | ) |   |   | (100 | ) % |
| Interest expense                               |   |                        | -      |   |   |   | 1 |   |   |   | (1 | ) |   |   | (100 | ) % |
| Impairment of intangibles                      |   |                        | -      |   |   |   | 49 |   |   |   | (49 | ) |   |   | (100 | ) % |
| Total operating expenses                       |   |                        | -      |   |   |   | 527 |   |   |   | (527 | ) |   |   | (100 | ) % |
|                                           |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                           |   |                        | -      |   |   |   | (222 | ) |   |   | 222 |   |   |   | 100 | % |
| Loss on sale of business                       |   |                        | -      |   |   |   | (22 | ) |   |   | 22 |   |   |   | 100 | % |
| Additional consideration on sale of business   |   |                        | 10     |   |   |   | - |   |   |   | 10 |   |   |   | n/a |   |
| Income (loss) before benefit from income taxes |   |                        | 10     |   |   |   | (244 | ) |   |   | 254 |   |   |   | 104 | % |
| Benefit from income taxes                      |   |                        | -      |   |   |   | (76 | ) |   |   | 76 |   |   |   | 100 | % |
| Income (loss) from discontinued operations     |   | $                           | 10     |   |   | $ | (168 | ) |   | $ | 178 |   |   |   | 106 | % |

----

|                                    |   | Three Months  |      |   | Six Months    |   |
|-----------------------------------------|--------|---------------|-----------|--------|---------------|--------|
|                                    |   | ended         |      |   | ended         |   |
|                                    |   | June 30, 2010 |      |   | June 30, 2010 |   |
|                                    |   |          |      |   |          |   |
|  Revenues                          |   |          |      |   |          |   |
|  Net premiums earned               |   | $             | 2,622,114 |   |          | $      | 4,840,061 |   |
|  Ceding commission revenue         |   |          | 1,971,144 |   |          |   | 4,182,281 |   |
|  Net investment income             |   |          | 148,923   |   |          |   | 281,203 |   |
|  Net realized gain on investments  |   |          | 110,089   |   |          |   | 144,749 |   |
|  Other income                      |   |          | 87,091    |   |          |   | 162,168 |   |
|  Total revenues                    |   |          | 4,939,361 |   |          |   | 9,610,462 |   |
|                                    |   |          |      |   |          |   |   |   |
|  Expenses                          |   |          |      |   |          |   |   |   |
|  Loss and loss adjustment expenses |   |          | 1,175,718 |   |          |   | 2,610,336 |   |
|  Commission expense                |   |          | 1,223,484 |   |          |   | 2,360,103 |   |
|  Other underwriting expenses       |   |          | 1,428,142 |   |          |   | 2,532,062 |   |
|  Depreciation and amortization     |   |          | 150,972   |   |          |   | 306,601 |   |
|  Total expenses                    |   |          | 3,978,316 |   |          |   | 7,809,102 |   |
|                                    |   |          |      |   |          |   |   |   |
|  Income from operations            |   |          | 961,045   |   |          |   | 1,801,360 |   |
|  Income tax expense                |   |          | 334,796   |   |          |   | 610,610 |   |
|  Net income                        |   | $             | 626,249   |   |          | $      | 1,190,750 |   |

|                                    |   | Direct |       |   | Assumed |   |   | Ceded  |   |   | Net        |   |
|-----------------------------------------|--------|--------|------------|--------|---------|--------|--------|--------|--------|--------|------------|--------|
|                                    |   |   |       |   |    |   |   |   |   |   |       |   |
|  Six months ended June 30, 2010:   |   |   |       |   |    |   |   |   |   |   |       |   |
|  Written premiums                  |   | $      | 16,593,343 |   |    | $      | 3,136  |   |   | $      | (9,513,527 | )      |   | $ | 7,082,952 |   |
|  Unearned premiums                 |   |   | (2,530,237 | )      |    |   | 2,072  |   |   |   | 285,274    |   |   |   | (2,242,891 | ) |
|  Earned premiums                   |   | $      | 14,063,106 |   |    | $      | 5,208  |   |   | $      | (9,228,253 | )      |   | $ | 4,840,061 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |       |   |   |   |   |   |
|  Loss and loss adjustment expenses |   | $      | 6,612,134  |   |    | $      | 4,718  |   |   | $      | (4,006,516 | )      |   | $ | 2,610,336 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |       |   |   |   |   |   |
|  Loss ratio                        |   |   | 47.0       | %      |    |   | 90.6   | %      |   |   | 43.4       | %      |   |   | 53.9 | % |
|                                    |   |   |       |   |    |   |   |   |   |   |       |   |   |   |   |   |
|  Three months ended June 30, 2010: |   |   |       |   |    |   |   |   |   |   |       |   |   |   |   |   |
|  Written premiums                  |   | $      | 8,932,360  |   |    | $      | 1,775  |   |   | $      | (5,229,674 | )      |   | $ | 3,704,461 |   |
|  Unearned premiums                 |   |   | (1,640,879 | )      |    |   | 663    |   |   |   | 557,869    |   |   |   | (1,082,347 | ) |
|  Earned premiums                   |   | $      | 7,291,481  |   |    | $      | 2,438  |   |   | $      | (4,671,805 | )      |   | $ | 2,622,114 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |       |   |   |   |   |   |
|  Loss and loss adjustment expenses |   | $      | 2,538,084  |   |    | $      | 3,588  |   |   | $      | (1,365,954 | )      |   | $ | 1,175,718 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |       |   |   |   |   |   |
|  Loss ratio                        |   |   | 34.8       | %      |    |   | 147.2  | %      |   |   | 29.2       | %      |   |   | 44.8 | % |

----

|  Net premiums earned                                    |   | $      | 4,840,061  |   |
|--------------------------------------------------------------|--------|--------|------------|--------|
|  Ceding commission revenue                              |   |   | 4,182,281  |   |
|  Other income                                           |   |   | 162,168    |   |
|                                                         |   |   |       |   |
|  Loss and loss adjustment expenses                      |   |   | 2,610,336  |   |
|                                                         |   |   |       |   |
|  Acquistion costs and other underwriting expenses:      |   |   |       |   |
|  Commission expense                                     |   |   | 2,360,103  |   |
|  Other underwriting expenses                            |   |   | 2,532,062  |   |
|  Total acquistion costs and other underwriting expenses |   |   | 4,892,165  |   |
|                                                         |   |   |       |   |
|  Underwriting income                                    |   | $      | 1,682,009  |   |
|                                                         |   |   |       |   |
|  Key Measures:                                          |   |   |       |   |
|  Net loss ratio                                         |   |   | 53.9       | %      |
|  Net underwriting expense ratio                         |   |   | 11.3       | %      |
|  Net combined ratio                                     |   |   | 65.2       | %      |
|                                                         |   |   |       |   |
|  Reconciliation of net underwriting expense ratio:      |   |   |       |   |
|  Acquisition costs and other underwriting expenses      |   | $      | 4,892,165  |   |
|  Less: Ceding commission revenue                        |   |   | (4,182,281 | )      |
|  Less: Other income                                     |   |   | (162,168   | )      |
|                                               |   | $      | 547,716    |   |
|                                                         |   |   |       |   |
|  Net earned premium                                     |   | $      | 4,840,061  |   |
|                                                         |   |   |       |   |

----

|                                    |   | June 30, 2010     |       |
|-----------------------------------------|--------|-------------------|------------|
|                                    |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   | Cost or           |       |   | Gross |   |   | Gross Unrealized Losses |   |   |   |   |   | % of |   |
|                                    |   | Amortized         |       |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Fair |   |
|  Category                          |   | Cost              |       |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | Value |   |
|                                    |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities and      |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  obligations of U.S. government    |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  corporations and agencies         |   | $                 | 2,474,497  |   |   | $ | 85,905 |   |   | $ | (15,635 | ) |   | $ | - |   |   | $ | 2,544,767 |   |   |   | 15.0 | % |
|                                    |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of States, |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Territories and Possessions       |   |              | 6,901,104  |   |   |   | 103,377 |   |   |   | (10,918 | ) |   |   | - |   |   |   | 6,993,563 |   |   |   | 41.2 | % |
|                                    |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds         |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Industrial and miscellaneous      |   |              | 4,919,368  |   |   |   | 128,013 |   |   |   | (7,805 | ) |   |   | - |   |   |   | 5,039,576 |   |   |   | 29.7 | % |
|  Total fixed-maturity securities   |   |              | 14,294,969 |   |   |   | 317,295 |   |   |   | (34,358 | ) |   |   | - |   |   |   | 14,577,906 |   |   |   | 85.9 | % |
|  Equity Securities                 |   |              | 2,314,476  |   |   |   | 119,216 |   |   |   | (38,105 | ) |   |   | - |   |   |   | 2,395,587 |   |   |   | 14.1 | % |
|  Short term investments            |   |              | -          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.0 | % |
|  Total                             |   | $                 | 16,609,445 |   |   | $ | 436,511 |   |   | $ | (72,463 | ) |   | $ | - |   |   | $ | 16,973,493 |   |   |   | 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 | % |

|                           | June 30, 2010                                      |
|--------------------------------|----------------------------------------------------|
|                           |                                               |   |   |   |   |   |   |
|                      |  Cost or                                      |  Gross |  Gross Unrealized Losses |   | % of |
|                           |  Amortized                                    |  Unrealized |  Less than 12 |   |  More than 12 |  Fair | Fair |
|  Category                 |  Cost                                         |  Gains |  Months |   |  Months |  Value | Value |
|                           |                                               |   |   |   |   |   |   |
|  U.S. Treasury securities |  $      106,205 |  $        10,608 |  $                  - |   |  $                  - |  $      116,813 | 100.0% |

----

|                     |   |   | June 30, 2010 |       |      | December 31, 2009 |   |
|--------------------------|--------|--------|---------------|------------|-----------|-------------------|--------|
|                     |   |   |          |       |      | Percentage of     |   |   |   |   |   | Percentage of |   |
|                     |   |   | Fair Market   |       |      | Fair Market       |   |   | Fair Market |   |   | Fair Market |   |
|                     |   |   | Value         |       |      | Value             |   |   | Value |   |   | Value |   |
| Rating                   |   |   |          |       |      |              |   |   |   |   |   |   |   |
| U.S. Treasury securities |   |   | $             | 2,544,767  |      |              |   | 17.5 | % |   | $ | 3,564,477 |   |   |   | 27.9 | % |
| AAA                      |   |   |          | 4,119,343  |      |              |   | 28.3 | % |   |   | 3,404,461 |   |   |   | 26.6 | % |
| AA                       |   |   |          | 3,599,801  |      |              |   | 24.7 | % |   |   | 2,564,302 |   |   |   | 20.0 | % |
| A                        |   |   |          |       | 3,642,647 |              |   |   | 25.0 | % |   |   | 2,808,145 |   |   |   | 22.0 | % |
| BBB                      |   |   |          | 671,348    |      |              |   | 4.6 | % |   |   | 449,695 |   |   |   | 3.5 | % |
| Total                    |   |   | $             | 14,577,906 |      |              |   | 100.0 | % |   | $ | 12,791,080 |   |   |   | 100.0 | % |

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

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

----

|                            |   | June 30, 2010       |      |
|---------------------------------|--------|---------------------|-----------|
|                            |   | Less than 12 months |      |   | 12 months or more |   |   | Total |   |
|                       |   |                |      |   |   |   |   | No. of |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                            |   | Fair                |      |   | Unrealized |   |   | Positions |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|  Category                  |   | Value               |      |   | Losses |   |   | Held |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |
|                            |   | (unaudited)         |      |
| Fixed-Maturity Securities:      |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities        |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and obligations of U.S.   |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| government corporations         |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and agencies              |   | $                   | 455,231   |   |   | $ | (15,635 | ) |   |   | 1 |   |   | $ | - |   |   | $ | - |   |   | $ | 455,231 |   |   | $ | (15,635 | ) |
|                            |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  States, Territories and   |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Possessions               |   |                | 1,807,922 |   |   |   | (10,918 | ) |   |   | 6 |   |   |   | - |   |   |   | - |   |   |   | 1,807,922 |   |   |   | (10,918 | ) |
|                            |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  bonds industrial and      |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  miscellaneous             |   |                | 1,426,766 |   |   |   | (7,805 | ) |   |   | 5 |   |   |   | - |   |   |   | - |   |   |   | 1,426,766 |   |   |   | (7,805 | ) |
|                            |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total fixed-maturity      |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  securities                |   |                | 3,689,919 |   |   |   | (34,358 | ) |   |   | 12 |   |   |   | - |   |   |   | - |   |   |   | 3,689,919 |   |   |   | (34,358 | ) |
|                            |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Equity Securities:        |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Preferred stocks          |   | $                   | 44,484    |   |   | $ | (9,161 | ) |   |   | 7 |   |   | $ | - |   |   | $ | - |   |   | $ | 44,484 |   |   | $ | (9,161 | ) |
|  Common stocks             |   |                | 1,388,128 |   |   |   | (28,944 | ) |   |   | 1 |   |   |   | - |   |   |   | - |   |   |   | 1,388,128 |   |   |   | (28,944 | ) |
|                            |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total equity securities   |   |                | 1,432,612 |   |   |   | (38,105 | ) |   |   | 8 |   |   |   | - |   |   |   | - |   |   |   | 1,432,612 |   |   |   | (38,105 | ) |
|                            |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total                     |   | $                   | 5,122,531 |   |   | $ | (72,463 | ) |   |   | 20 |   |   | $ | - |   |   | $ | - |   |   | $ | 5,122,531 |   |   | $ | (72,463 | ) |

----

|                            |   | 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 | ) |

----

| Six Months Ended June 30,                            |   | 2010   |       |   | 2009   |   |
|------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                 |   |   |       |   |   |   |
|  Cash flows provided by (used in):              |   |   |       |   |   |   |
|  Operating activities                           |   | $      | 1,622,815  |   |   | $      | (783,797 | ) |
|  Investing activities                           |   |   | (1,720,976 | )      |   |   | 1,751,139 |   |
|  Financing activities                           |   |   | 387,960    |   |   |   | (942,456 | ) |
|  Net increase in cash and cash equivalents      |   |   | 289,799    |   |   |   | 24,886 |   |
|  Cash and cash equivalents, beginning of period |   |   | 625,320    |   |   |   | 142,949 |   |
|  Cash and cash equivalents, end of period       |   | $      | 915,119    |   |   | $      | 167,835 |   |

----

----

----

|   |   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                                                                                                                                                         |
|   |        |                                                                                                                                                                          |
|   | 10          | Form of Exchange Agreement, dated as of June 30, 2010, between Kingstone Companies, Inc. and the holders of Series E Preferred Stock.                                         |
|   |        |                                                                                                                                                                          |
|   | 31(a)       | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                    |
|   |        |                                                                                                                                                                          |
|   | 31(b)       | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                    |
|   |        |                                                                                                                                                                          |
|   |  32    | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

----

    

  

  

  

  

  

  

----

|                              | KINGSTONE COMPANIES, INC. |                        |
|-----------------------------------|---------------------------|-----------------------------|
|                              |                      |                        |   |
| Dated:  August 16, 2010 | By:                       | /s/ Barry B. Goldstein |   |
|                              |                      | Barry B. Goldstein          |   |
|                              |                      | President                   |   |
|                              |                      |                        |         |
|                              |                      |                        |   |
|                              | By:                       | /s/ Victor Brodsky          |   |
|                              |                      | Victor Brodsky              |   |
|                              |                      | Chief Financial Officer     |   |